PartyGaming PLC, the parent company of PartyPoker, reported its annual financial results for the fiscal year ending December 31, 2009 last week. All told, PartyGaming brought in net revenues of $444.7 million, a 6 percent decrease from the $472.9 million in net revenue in 2008.
In the report on PartyGaming’s website, CEO Jim Ryan said, “We delivered a solid performance during 2009 which demonstrated the resilience of our business model that continues to generate strong cashflow, even in the most challenging of circumstances. Leading brands and market position, supported by a strong balance sheet underpin our business strategy. With some acquisitions and major B2B deals already under our belt, we plan to do more in 2010 and I believe we are on course to meet our objective of becoming the world’s most valuable online gaming company.”
Drilling down further into the numbers, it appears that PartyPoker, the stand-out brand of the company, was the weak link in 2009. While it brought in more revenue ($196.7 million) than any of the other business units, it was the only one that saw its net revenue decline from the previous year. With $274.0 million in 2008, PartyPoker experienced a sizable 28.2 percent drop off in revenue. In comparison, PartyCasino, PartyGaming’s casino arm (online slots, craps, blackjack, and the like) almost matched PartyPoker’s net revenue in 2009, making $196.2 million. But unlike PartyPoker, PartyCasino’s net revenues grew year-over-year from $175.0 million, a 12.1 percent increase.
On top of that, PartyPoker was less profitable than PartyCasino, with an EBITDA (earnings before interest, taxes, depreciation, and amortization) of just $42.8 million compared with PartyCasino’s $74.4 million. The $42.8 million represents a decline of 43.8 percent, while PartyCasino’s EBITDA was 13.2 percent higher than in 2008.
As for the other business units, PartyBingo’s net revenue soared 556 percent from $5.9 million to $32.8 million, while PartyBets, which is PartyGaming’s sports book, had its net revenue increase 5.6 percent, from $18 million to $19 million. PartyBingo’s leap was largely the result of PartyGaming’s acquisition of online bingo and casino operator Cashcade for £95.9 million.
In 2009, PartyGaming also acquired the World Poker Tour for $12.3 million.
Beyond EBITDA, PartyGaming’s after-tax profit from continuing operations was $76.7 million in 2009, a $1.1 million decrease from 2008 (1.4 percent). In the end, however, once all expenses were taken into account, PartyGaming experienced a net after-tax loss of $26.5 million, compared to a net profit of $66.9 in 2008. The company explained the loss by pointing out that it incurred costs of $105 million related to the Non-Prosecution Agreement with United States government in April 2009. It will make semi-annual payments over three and a half years and has already paid $15 million of the total.
So far in 2010, PartyGaming is encouraged by its numbers at PartyPoker. While gross daily revenue was down very slightly during the first two months of the year compared to the fourth quarter of 2009, all other metrics were up. New player sign-ups at PartyPoker increased from 1,400 to 1,700 per day, average daily players increased from 51,700 to 55,900, and average daily gross poker revenue increased from $690,000 to $709,000.

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