Amaya Reports Record Revenue in Q4 But Profits Fall Slightly Short
Posted on: March 26, 2017, 11:00h.
Last updated on: March 25, 2017, 01:39h.
PokerStars parent Amaya has reported record revenues in Q4 and across 2016, citing “proactive changes” to the online poker ecosystem, as well as better-than-expected growth of its casino operations.
The Canadian company said, year-over-year, revenues rose 5.9 percent in Q4, to $310 million, and 7.8 percent for the whole of 2016, to $1.15 billion.
Nevertheless, profit in the fourth quarter was 53 cents a share, which missed the average projection of 56 cents.
PokerStars’ changes to its ecosystem, initiated in late 2015, caused sit-out protests by some players at the time, mainly its high volume, high stakes players, who were, by definition, its best customers.
Rebalancing the Poker Ecosystem
But Amaya wanted to tip the scales in favor of recreational players, or net depositors, who had been scared away in recent years by a widening skill gap and the increasing use of poker tracking software by multi-tabling, net-withdrawing pros.
It tweaked its player rewards scheme and introduced a host of recreational-friendly “jackpot” style games, which were designed to level the playing field by increasing the luck factor. To the horror of pros, it seems to have worked.
Even so, Amaya is wary of relying completely on poker as the appetite for the game continues to wane globally.
“[Changes to poker] 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,” said Rafi Ashkenazi, Amaya CEO.
Poker accounted for 70 percent of revenue in Q4 compared with 78 percent in the previous quarter, while the share of online casino and sports book rose to 25.8 percent from 17.2 percent, respectively.
Last year was a turbulent one for Amaya. It saw its founder and major shareholder, David Baazov, resign as chairman and CEO, in the face of serious insider trading charges, while a proposed merger with William Hill was derailed by a William Hill shareholder revolt.
Nevertheless, Amaya is reducing the debt it accumulated in its $4.9 billion takeover of PokerStars, which means increased revenues will soon begin to translate into bigger profits.
“The strong performance of our business has helped us to reduce our currency risk, lower our interest expense, and accelerate the payment of the remaining amounts owed on our deferred payment obligation, all of which will allow us to continue pursuing our four strategic priorities,” said Ashkenazi. “We expect to continue our 2016 momentum and execute on our strategy in 2017.”
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