Canadian online gambling software provider Chartwell Technology has posted Quarter 2 2009 results for the three months ended April 30 2009, showing sharply declining revenues due to increased competition, tough economic times and the loss of two licensees.
Management remains optimistic, pointing out in operational highlights that the company has:
* Renewed its multi-year contracts with major operators like Bwin and Eurobet
* Signed two new software license agreements yet to be announced.
* Completed the development of three new online casino games and completed enhancements to three casino table games.
* Completed software development and infrastructure construction for its new Games Distribution System (“GDS”) platform.
Q2 2009 revenue dropped to $4.6 million compared to $7.0 million for the same period a year earlier. Management reports that the period over period decrease in revenue was a result of two single term software licenses which expired and a general increased level of industry competition and a weakened economy in key markets.
Total expenses before income taxes were virtually the same as the second quarter of 2008 as slightly higher software development and support expenses were offset by reduced stock based compensation expense.
Net loss for the second quarter was $600 000, a loss per share of $0.03 as compared to a net income of $1.1 million or $0.05 per share in the same quarter of the prior fiscal year. EBITDA declined from a positive $2.2 million in the second quarter of fiscal 2008, to a negative $200 000 in the second quarter of fiscal 2009. Cash flow from operations before working capital adjustments declined from $2.0 million in the comparative quarter to cash used in operations of $100 000 in the second quarter of 2009.
Software development and support expense was up at $3.1 million in the second quarter compared to $2.8 million for the same period of fiscal 2008. The increased expense was the result of an overall increase in software development staff focusing on the completion of Chartwell’s new GDS and on adding new gaming content and features to the company’s gaming suite.
Chartwell also invested significant time and money in establishing an Alderney gaming licence, expected to be granted in the third quarter of fiscal 2009 which will provide the basis for the launch of the new GDS platform. The platform represents a software and hardware platform with the capability to deliver any and all third-party gaming content and in the most cost effective manner for traditional operators and database companies seeking to enter the online gaming market.
Sales and marketing expenses were $700 000 in the second quarter of 2009 as opposed to $600 000 in the second quarter of 2008.
Chartwell's Chief Financial Officer, Alan Richter, commented: “While we have experienced reduced revenue in fiscal 2009 when compared to a record quarter in 2008, we are on track to replace that lost revenue from both new clients we have signed and from new products and service capabilities which have been developed and integrated.
"We are committed to our strategy of improving the depth and breadth of our product and services offerings and we believe that our considerable expenditure of time and resources in those areas will produce positive returns this year.”
The Company continued to maintain a strong balance sheet. At April 30, 2009 Chartwell had $19.9 million of cash and short-term investments compared to $21.2 million at January 31, 2009.