PartyGaming Expects to Miss 2007 Forecast

PartyGaming announced this week that it expects to fall short of its profit forecast for 2007 based on its results for the first quarter. 

The pared down forecast comes after lower than expected profitability per player.  While new real-money signups were up 117 percent from the previous quarter, the company spent more to acquire those customers, who in turn provided PartyGaming with less revenue.  Yield per active player per day was down 12 percent to $11.40 primarily because a significant portion of the new customers were casual players and the high volume poker players were migrating to poker rooms that accepted U.S. customers. 

Overall numbers were up from the fourth quarter of 2006, though.  Group revenues increased 26 percent to $94.8 million.  Daily poker revenue from PartyPoker.com rose by almost 18.8 percent to $750,900, while casino revenue higher by 38.2 percent, up to $248,900. 

Brokers Dresdner Kleinwort downgraded PartyGaming’s EBITDA forecast for 2007 from $142 million to $107 million, but upgraded its 2008 forecast because the customer acquisitions, which have been successful, are incurring their expenses up front.  Ongoing, the customers attracted now will have much lower expenses associated with them next year.

Originally published 11:50 PM Thursday, May 03, 2007