Internet Poker

Cryptologic Quarterly Earnings Down Sharply on BetFair Exit

While Cryptologic eeked out earnings of $1.5 million for the three months ending March 31, 2007, revenue and earnings were down sharply year over year, dropping 27% and 80%, respectively. As if that wasn’t bad enough, the positive quarterly earnings were entirely due to a positive gain on the books for changing their accounting on planned jackpot payouts in the future, as otherwise the company would have shown a net loss for the quarter.

While Cryptologic has signed new clients such as the WPT, Playboy, and Betsafe, the loss of BetFair has hit them hard. Betfair moved to their own proprietary gaming platform in Q4 2006, and as a previous significant customer was largely responsible for the hit to revenue and earnings numbers.

The company isn’t projecting a prettier picture in the near term, either, forecasting a small net loss of $1.5 million in Q2 2007. While Cryptologic wasn’t hit nearly as hard as other sites when the UIGEA was passed in October 2006 (70% of the company’s revenues at the time were generated by European players), it still suffered as nearly all companies in the industry did, a fact that has been compounded by the exit of BetFair, which is only know showing up directly in the company’s quarterly numbers.

The company’s stock was selling off sharply in trading Thursday morning, down nearly 12% in early trading.