DigiPlus slips to US$15mln 3Q loss as it books fair-value decline on financial assets

Net income attributable to the parent at DigiPlus Interactive Corp fell 155.4 percent year-on-year, with the Philippine-listed online gaming provider registering a loss of PHP947.58 million (US$14.9 million) for the three months to September 30. That compared to positive net income of PHP1.71 billion in the prior-year quarter. Third-quarter earnings before interest, taxation, depreciation, and amortisation (EBITDA) were actually up 39.6 percent year-on-year, at just under PHP2.85 billion. The third-quarter result was in a Tuesday filing to the Philippine Stock Exchange. DigiPlus is an online gaming provider licensed by the Philippine Amusement and Gaming Corp (Pagcor), and runs within that country BingoPlus, an online bingo platform; ArenaPlus, a sportsbook; and GameZone, a platform for casual and arcade gaming. The results were impacted by the firm booking a nearly PHP4.52-billion net loss on financial assets. That related to some of the value of a subscription agreement with Hong Kong-listed International Entertainment Corp – backer of a casino hotel in Manila Bay, now known as LaVie Resort & Casino Manila. It was for subscription to convertible notes with an aggregate principal amount of HKD1.6 billion (US$203.9 million currently). DigiPlus’ group wide quarterly net income performance was on third-quarter revenue that dipped 32.3 percent year-on-year, to just under PHP12.90 billion. The revenue decline was “primarily attributable to lower retail gaming revenues following reduced customer acquisition, engagement, and transaction activity across the group’s digital gaming platforms,” the company said in commentary on the results. A number of investment analysts had suggested during the reporting period that a downturn to the Philippine economy amid rising fuel prices linked to Middle East tensions, had affected the Philippine land-based and online gaming sectors. DigiPlus has an online gaming licence in Brazil, though on September 25 – within the reporting period – Brazil effected a provision to prohibit fixed-odds betting activities, including sports betting and online gaming. The temporary measure also provides for the termination of existing betting authorisations. Nonetheless, the step must be considered by Brazil’s congress, and is being challenged in the country’s Supreme Court. “Management has assessed that the measure has no material impact on the group’s financial condition or results of operations for the period” of the current report, reiterated DigiPlus in its Tuesday filing. In a September statement the firm had downplayed the impact. As of September 30, DigiPlus reported just over PHP58.21 billion in total assets, PHP46.76 billion in total equity, and PHP11.68 billion in cash and cash equivalents. Quoted in a press release on DigiPlus’ results, president Ping Chen said: “We remain focused on sustainable growth through self-development of compelling content, stronger user acquisitions and retention, and disciplined spending on advertising and promotions, and investments. He added: “Our average monthly active bettors and depositors continue to grow, and our user retention cohort continues to improve.” The firm said that during the July to September period, average monthly active users “increased 3 percent quarter-on-quarter to 5.9 million, while monthly active bettors and depositors rose 5 percent to 4.9 million.