Huge Success for Playtech in 2006

[Vallerius]

Playtech has being performing really well lately.
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Last week they published their financial report for the first half of 2006, revealing that compared to the first half of last year their revenues have increased by 139 percent to $46.2 million. Overall net profit reached $37.3 million, which is a massive improvement over last year’s $13.7 million.
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Revenues from casino activities reached $40.4 million (129 percent improvement over $17.6 million in first half of 2005) while revenues from poker only reached $4.8 million (an 851 percent improvement over first half of 2005). Revenue from poker is significantly lower than that of the casino division because Playtech’s iPoker network is relatively new, having debuted in 2004 while Playtech casino products have been operational since 2001.
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Playtech launched gambling sites for seven new licensees during the first half of 2006, bringing its grand totals to 42 gambling site operators who run 137 gambling sites. I assume that most of Playtech’s contracts with licensees use some sort of revenue-sharing structure, so each new licensee brings in a significant chunk of revenue for the company.
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The company seems to be making an attempt at decreasing its reliance on the American market and expanding in other growth markets such as Asia. One of playtech’s stated goals is “to supply a global software solution that is tailored for specific markets,” and to that the end their report states, “Our new game developments are mainly focused on the Asian and South American markets, providing players from these areas with the traditional games that they have grown up with. This approach is much more effective than trying to convert these conservative gaming markets to Western games that players are unfamiliar with. For the Asian market we are close to launching versions of Mahjong. The Mahjong development process will be divided into stages and will continue into 2007. In addition, we are enhancing our live gaming experience in order to better support our Asian licensees and increase our Casino game portfolio.”

There is no mention of how the company intends to market these specifially tailored sites once it launches them.

The report does not break down performance by individual gaming site performance, so I am not able to gauge the success of each individual site. I am also unable to gauge how successful affiliate marketing has been for the company, but my suspicion is that it must be quite integral, because with the exception of GoldenPalace most Playtech licensees are not ultra-high profile companies that advertise much on television, radio, and billboards, at least in the U.S.

The first half results were so good that the company issued a maiden interim dividend of 8.7 cents per share. <O></O>The company also noted that it is “currently in the middle of our second transition period which is focused on diversifying the company’s product portfolio by leveraging the success of the casino software offering in order to become a major multi product supplier. We are investing considerable efforts into new product development and have launched two new products this month—namely Mobile gaming and Videobet, our server-based gaming terminals product.”