30th Apr 2009 07:00
NEOVIA Financial Plc
First Quarter Trading Update
Thursday, 30 April 2009 - NEOVIA Financial Plc (LSE: NEO) ("NEOVIA" or the "Group"), the independent global online payments business, announces its trading update for the first quarter ended 31 March 2009.
First Quarter Highlights
Group revenue of $16.4m down 3% compared to Q1 2008 of $17.0m;
E-wallet revenue flat at $11.4m but overall fee revenue, including gateway businesses, up 3% from Q1 2008 to $15.8m;
Average daily receipts down 4% from Q4 2008 and 11% from Q1 2008;
Active e-wallet users down 5% at 92,757 compared to Q4 2008 (excluding North America);
E-wallet revenue per active e-wallet user $122 for Q1 2009, an 8% increase on Q1 2008;
Gross margin at 58% compared to 62% and 64% for Q1 2008 and Q4 2008 respectively;
Income from operations up 29% to $3.1m compared to $2.4m in Q1 2008;
Total Group cash was $76.5m at 31 March 2009;
Board committed to Group's strategic vision and objectives to deliver shareholder value.
Dale Johnson, Chairman, commented: "Trading in the first three months of 2009 is disappointing and reflects a weakening trend in Europe due to an increasingly competitive market, challenging economic conditions, volatile current markets and limitations in new product introductions until Newteller (the Company's new technology platform) is launched in Q3 2009. The future benefits of Newteller will include cost savings and greater operating efficiencies within the Group. We expect 2009 to be a year of both significant challenge and exciting opportunity. Investment in the business will continue, especially for completion of the Newteller programme. Strategic opportunities are being examined, particularly in support of the Group's card strategy. The work to create greater differentiation, accompanied by a cost structure that creates competitive advantage, will be accelerated. While the Board remains confident about the Group's prospects, the overarching themes for 2009 will be leveraging high potential initiatives, cost control and prudent cash management."
For further information contact:
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NEOVIA Financial Plc |
Email: [email protected] |
+ 44 (0) 207 638 9571 (30 April) |
|
Dale Johnson |
Chairman |
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|
Ron Martin |
President & CEO |
|
|
Doug Terry |
CFO |
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Andrew Gilchrist |
VP Communications |
+ 44 (0) 1624 698 713 |
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Citigate Dewe Rogerson |
+ 44 (0) 207 638 9571 |
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Sarah Gestetner / George Cazenove |
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Daniel Stewart & Co Plc |
+ 44 (0) 207 776 6550 |
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Paul Shackleton |
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NEOVIA also released its 2008 full year results today and a conference call for institutional investors will be held later today at 2.00 p.m. BST. Full details are available on the Group's website at www.neovia.com.
* * * * *
Key performance indicators
The first quarter saw weakness in the Group's principal KPIs, with active e-wallet users decreasing by 8% compared to the same quarter in 2008 (excluding North American active e-wallet users), and also decreasing by 5% quarter on quarter. Average daily receipts from e-wallet users were $396,413, which represented a decrease of 11% compared to Q1 2008, and a decrease of 4% from Q4 2008. Total receipts from e-wallet users during Q1 2009 totalled $35.7 million compared to $40.5 million in Q1 2008, and $38.0 million in Q4 2008. The Group now tracks customer receipts (with restated prior period comparisons) to include Canada (non-gambling) and 1 Pay (Asia e-wallet), which has successfully grown to become a significant contributor of e-wallet receipts and associated fees.
