Services Stock under Consideration – Amaya Inc (NASDAQ:AYA)
On Wednesday, Shares of Amaya Inc (NASDAQ:AYA), gained 2.61% to $15.75. The 52-week range of the share price is from $15.30 – $15.90. The beta value for this stock stands at 2.00 points, while its earnings per share (EPS) was $ 0.24. The company has total market capitalization of $2.23B and a total of 145.56M outstanding shares.
Amaya Inc. (NASDAQ: AYA; TSX: AYA) recently stated its financial results for the fourth quarter and year ended December 31, 2016 and offered a 2017 update and full year financial guidance ranges, in addition to certain additional highlights and updates. Unless otherwise noted, all dollar ($) amounts are in U.S. dollars.
Fourth Quarter and Full Year 2016 and Subsequent Financial Highlights:
Revenues – Total revenues for the quarter and year raised about 5.90% and 7.80% year-over-year, respectively. Apart from the impact of year-over-year changes in foreign exchange rates, total revenues for the quarter and year would have raised by about 10.40% and 12.50%, respectively. Real-money online poker revenues and real-money online casino and sportsbook combined revenues represented about 70.0% and 25.80% of total revenues for the quarter, respectively, and 73.20% and 22.80% for the year, respectively, as contrast to about 78.0% and 17.20% and 82.70% and 12.70% for the applicable prior year periods.
Poker Revenues – Real-money online poker revenues for the quarter were $217.20M, or a decrease of about 5.10% year-over-year, and $846.10M for the year, or a decrease of about 4.60% year-over-year. Apart from the impact of year-over-year changes in foreign exchange rates, real-money online poker revenues would have reduced by about 1% for the quarter and remained flat for the year. In the fourth quarter of 2015 there was also $6.80M of one-time poker revenues resulting from accounting adjustments related to offsets to gross gaming revenue. Amaya continues to see a positive impact from its formerly declared strategy of focusing on recreational players, counting through changes to its online poker loyalty program and rake structure, and certain adjustments to the poker ecosystem despite the year-over-year declines.
Debt – Total long term debt outstanding at the end of the year was $2.53B with a weighted average interest rate of 4.90%. Following the end of the year, Amaya declared the successful repricing and retranching of its U.S. dollar and Euro denominated first lien term loans resulting in the reduction of the applicable interest rate margins by 50 basis points, removing the Euribor floor on the Euro denominated first lien term loans, and raising €100.0M of incremental Euro denominated first lien debt and using the same to reduce its U.S. denominated first lien debt. As a result, the weighted average interest rate on the long term debt will decrease to 4.50% and Amaya presently anticipates saving about 13%, or $15.40M, of interest expense annually. Amaya and the lenders also amended the credit agreement for its first lien term loans to, among other things, reflect the repricing, retranching, and waive the required 2016 and 2017 excess cash flow repayments (as defined and described in the credit agreement) formerly due on March 31, 2017 and March 31, 2018, respectively.
Rational Group Deferred Payment – Amaya anticipates that it will pay the remaining outstanding balance of the deferred purchase price for its acquisition of the Rational Group of about $122.50M using cash on its balance sheet and cash flow from operations by the end of June 2017. As formerly declared Amaya paid $200.0M in November 2016, an additional $75 million in January 2017 and will also pay an additional about $48.0M by May 15, 2017 which was formerly allocated to Amaya’s 2016 excess cash flow repayments. In February 2017, Amaya also paid about $6.0M representing three-months of non-refundable late payment fees on the then-outstanding balance (as required by its formerly declared agreement with the former owners of the Rational Group). Starting on May 1, 2017, any additional fees will be calculated at the rates outlined in the original merger agreement.
