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Curtis Rush
STAFF REPORTER THESTAR.COMThe billion-dollar gambling industry is seeing more and more action from Internet players, and that’s giving a Toronto-based company a winning hand, according to some analysts.
Cryptologic Inc. says that people in 240 countries and territories worldwide have registered to use its software. The company has processed more than one billion individual transactions and in excess of $12 billion (U.S.) in secure electronic deposits, from more than one million clients.
HIGH ROLLERS: Cryptologic Inc. (TSX: CRY), a Toronto-based company that develops software for the Internet gaming industry, is a buy for long-term gains, according to adviceforinvestors.com, which is affiliated with Investor’s Digest.
The company develops software for online casinos and for processing financial transactions online. In the first half of 2004, Cryptologic earned $7 million, or 52 cents a share (figures U.S.) — up from $4.3 million, or 35 cents a share, a year earlier. During the same period, its revenue jumped almost 53 per cent, to $30.1 million and its cash flow was up 68 per cent, to $8.4 million.
The company’s core market is slot games and revenue from existing licensees is growing, thanks partly to 11 new releases for slot games.
Cryptologic has also expanded into fast-growing online poker. The firm’s software can simultaneously support thousands of poker players around the clock and around the world, the analysts point out. They add that poker accounts for 15 per cent of Cryptologic’s revenue.
Another factor driving the company’s revenues is overseas expansion. Cryptologic now generates 60 per cent of its revenue abroad, up from 40 per cent in 2002.
To support its investment in new software, the firm has cash of $77.2 million, or $5.71 a share, the analysts say.
“And since its cash flow greatly exceeds its needs, more cash keeps piling up. In fact, that’s partly why Cryptologic introduced a dividend of 12 cents a share,” the analysts said in the report.
The stock closed Monday on the TSX at $19.78, down from its 52-week high of $27.95.
