Amaya to Release Q1 Earnings Mid-May, Revenue Estimates Lowered

May 5th, 2015 | by Greg Shaun
Amaya PokerStars Full Tilt Q1 earnings

On May 14th, Amaya executives will reveal the company’s first-quarter earnings for 2015, projected to be lower than the gaming conglomerate previously estimated. (Image: marketbusinessnews.com)

Amaya will reveal to investors its first-quarter earnings for 2015 during a conference call on May 14th led by David Baazov, CEO of the gaming company and parent to PokerStars and Full Tilt.

In a press release, the company says revenues for January through the end of March are expected to be in the area of $278 to $283 million, a projection that will fall short of its yearlong target of $1.34 billion.

To reach its full-year goal, quarterly numbers need to be around $335 million, but the company points to its selling of previously held companies including Diamond Game, Cadillac Jack, Chartwell, and Cryptologic as cause for the revenue reduction.

Had those earnings been included, Amaya would be closer to its quarterly target.

American Industry Hurting

Online cash games in the United States seem to be headed in the wrong direction as PokerScout reported a 12 percent drop in total revenues this week, another sign that the industry’s best days might have been seen.

With the owner of the world’s largest iPoker networks also reporting less than expected gains, investors might be eager to dump ownership in Amaya.

Traded on the Toronto Stock Exchange (TSX:AYA), Amaya shareholders have been pleasantly rewarded over the last year as the stock soared after its acquisition of PokerStars and Full Tilt.

Year-to-date, AYA is up 262 percent, but over the last six months it’s been one of the more volatile investments on the market.

Topping out at $32.32 per share in December, the stock has fluctuated since, dropping to $21.82 earlier this year before rebounding to its current valuation just below $24.

Though revenue from cash games has suffered during this period, Amaya has created new income streams through sit-and-gos (SNGs).

The fast-paced three-player max format has appealed to both traditional and new online poker players, and the revenues SNGs have brought in to Amaya are significant, a likely highlight during the May 14th call.

Affiliates Suffer

Amaya also revealed this week changes to its affiliate program, telling its outside partners that beginning June 1st PokerStars will only make payments for the first two years a referred player is on its network.

That’s a significant change from affiliates receiving rake for life on referrals.

Even more damaging is the fact the change is retroactive, meaning affiliate programs won’t continue receiving funds for player referrals who have been on PokerStars for more than two years. 

“As we look towards the future, PokerStars wants to significantly grow the game of poker by introducing the game to new audiences and continue to acquire recreational players,” the e-mail read. “Consequently, we are announcing plans to rebalance the PokerStars affiliate payment program.”

Future Bright

Though the market as a whole seems to be struggling and total gross revenues for PokerStars and Full Tilt might not be quite as strong as expected, business analysts believe Amaya’s decision to unload underperforming B2B assets to focus on online poker will only better the company’s position for long-term growth.

Writing on The Motley Fool last month, a website that focuses on stocks and investing, Nelson Smith says, “I’m bullish on Amaya Inc. One thing that concerned me after the big acquisition was the amount of debt the company took on.”

“But management is responding. Amaya has sold off more than $500 million worth of assets during the first quarter, streamlining the business to focus on online poker.”

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