MONTREAL, March 31, 2015 – Amaya Inc. (“Amaya” or the “Corporation”) (TSX: AYA) today reported record financial results for the three and twelve month periods ended December 31, 2014, driven by growth in its core B2C poker business. The Corporation also provided its 2015 financial guidance. All dollar ($) figures are in Canadian dollars unless otherwise noted. (Financials can be found here.)
Key performance highlights for Q4 2014 include:
- Revenues of $369 million compared to $37 million in Q4 2013;
- Adjusted net earnings1 of $86 million compared to $5 million in Q4 2013;
- Diluted adjusted net earnings1 per share of 42 cents compared to 5 cents in Q4 2013;
- Adjusted EBITDA2 of $155 million compared to $17 million in Q4 2013; and
- Cash flow from operating activities of $56 million compared to $3 million in Q4 2013.
| _____________________________________________________ 1 Adjusted net earnings (loss), and adjusted net earnings (loss) per basic and diluted share, as defined by the Corporation means net earnings (loss) from continuing operations before interest accretion, amortization of Intangible assets resulting from purchase price allocation following acquisitions, stock-based compensation, foreign exchange, and other non-recurring costs. Adjusted Net Earnings (loss) is a non-IFRS measure. Reconciliation to Net Income from continuing operations is included in this release. |
| 2 Adjusted EBITDA as defined by the
Corporation means net earnings (loss) from continuing operations before interest and financing costs
(net of interest income), income taxes, depreciation and amortization, stock-based compensation,
restructuring and other non-recurring costs. Adjusted EBITDA is a non-IFRS measure. Reconciliation
to Net Income from continuing operations is included in this release. |
“We completed our transformation into an online consumer technology leader in 2014 with the successful integration of PokerStars and Full Tilt into Amaya,” said Amaya’s Chairman and CEO, David Baazov. “The strength and vitality of the platforms supported strong growth and innovation, highlighted by the launch of Spin & Go’s on PokerStars, and delivered strong customer growth, with more than two million new customers registered during the fourth quarter. Additionally, we continued to expand our casino offerings, while making investments in IT and R&D to prepare for geographic and product growth.
“Thus far in 2015, we have introduced initiatives to grow the poker sector in key European markets, including the UK, as well as in Asia. PokerStars intends to continue to grow its core poker business through geographic expansion, new and innovative marketing campaigns, including exciting global celebrity endorsements and promotions, and continued innovation in games and technology to improve the consumer experience and attract new players to the game and our other offerings.
“Additionally, we have further developed our casino offering through the introduction of live dealer games and table games on mobile, with slots anticipated to roll out on PokerStars through the first half of 2015. Thus far, we have seen cross-sell rates and revenue yields above our expectations, with a significant majority of the casino spend coming from new deposits to the platforms. We anticipate the launch of sports betting in certain markets in the coming days with an expansion across the network to take place through the first half of 2015.
“Going forward, Amaya intends to acquire new customers and gain online gaming market share through the continued expansion of the B2C business in other verticals, including sportsbetting, casino, social gaming and daily fantasy sports, which we expect will supplement our current growth plans for our core poker business. Amaya currently anticipates executing on this strategic direction through both organic development and strategic M&A.
“As our B2C business is Amaya’s core growth platform, we have initiated a process to identify opportunities to divest our B2B assets, with the aim of facilitating their future growth and maximizing value for Amaya shareholders. Our recent announcements about the planned divestiture of Cadillac Jack and spinoff of Diamond Game is in line with this strategy, and we anticipate providing updates on plans for our other B2B assets in the near future.
“Finally, to further our position as a leading global, online consumer technology company, we recently applied to list our common shares on the Nasdaq Global Select Market, and currently anticipate providing an update on the status of such application in the near future.”
