MONTREAL, Nov. 14, 2016 /PRNewswire/ - Amaya Inc. (NASDAQ:
AYA; TSX: AYA) today reported financial results for the third
quarter ended September 30, 2016,
updated its previously announced guidance ranges for the full year
2016, and provided certain additional updates. Unless otherwise
noted, all dollar ($) amounts are in U.S. dollars.
"As we have concluded the strategic review process, we are
excited to continue focusing on improving the company and our
operations. We continued to execute on our four strategic
priorities during the quarter as evidenced by our strong
performance," said Rafi Ashkenazi, Chief Executive Officer of
Amaya. "I am particularly pleased with our core poker business as
we believe the proactive changes we made to our poker ecosystem
have both substantially offset and began to reverse certain
negative trends facing that business. We plan to continue
leveraging this positive momentum into our casino and sportsbook
offerings as we focus on becoming the world's favorite online
gaming destination and maximizing winning moments for all of our
customers."
Third Quarter and Year-to-Date Financial
Summary(1)
|
|
Three Months Ended
September 30,
|
|
Year-
over-Year
Change
|
|
Nine Months Ended
September 30,
|
|
Year-
over-Year
Change
|
$000's, except
percentages and per share amounts
|
|
2016
|
|
2015
|
|
|
|
2016
|
|
2015
|
|
|
Total
Revenue
|
|
270,846
|
|
247,327
|
|
9.5%
|
|
845,458
|
|
779,119
|
|
8.5%
|
Adjusted
EBITDA
|
|
123,164
|
|
108,052
|
|
14.0%
|
|
376,489
|
|
333,985
|
|
12.7%
|
Net earnings
(loss) from continuing operations
|
|
12,523
|
|
(34,438)
|
|
136.4%
|
|
90,511
|
|
(4,793)
|
|
1988.4%
|
Adjusted Net
Earnings
|
|
84,979
|
|
69,020
|
|
23.1%
|
|
259,686
|
|
208,515
|
|
24.5%
|
Diluted earnings
(loss) from continuing operations per common share
|
|
$ 0.06
|
|
$(0.26)
|
|
124.5%
|
|
$ 0.47
|
|
$(0.04)
|
|
1399.3%
|
Adjusted Net Earnings
per Diluted Share
|
|
$ 0.42
|
|
$ 0.35
|
|
22.5%
|
|
$ 1.34
|
|
$ 1.05
|
|
28.1%
|
______________________________________ (1)
For important information on Amaya's non-IFRS measures, see below
under "Non-IFRS and Non-U.S. GAAP Measures" and the tables under
"Reconciliation of Non-IFRS Measures to Nearest IFRS Measures". As
a result of Amaya's change in presentation currency from Canadian
dollars to U.S. dollars during the first quarter of 2016, the
comparative and historical figures disclosed herein and in Amaya's
financial statements and management's discussion and analysis for
the three and nine months ended September 30, 2016 have been
retrospectively adjusted to reflect such change as if the U.S.
dollar had been used as the presentation currency for all prior
periods presented.
|
Third Quarter 2016 Financial Highlights
- Revenues - Total revenues for the quarter increased
approximately 9.5% year-over-year. Excluding the impact of
year-over-year changes in foreign exchange rates, total revenues
for the quarter would have increased by approximately 11.7%.
Real-money online poker revenues and real-money online casino and
sportsbook combined revenues represented approximately 73% and 24%
of total revenues for the quarter, respectively, as compared to
approximately 81% and 15% for the prior year period.
- Poker Revenues – Real-money online poker revenues for
the quarter were $196.8 million, or a
decrease of approximately 1.3% year-over-year, evidencing the
continued positive impact of Amaya's previously announced strategy
of focusing on recreational players, including through changes to
its online poker loyalty program and rake structure, certain
adjustments to Amaya's multi-table tournament payout structure, and
the introduction of new poker promotions. This positive impact
offset an approximately 7.8% year-over-year decline in July alone
following the 2016 Euros tournament
and the cessation of operations in a few smaller
jurisdictions.
- Debt – Total long term debt outstanding at the end of
the quarter was $2.56 billion with a
weighted average interest rate of 5.1%.