Fourth Quarter 2016 and Subsequent Operational Highlights:
Quarterly Real-Money Active Uniques (QAUs) – Total combined QAUs were about 2.60M, a boost of about 8% year-over-year mainly led by customer acquisition programs. About 2.50M of such QAUs played online poker during the quarter, a boost of about 5% year-over-year, while Amaya’s online casino offerings had about 648,000 QAUs, a boost of about 47% year-over-year, which Amaya continues to estimate as one of the leading casino player bases among its competitors. Amaya’s emerging online sportsbook offerings had about 247,000 QAUs, an 88% increase year-over-year.
Quarterly Net Yield (QNY) – Total QNY was $114.0, a boost of 0.50% year-over-year. Apart from the impact of year-over-year changes in foreign exchange rates, total QNY was $117, a boost of 3.3% year-over-year. Notwithstanding the increase, QNY in the fourth quarter of 2016 was negatively influenced by (i) an increasing proportion of newly registered QAUs, who tend to have lower yields in their first few quarters of activity, as a total percentage of QAUs, mainly as a result of an evolving marketing strategy and certain customer acquisition programs, and (ii) Amaya only offering online poker in Portugal for about one month following its relaunch in that jurisdiction late in the quarter. QNY in the fourth quarter of 2015 also benefited from the one-time poker revenues noted above. QNY is a non-IFRS measure.
Customer Registrations – Customer Registrations raised by 2.60M during the quarter to about 108.0M at the end of the year.
Operational Excellence Programs – As part of Amaya’s policy and as formerly stated, it continues to review its expense structure and identify areas for improvement that it believes will enhance shareholder value. In 2016, this included certain office and departmental restructurings, counting in London, Sydney and Dublin. Where possible, Amaya has and continues to reassign and replace staff throughout the organization as part of these efforts. Amaya continues to assess and monitor the overall impact of these and potential future programs on its operations and performance.
Retirement of Chief Financial Officer – In January 2017, Amaya declared that its CFO, Daniel Sebag, had advised it that he will retire as CFO later this year once his successor is identified and designated, and will assist Amaya in ensuring an orderly transition of his duties. The Board and leading executive recruiting firm Spencer Stuart have started a global CFO search and are in the process of interviewing certain potential candidates.
2017 Performance Update and Full Year Guidance:
Revenues – For the first two months of 2017, Amaya estimates that unaudited merged revenues were about $215.30M, representing a boost of about 13.30% over the same period of 2016. Of such revenues, 68.90% was attributable to real-money online poker estimated revenues and 27.4% was attributable to real-money online casino and sportsbook combined estimated revenues. Apart from the impact of year-over-year changes in foreign exchange rates, Amaya estimates that such revenues were about $214.6 million, representing a boost of about 12.9% over the same period of 2016.
“2016 was a record year of revenues for Amaya,” said Rafi Ashkenazi, Chief Executive Officer. “Our upbeat changes to the poker ecosystem and customer acquisition programs continue to reverse certain negative trends and we are starting to see organic growth in that business, our casino offering exceeded expectations as we introduced limited marketing campaigns and focused on our cross-sell efforts, and we continued to build and develop our sportsbook.
“The strong performance of our business has assisted us to reduce our currency risk, lower our interest expense, and accelerate the payment of the remaining amounts owed on our deferred payment obligation, all of which will allow us to continue pursuing our four planned priorities. We expect to continue our 2016 momentum and execute on our strategy in 2017,” noted Ashkenazi.
Full Year Guidance – Amaya presently anticipates the following 2017 full year financial guidance ranges:
- Revenues of $1,200.0 to $1,260.0M;
- Adjusted EBITDA of $560 to $580.0M;
- Adjusted Net Earnings of $400 to $430.0M; and
- Adjusted Net Earnings per Diluted Share of $1.94 to $2.13.
Technical Analysis:
The average true range of the stock is recorded at 0.36 and the relative strength index of the stock stands 71.63. The stock price is going above to its 52-week low with 52.91% and down from its 52-week high with -10.36%.
The stock has shown weekly performance of 5.70% and monthly performance stands at 7.14%. The stock price is trading upbeat from its 200 days moving average with 6.01% and down from 50 days moving average with 9.68%.
Analyst recommendation for this stock stands at 2.00.