Cryptologic Reports Strong 2006, Weak Fourth Quarter

As expected, online poker and casino software developer, Cryptologic, reported a significant drop in fourth quarter profit following the banning of U.S. customers after the passage of the Unlawful Internet Gambling Enforcement Act. Profits dropped more than 70 percent for the final quarter of 2006, to $1.7 million. Revenue was also down to $19 million from $25.1 million.

Exacerbating the problems was a $1 million hit the company took in moving its headquarters to Ireland.

Despite the fourth quarter downturn, Cryptologic still posted record numbers for the year as a whole. Revenue and earnings were both up 21 percent to $104.0 million and $24.8 million, respectively. The company also is quite liquid, with over $128 million in cash available.

The company commented that despite the drop in its financials for the quarter, because it did not rely on the U.S. as much as other online gaming companies, the hit was not as serious as it was for some.

Said Cryptologic president and CEO, Lewis Rose:

“While 2006 was a challenging year for the industry, it was another record year for CryptoLogic - and we enter 2007 with both focus and momentum.
“We've launched five new customer sites since December, and have three more in the queue - including two for Holland Casino, CryptoLogic's first government-owned customer.
“With our largest licensees on long-term agreements, and modest revenue expected this year from our new Asian venture, CryptoLogic is poised for long-term growth in the European markets of today -- and the Asian markets of tomorrow.”

Originally published 2:20 PM Friday, February 16, 2007