Improvement In Bwin's Quarterly Results

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Austrian giant now has 729 000 registered active players

Austrian public company Bwin has released its latest quarterly report with the good news that things are getting better after a tough recent history that saw significant short term losses, mainly due to the UIGEA impact on subsidiary Ongame.

Gross gaming revenues of have climbed Euro 18.1 million to Euro 89.4 million in Q1 2007 (Q1 2006: Euro 71.3 million excl. US operations) Sports betting made up the bulk of the increase at Euro 50.1 million (Q1 2006: EUR 39.2 million) with an impressive registered and active player membership of 729 000 and 182 000 new real-money customers.

Profit after tax is Euro 9.9 million (Q1 2006: EUR 1.5 million)

The company says that for the first time it has achieved a goal pursued since 2004 of becoming the biggest online betting group worldwide in terms of both the number of active customers and gross and net gaming revenues.

In Q1 2007 Bwin generated gross gaming revenues from its poker, casino and games operations of Euro 89.4 million. Gross gaming revenues from sports betting rose by 27.8 percent compared to Q1 2006 to Euro 50.1 million, with a sports betting margin of 9.5 percent.

Although the number of active customers in Q1 2007 rose by 10.7 percent compared to Q1 2006, from 658 000 (excl. US operations) to 729 000, this indicator fell by 6.1 percent compared to Q4 2006 (776 000 excl. US operations). A total of 182 000 customers were active for the first time in Q1 2007 (Q1 2006: 259 000 or Q4 2006: 213,000, excl. US operations in each case).

The decline in new active customers and less effective churn management by comparison were attributable mainly to a drastic reduction in the marketing budget, a decision made last year to reduce operating costs.

The company says that various inertia effects, particularly in the case of sport sponsoring, produced an unfavourable marketing mix in Q1 2007 which may persist for the next three quarters, and can only be completely resolved during the course of the coming year.

"In the short term, the Company could therefore face weaknesses in the activation of customers and less dynamic growth of new customers," the report informs investors. "Apart from this, at the beginning of March 2007 the company also temporarily suspended its offering of online gaming products in Turkey."

Earnings before interest, taxes, depreciation and amortization (EBITDA) rose to Euro 23.2 million, an increase of 56.9 percent compared to Q1 2006 (EUR 14.8 million). Operating income rose from Euro 1.5 million in Q1 2006 to Euro 12.3 million in Q1 2007. A profit after tax and third-party interests of Euro 9.9 million was reported for Q1 2007, as compared to a profit of Euro 1.5 million for the comparable period the previous year.