Third Quarter 2016 Operational Highlights
- Quarterly Real-Money Active Uniques (QAUs) – Total
combined QAUs were approximately 2.4 million, an increase of
approximately 5% year-over-year. Approximately 2.3 million of such
QAUs played online poker during the quarter, an increase of
approximately 3% year-over-year, while Amaya's online casino
offerings had approximately 486,000 QAUs, an increase of
approximately 40% year-over-year, which Amaya estimates is one of
the largest casino player bases among its competitors. Amaya's
emerging online sportsbook offerings had approximately 232,000
QAUs, a significant increase year-over-year.
- Quarterly Net Yield (QNY) – Total QNY was $111, an increase of 4.2% year-over-year.
Excluding the impact of year-over-year changes in foreign exchange
rates, total QNY was $114, an
increase of 7.0% year-over-year. QNY is a non-IFRS measure.
- Customer Registrations – Customer Registrations
increased by 1.9 million to approximately 105.5 million at the end
of the quarter.
- Operational Excellence Initiatives – As part of Amaya's
strategy and as previously reported, it continues to review its
expense structure and identify areas for improvement that it
believes will enhance shareholder value. This has included certain
office and departmental restructurings, including in London, Sydney and Dublin. Where possible, Amaya has been
reassigning staff within the organization and does not currently
expect a significant net reduction in headcount by the end of 2016.
Amaya continues to assess and monitor the overall impact of these
initiatives on its operations and performance.
2016 Full Year Guidance
Amaya has updated its 2016 full year guidance ranges, as
previously announced on October 18,
2016, and currently expects the following:
- Revenues of $1,137 to
$1,157 million;
- Adjusted EBITDA of $500 to $510
million;
- Adjusted Net Earnings of $344 to $354
million; and
- Adjusted Net Earnings per Diluted Share of $1.78 to $1.83.
These estimates reflect management's view of current and future
market conditions, including assumptions of no (i) material
adverse regulatory events or (ii) material foreign currency
exchange rate fluctuations that could negatively impact customer
purchasing power as it relates to Amaya's U.S. dollar denominated
product offerings.
Rational Group Deferred Payment
Amaya intends to prepay approximately $200 million of the $400
million deferred purchase price for its acquisition of the
Rational Group in August 2014 on or
about November 18, 2016, subject to
market, business and other conditions and considerations. To make
such payment, Amaya will use approximately $143 million of its required monthly excess cash
flow deposits and approximately $57
million of unrestricted cash on its balance sheet. Such
prepayment will be at a 6% annual discount rate and Amaya expects
to save approximately $2.5 million by
making the prepayment. The balance of the deferred purchase price
is due on February 1, 2017. As
previously reported, Amaya is pursuing various non-dilutive options
to pay the balance of such deferred purchase price and expects to
announce the same by the end of the current fiscal year.
Financial Statements, Management's Discussion and Analysis
and Additional Information
Amaya's unaudited condensed consolidated financial statements
and management's discussion and analysis for the three and nine
months ended September 30, 2016, as
well as additional information relating to Amaya and its business,
can be found on SEDAR at www.sedar.com, Edgar at www.sec.gov and
Amaya's website at www.amaya.com.
In addition to press releases, securities filings and public
conference calls and webcasts, Amaya intends to use its investor
relations page on its website as a means of disclosing material
information to its investors and others and for complying with its
disclosure obligations under applicable securities laws.
Accordingly, investors and others should monitor the website in
addition to following Amaya's press releases, securities filings
and public conference calls and webcasts. This list may be updated
from time to time.