FINANCIAL HIGHLIGHTS
| FOR THE THREE AND TWELVE MONTH PERIODS ENDED DECEMBER 31 $000’S EXCEPT PER SHARE FIGURES |
Q4 2014 | Q4 2013 | FY 2014 | FY 2013 |
| Revenues | 368,638 | 37,083 | 688,222 | 145,892 |
| Adjusted EBITDA | 154,658 | 16,688 | 292,735 | 62,651 |
| Adjusted EBITDA margin (as % of revenue) | 42% | 45% | 43% | 43% |
| Net earnings (loss) from continuing operations | 1,687 | (523) | 57,188 | (4,765) |
| Adjusted net earnings | 85,741 | 11,128 | 145,021 | 22,833 |
| Net earnings (loss) | (26,666) | (6,824) | (7,529) | (29,173) |
| Cash flows from operating activities | 55,763 | 3,043 | 190,658 | (60) |
| Basic adjusted net earnings per share | $0.65 | 0.13 | 1.09 | 0.26 |
| Diluted adjusted net earnings per share | $0.42 | 0.12 | 0.70 | 0.25 |
FINANCIAL RESULTS
Revenue for the three-month period ended December 31, 2014 was $368.64 million as compared to $37.08 million for the comparable prior year period. This increase is primarily attributable to (i) consolidating B2C revenue, primarily generated by PokerStars, with B2B revenue and (ii) consolidating Diamond Game revenue, partially offset by significant finance lease revenue earned during 2013. Revenue for the year ended December 31, 2014 was $688.22 million as compared to $145.89 million for the year ended December 31, 2013. This increase is primarily attributable to (i) consolidating B2C revenue, primarily generated by PokerStars, with B2B revenue, and (ii) consolidating Diamond Game revenue, partially offset by (a) significant finance lease revenue earned during 2013, (b) WagerLogic hosted casino revenue earned during 2013 and (c) significant upfront software licensing fees earned during 2013.
Sales and marketing expenses increased from $2.84 million for the three-month period ended December 31, 2013 to $62.96 million for the three-month period ended December 31, 2014, and increased from $13.73 million for the year ended December 31, 2013 to $101.49 million for the year ended December 31, 2014. The increase in both periods was primarily the result of advertising expenses incurred by the B2C business during such periods.
General and administrative expenses increased from $29.69 million for the three-month period ended December 31, 2013 to $207.69 million for the three-month period ended December 31, 2014, and increased from $109.55 million for the year ended December 31, 2013, to $430.10 million for the year ended December 31, 2014. The increase in both periods was primarily the result of (i) a growing employee base due to the acquisitions of Diamond Game and Rational Group, (ii) gaming duty and processing costs incurred by the B2C business in connection with generating B2C revenues, (iii) impairments and losses on B2B redundant assets and (iv) increased amortization of purchase price allocated intangibles. During these periods, the Corporation determined that a number of B2B-related intangible and tangible assets are redundant to its core operations, which is its B2C business. Impairment losses of approximately $6.13 million and a loss on disposal of assets of approximately $1.40 million were recognized in the fourth quarter of 2014, while impairment losses of approximately $15.17 million and a loss on disposal of assets of approximately $5.76 million were recognized in the year ended December 31, 2014.
Financial expenses increased from $6.16 million for the three month period ended December 31, 2013 to $72.92 million for the three month period ended December 31, 2014, and increased from $20.53 million for the year ended December 31, 2013 to $98.57 million for the year ended December 31, 2014. The increase in both periods was primarily the result of interest on debt during such periods.
Acquisition related expenses increased from $1.33 million for the year ended December 31, 2013 to $22.39 million for the year ended December 31, 2014. This increase was primarily the result of an increase in underwriter fees and professional fees incurred in connection with the acquisitions of Diamond Game and Rational Group during the year ended December 31, 2014.
Current income taxes decreased from $10.0 million for the year ended December 31, 2013 to $8.64 million for the year ended December 31, 2014. This decrease was primarily the result of to the Corporation being less taxable in a number of tax jurisdictions in which it operates.
For the three month period ended December 31, 2014, the Corporation recognized deferred income tax expense of $26.33 million as compared to recognized deferred income tax expense of $2.86 million for the comparable prior year period. This increase was primarily attributable to movements in the valuation allowance in respect of deferred tax assets during the year.
2014 RESULTS VS FINANCIAL GUIDANCE
- On November 10, 2014, Amaya affirmed its previously announced guidance for the full year 2014 for revenue of $669 to $715 million and Adjusted EBITDA of $265 to $285 million, with results expected at the high end of the range. Actual full year 2014 revenues were $688.2 million and Adjusted EBITDA of $292.7 million
2015 FULL YEAR FINANCIAL GUIDANCE
- Revenues of $1.620 billion to $1.740 billion. Assumptions include:
- USD/CAD exchange rate of 1.26, as at close on March 27, 2015
- A full year of revenues from both Amaya’s B2C business (~90% of revenues) and B2B business (~10% of revenues)
- Growth in revenues driven by an increase in B2C poker, casino and sportsbook business revenues
- Adjusted EBITDA of $670 million to $715 million. Assumptions include:
- USD/CAD exchange rate of 1.26, as at close on March 27, 2015
- A full year of Adjusted EBITDA from both the B2C business (~90% of Adjusted EBITDA) and B2B business (~10% of Adjusted EBITDA)
- Growth driven by B2C casino, sportsbook and the core poker business, offsetting:
- approximately $45 million in new Value Added Taxes (VAT) and UK point of consumption (POC) taxes on the co