Amaya shares rise on user growth, better guidance
‘Record year of revenues’ touted after rocky 2016 for gaming firm
Amaya Inc.’s updated guidance won praise from investors on Friday, as shares of the Quebec-based online gaming company rose more than three per cent.
Following a year that was devoid of any updates amid a potential takeover deal, as former chief executive David Baazov unveiled an offer to buy Amaya that never came to fruition, the company’s fiscal 2016 outlook demonstrated that it is doing better than analysts expected.
Amaya expects revenues to come in at the high end of its previous range of US$1.137 billion and US$1.157 billion, with its new forecast updated to between US$1.153 and US$1.158 billion. That compares to about US$1.072 billion in 2015.
Adjusted net earnings per share (diluted) are also expected to be higher than previously thought, with the company’s new guidance between US$187 and US$1.92. This figure was US$147 in 2015.
“We anticipate that 2016 will be a record year of revenues for Amaya,” Rafi Ashkenazi, the company’s chief executive, said in a statement. “We built positive momentum in 2016 that accelerated throughout the year, and which we believe was largely the result of the positive impact of our strategy to improve the poker ecosystem for recreational players, and leverage our global competitive advantage in online poker to acquire new customers, cross-sell existing and new customers into our online casino and sportsbook offerings, and maximize the lifetime value of all of our customers.”
Another positive sign is the growth Amaya has experienced in its casino business.
The company said quarterly realmoney active unique users rose to 648,000, a gain of about 47 per cent on an annual basis.
This was ahead of Canaccord Genuity analyst Kevin Wright’s 628,000 estimate, which he admitted looks impressive at first glance.
While Amaya didn’t break out its financial performance by segment, Wright said he would be surprised if the company’s initiatives are helping to slow erosion in the poker business, and accelerate growth in its online casino operations.
Amaya also announced the retirement of chief financial officer Daniel Sebag.
The company has begun a search for his replacement.
“We are encouraged by the better than expected financial performance and see changes in the CFO seat as another opportunity for CEO Rafi Ashkenazi to put his mark on the business,” Wright said in a research note.
Ashkenazi took over the top job on a permanent basis last August, after Baazov resigned from all his positions in the wake of an insider trading investigation by Quebec’s securities regulator.
Amaya shares closed at $18.31, up 3.21 per cent in Toronto trading.
We built positive momentum in 2016 that accelerated throughout the year.