Conference Call and Webcast
Amaya will host a conference call today, November 14, 2016 at 8:30
a.m. ET to discuss its financial results for the third
quarter and year-to-date 2016 and related matters. Rafi Ashkenazi,
Chief Executive Officer of Amaya, will chair the call. To access
via tele-conference, please dial +1 877-407-0789 or +1 201-689-8562
ten minutes prior to the scheduled start of the call. The playback
will be made available two hours after the event at +1 844-512-2921
or +1 412-317-6671. The Conference ID number is 13649792. To access
the webcast please use the following link:
http://public.viavid.com/index.php?id=121913
Reconciliation of Non-IFRS Measures to Nearest IFRS
Measures
The table below presents reconciliations of Adjusted EBITDA,
Adjusted Net Earnings and Adjusted Net Earnings per Diluted Share
to the nearest IFRS measures:
|
|
Three Months Ended
September 30,
|
|
|
Nine Months Ended
September 30,
|
|
$000's, except per
share amounts
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
|
Net earnings (loss)
from continuing operations
|
|
|
12,523
|
|
|
|
(34,438)
|
|
|
|
90,511
|
|
|
|
(4,793)
|
|
Financial
expenses
|
|
|
49,155
|
|
|
|
54,295
|
|
|
|
101,342
|
|
|
|
146,012
|
|
Income
taxes
|
|
|
(400)
|
|
|
|
3,525
|
|
|
|
4,078
|
|
|
|
13,471
|
|
Depreciation of
property and equipment
|
|
|
2,119
|
|
|
|
1,995
|
|
|
|
6,109
|
|
|
|
5,575
|
|
Amortization of
intangible and deferred assets
|
|
|
33,326
|
|
|
|
29,945
|
|
|
|
96,919
|
|
|
|
89,208
|
|
EBITDA
|
|
|
96,723
|
|
|
|
55,322
|
|
|
|
298,959
|
|
|
|
249,473
|
|
Stock-based
compensation
|
|
|
1,978
|
|
|
|
3,543
|
|
|
|
8,396
|
|
|
|
11,323
|
|
Termination of
employment agreements
|
|
|
3,047
|
|
|
|
2,099
|
|
|
|
11,365
|
|
|
|
3,138
|
|
Termination of
affiliate agreements
|
|
|
1,053
|
|
|
|
—
|
|
|
|
3,386
|
|
|
|
5,290
|
|
Loss (gain) on
disposal of assets
|
|
|
246
|
|
|
|
(18)
|
|
|
|
562
|
|
|
|
163
|
|
Loss from investments
and associates
|
|
|
11,104
|
|
|
|
15,108
|
|
|
|
14,795
|
|
|
|
12,127
|
|
Gain on sale of
subsidiary
|
|
|
—
|
|
|
|
(5,352)
|
|
|
|
—
|
|
|
|
(5,352)
|
|
Acquisition-related
costs
|
|
|
—
|
|
|
|
91
|
|
|
|
199
|
|
|
|
220
|
|
Impairment
|
|
|
527
|
|
|
|
14,234
|
|
|
|
7,285
|
|
|
|
15,519
|
|
Other
costs
|
|
|
8,486
|
|
|
|
23,025
|
|
|
|
31,542
|
|
|
|
42,084
|
|
Adjusted
EBITDA
|
|
|
123,164
|
|
|
|
108,052
|
|
|
|
376,489
|
|
|
|
333,985
|
|
Current income tax
expense
|
|
|
(342)
|
|
|
|
(942)
|
|
|
|
(5,814)
|
|
|
|
(4,319)
|
|
Depreciation and
amortization (excluding amortization of purchase price allocation
intangibles)
|
|
|
(4,369)
|
|
|
|
(2,568)
|
|
|
|
(12,359)
|
|
|
|
(6,670)
|
|
Interest (excluding
interest accretion)
|
|
|
(33,474)
|
|
|
|
(35,522)
|
|
|
|
(98,630)
|
|
|
|
(114,481)
|
|
Adjusted Net
Earnings
|
|
|
84,979
|
|
|
|
69,020
|
|
|
|
259,686
|
|
|
|
208,515
|
|
Diluted
Shares
|
|
|
200,016,913
|
|
|
|
198,947,923
|
|
|
|
193,866,395
|
|
|
|
199,356,102
|
|
Adjusted Net
Earnings per Diluted Share
|
|
$
|
0.42
|
|
|
$
|
0.35
|
|
|
$
|
1.34
|
|
|
$
|
1.05
|
|
The table below presents certain items comprising "Other costs"
in the reconciliation table above:
|
|
Three Months Ended
September 30,
|
|
|
Nine Months Ended
September 30,
|
|
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
|
|
|
$000's
|
|
|
$000's
|
|
|
$000's
|
|
|
$000's
|
|
Non-U.S. lobbying
expenses
|
|
|
476
|
|
|
|
1,761
|
|
|
|
2,300
|
|
|
|
5,308
|
|
U.S. lobbying and
legal expenses
|
|
|
2,336
|
|
|
|
2,962
|
|
|
|
9,163
|
|
|
|
6,557
|
|
Strategic review
professional fees
|
|
|
2,237
|
|
|
|
—
|
|
|
|
7,372
|
|
|
|
—
|
|
Retention
bonuses
|
|
|
437
|
|
|
|
1,320
|
|
|
|
2,657
|
|
|
|
6,610
|
|
Non recurring
professional fees
|
|
|
413
|
|
|
|
2,530
|
|
|
|
4,833
|
|
|
|
3,926
|
|
