Amid Uncertainty in US, Crypto Performs Well in Q1

In the first quarter of its fiscal year, CryptoLogic Inc. has already accomplished several of its yearlong goals, although the company is still keeping a wary eye on the U.S. legislative I-gaming agenda, company executives said during an April 30 conference call.

Lewis Rose, the online gambling software maker's president and CEO, told the conference audience that CryptoLogic is starting the year off on the right foot with a financial report that surpassed analysts' and the group's own estimates.

The company is reporting US$8.9 million in revenue versus $8.7 million in revenue during the first quarter of 2002. Net income was $1.8 million, compared to $2.2 million in the same period last year; and diluted earnings per share were 15 cents, compared to 16 cents per share in 2002.

CryptoLogic is also making progress on its goal to increase the percentage of its licensees' customers who are not from the United States. International revenue for licensees' customers is at 50 percent at the end of Q1 2003, versus 40 percent at the end of the first quarter last year.

Rose said the group is halfway to its yearlong goal of adding four new international licensees. During the first quarter it signed Bingo Entertainment, which will license the company's multiplayer poker software, and ukbetting, the self-proclaimed largest sports content provider in the United Kingdom.

In addition, during the first quarter the CrytoLogic became licensed in Alderney, another of its goals for 2003. Rose said it speaks to the integrity of the company that they are willing to go through strict government probity in Alderney.

Rose also mentioned several challenges Crypto faces, including HR 21, the Internet gambling bill proposed by Rep. James Leach, R-Iowa, that was discussed this week in a subcommittee meeting of the House of Representatives. The bill would make it illegal for online gambling merchants to accept payment from Americans if they try to pay with a credit card, check or any other bank instrument.

Due to the legal situation of online gambling in the United States, Rose said his group is looking still to expand its business in Europe and Asia.

"Regulatory uncertainly in the U.S. remains a business risk that is tempering growth aspects for our licensees in North America," he said.

In that vein, Rose mentioned that CryptoLogic has one Japanese licensee already, a company called Casino Inn. He said Crypto would continue to pursue the Asian market by making local contacts.