Internet gaming software leader CryptoLogic Limited announced its financial results for the three months ending September 30, 2008. The company posted a net loss of $5.9 million, including a foreign exchange of $4.2 million, leading to a new strategic poker partnership with GTECH Corporation, the majority stakeholder of Boss Media, which recently became known to the public.
As a result, CryptoLogic has slashed its quarterly dividend to $0.03 a share, reduced by 75%. The company had previously paid a dividend of $0.12 per share.
“The continuing payment of a dividend, even in a challenging year for the company, reflects the board’s confidence in CryptoLogic’s strategy to return to growth and profitability in 2009,” the company said in a statement.
The company posted revenue of $14.0 million in its latest financial statement, a decrease of 16.4% from the second quarter of 2008 and 19.7% when compared with the same period in 2007. Operating expenses for the quarter that ended September 30, 2008 were $16.5 million, or 117.5% of revenue. Operating expenses increased primarily due to a $4.2 million loss on foreign exchange recorded during the quarter as the U.S. dollar appreciated by approximately 10% against both the U.K. pound and the Euro during a period where the company had significant net asset positions in these currencies. By partnering with GTECH, it hopes to cut operating expenses by $12 to $15 million in 2009.
“In a challenging year for our company and our industry, we recognize that we must do better – and that is why CryptoLogic is aggressively implementing its strategy to achieve profitability and growth in 2009,” said Brian Hadfield, CryptoLogic’s President and CEO. “CryptoLogic’s proven casino offering is attracting new customers more swiftly than ever before, and our branded games have earned the confidence of some of the world’s biggest gaming operators. And we have already begun reducing our operating costs — a trend that will continue as we implement our new poker partnership.”
By collaborating with GTECH’s International Poker Network in 2009, Cryptologic will give its licensees and players access to a much larger network, while limiting annual expenses. This is part of CryptoLogic’s line of attack to increase revenue and profitability by instead focusing on its internet casino business and branded games. Cryptologic announced multi-year contracts with Gaming Media Group Limited, Sky Betting and Gaming, and GigaMedia Limited this year, and also launched a new site for Betjacks, one of the company’s new European clients. That site went live on November 4th.
CryptoLogic’s internet casino is by far its most profitable business and the company anticipates considerable revenue growth from the division next year. It signed a total of 10 new customers in 2008 and more are expected to come.