Romania back
taxes
|
|
|
—
|
|
|
|
6,988
|
|
|
|
—
|
|
|
|
6,988
|
|
New Jersey license
fees
|
|
|
—
|
|
|
|
1,440
|
|
|
|
—
|
|
|
|
1,440
|
|
AMF investigation
professional fees
|
|
|
2,587
|
|
|
|
3,005
|
|
|
|
4,492
|
|
|
|
4,858
|
|
Office restructuring
and legacy business
unit
shutdown costs
|
|
|
—
|
|
|
|
3,019
|
|
|
|
725
|
|
|
|
6,397
|
|
Other
costs
|
|
|
8,486
|
|
|
|
23,025
|
|
|
|
31,542
|
|
|
|
42,084
|
|
The table below presents a reconciliation of the numerator of
QNY (i.e., real-money online poker revenue and real-money online
casino and sportsbook combined revenue) to the nearest IFRS measure
(i.e., total revenue) as reported for the applicable period. Unless
otherwise noted, any deviation in the reconciliation below to
measures presented herein may be the result of immaterial
adjustments made in later periods due to certain accounting
reallocations.
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
|
|
2016
|
|
|
2015
|
|
|
|
$000's
|
|
|
$000's
|
|
Total
revenue
|
|
|
270,846
|
|
|
|
247,327
|
|
Corporate
revenue
|
|
|
(165)
|
|
|
|
(225)
|
|
Other
business-to-consumer revenue
|
|
|
(9,632)
|
|
|
|
(9,729)
|
|
Real-money online
poker revenue and real-money online casino
and
sportsbook combined revenue
|
|
|
261,049
|
|
|
|
237,373
|
|
Amaya has not provided a reconciliation of the non-IFRS measures
to the nearest IFRS measures included in its full year 2016
financial guidance provided in this release, including Adjusted
EBITDA, Adjusted Net Earnings and Adjusted Net Earnings per Diluted
Share, because certain reconciling items necessary to accurately
project such IFRS measures, particularly net earnings (loss) from
continuing operations, cannot be reasonably projected due to a
number of factors, including variability from potential foreign
exchange fluctuations impacting financial expenses, and the nature
of other non-recurring or one-time costs (which are excluded from
non-IFRS measures but included in net earnings (loss) from
continuing operations).
For additional information on Amaya's non-IFRS measures, see
below and its Management's Discussion and Analysis for the three
and nine months ended September 30,
2016 (the "Q3 2016 MD&A"), including under the headings
"Management's Discussion and Analysis" and "Selected Financial
Information—Other Financial Information".
About Amaya
Amaya is a leading provider of technology-based products and
services in the global gaming and interactive entertainment
industries. Amaya ultimately owns gaming and related consumer
businesses and brands including PokerStars, Full Tilt, BetStars,
StarsDraft, PokerStars Casino and the PokerStars Championship and
PokerStars Festival live poker tour brands (incorporating the
European Poker Tour, PokerStars Caribbean Adventure, Latin American
Poker Tour and the Asia Pacific Poker Tour). These brands have more
than 105 million cumulative registered customers globally and
collectively form the largest poker business in the world,
comprising online poker games and tournaments, live poker
competitions, branded poker rooms in popular casinos in major
cities around the world, and poker programming created for
television and online audiences. Amaya, through certain of these
brands, also offers non-poker gaming products, including casino,
sportsbook and daily fantasy sports. Amaya, through certain of its
subsidiaries, is licensed or approved to offer, or offers under
third party licenses or approvals, its products and services in
various jurisdictions throughout the world, including in
Europe, both within and outside of
the European Union, the Americas and elsewhere. In particular,
PokerStars is the world's most licensed online gaming brand,
holding licenses or related operating approvals in 16
jurisdictions.
