PokerTek reports Q4 results

MATTHEWS, North Carolina -- (PRESS RELEASE) -- PokerTek, Inc. (NASDAQ:PTEK - News) today reported financial results for the fourth quarter and full year ended December 31, 2007. Highlights of recent announcements and operating results are as follows:

Fourth Quarter 2007 Operating Highlights

Revenues increased 31.9% compared to the third quarter of 2007. Operating expenses declined 14.9% as compared to the third quarter of 2007. Net loss declined 18.8% as compared to the third quarter of 2007. There were 189 PokerPro™ tables deployed worldwide as of December 31, 2007, a 166% increase from 71 as of December 31, 2006, and a 44% increase from 131 PokerPro tables as of September 30, 2007. Revenues for the fourth quarter of 2007 increased 49.0% to $1,421,000 from $954,000 for the fourth quarter of 2006.

Net loss for the fourth quarter was $3,322,000 or ($0.30) per diluted share as compared with a net loss of $3,007,000, or ($0.32) per diluted share in the fourth quarter of 2006.

Recent Announcements

Company's installation of 43 PokerPro tables at three casinos operated by Societe des Casinos du Quebec, Inc., including Casino de Montreal which became PokerTek's largest installation.

The successful launch of Heads-Up Challenge, PokerTek's new amusement product, with sales of 40 units through December 31, 2007. The successful installation of PokerPro tables at Mohegan Sun in Uncasville, Connecticut.

The company's first installation in Central America, with Marriott Royal Casino in Panama City, Panama.

The installation of a fully automated PokerPro room at Fantasy Springs Resort Casino in Palm Springs, California.

The expansion of the Heads-Up Challenge distribution network to include coverage for the entire United Kingdom as well as U.S. Military locations.

Full Year 2007 Operating Highlights

Revenues for 2007 increased 102.3% to $4,005,000 from $1,980,000 in 2006. Net loss for 2007 increased 40.5% to $12.8 million, or ($1.23) per diluted share, from $9.1 million, or ($0.97) per diluted share, for 2006. Management Comments

"The strength of automated poker allowed us to finish the year with a solid fourth quarter and good momentum heading into 2008," said PokerTek CEO Chris Halligan. "We grew revenues by 32% over the third quarter, increased our Casino table count by 44% during the fourth quarter and successfully launched Heads-Up Challenge . PokerPro is becoming a market reality, as evidenced by our recent successes around the world."

"We were also able to improve our quarterly results by reducing operating expenses while driving top-line growth," Halligan added. "Our management team is focused on making our customers successful and executing our growth strategy while investing our resources wisely."

Revenues

Revenue growth was primarily driven by an increase in the number of PokerPro tables deployed and generating recurring license and service fees. License and service fees for the quarter were $763,000, an increase of 290.6% over the fourth quarter of 2006, and were $2,495,000 for the full year, an increase of 202.8% over the prior year.

Product sales declined 13.3% to $657,000 for the fourth quarter and increased 30.6% to $1,510,000 for the full year, as compared to prior year periods. Sales of Casino products, primarily to Aristocrat International Pty. Limited, increased 14.6% on an annual basis, but declined 34.3% for the quarter primarily due to a large international installation that occurred during the fourth quarter of 2006.

Product sales comparisons were favorably impacted by the launch of the new Heads-Up Challenge amusement product, which contributed $159,000 for the fourth quarter and $185,000 for the full year to product sales.

Operating Expenses

For the fourth quarter, total operating expenses increased 25.9% from the fourth quarter of 2006, to $4,228,000. Selling, general and administrative expenses increased 29.9% to $2,564,000, research and development expenses decreased 10.5% to $1,007,000 and depreciation increased 152.9% to $657,000.

On an annual basis, total operating expenses increased 49.8% from 2006 to $16,081,000. Selling, general and administrative expenses increased 60.3% to $9,746,000, research and development expenses increased 8.4% to $4,282,000 and depreciation increased 189.4% to $2,053,000.

Increases in operating expenses are directly attributable to the company's investment in staff to support the growth of the company, depreciation expense on the growing base of depreciable PokerPro systems, and professional fees related to regulatory, intellectual property and other legal costs, including the Tellis lawsuit, which was successfully settled during the fourth quarter.