Probability: building a 'very large' business for the future - REALLY???

Note: The CEO says this is a "fully regulated gambling service."  I would be interested to know exactly what he means by that.  I like the targeting of female casual gamers, but to get them to bet real money online...maybe, but since this is clearly a paid PR piece, it would be better to know the actual demographics of the current users and their spend rate or projected spend rate.


Probability: building a 'very large' business for the future - Proactiveinvestors (NA)

Probability: building a 'very large' business for the future

4:10 am by Jamie Ashcroft

Mobile phone-based slot gaming specialist Probability (LON:PBTY) enjoyed a strong three months as revenues and player deposits rose over 40 per cent.

Probability said net gaming revenues were £2.26 million in the quarter to June 30, compared with £1.57 million in the comparable period last year.

A rise in player deposits, meanwhile, points to a stable operating margin, the group said.

The company also made a breakthrough in getting its LadyLuck’s application into the Apple App Store following many months in review.

It is still early days and the company says the long term impact can’t yet be predicted but the early signs are positive.

Indeed, LadyLuck’s has now been available to download from the app store for just five days. And in that time it has already become a highly ranked download, reaching as high as number three in the store’s ‘top free’ casino games.

Such a ranking reflects LadyLuck’s strong early traction on the app store which clearly is an important distribution channel forProbability.

However chief executive Charles Cohen is quick to point out that the company’s mobile gambling product is, for several reasons, very different to most of the other casino games in the app store.

And importantly he stresses that the product’s success does not depend on either Apple’s or Google’s marketplace.

“We don’t need to be in the App Store or the Google Play store in order to get people to use our product on their phones,” he said.

“It (the App Store) is just a nice extra thing. We want people to be able to find us wherever they look.”

Cohen explains that unlike other social gaming products, its service is not simply about entertainment, it is a fully regulated gambling service.

And Probability’s new ‘LadyLuck’s’ app is about drawing in more new players.

The aim is that in time users of the free app credit their accounts with cash and it is through these ‘cash’ players that the firm is able to generate revenues.

This, along with the firm’s Facebook and TV advertising, is central to Probability’s strategy to grow its user base and revenues going forward.

A new TV advert began to air in April. Cohen explains that the company has been closely monitoring the impact the campaign has had on new customer sign-ups. And he adds that initial findings are ‘very positive’.

The company will however have to wait a little longer to get a definitive idea of the boost this is going to have on revenues.

“It takes time for new sign-ups to convert into real cash play.

“So you could make an estimate, but really you have to wait a few months before you can be sure of the return you’re going to get from them (new users).”

Advertising regulations mean that Probability’s adverts can’t be broadcast before the 9:00pm watershed. The company is targeting women in their late twenties to early thirties and men in their thirties.

As such, Cohen explains that the cheaper late night advertising is an ideal fit for Probability because essentially the company’s product ‘provides a solution to people’s boredom’.

Cohen emphasises that paid for TV advertising slots are an important and efficient way of growing the company’s profile.

And he believes this approach is in line with the group’s ambition of building a large scalable company.

“It is about how much we can spend (on advertising) effectively. As we gradually increase our advertising spend we are watching the numbers carefully. And we are pretty confident that our campaigns are scaling (up) efficiently.

“It takes about four to five months to get back the money (invested in advertising).”

Going forward, the key to Probability’s business is building a ‘critical mass’ of cash players. And the 40 per cent rise in quarterly revenue is a definite sign that the company is moving in the right direction.

“Revenues are almost completely driven by our marketing at the moment.

“And I think it going to continue like that for a while until we reach a critical mass (of users). It is in the nature of this kind of business that you have to fight for every customer.”

Cohen says he has his own idea of when Probability can reach this ‘critical mass’ but for now he remains tight lipped though bullish about the company’s future.

“We are still of the view that we are building a very large business for the future, rather than a small one (for right now).”

This bullish view is shared by City broker Numis which rates the stock as a ‘buy’ with a 150p target.

“Probability continues to thrive in its sweet spot,” analyst Ivor Jones said in a note to clients.