Continued Growth For CryptoLogic
Published: Tuesday, March 18, 2008 Online-Casinos.com
CONTINUED GROWTH FOR CRYPTOLOGIC
Revenue and earnings for Q4 ending December 31, 2007, ahead of market expectations.
Dublin-based online gambling turnkey provider and software developer Cryptologic has reported continued growth in revenue and earnings for the fourth quarter ending December 31, 2007, ahead of the company's guidance and market expectations.
The Internet gambling pioneer posted fourth-quarter revenue of $20.4 million and net earnings of $5.0 million this week, delivering net earnings of $4.3 million. CryptoLogic's guidance, announced in November 2007, forecast revenue up to $18.5 million and net income between $2 million and $3 million for the quarter.
"In 2007, CryptoLogic demonstrated the resilience of its business - and the strength of its strategy," said recently appointed president and CEO Brian Hadfield. "CryptoLogic led the industry in gaming innovation, broadened and deepened its customer relationships, grew both its core and emerging businesses, and made strategic investments in Europe and Asia. CryptoLogic enters 2008 with a new wave of momentum - and a new world of opportunity."
On a sequential basis, CryptoLogic grew its quarterly revenue and earnings before income tax and minority interest by 16 percent and 82 percent, respectively, over the third quarter of 2007. The company attributes this growth, in part, to the successful release of its newest line-up of casino games in October, and to the launch of the much-anticipated Spider-Man and Fantastic Four slot games in December. The company also benefited from a release of a contingency of $2.0 million. Excluding the impact of this benefit, quarterly revenue was 4.8 percent higher than in the third quarter.
CryptoLogic continues to have a strong balance sheet, ending the year with $77.5 million in cash and cash equivalents even after making four strategic investments in Europe and Asia over the course of 2007. This provides the company with the financial resources and flexibility for expansion in key markets, including the opportunity for earnings-enhancing corporate transactions.
Operational highlights included:
The release of Bonus Pack 12, a new line-up of adventure-themed casino games including Rajah's Rubies, Double Panda, Native Treasure and Computer Rage.
The launch of the latest eagerly-anticipated slot games featuring the popular Marvel Super Heroes, Spider-Man and the Fantastic Four. In 2007 CryptoLogic released 15 new games and began work for four new licensees launching seven new casino and poker sites.
During the year the company acquired an initial stake in Mikoishi (Asia Pacific) Pte Ltd, one of Asia's best-known game development and design companies. This move gives CryptoLogic an opportunity to benefit from the size and rapid growth of the Asian mobile phone market.
Other significant investments included the acquisitions of Parbet.com, a popular Scandinavian poker brand, and Casino.co.uk, a popular gaming portal; and the purchase of a major financial interest in 568 Network Inc., a developer and distributor of online casual games to the Chinese market.
Over the course of 2007, CryptoLogic steadily increased revenue and net earnings as the company continued to make progress on restoring its profitability to historic levels. Total revenue increased from $17.5 million in the third quarter to $20.4 million in the fourth quarter of 2007. The company benefited from strong online casino revenue as well as $2.0 million due to the release of contingency funds.
CryptoLogic attributes its better-than-anticipated casino revenue to the popularity of its newest games.
CryptoLogic continues to have a strong balance sheet, which enabled strategic acquisitions and investments to continue in the fourth quarter, which still ended with $77.5 million in net cash. This is a reduction of $7.9 million from the third quarter largely due to the acquisition of a significant stake in Mikoishi Studios of Singapore. The company continues to be debt-free.
CEO Hadfield says the group will continue to grow its core businesses by releasing more innovative casino games and using tournaments and other innovations to attract loyalty and liquidity to its licensees' shared poker room. At the same time, Crypto will seek new quality licensees, and is in active discussions with various candidates. Thanks to leverage from its robust, scalable technology platform, substantially all incremental revenue goes directly to the bottom line.
Diversification into Asia continues to be a strategic priority, along with deeper penetration of the mobile gaming and other promising segments of the Internet gaming market.
