Youbet.com reported net income of $1.5 million, or 4 cents per diluted share, for the fourth quarter that ended Dec. 31, 2005.
For the fourth quarter of 2004, Youbet reported net income of $500,000, or 2 cents per diluted share.
The 2005 final quarter figures were inclusive of a non-cash income tax benefit of $1.9 million, or 5 cents per diluted share, as a result of the Internet betting giant releasing a portion of its reserve against net deferred tax assets on its balance sheet,
The results "were adversely impacted by the previously disclosed weather-related track closures and the cancellation of races at a number of other tracks that led to approximately 300 fewer races available to our customers compared to the prior year period," said Charles F. Champion, Youbet president and chief executive officer.
"Despite this level of lost content, Youbet's quarterly handle grew approximately 17% year-over-year, demonstrating our continued ability to offer the industry's premier wagering service and success in expanding our customer base," Champion added. "We believe that the strong growth in our fiscal 2005 full year financial results underscores the attractiveness of our Advanced Deposit Wagering platforms among a growing base of customers, many of whom we believe are experiencing the excitement and entertainment of pari-mutuel wagering on horse racing for the first time."
Champion said the Woodland Hills, Calif., company has made significant progress in completing strategic acquisitions over the past year. The company announced Feb. 13 that it had acquired United Tote Company, a leading supplier of totalizator systems, for $31.9 million in cash and $14.7 million in United Tote debt.
The transaction "expands Youbet's product offerings, diversifies our revenue mix, and advances our efforts to be the pari-mutuel industry's highest quality end-to-end technology provider," Champion said. "In addition, our acquisition of International Racing Group last June grew our customer base and profile and expanded our operations into a new channel. As the only pari-mutuel wagering rebate provider to be licensed by a U.S. racing regulatory jurisdiction, we believe that IRG will help us to further grow this important wagering channel which will also benefit those tracks that understand and appreciate this key source of handle."
Operating expenses (excluding track, licensing fees and depreciation and amortization) increased approximately $2 million, or 37.9%, to $7.4 million for the quarter, from $5.4 million in the for the same period a year ago. IRG operating expenses accounted for $900,000, or 45%, of the increase. Operating expenses as a percent of total revenue in the 2005 fourth quarter rose to 35.6% from 33.1% in the year ago period.
Youbet ended the year with cash and cash equivalents of $16.7 million, total current assets of $29.8 million and working capital of $12 million, including $4.1 million in current deferred tax assets.