Edison Investment Research

Sportingbet

Company overview

Sportingbet is an online gaming and betting operator mainly serving European and Australian markets. In October 2006 it sold its US-facing business and stopped accepting bets from US customers.

Date	Reports available	Download
Nov 28 2008	Strong Q1 trading Sportingbet delivered a pleasing 45% uplift in normalised profit for its seasonally quiet Q1 with strong growth in its core sports betting business, especially in Australia. So far trading in the busy Q2 is in line with management expectations and our full year PBT estimate of £29.0m is unchanged. The business is highly cash generative and net cash of £19.5m should increase to nearer £40m by the year end. Research type: Update - First quarter results	Log in to download 4 page note available
Oct 16 2008	Trading strongly Final results ahead of expectations, revenue up 30% in the first two months of 2008/09 and net cash of £28.6m all demonstrate the strength of Sportingbet’s business model. Online gambling should be recession resilient (although not immune) and the rating appears exceptionally low on our unchanged forecasts even allowing for ongoing regulatory risks. Research type: Update - Full year results	Log in to download 4 page note available
Jul 30 2008	Betting on growth We expect Sportingbet to deliver 25% plus earnings growth in 2008/09, with strong positive cash flows from a relatively recession-resilient business. The share rating appears very low but investors need to satisfy themselves as to the level of regulatory risk they are prepared to bear, notably in relation to Turkey. M&A in the sector is currently stymied by talks with the US DoJ, but consolidation is likely to re-emerge as a sector driver medium-term and ratings have significant scope to improve. Research type: Outlook - Quarterly results	Log in to download 12 page note available
Jun 06 2008	Excellent Q3 but... Q3 results were excellent with nine-month operating profit of £19.0m (£7m). The figures were somewhat overshadowed by last week’s news of staff detentions in Turkey. Sportingbet (SBT) is reducing dependence on that market (14% of revenue in Q3) by increasing operational spend elsewhere. Regulatory uncertainties need to be weighed against the attractions of strong organic growth and cash generation. Research type: Update - Third quarter results	Log in to download 2 page note available
Mar 06 2008	Growth on track Sportingbet is delivering on its 2008 targets. First half normalised operating profit was ahead of expectations at £11.7m (2007: £4.0m) and the £11.2m acquisition of its Bulgarian marketing partner is part of the revamped marketing strategy. Regulatory uncertainties are affecting the share rating but these need to be weighed against the attractions of strong organic growth and cash generation. Research type: Quarterly Update - Quarterly results	Log in to download 4 page note available
Jan 22 2008	A new approach Sportingbet has largely completed its post-UIGEA reorganisation and is now focusing on applying e-retailing best practise to online gaming. Demand for online gaming is continuing to grow, helped by rising internet penetration. Sportingbet believes that by adopting a customer centric approach it can deliver significant organic growth simply by acquiring better customers more cheaply, retaining them and up-selling/cross-selling additional gaming products. Research type: Interim Review - Trading update	Log in to download 8 page note available
Dec 11 2007	Solid start to the year Sportingbet’s Q1 results showed a doubling in normalised operating profit to £4.2m despite tough poker comparatives. Organic growth is strong and we remain very comfortable with our full year £21.5m normalised pre-tax forecast. With the restructuring phase largely behind it Sportingbet will increasingly benefit from the operational, IT and marketing changes it has implemented. Research type: Flash note - Quarterly results	Log in to download 1 page note available
Oct 18 2007	A good bet! Sportingbet’s final results have drawn a line under the dramatic changes wrought by its forced exit from the US-facing market in October 2006. Management has made excellent progress restructuring and reshaping the group, with further product enhancements. A strong start to the year underpins our unchanged forecast for normalised pre-tax profits to increase to £21.5m in 2007/08. Research type: Quarterly Update - Full year results	Log in to download 4 page note available
Jul 26 2007	A year of transition Sportingbet is nearing the end of a fiscal year that has seen a dramatic change in its business mix as a result of US legislation. Management has made, and continues to make, significant progress restructuring and refocusing its business. The failure of takeover talks with Bwin highlighted ongoing regulatory risks, but the EU’s stance has been encouraging. The operational gearing in the business means that strong growth in customer numbers will be reflected in both profits and cash. Research type: Outlook - Quarterly results	Log in to download 12 page note available