Cautionary Note Regarding Forward Looking Statements
This news release contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995 and
applicable securities laws, including, without limitation, certain
financial and operational expectations and projections, such as
full year 2016 financial guidance and certain future operational
plans and strategies, including, without limitation, as it relates
to its operational excellence initiatives and the repayment of the
deferred purchase price for the acquisition of the Rational Group
and the financing of the same. Forward-looking statements can, but
may not always, be identified by the use of words such as
"anticipate", "plan", "continue", "estimate", "expect", "may",
"will", "project", "predict", "potential", "targeting", "intend",
"could", "might", "would", "should", "believe", "objective",
"ongoing" and similar references to future periods or the negatives
of these words and expressions. These statements, other than
statements of historical fact, are based on management's current
expectations and are subject to a number of risks, uncertainties,
and assumptions, including market and economic conditions, business
prospects or opportunities, future plans and strategies,
projections, technological developments, anticipated events and
trends and regulatory changes that affect us, our customers and our
industries. Although Amaya and management believe the expectations
reflected in such forward-looking statements are reasonable and are
based on reasonable assumptions and estimates, there can be no
assurance that these assumptions or estimates are accurate or that
any of these expectations will prove accurate. Forward-looking
statements are inherently subject to significant business,
regulatory, economic and competitive risks, uncertainties and
contingencies that could cause actual events to differ materially
from those expressed or implied in such statements. Specific risks
and uncertainties include, but are not limited to: the heavily
regulated industry in which Amaya carries on business; interactive
entertainment and online and mobile gaming generally; current and
future laws or regulations and new interpretations of existing laws
or regulations with respect to online and mobile gaming; potential
changes to the gaming regulatory scheme; legal and regulatory
requirements; ability to obtain, maintain and comply with all
applicable and required licenses, permits and certifications to
distribute and market its products and services, including
difficulties or delays in the same; significant barriers to entry;
competition and the competitive environment within Amaya's
addressable markets and industries; impact of inability to complete
future acquisitions or to integrate businesses successfully;
ability to develop and enhance existing products and services and
new commercially viable products and services; ability to mitigate
foreign exchange and currency risks; ability to mitigate tax risks
and adverse tax consequences, including, without limitation, the
imposition of new or additional taxes, such as value-added and
point of consumption taxes, and gaming duties; risks of foreign
operations generally; protection of proprietary technology and
intellectual property rights; ability to recruit and retain
management and other qualified personnel, including key technical,
sales and marketing personnel; defects in Amaya's products or
services; losses due to fraudulent activities; management of
growth; contract awards; potential financial opportunities in
addressable markets and with respect to individual contracts;
ability of technology infrastructure to meet applicable demand;
systems, networks, telecommunications or service disruptions or
failures or cyber-attacks; regulations and laws that may be adopted
with respect to the Internet and electronic commerce and that may
otherwise impact Amaya in the jurisdictions where it is currently
doing business or intends to do business; ability to obtain
additional financing on reasonable terms or at all; refinancing
risks; customer and operator preferences and changes in the
economy; dependency on customers' acceptance of its products and
services; consolidation within the gaming industry; litigation
costs and outcomes; expansion within existing and into new markets;
relationships with vendors and distributors; and natural events.
Other applicable risks and uncertainties include those identified
under the heading "Risk Factors and Uncertainties" in Amaya's
Annual Information Form for the year ended December 31, 2015 and "Risk Factors and
Uncertainties" and "Limitations of Key Metrics and Other Data" in
its Q3 2016 MD&A, each available on SEDAR at www.sedar.com,
EDGAR at www.sec.gov and Amaya's website at www.amaya.com, and in
other filings that Amaya has made and may make with applicable
securities authorities in the future. Investors are cautioned not
to put undue reliance on forward-looking statements. Any
forward-looking statement speaks only as of the date hereof, and
Amaya undertakes no obligation to correct or update any
forward-looking statement, whether as a result of new information,
future events or otherwise, except as required by applicable
law.
