Profits Rise For Amaya Gaming As It Reduces Reliance On Poker
Canadian based gaming operator Amaya Inc, the owner of biggest online poker website PokerStars has reported a better-than- expected fourth quarter profit, bouncing back after recording losses a year ago. Over the past 12 months, the company has slashed costs and reduced its dependence on online poker as a segment, leading to its improved performance.
Amaya’s net income for the quarter ending December 31 was around $45 million, as compared loss of $15.2 million a year earlier. The company’s revenue has gone up by around 6 percent to reach $310.4 million for the quarter. According to the company, the adjusted earnings per share would be in the range of $1.94 to $2.13 beating analysts’ expectations of $1.91. The optimistic forecast caused the stock to jump by around 3.2 percent to $21.09 in Toronto stock market where it is listed.
Kevin Wright, an analyst at Canaccord Genuity Corp. said that the company was handling poker erosion, while growing casino/sports offerings and curbing costs. Growth in online poker has been under pressure due to increasing regulatory restrictions in United States and professional power players pushing away casual players on the site.
Amaya has taken several measures in the last few months to improve the site experience for recreational players with new offerings and better protection policies. It has also used its large base of customers to reduce its dependence on poker by cross-selling other gaming options. Amaya currently has a registered customer base of nearly 100 million.
The company revealed that poker contributed to around 70 percent of revenue in the fourth quarter, down from 78 percent last year. Online casino games and sportsbook went up to 25.8 percent from 17.2 percent in the same time period. Revenue from poker was down by 5.1 percent from previous year.
In a statement Rafi Ashkenazi CEO said,
2016 was a record year of revenues for Amaya. Our proactive changes to the poker ecosystem and customer acquisition initiatives continue to reverse certain negative trends and we are starting to see organic growth in that business. Our casino offering exceeded expectations as we introduced limited marketing campaigns and focused on our cross-sell efforts, and we continued to build and develop our sportsbook.
Ashkenazi attributed the decline in poker revenue to several causes including cannibalization from cross-selling and PokerStars’ exit from a few smaller markets. According to Ashkenazi, a key priority for 2017 was growing online poker by introducing more innovation particularly in the mobile platform arena. The company is also planning new market expansions with India being one of countries on the list.