Unibet Grapples Still with Maria

In third-quarter results, Unibet, the Swedish online betting and gaming operator, reported year-over-year top-line growth of 51 percent but said its bingo operation, acquired last year, continues to underperform.

Gross winnings revenue came in at £29.3 million over £19.4 million during the prior-year quarter.

Sports betting revenue, after free bets, totaled £9.6 million, up slightly, sequentially, and 65 percent versus last year. The company achieved a gross margin, net of free bets, of 7.1 percent.

Non-sports betting, which includes poker, casino and bingo, also grew slightly, sequentially, and 45 percent year over year.

Unibet's £54 million bingo business, Maria Holdings Ltd., was brought on in December 2007 as a growth product oriented toward women. The Maria brand, already popular in the Nordic region, is being rolled out and localized in other of the company's markets but has yet to catch fire with users.

"We were hoping to be faster in rolling out the product in Central and Southern Europe," Petter Nylander, the company's chief executive, said during an analyst conference yesterday.

So far this year, Maria has generated £7.8 million in gross win -- but on a loss of £2.8 million before taxes and forex losses.

"It is not clear to us why Maria is underperforming in this way," Ivor Jones, an analyst with Evolution Securities, wrote in a research note. "However, there are many operators trying to grow bingo revenues and, perhaps, Maria is succumbing to competitive pressures."

Unibet financed the Maria acquisition with a 100 million euro bond that is due on Dec. 21, 2010. Henrik Tjärnström, the company's chief financial officer, said the board is mulling whether to redeem the bond in 2009.

As it stands, the bond comprises the entirety of Unibet's debt -- 74.3 million euros have still to be paid. The company is likely facing a decision on whether to cancel its 2008 fiscal year dividend and redeem the bond, or continue paying the dividend and redeem the bond in 2010, Mr. Jones said.

Unibet achieved an operating profit of £7.25 million during the quarter on a margin of 24.7 percent. Profits after tax came in at £3.9 million.

Mr. Nylander said at the conference that his company has yet to see any negative impact from the broader economic downturn.