Amaya Gaming, the parent company of PokerStars, reported record 2016 revenues Wednesday on the heels of continued diversification into online casino and sportsbook offerings.
The Montreal-based company posted $1.2 billion in revenues for the full year, up 8 percent from the prior year on a standard basis and 12 percent adjusting for the decline in foreign currencies against the U.S. dollar. Adjusted EBITDA grew 14 percent to $524 million while adjusted net earnings grew 26 percent to $366 million.
“2016 was a record year of revenues for Amaya,” said Rafi Ashkenazi, Amaya’s chief executive officer. “Our proactive changes to the poker ecosystem and customer acquisition initiatives continue to reverse certain negative trends and we are starting to see organic growth in that business, our casino offering exceeded expectations as we introduced limited marketing campaigns and focused on our cross-sell efforts, and we continued to build and develop our sportsbook.”
Ashkenazi pointed to other highlights from 2016, including the launch of online poker operations in Portugal – where Amaya has a strong first-mover advantage – the creation of 10 million “winning moments” for customers, the leveraging of Amaya’s poker player base to drive growth in its new online casino and sportsbook offerings with minimal outside marketing and a restructuring of debt that will save the company roughly $50 million in annual interest expense.
He also noted that Amaya was granted the first online gambling license in the Czech Republic in January.
For the 2016 fourth quarter, Amaya posted total revenues of $310 million, up 6 percent year-over-year and up 10 percent on a constant currency basis. Adjusted EBITDA grew 18 percent to $148 million while adjusted net earnings checked in at $107 million, a 30 percent jump.
Poker revenues were largely flat for the year on a constant currency basis, but Ashkenazi said that this development was expected due to cannibalization the casino and sportsbook verticals.
“We’ve been encouraged by the fact that we’re generating revenue from new poker users who are also playing casino and sportsbook,” he said on a call with investors, emphasizing that 2016 saw Amaya become one of the largest online casinos in the world measured by active users.
The share of Amaya’s total revenues from casino and sportsbook products grew from 17 percent in 2015 to 26 percent in 2016.
At the end of 2016, the company had outstanding debt of $2.53 billion priced at an average interest rate of 4.9 percent.
“The strong performance of our business has helped us to reduce our currency risk, lower our interest expense, and accelerate the payment of the remaining amounts owed on our deferred payment obligation, all of which will allow us to continue pursuing our four strategic priorities. We expect to continue our 2016 momentum and execute on our strategy in 2017,” Ashkenazi added.
Earlier this month, David Baazov – the company’s embattled founder who is facing charges of insider trading in Quebec – reduced his overall holdings in the company to 12 percent by selling off 7 million shares. This move came after he offered to buy the company entirely for $2.58 billion last November.
While management avoided commenting on the matter, analysts say that easing Baazov out of the picture is a welcomed development that will ultimately reduce legal overhang and remove a cloud of uncertainty for investors.
“While current [management] has already affirmed commitments towards a future without Baazov, a reduced stake should ease investor concerns of future noise,” said Chad Beynon, an analyst with Macquarie.
