Bwin.party Announces Two Percent Increase in EBITDA Despite Declining Revenues
In its unaudited results for the six months that ended June 30, 2015, Bwin.party digital entertainment plc reported €47.3 million in Clean Earnings Before Interest Taxes and Depreciation (EBITDA), which represents a two percent increase from the €46.4 million in Clean EBITDA reported for the same period in 2014.
This is certainly good news for bwin.party, the operators of many popular brands including partypoker and bwin, but even more so for the two companies — 888 Holdings, the operator of 888poker and GVC Holdings, the operator of many brands including Sportingbet — currently engaged in a bidding war to acquire the company. An announcement is expected on September 1 to determine which company will move forward with the acquisition.
While nothing is certain, the report provides a hint that 888 Holding may have an edge on the competition with the unaudited report stating, "Whilst discussions with GVC are continuing, there has been no change to the Board’s recommendation for 888’s offer and the associated shareholder documents are expected to be sent to shareholders shortly."
Our progress on non-core asset disposals and other cost saving initiatives is running ahead of plan.
The increase in Clean EBITDA comes despite a small loss in revenues, a sign that the company is operating more efficiently than last year. Revenues for the group declined by 6.5 percent from €317.1 million during the first six months of 2014 compared to €296.5 million during the first six months of this year. The company has a stated objective to meet or exceed €15 million in incremental cost savings this year, which according to the report they are on target to accomplish.
Another sign that the company is in a much healthier position than last year is that the company's operating profit for the first six months of 2015 was €5.3 million, which is much better than the €100.4 million loss the company experienced during the same period last year.
Similarly, the company reported a €2.9 million profit after taxes in the first six months of 2015, compared to a loss of €94.0 million recognized during the first six months of 2014.
Norbert Teufelberger, Chief Executive Officer of bwin.party, seems pleased with the results stating, "Clean EBITDA increased by 2% year-on-year despite the introduction of VAT in a number of EU Member States and the new UK point of consumption tax. However, our progress on non-core asset disposals and other cost saving initiatives is running ahead of plan - excluding the impact of EU VAT and UK point of consumption tax (‘POCT’), Clean EBITDA would have increased by 24%. Based upon our progress in the year-to-date and with the further roll-out of our latest mobile products, the introduction of new CRM tools and planned entry into two new nationally regulated markets later this year, we remain confident about the full year outlook."
Despite the general good news for bwin.party, there are signs that the company's long-term health is declining. New player sign-ups declined by a staggering 24 percent from 485,800 new players reported during the first six months of 2014 compared to 370,100 players during the first six months of 2015.
Furthermore, the number of daily average players declined by 22 percent from 163,000 players reported in the first six months of 2014 compared to 127,100 players reported during the first six months of the current year.
However, despite less players playing at sites owned by the company, the yield per active player, per day is up by 15 percent from €10 being contributed from the average per player, per day during the first six months of 2014 to €11.50 being contributed per player, per day during the first six months of 2015. This means that even though the group has less players, each player is contributing to the company's revenue stream in a more efficient manner.