Calgary-based online gambling software provider Chartwell Technology has released its financial results for the three and nine months periods ending July 31, showing sharply lower revenues and foreign exchange losses.
Revenue for the third quarter 2009 was $3.8 million compared to $6.1 million for the same period a year earlier. The period over period decrease in revenue was a result of the expiry of two single term software licenses referred to in prior releases and a weakened economy in our key markets.
Total expenses before income taxes were $5.1 million in the third quarter of this year and $5.3 million in the same quarter of last year. Foreign exchange losses incurred this quarter as a result of the strengthening Canadian dollar were offset by lower software development and support expenses.
Net loss for the third quarter was $900 000, a loss per share of $0.05 as compared to a net income of $600 000 and earnings per share of $0.04 (basic) and $0.03 (fully diluted) in the same quarter of the prior fiscal year.
EBITDA declined from $1.3 million in the third quarter of fiscal 2008, to $700 000 in the third quarter of fiscal 2009. Cash flow from operations before working capital adjustments declined from $900 000 in the comparative quarter to cash used in operations of $600 000 in the third quarter of 2009.
During the quarter software development and support expenses totalled $2.8 million compared to $3.0 million for the same period of fiscal 2008. While the company continued to reduce costs associated with its Poker product, a shift in resources was necessary for the accelerated development of the company's Casino product and gaming platform, which included licensing applications and software certification in Alderney.
Sales and marketing expenses totalled $600 000 for the third quarter of 2009 and 2008, commensurate with consistent activity levels in both periods.
"The seasonally slow third quarter was compounded by overall economic weakness," said Alan Richter, CFO of Chartwell. "Through this period however, we have demonstrated our commitment to future growth by expanding our base of licensees, aggressively developing new content internally, and broadening our service and product portfolio through the imminent launch of the Chartwell Gaming Platform.
"This state of the art gaming platform will host our proprietary and third party content, will be most cost efficient to Chartwell and will provide seamless integration to our customer base moving forward."
Richter adds "The majority of our new client signings did not launch during the quarter and accordingly did not contribute to revenue in our third quarter. We expect these new clients to be deployed in the current quarter. While we manage our business through this difficult economic environment we will continue to carefully manage expenses without compromising customer satisfaction and Company growth."
Chartwell continued to maintain a strong balance sheet. At July 31, 2009 the company had $19.5 million of cash and short-term investments compared to $19.9 million at April 30, 2009.
Business highlights for the third quarter of 2009 included:
* Four new licensees advanced toward deployment; one of which deployed late in the third quarter, with the remaining three to deploy in the fourth quarter.
* Gala Coral group renewed its contract for another three year term.
* Received preliminary approval for a license in Alderney in preparation for the launch of the Chartwell Gaming Platform, which will host all proprietary and third party content for licensing.
* Negotiated agreements with multiple third party content providers, including Novomatic games from Astra Games Limited for unique gaming content (see previous report).
* Completed the development of two new table games and enhancements to three other table games.
* Received software certification for Isle of Man, one of the major online gaming jurisdictions.