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02-18-2005, 10:15 AM
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Cryptologic results
http://biz.yahoo.com/bw/050218/185146_1.html
Better that expectations. "CryptoLogic Achieves Record Revenue & Excellent Earnings In 2004 Friday February 18, 6:00 am ET TORONTO--(BUSINESS WIRE)--Feb. 18, 2005--CryptoLogic Inc. (TSX:CRY)(NASDAQ:CRYP - News; LSE:CRP - News) - Fourth quarter revenue up 33%, earnings up 25% Focused strategy delivers "blue-chip" results, global strength in online casino and poker CryptoLogic Inc., a leading software developer to the global Internet gaming market, announced today its financial results for the fourth quarter and year ended December 31, 2004. Record revenue, excellent earnings and healthy operating cash flow in 2004 are evidence of the company's focused strategy and growth momentum in both the casino and poker segments of the global online gaming market. "CryptoLogic continues to be the blue-chip e-gaming software company, with a winning hand in both the thriving online casino and poker markets," said Lewis Rose, CryptoLogic's President and CEO. "2004 marked another year of revenue growth, profitability and cash generation for CryptoLogic. In 2005, we will continue to capitalize on our strong financial performance to invest for the future, build on our market strength and continue to drive profitable returns." --------------------------------------------------------------------- Financial Highlights (in millions of US dollars, Three months ended Years ended except per share data) December 31, December 31, 2004 2003 2004 2003 --------------------------------------------------------------------- Revenue $17.9 $13.5 $63.7 $44.2 Earnings $3.8 $3.0 $13.7 $9.4 Earnings per diluted share $0.27 $0.23 $1.01 $0.75 --------------------------------------------------------------------- Highlights for the fourth quarter included: Fourth quarter earnings grew to $0.27 per diluted share, ahead of analysts' average forecast and the 2003 fourth quarter of $0.23. Fiscal 2004 full year earnings were also strong at $1.01 per diluted share on a 44% increase in revenue to a record $63.7 million; Consistent cash generation led to the previously announced 67% increase in the quarterly dividend to $0.05 per share; Online poker fees rose by more than 165% over the same previous year quarter, and accounted for over 20% of Q4 2004 revenue. Internet casino revenue grew 15% from the fourth quarter of 2003; International diversification remained strong, with overseas markets exceeding 60% of licensees' revenue for the year, up from over 55% in 2003; and Subsequent to year-end, the company renewed and extended its multi-year, exclusive agreement with an existing UK licensee, The Ritz Club London Online, for both online casino and poker solutions developed by CryptoLogic. Strong 2004 Financial Performance (All figures are expressed in US dollars) CryptoLogic posted record revenue and excellent earnings for the fourth quarter ended December 31, 2004. The first and fourth quarters are typically the strongest periods as players tend to spend more time indoors during the winter and fall seasons. Revenue rose 33% to $17.9 million (Q4 2003: $13.5 million). EBITDA(1) for the quarter grew 25% to $4.7 million (Q4 2003: $3.8 million). EBITDA(1) margin for the quarter was 26% as a percentage of revenue, despite higher investments to drive long term returns (Q4 2003: 28%). Earnings for Q4 2004 rose 25% to $3.8 million or $0.27 per diluted share (Q4 2003: $3.0 million or $0.23 diluted share). The fourth quarter results reflected strong organic growth from existing customers, recently launched poker licensees, new casino games and product enhancements. The introduction of poker tournament capabilities, an expanding poker clientele, and increased system scalability translated into rising online poker fees. The company's poker customers also benefited from the success of their first land-based poker tournament, the Caribbean Poker Classic(, which was televised and a great marketing draw for players. An expanded casino game portfolio, particularly in the popular slot category, helped growth in Internet casino revenue. Revenue for the year ended December 31, 2004 increased by 44% to $63.7 million (2003: $44.2 million). EBITDA(1) for fiscal 2004 rose by 51% to $17.3 million (2003: $11.5 million). This translated into EBITDA(1) margin for the year rising to 27% (2003: 26%) despite increased investments, which are already producing early returns. Earnings for the full year improved by 45% to $13.7 million or $1.01 per diluted share (2003: $9.4 million or $0.75 per diluted share). In the second half of 2004, CryptoLogic announced and embarked upon a major investment program, which is over and above its normal course expenditures, to support long term growth. Approximately 70%, or $7.1 million, of this program was invested in 2004. Most of the remaining 30% balance will be completed in the first half of 2005. In 2004, these expenditures included $2.6 million in operating costs and $4.5 million in capital expenditures (comprising $3.2 million for the purchase of capital assets and $1.3 million in capitalized software development costs related to the investment program). Balance Sheet Strength CryptoLogic continued to add to its strong balance sheet. At December 31, 2004, the company had no debt, and total cash grew to $86.0 million or a cash value of $6.33 per diluted share (comprising cash and cash equivalents, short