Overview
The first quarter of the new fiscal year has produced record profits, exceeding those achieved in Q4 of the previous financial period. It should be noted, however, that profits have been consistently above expectation during the period (by around 20%), which should encourage a degree of caution in any projections.
Q1 Financial Results
- Total Expected Revenue: $13,651.23
- Total Playing/coaching Hours: c 272h
- Hourly Rate: $50.11/hr
- $/Tournament: ~$7.27
ABI decreased slightly, from $63.88 to $59.90 (see below). Underlying profitability has remained fairly constant, however, and the increase in $/Tournament is largely indicative of having run above expectation (i.e. EV ROI has remained steady at around the 8% mark).
Q1 Summary
The period has been marked by steadier earnings than the previous period. The reduction in ABI reflects a noticeable "cooling" in the quality of games available over the summer months. It remains to be seen whether this is a seasonal issue or merely part of the continual contraction of the overall poker economy. The addition of approximately 40 coaching hours (with a 'playing to coaching' ratio of 85:15) has been beneficial, since this time has replaced some of the "dead" hours spent at the PC. Coaching receipts account for on average between 10% and 20% of monthly income and can be expected to have something of a 'smoothing effect' due to their being unaffected by variance. Furthermore since this time has been very rewarding from a job satisfaction point of view, it can be expected to have had a positive effect on the profitability of playing hours, as a corollary.
Q2 Planning
While bankroll has remained steady over the last quarter (with only a modest increase) play has stabilised to include limits between the $30 and $100 range, but not progressed beyond this. The anticipated return of Full Tilt Poker at the beginning of Q2 should have a fairly significant impact, however. The expectation is for total bankroll to increase by approximately 25%. This should allow us - subject to game selection - to omit the $30 limit permanently as we extend our range into the $200 limit. It can be expected that ABI will, at this time, increase significantly from approximately $60 to a level closer to $100. The Directors are in favour of this increase to ABI, in the expectation of this leading to a higher hourly rate. We are of the opinion that an hourly rate in excess of $50/h should be attainable assuming profitable games at the new limit can be sourced (see below).
It is hard to determine the overall impact on game quality of FTP’s return (particularly given the observations above about the recent unfavourable tren at Stars), although the availability of previously tied up player bankrolls should have, at least to begin with, a positive effect on the overall poker economy. Since our approach has traditionally been to forego mass volume (such as might make the attainment of Super Nova Elite status at PokerStars possible) in favour of game selection, it seems reasonable to suppose that the reintroduction of another major poker platform can only aid this approach.
Notwithstanding the foregoing, it is the Directors intention, once total bankroll is equivalent to 100 BI at the $200 limit, to permit a greater proportion of any excess profits (i.e. profits beyond those required to support current lifestyle and monthly expenses) to be distributed to the shareholders. The previous 18-24 months has entailed a significant sacrifice by the player's family, as virtually all excess profits have been ploughed back into the business in order to facilitate bankroll growth and consequent increase in hourly rate. The Directors feel that while it is prudent to continue to reinvest some of the excess profits in BR development, it is also now reasonable to allow the shareholders to reap some of the benefits of the hard work of the last 18-24 months. Our current proposal is for a 50:50 split between the reinvestment and distribution of any such excess profits.
Future Ventures
Of these distributable profits, the Directors may propose a certain portion be directed at new ventures, such as book publishing activities and/or online trading. For example, the directors are keen to assess the prospect of online trading once the Tradimo website is up and running.
31/10/2012
