SHFL egaming losses increase despite gross profit rise
Litigation and product management costs bite as firm outlines online gaming strategy
SHFL’s egaming division saw its operating loss more than double to $2.4m for the three months ended 31 July 2013.
The US-based casino developer witnessed losses in its egaming arm rise 118% from the $1.1m deficit posted in 2012 due to costs associated with the development of a dedicated product management and sales team.
Higher litigation costs related to the firm’s pursuit of online copyright infringement cases were also cited as factors behind the increased loss.
However, revenue from egaming increased by 1,140% year-on-year to $62,000, with revenue derived primarily from settlement and licensing fees from online operators.
“In the current year, we expect to generate revenue from providing online versions of our games in real money gambling regulated markets, licensing our content to additional online operators, and launching free-to-play online versions of our games,” said SHFL in the results statement.
Research and development costs associated with the company’s egaming division stood at $0.7m, owing to an expansion of its igaming department which will work on the development of games and the integration of existing content into SHFL’s online delivery platform.
Results were further offset by a reduction in expenses related to the company’s cancelled acquisition of Ongame Network.
Total company revenue stood at $73.5m for the period, up 16% year-on-year with egaming now responsible for approximately 0.1% of group revenue.
Adjusted EBITDA stood at $20.5m, down from the $21.2m figure recorded last year as the company incurred expenses of $3.6m relating to its $1.3bn merger with fellow casino developer Bally Technologies, which is due to complete next year.