Cryptologic Performance Improves MarginallyBy: Joan Peppin, Friday August 12th 2011
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Ever since the leading online casino software provider Cryptologic reported a downturn in financial performance and operational problems, the online gaming industry is alert to the developments. Cryptologic has just announced the results of its performance for the second quarter of 2011. There is no magical recovery, but those having any stake in Cryptologic, whether investors in it stock, or operators who offer Cryptologic games or players who wager on them, will be relieved at the status quo.
The financial results highlights for the second quarter ended June 30, 2011 are as follows. The total revenue has increased to $7.0 million from $6.0 million in the first quarter this year. The total expenses have been held at $6.5 million, the same as the first quarter. Therefore Cryptologic has reported an income before tax of $0.5 million as compared to a loss in the first quarter. The announcement states, "The Board is encouraged by the performance in the quarter and continues to focus on driving revenues further while managing costs tightly to enhance shareholder value."
Cryptologic reported several small reasons for the marginal increase in revenue. There was a reduction in liability previously provided against revenue because of the resolution of a dispute with a significant supplier of games. One of the key licensees in the hosted casino segment turned in a higher contribution. However the online casino operator was not named by Cryptologic. There was an increase in the revenue from branded games. Six new branded games went live in the quarter taking the total number of games rolled out by licensees and generating revenues to date to 185 from 179 at the end of the first quarter. This does not refer to new games at a grassroots level but to Cryptologic licensees acquiring games from its existing portfolio. There was a loss in revenue from online poker.
One of the highlights in the second quarter was the progressive jackpot win on Millionaires Club slot game amounting to $4.2 million at Sky Vegas online casino. This resulted in a decreased provision for jackpot wins and a corresponding decrease in the cash and cash equivalents held as at June 30, 2011. Cryptologic directly pays out the progressive jackpot wins on any of its games in order to prevent any dispute between player and online casino.
The announcement from Cryptologic also provided an update on commercial agreements. The dispute resolution with a supplier of games has already been referred to. Cryptologic has signed a binding agreement with the supplier of games to continue their commercial relationship. The dispute with the brand licensor remains unresolved. The online gaming industry is keen on the outcome of the strategic review being conducted by Deloitte Corporate Finance. However, Cryptologic reported that the review is ongoing and further announcements will be made as and when appropriate.
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