Q4 2005 PARTYGAMING Earnings Conference Call - Part 1.

(From Fair Disclosure Wire)

OPERATOR: Good morning, ladies and gentlemen, and welcome to today's PartyGaming Q4 Key Performance Indicators Conference Call. [OPERATOR INSTRUCTIONS]. I'd now like to hand over to your hosts, Mr. Richard Segal, CEO, and Mr. Martin Weigold, CFO. Please go ahead, gentlemen. RICHARD SEGAL, CEO, PARTYGAMING PLC: Thank you. Good morning, ladies and gentlemen, and welcome to PartyGaming's announcement of KPIs for the fourth quarter of 2005. This is Richard Segal speaking and with me is Martin Weigold, the Group Finance Director. The statement we released this morning shows that we returned strong performances from both our poker and casino businesses. Additionally, trading has remained strong since the start of this year and we are moving towards our next major milestone, the launch of our fully integrated party branded platform. Looking at the fourth quarter performance, I would like to draw your attention to and then go into more detail about the following fourth quarter highlights. Group revenues rose 65% to $320m compared with the $194m achieved in the same period in 2004. Total active players were up 62% to 15.4m compared to 9.5m for the same period in 2004. Yield per active player day in poker was ahead 8% to $17.9 versus the third quarter. Pleasingly, record number of new poker sign-ups were over 229,000, which compares to the same period for 2004 of 182,000. Again, 32% of new poker sign-ups came from outside the U.S. and that's against 18 -- against 14% for the same period in 2004. And of course cross-selling blackjack boosted net casino revenues to $82.3m compared with $10.6m in 2004, showing just how successful blackjack has been. Going into more detail about the highlights, I'll first turn to our poker operations. There were three major drivers behind the growth in our poker business. First, not only did we manage to set a fresh record for sign-ups by adding almost another 230,000 real money players in the fourth quarter, but we also continued to broaden the geographical spread of our player base. On the last call, just before Christmas, I said that November had been a record month with 77,000 sign-ups. December was better with 82,000 new players added. In the fourth quarter, almost one in three of real money player sign-ups came from outside the U.S. compared to one in seven for the same period in 2004. The record number of sign-ups also resulted in us beating our full-year target by close to 5%, with a total of more than 839,000 real money players joining PartyPoker.com during 2005. Second, as expected, the fourth quarter poker performance enjoyed a seasonal uplift. The yield per active player day rose by 8% to $17.9 compared with $16.6 in the previous three-month period. The fourth quarter was also marked by a significant event, and that was when we moved PartyPoker.com to its own platform in October and started the cross-selling of blackjack. The returns from blackjack have served to underline our core plans to cross-sell games to existing customers. During the quarter, 44% of PartyPoker.com players who were active at some point in the period also played blackjack, although it's fair to say that there has been a steady decline each month and the percentage in December was around 33%. However, the incremental revenue generated has had a substantial and positive impact on the profitability of the Group. The performance by blackjack naturally leads me on to talk about our casino operations. At the time of our 2005 pre-close announcement last month, I said that while poker had been performing well the performance of our casino business had been nothing short of outstanding, and that remains so throughout December. It's fair to say that the success of blackjack during the fourth quarter has transformed our casino business and we are already well on the way to becoming the world's largest online casino. On the back of the strong performance of blackjack, net casino revenues in the fourth quarter amounted to $82.3m compared with the $11m achieved in the previous three months. Whilst revenues from blackjack included a certain element of novelty ...