| Real
Casinos> 2007
- Real Casinos News Archive>
First Quarter 2007 Results From Wpt
Poker company reports net loss of $2.3 million compared
to net income of $3.6 million in 2006.
WPT Enterprises, Inc. has announced financial results for the first
quarter ended April 1, 2007. Highlights for the quarter include
the delivery of five episodes of Season V of the World Poker Tour
(WPT) television series and the signing of a Professional Poker
Tour (PPT) Season I agreement in Finland, which represents the first
executed agreement under the Party Gaming sponsorship agreement.
Subsequent to the quarter end, WPT signed a new broadcast-rights
agreement for WPT Season VI with Game Show Network for the broadcast
of twenty-three individual episodes, with taping of Season VI scheduled
for May 2007 for debut on GSN in early 2008.
WPT has also announced a three-year agreement with CryptoLogic
(see previous InfoPowa report) in connection with the re-launch
of WPT's new online poker room and online casino.
The re-launched site will now deploy CryptoLogic's proven online
gaming and poker room software platform to deliver a unique WPT
look and feel that will only be available at WorldPokerTour.com.
The site will only be available for real-money play outside the
United States in jurisdictions where online gaming is permitted,
and is scheduled to open for business in June 2007.
"We are excited about our prospects in 2007 and are confident
in our ability to continue to successfully build the World Poker
Tour brand and execute our strategic plan," said Steve Lipscomb,
President and CEO of WPT Enterprises.
Revenues are down in the first quarter of 2007 at $4.5 million,
compared to $6.5 million in the same period in 2006. The decrease
was primarily a result of the delivery of fewer episodes. Specifically,
five episodes of Season V of the WPT television series were delivered
in the first quarter of 2007 versus the delivery of six episodes
of Season IV of the WPT and one episode of the PPT in the 2006 period.
The company reported a net loss for the quarter of $2.3 million
compared to net income of $3.6 million in the 2006 period.
Domestic television license revenues were $2.4 million in the first
quarter of 2007, a decrease from $3.0 million in the first quarter
of 2006 due to the delivery of fewer episodes of the company's television
series in the first quarter of 2007 versus a year ago.
Online gaming, sponsorship and international television license
revenues were also down at $1.1 million in the first quarter of
2007 compared to $2.6 million in the prior year period. The decrease
of $0.4 million in online gaming revenue during 2007 was primarily
due to lower levels of player activity versus the prior year period.
Sponsorship and event revenues decreased $0.7 million, which was
primarily due to not airing any Season V episodes in the first quarter
of 2007 versus the airing of five episodes of Season IV in the prior
year period.
International television licensing revenues decreased by $0.5 million
as a result of fewer distribution agreements in the international
marketplace. Product licensing revenues increased to $0.9 million
in the first quarter of 2007 compared to $0.7 million in the first
quarter of 2006. The increase was due primarily to higher revenues
from Hands-On Mobile.
Overall gross margins were 52 percent in the first quarter of 2007,
compared to 63 percent in the first quarter of 2006. Domestic television
licensing margins were 37 percent in the first quarter of 2007 compared
to 44 percent in the same period in 2006. This decrease was principally
because of the delivery of an episode of the Professional Poker
Tour series in 2006 for which the production costs had been expensed
in an earlier period. The lower margin contribution from online
gaming in the first quarter of 2007, a result of the amended agreement
with the service provider that significantly increased the percentage
of revenues paid to that party, also contributed to the overall
lower margin.
An unsuccesful strategy whereby WPT tried develop its own online
gaming software and support led to increased selling, general and
administrative expenses to $5.3 million. The company subsequently
stopped its own development and entered into an agreement with CryptoLogic
for its online poker room and casino.
At April 1, 2007, the company had no debt, and total cash, cash
equivalents and investments in marketable securities of approximately
$37.0 million.
Looking ahead, the report suggests:
For the second quarter of 2007, revenues are expected to be in
the range of $7.0-$7.5 million. Regarding the outlook for 2007,
WPT expects:
* To deliver nine episodes of Season V of the WPT television series
in the second quarter of 2007, with the remaining three episodes
of Season V to be delivered during the third quarter of 2007.
* To deliver one episode and four episodes of Season VI of the
WPT television series in the third and fourth quarters of 2007,
respectively.
* To recognize host fee and sponsorship revenues as WPT episodes
are aired during the second and third quarters of 2007.
* Lower revenues and gross profits in online gaming during the
second quarter of 2007 compared to 2006, as a result of the increased
percentage of online poker revenues WPT has agreed to pay to its
current service provider for the remaining term of the agreement.
* To significantly increase year-over-year sales and marketing
costs beginning in June 2007 as the company aggressively markets
the new online gaming site.
As a result of the decision to use the CryptoLogic software platform
for the re-launch of the online gaming site and to stop the development
of an internally-created software platform, the Company expects
the following effects on its results of operations and financial
condition:
* In the second quarter of 2007, a write-off of approximately $2.0-$3.0
million of certain property, equipment and other capitalized costs
related to the internally-developed online gaming platform.
* A decrease in general and administrative expenses from current
levels, beginning in the third quarter of 2007.
|