term investments, and including security deposits of $7.0 million). Working capital grew to $62.8 million or $4.62 per diluted share. Operating cash flow for the fourth quarter of 2004 was $9.0 million (Q4 2003: $7.7 million). For fiscal 2004, operating cash flow was $18.9 million (2003: $38.7 million). The year-over-year decline related primarily to increased receivables in 2004 resulting from two licensees assuming responsibility for their own e-cash processing. In addition, cash generated from operations was exceptionally high in 2003 due to more favourable security deposit arrangements beginning that year and the timing of accounts payable. Increased Quarterly Dividend On November 4, 2004, CryptoLogic's Board approved a 67% increase in the company's quarterly dividend to US$0.05 per common share or an annual rate of US$0.20 (up from US$0.03 per share each quarter), reflecting the company's consistent earnings and cash generation. The increased rate began with the quarterly dividend paid on December 15, 2004. On February 16, 2005, the Board declared the company's quarterly dividend of US$0.05 per share, payable on March 15, 2005 to shareholders of record as at March 8, 2005. CryptoLogic continues to be one of the few software companies with a regular dividend policy - a sign of its financial strength. Internationally Diversification CryptoLogic has established an internationally diversified business. In 2004, more than 60% of licensees' revenue was derived from international players, up from over 55% in 2003 and 40% in 2002 . The UK and Continental Europe remain the company's key geographic focus, having grown to more than 30% and 20% respectively of licensees' overall revenue. CryptoLogic continues to work with some of the most prominent international gaming brands. Subsequent to the year-end, in February 2005, The Ritz Club London Online renewed and extended a multi-year contract with CryptoLogic's subsidiary, WagerLogic Limited, to continue to use the company's online casino and poker offerings exclusively during the term of the agreement. Market-Oriented Solutions CryptoLogic continued to deliver profitable growth in both its core casino and the burgeoning online poker areas. The company further expanded its online casino suite - launching more than 30 new choices of the most popular table and slot games in 2004, which helped grow Internet casino revenue by 15% in Q4 2004 over a year ago. CryptoLogic continued to demonstrate its reputation for innovation by being the first to bring "Fruit Machine" style slots, a UK pub favourite, to the Internet. CryptoLogic is also building a strong presence in the global online poker segment. Enhanced tournament capabilities, increased system scalability and the growing momentum of brand name poker licensees have all contributed to a more than 165% rise in online poker fees in Q4 2004 over a year ago. Online poker accounted for over 20% of total Q4 revenue, ahead of CryptoLogic's target of 15% for the year. Today, CryptoLogic-developed software powers one of the top five revenue-generating poker rooms on the Web, according to PokerPulse, an independent industry research website. Management Team During the fourth quarter, CryptoLogic appointed Andrew Goetsch as Vice President of Poker Software Development. As a senior executive with more than 20 years experience in strategic planning, technology, finance and mergers and acquisitions, Goetsch helped increase sales and profits for consumer goods and manufacturing companies. He obtained his Certified Public Accountant Designation at one of the big accounting firms. As a seasoned executive and accomplished poker player - including several final table appearances, and more than 200 "in the money" finishes in poker tournaments held both online and around the world, including the main event in the 2004 World Series of Poker - Goetsch's extensive expertise will help the company continue the growth and development of its software product plans in Internet poker. Outlook CryptoLogic's focused strategy and investment in key markets and fast-growing product segments have continued to translate into revenue growth, solid earnings and positive cash flow, notwithstanding a competitive online gaming industry marked by US regulatory uncertainty. By remaining disciplined in its execution, CryptoLogic will build on its positive momentum into 2005. Revenue in the traditionally strong first quarter is forecast to range from $19.0-$19.4 million, with earnings of $4.1-$4.3 million or $0.29-$0.30 per diluted share. Given CryptoLogic's revenue generation and financial strength, Management believes this is the best time to invest for growth in both its core casino and poker businesses. CryptoLogic will continue its major capital investment program largely in the first half of 2005, substantially enhancing its game offerings, infrastructure, scalability, customer care and back-office systems - all to secure continued global leadership in the major segments of the online gaming market, and intended to enhance returns in the near and long term. 2004 Fourth Quarter and Year End Analyst Call A conference call is scheduled for 8:30 a.m. (EST) (1:30 p.m. GMT) on Friday, February 18, 2005. Interested parties should call either 416-695-5259, 1-877-888-3490 (North America) or international toll free number at (Country Code) 800-4222-8835. Instant replay will be available until February 25, 2005 by calling 416-695-5275 or 1-866-518-1010." 
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