Non-IFRS and Non-U.S. GAAP Measures
This news release references non-IFRS and non-U.S. GAAP
financial measures, including QNY, Adjusted EBITDA, Adjusted Net
Earnings, Adjusted Net Earnings per Diluted Share, and the foreign
exchange impact on revenues (i.e., constant currency). Amaya
believes these non-IFRS and non-U.S. GAAP financial measures will
provide investors with useful supplemental information about the
financial performance of its business, enable comparison of
financial results between periods where certain items may vary
independent of business performance, and allow for greater
transparency with respect to key metrics used by management in
operating its business. Although management believes these
financial measures are important in evaluating Amaya, they are not
intended to be considered in isolation or as a substitute for, or
superior to, financial information prepared and presented in
accordance with IFRS or U.S. GAAP. They are not recognized measures
under IFRS or U.S. GAAP and do not have standardized meanings
prescribed by IFRS or U.S. GAAP. These measures may be different
from non-IFRS and non-U.S. GAAP financial measures used by other
companies, limiting its usefulness for comparison purposes.
Moreover, presentation of certain of these measures is provided for
year-over-year comparison purposes, and investors should be
cautioned that the effect of the adjustments thereto provided
herein have an actual effect on Amaya's operating results. In
addition to QNY, which is defined below under "Key Metrics and
Other Data", Amaya uses the following non-IFRS and non-U.S. GAAP
measures in this release:
Adjusted EBITDA means net earnings (loss) from continuing
operations before interest and financing costs (net of interest
income), income taxes, depreciation and amortization, stock-based
compensation, restructuring and certain other items.
Adjusted Net Earnings means net earnings (loss) from continuing
operations before interest accretion, amortization of intangible
assets resulting from purchase price allocation following
acquisitions, deferred income taxes, stock-based compensation,
restructuring, foreign exchange, and certain other items. Adjusted
Net Earnings per Diluted Share means Adjusted Net Earnings divided
by Diluted Shares. Diluted Shares means the weighted average number
of common shares on a fully diluted basis, including options,
warrants and Amaya's convertible preferred shares. The effects
of anti-dilutive potential common shares are ignored in calculating
Diluted Shares. See note 8 to Amaya's unaudited interim condensed
consolidated financial statements for the three and nine months
ended September 30, 2016. As of
September 30, 2016 and for the
purposes of the full year 2016 guidance provided in this release,
Diluted Shares equals 193,866,395.
To calculate revenue on a constant currency basis, Amaya
translated revenue for the three and nine months ended September 30, 2016 using the prior year's monthly
exchange rates for its local currencies other than the U.S. dollar,
which Amaya believes is a useful metric that facilitates comparison
to its historical performance.
For additional information on Amaya's non-IFRS measures, see the
Q3 2016 MD&A, including under the headings "Management's
Discussion and Analysis" and "Selected Financial Information—Other
Financial Information".
Key Metrics and Other Data
Amaya defines QAUs as active unique customers (online,
mobile and desktop client) who generated rake, placed a bet or
otherwise wagered (excluding free play, bonuses or other
promotions) on or through an Amaya poker, casino or sportsbook
offering during the applicable quarterly period. Amaya defines
unique as a customer who played at least once on one of Amaya's
real-money offerings during the period, and excludes duplicate
counting, even if that customer is active across multiple verticals
(e.g., both poker and casino). Beginning with its second quarter
2016 results, Amaya no longer provides PokerStars-only QAUs as a
result of the recently completed migration of the Full Tilt brand
and customers to the PokerStars platform.
Amaya defines QNY as combined real-money online gaming and
related revenue (excluding certain other revenues, such as revenues
from play-money offerings, live events and branded poker rooms) for
its two business lines (i.e., real-money online poker and
real-money online casino and sportsbook) as reported during the
applicable quarterly period (or as adjusted to the extent any
accounting reallocations are made in later periods) divided by the
total QAUs during the same period. Amaya provides QNY on a U.S.
dollar and constant currency basis. QNY is a non-IFRS measure.
Amaya defines Customer Registrations as the cumulative number of
real-money and play-money customer registrations on PokerStars and
Full Tilt.
For additional information on Amaya's key metrics and other
data, see the Q3 2016 MD&A, including under the headings
"Limitations on Key Metrics and Other Data" and "Key Metrics".
SOURCE Amaya Inc.