WPT Inc.turns
its first profit

Aug 8, 2006 2:36 AM

World Poker Tour Enterprises last week announced financial results for the second quarter ended July 2, which included the company’s first ever profit.

Revenues for the second quarter were $11.0 million, compared to $6.6 million in the same period in 2005, a 67% increase.

The increase was mostly a result of the delivery of 10 episodes of Season IV of the WPT television series versus the delivery of eight episodes in the same period in 2005, and the delivery of nine episodes of the inaugural Professional Poker Tour (PPT) television series versus no episodes of the PPT delivered in the same period in 2005.

The company reported net earnings for the quarter of $2.6 million, or $0.12 per fully diluted share, compared to a net loss of $0.4 million, or $0.02 per fully diluted share, in the 2005 period.

"We are pleased with the continued progress we are making, particularly in our core television business where we delivered a combined nineteen World Poker Tour and Professional Poker Tour episodes this quarter," said Steve Lipscomb, founder and CEO of WPT Enterprises. "In addition, we continue to build the World Poker Tour brand through licensing, host fees and international distribution. During the quarter, we strengthened our online gaming efforts and set a new strategic direction with our decision to use CyberArts’ technology for a new delivery platform. We are very excited to work with CyberArts to build a superior online product which we plan to have up and running in 2007."

Television license revenues were $7.3 million in the second quarter of 2006, an increase from $3.6 million in the second quarter of 2005.

Product licensing revenues were $0.8 million in the second quarter of 2006 compared to $1.1 million in the second quarter of 2005. The decrease was due, in part, to lower license revenues from US Playing Card and MDI, which were partially offset by increased mobile gaming sales from Hands-On Mobile (formerly Mforma).

Online gaming, which commenced in the third quarter of 2005, generated revenues of $0.8 million in the second quarter of 2006 compared to $0.9 million in the first quarter of 2006. The slight decrease was due primarily to reduced marketing efforts as the WPTE was in the process of revising its strategic direction for its online gaming business.

Hosting and sponsorship revenues increased 21% to $1.4 million from $1.2 million in the second quarter of 2005, as a result of an increase in the sponsorship fees for Season Four of the WPT versus Season Three.

The company also finalized a sponsorship agreement with Xyience during the second quarter to promote its product as the "official energy drink" of Season V and Season VI of the World Poker Tour.

Overall gross margins were 62% in the second quarter of 2006, compared to 34% in the second quarter of 2005. Domestic television licensing margins were 51% in the second quarter compared to negative 14% in the same period of 2005.

For the third quarter of 2006, revenues are expected to be in the range of $5.5 to $6.0 million. The company expects to deliver the first episode of Season V of the WPT and nine episodes of Season I of the PPT. The company also expects to deliver an additional four episodes of Season V of the WPT and the remaining five episodes of Season I of the PPT in the fourth quarter of 2006.

WPT Enterprises is the creator of the World Poker Tour, which is now in its fifth season. WPTE has also launched a second series on the Travel Channel, the Professional Poker Tour, which focuses on the play of poker’s leading stars.

WPT also operates a real-money online gaming website, www.wptonline.com, which prohibits wagers from players in the U.S. and other restricted jurisdictions.