Jun 06 2007	Q3 results update Sportingbet delivered strong Q3 results while at the same time making significant operational changes which will benefit the group in fiscal 2007/8 and beyond. Takeover talks with Bwin are continuing and may or may not result in a deal. Research type: Flash note - Quarterly results	Log in to download 1 page note available
Mar 02 2007	Taking shape Q2 results demonstrated that Sportingbet’s management has moved rapidly to reshape the group and cut costs post the US exit. Key performance indicators (KPIs) remain very positive and the 40% increase in continuing business gross profits demonstrates strong organic growth. We have increased our 2007/8 forecast by £5m to £22m to reflect the benefits of the Turkish acquisition and efficiencies in poker following the migration to the Boss platform. Research type: Quarterly Update - Quarterly results	Log in to download 4 page note available
Nov 30 2006	Q1 in transition Sportingbet’s Q1 results showed strong growth in continuing operations with gross profit up by 48%. Management is making good progress restructuring and refocusing the group. The business is still in transition post the forced disposal of its US-facing business in October (see our Review dated 10 November) but the balance sheet is strong and Sportingbet has good organic growth prospects together with possible medium term acquisition opportunities. Research type: Quarterly Update - Q1 Results	Log in to download 2 page note available
Nov 10 2006	A fresh start Sportingbet is focusing on its European and Australian operations post the forced disposal of its US-facing business. Management is working hard to streamline operations to fit its reduced scale. The continuing businesses have strong market positions and growth prospects. The balance sheet is sound with £15m net cash and we would not be surprised to see Sportingbet involved in expected industry M&A activity over the medium term. Research type: Interim Review - Disposal	Log in to download 12 page note available
Jul 28 2006	Sector under a cloud Sportingbet has continued to deliver strong organic growth over the past year, demonstrating the scalability of its business model. Online gambling is still only about 5% of the industry and as internet penetration grows demand is set to rise further. However, the US regulatory situation and the BetOnSports (BoS) indictment have cast a dark cloud over the sector. We believe the BoS situation to be company specific, but the sector – and US-facing sportsbooks in particular – will remain unsettled near term. Research type: Outlook - Regulatory Update	Log in to download 12 page note available
Feb 23 2006	Excellent interim results Interims Research type: Quarterly Update	Log in to download 4 page note available
Dec 08 2005	All about marketing Sportingbet’s Q1 results reflected its core competitive advantage: a broad product range and geographic spread, which is delivering substantial organic growth and economies of scale. We have again upgraded our profit forecasts for 2006 and 2007. This review focuses on Sportingbet’s marketing activities and its recent successful campaigns, which have produced such strong growth in customer numbers for both poker and sports. Research type: Interim Review	Log in to download 8 page note available
Aug 15 2005	Playing to win Sportingbet is the world’s leading online sports betting company. Recent results demonstrated strong underlying growth and a solid financial position, and we project continuing rapid earnings growth. The main risk the company faces is that US regulation restricts its American business. But recent developments have been more positive and overall the risk reward ratio looks attractive. Research type: Outlook - Initiation of coverage	Log in to download 12 page note available
Jun 16 2005	Sportingbet's excellent Q3 results reflected its core advantages of size (the online gambling industry offers significant economies of scale), its broad product range and its global reach. Research type: Quarterly Update	Log in to download
Feb 25 2005	Interims Research type: Quarterly Update	Log in to download
Jun 16 2004	Initiation of Coverage Research type: Outlook	Log in to download 12 page note available
Jan 29 2004	Acquisition of Paradise Poker Sportingbet is an online sports betting and gaming operator. It has over 425,000 active customers in Europe and Australia but no longer accepts bets from US residents. Research type: Company Comment - Quarterly Results	Log in to download 2 page note available

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Peter Knowles
Director, Fyshe Horton Finney