The Canadian online gambling turnkey provider Chartwell Technology announced solid third quarter and nine month results this week, reporting continued strong growth in casino and poker revenues, which rose by 16.5 percent. EBITDA was also up by 18 percent to $1.3 million in the quarter, compared to $1.1 million in the same period in 2007.
Cash flow from operations before working capital adjustments and before a restricted cash adjustment similarly grew by 32.6 percent to $1.3 million, from $1.0 million in the same period in 2007.
At the operational level, Chartwell deployed 4 new games in the quarter, bring to 17 the number of new games launched so far in this fiscal year. The company was also proud to announce the acquisition of British remote and non-remote operating licenses, and will soon announce its first major UK licensee.
Total revenue for this year's third quarter was $6.1 million compared to $5.3 million for the same period a year earlier. License fee revenue increased 13.5 percent to $5.7 million from $5.0 million in the third quarter of 2007 with both casino and poker license fees contributing to the increase in revenue.
The increase in license revenue was the result of organic growth from existing licensees as they benefited from the Euro 2008 football tournament as well as numerous additional games from the company, Chartwell reported.
Following the acquisition of Elite Club Management (ECM) in the second quarter of 2008, the company significantly increased service revenue to $300 000 in the third quarter of 2008.
Net earnings for the third quarter were $600 000 compared to $400 000, enabling the company to increase the tempo of its investment in new products and services.
Software development and support expenses were $3.1 million and $8.2 million respectively in the three and nine months ended July 31, 2008. This compared to $2.4 million and $7.3 million for the same periods of fiscal 2007.
Sales and marketing expenses were $600 000 and $1.9 million for the three months and nine months ended July 31, 2008, compared to $700 000 million and $2.4 million for the same periods in 2007 as Chartwell focused its sales and marketing efforts out of Malta, and reduced its operating costs in London.
General and administrative expenses were $900 000 and $2.7 million in the three and nine months ended July 31, 2008 as compared to $800 000 million and $3.1 million in the same periods in 2007. The increase in general and administrative expense in the third quarter was the result of additional administrative staff following the acquisition of ECM, and higher professional services expenses.
Alan Richter, CFO of Chartwell said, "Chartwell's cash flow from operations for the first three quarters of 2008 of $8.3 million as compared to $3.8 million for the same period in 2007 shows the real strength of our business. This cash flow will allow the company to invest in broadening our product base, improving the services we offer, and to continue with our share repurchase program. In particular, we are very excited about the games that we have in the pipeline, and believe they will set the standard for online Casino slot games."
Chartwell continued to maintain a strong balance sheet through positive cash flow and working capital. At July 31, 2008 the company had $21.7 million of cash and short-term investments compared to $15.1 million at October 31, 2007.