MATTHEWS, NC -- (Marketwire) -- 11/06/12 -- PokerTek, Inc. (NASDAQ: PTEK) today reported financial results for the period ended September 30, 2012.
Financial Highlights (compared to prior year):
•Gross Margin increased to 74% from 70% •Operating Expenses decreased 29% •Operating loss improved 45% •25% growth in gaming positions
•Gross Margin increased to 71% from 68% •Operating expenses decreased 35% •Operating loss improved 34%
"We made solid progress towards the goal of sustainable EPS profitability, with operational execution driving improved financial results," commented Mark Roberson, Chief Executive Officer. "Business momentum is accelerating with recurring revenue increasing 21%, gross margins in excess of 70%, operating expenses declining 6% and pre-tax income improving 31% from June to September. In addition, recurring revenue represented over 98% of total revenue for the third quarter, providing a solid foundation to support profitable growth for the balance of 2012 and 2013.
"I am encouraged by the opportunity to leverage our dominant position in electronic poker and accelerate growth. Gaming positions grew by 25% over the past 12 months and we expect momentum to continue as we expand in North America while also entering several new international markets with significant potential. In addition, we are developing Baccarat as the next new game on our ProCore platform, which will expand our market reach and placement opportunities. With continued growth, we should reach record installation levels in the near future.
"Looking ahead, we are increasingly confident that our positive momentum will continue into Q4 and 2013 as we grow our recurring revenue and are nearing EPS profitability."
Total revenue was $3.8 million for the first nine months of 2012 compared to $5.2 million in 2011, a reduction of 25.7%.For the third quarter, total revenue was $1.1 million in 2012 compared to $1.7 million in 2011, a reduction of 34.2%.
Revenues increased in North America where we are expanding in Ontario, Canada and the state of Ohio. Those increases were offset by reduced revenue from Mexico, reductions in revenue from Europe where macroeconomic conditions continue to impact discretionary spending on gaming activities, and changes in sales mix.
Recurring revenue from license and service fees decreased $748 thousand for the first nine months of 2012 and $159 thousand for the third quarter. On a sequential basis, revenue from license and service fees increased 21% from the second quarter of 2012 as recent installations began contributing to quarterly results.
Revenues from sales of systems and equipment decreased $577 thousand for the first nine months of 2012 and $420 thousand for the third quarter. In the current year, product mix has been more heavily weighted towards recurring revenue which makes for unfavorable prior year comparisons, but provides a healthier base for future growth.
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