Churchill Downs bought Big Fish. GeekWire Illustration; Photo by Jeff Kubina, via Flickr.
Churchill Downs bought Big Fish. GeekWire Illustration; Photo by Jeff Kubina, via Flickr.

It was a bit odd when Kentucky Derby operator Churchill Downs gobbled up Seattle gaming powerhouse Big Fish late last year for $885 million. After all, some wondered what a horse track and casino operator would know about a company that makes games with titles like Gummy Drop.

Paul Thelen of Big Fish.
Paul Thelen of Big Fish.

But, so far, the deal is turning out splendidly for Churchill Downs, which earlier this week announced record revenues and earnings.

Big Fish is playing a big part in the success, with company executives gushing about the game maker in a call with analysts.

“So far, Big Fish has been everything we hoped it would be,” said Churchill Downs CEO William Carstanjen in his remarks.

Oftentimes, deals of this size and complexity don’t work out, or take many years to pay off. But Big Fish is already adding to the bottom line of the race track operator.

Carstanjen added that the newly-acquired game maker was “clearly the biggest contributor to the changes in the year-over-year comparisons, and we expect it will continue to be so going forward.”

Big Fish alone added $20 million to the company’s adjusted EBITDA, helping Churchill Downs increase the metric by 97 percent over the same period last year. Big Fish’s reported $104 million in quarterly bookings —  an impressive 40 percent gain over the same period last year — also helped propel revenues. Total net revenue for Big Fish for the quarter was $91.9 million, actually more than what Churchill Downs recorded from its casino and racetrack operations, both of which saw decreases in quarterly revenue.

Churchill Downs reported revenue of $250 million for the quarter, up 50 percent, and adjusted EBITDA of $48.3 million.

Shares of the company jumped 5.4 percent on Tuesday, and have surged 25 percent so far this year. Big Fish is having a lot to do with that growth.

Beyond the financial implications, Big Fish also is helping to usher in a new era where metrics and testing are highly valued.

Responding to a question about the most surprising attributes of the acquisition, Carstanjen noted the rigor at which Big Fish tests and analyzes the performance of its games. He described Big Fish as being “creatively focused.”

“It’s a creative process, it’s art more than science because that’s the nature of games. And the lack of predictability about — over which games will be successful and which aren’t.

So, while creativity is a big part of the customer-facing product, the fact is I think the secret sauce for Big Fish — and I think what caught us most by surprise is just how rigorous the testing and measuring behind that creativity really is, both in terms of the features of the games but then how the games are resonating with the customers, the marketing analytics, the business analytics. Those are very, very powerful.

Those systems and processes and those people are very, very good. And I hope we will see some cross (pollination) from those skill sets into TwinSpires and other businesses we do over time. So that series of attributes, I think, is what caught us most by surprise and we were most happy with.”

Churchill Downs may be buzzing with Kentucky Derby fever this Saturday, but it appears as if the company has already found its winner, and it just so happens to be a Seattle company named after an aquatic creature.

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