The table below sets out the Group's active e-wallet users by region, excluding those from North America:
|
Active e-wallet users |
Q1 2009 |
Q1 2008 |
% change Q1 2009 vs Q1 2008 |
Q4 2008 |
% change Q1 2009 vs Q4 2008 |
|
Europe |
73,418 |
81,552 |
-10% |
77,916 |
-6% |
|
Asia Pacific |
13,097 |
14,984 |
-13% |
13,794 |
-5% |
|
Rest of World |
6,242 |
4,765 |
31% |
5,963 |
5% |
|
Total |
92,757 |
101,301 |
-8% |
97,673 |
-5% |
|
Total signed up e-wallet users |
1,442,815 |
1,097,456 |
31% |
1,358,718 |
6% |
The table below shows by region the Group's e-wallet revenue per active e-wallet user based on the average quarterly fee revenue per user for the relevant quarters in 2009 and 2008:
|
E-wallet revenue per active e-wallet user ($) |
Q1 2009 |
Q1 2008 |
% change Q1 2009 vs Q1 2008 |
Q4 2008 |
% change Q1 2009 vs Q4 2008 |
|
Europe |
123 |
117 |
5% |
138 |
-11% |
|
Asia Pacific |
133 |
102 |
30% |
137 |
-3% |
|
Rest of World |
89 |
81 |
10% |
97 |
-8% |
|
Total |
122 |
113 |
8% |
135 |
-10% |
Average daily sign ups improved quarter on quarter by 10%, with 1,023 average daily sign ups in Q1 2009 (excluding North America). This included growth of 8% from Europe. Total average daily sign ups in Q1 2009 (including North American sign ups from Canadian e-wallet users) were 1,040 compared to 946 in Q4 2008.
The table below shows the Group's sign ups by region (excluding North America):
|
Average daily sign ups |
Q1 2009 |
Q1 2008 |
% change Q1 2009 vs Q1 2008 |
Q4 2008 |
% change Q1 2009 vs Q4 2008 |
|
Europe |
721 |
819 |
-12% |
669 |
8% |
|
Asia Pacific |
148 |
176 |
-16% |
129 |
15% |
|
Rest of World |
154 |
106 |
45% |
130 |
18% |
|
Total |
1,023 |
1,101 |
-7% |
928 |
10% |
The number of consumers who have e-wallets totalled 4,403,645 at the end of Q1 2009, including registered e-wallet users from North America.
Financial highlights
Revenue
Revenue for Q1 2009 of $16.4 million represented a decrease of 3% from $17.0 million for Q1 2008 primarily due to a significant decrease in interest revenue due to sharply lower interest rates. Challenging economic conditions, an increasingly competitive market and limited product enhancements also adversely impacted revenue during the quarter.
E-wallet revenue, which comprises merchant and consumer fees generated from the use of the e-wallet, excluding fees from the Group's NETBANX gateway businesses, totalled $11.4 million in Q1 2009, flat compared to Q1 2008, but a decrease of 22% from Q4 2008. Fee revenue as a whole (including revenue from the Group's gateway businesses) rose 3% from Q1 2008 to $15.8 million in Q1 2009, a creditable performance given the challenging markets the Group currently faces.
|
Revenue ($ millions) |
Q1 2009 |
Q1 2008 |
% change Q1 2009 vs Q1 2008 (2) |
Q4 2008 |
% change Q1 2009 vs Q4 2008 (2) |
||
|
Europe |
9.0 |
9.5 |
-5% |
11.6 |
-22% |
||
|
Asia Pacific |
1.7 |
1.5 |
13% |
2.1 |
-19% |
||
|
Rest of World (1) |
0.6 |
0.4 |
51% |
1.0 |
-33% |
||
|
Total e-wallet revenue |
11.4 |
11.4 |
0% |
14.7 |
-22% |
||
|
NETBANX |
1.1 |
1.8 |
-39% |
1.2 |
-8% |
||
|
NETBANX Asia |
3.4 |
2.1 |
57% |
3.6 |
-8% |
||
|
Total fee revenue |
15.8 |
15.3 |
3% |
19.5 |
-19% |
||
|
Interest |
0.6 |
1.7 |
-65% |
1.5 |
-60% |
||
|
Total |
16.4 |
17.0 |
-4% |
21.0 |
-22% |
(1) Rest of World e-wallet revenue in Q1 2009 includes $80,000 (Q4 2008: $340,000) earned from the Group's Canadian e-wallet customers for non online gambling related transactions.
(2) Percentage changes are based on revenue figures to two decimal places
Interest revenue continues to decrease through both the impact of lower balances held by the Group generally and also the reduction in interest rates, particularly for funds held in US dollars.
Gross margin
Gross margin for Q1 2009 was 58.0% compared to 62.2% in Q1 2008 and 63.9% reported for Q4 2008. Customer support costs continued to represent a large proportion of direct costs at 12.9% (Q1 2008: 15.2%) of revenue, compared to 10.1% in Q4 2008. Website maintenance costs are in line at 5.5% of revenues (Q1 2008: 5.6%). Deposit and withdrawal fees have increased to 21.9% of revenues in Q1 2009 (Q1 2008: 16.7%) and up from 19.7% in Q4 2008, as third party card programme related costs and merchant and customer payment processing fees remain high. Bad debts were approximately 1% of revenue.
Operating expenses and other items
The Group achieved income from operations of $3.1 million in Q1 2009, up from $2.4 million in Q1 2008. General and administrative expenses decreased to $6.4 million from $7.4 million in Q4 2008. However, the Group also incurred $0.9 million of non-cash impairment expense relating to fees and other costs incurred in relation to the acquisition of IDT Financial Services which failed to complete during the first quarter.
Cash position of the Group
Total Group cash was $76.5 million at 31 March 2009, which includes restricted cash surpluses and the excess of EU customers' qualifying liquid assets over balances payable. The working capital position of the Group, defined as current assets less current liabilities, is approximately $63.9 million. Required cash inventory comprising amounts held at processors, operating account balances to cover payouts and the buffer on trust accounts is approximately $30 million, resulting in "free cash" of about $33.9 million available for capital expenditures and other purposes. The Group's focus during 2009 will be on prudent cash management.
Business highlights
Early indications from the Net+ prepaid debit card programme provide encouraging support for the differentiation strategy being developed around an end-to-end payment solution that includes issuing and acquiring services connected to virtual wallets for consumers. The Board remains confident that the Group's strategic objectives will lead to significant improvement in the Group's business performance and results over the medium term.
In the short term, the Group is responding to challenging economic conditions with increased focus on revenue uplift opportunities and aligning the cost structure to revenue generation expectations. Several initiatives are being progressed to improve operating margins in 2009, such as relocation of contact centre support and streamlining of payout processing.
Strategic developments
The Group announced on 20 March 2009 that the Gibraltar Financial Services Commission ("Gibraltar FSC") would not grant consent for the proposed acquisition of IDT Financial Services ("IDTFS"), a bank with a prepaid card business, due to the unwillingness of a substantial shareholder (with controller status) in NEOVIA to provide the requisite information to the Gibraltar FSC. This acquisition had been announced on 1 December 2008 subject to regulatory consent and would have cost the Group $15.05 million consideration, of which approximately $10 million was regulatory banking capital. As a result of this, the Group incurred approximately $870,000 of acquisition-related costs which were taken as an expense in the first quarter of 2009. The Group remains committed to developing its prepaid card business, building on the existing Net+ card operations, and the Group continues to explore strategic alternatives to further this objective.
Management and board
The Group announced on 13 March 2009 that Ron Martin, President & CEO, would be stepping down from his role with the Group and from the Board. The Group has commenced a process to identify and appoint a successor to Mr Martin and in the meantime he will continue in his role for a transitional period.
* * * * *
About NEOVIA Financial
Trusted by consumers and merchants in over 160 countries to move and manage billions of dollars each year, NEOVIA Financial Plc (formerly NETELLER Plc) operates the world's leading independent online payments business. Through its Payment Suite, featuring NETELLER®, NETBANX®, Net+™ and 1-PAY™ brands, NEOVIA Financial specialises in providing innovative and instant payment services where money transfer is difficult or risky due to identity, trust, currency exchange, or distance. Being independent has allowed the company to support thousands of retailers and merchants in many geographies and across multiple industries.
NEOVIA Financial Plc (formerly NETELLER plc) is quoted on the London Stock Exchange's AIM market, with a ticker symbol of NEO. Subsidiary company NETELLER (UK) Ltd is authorised by the Financial Services Authority (FSA) to operate as a regulated e-money issuer. For more information about NEOVIA Financial visit www.neovia.com or contact us by email at [email protected].
First Quarter 2009 Unaudited Financial Information
|
Q1 - 2009 |
% revenue |
Q1 - 2008 |
% revenue |
Q4 -2008 |
Q1 09 vs Q1 08 |
|||||||||||
|
US$ |
% revenue |
Q1 09 vs Q4 08 |
||||||||||||||
|
Revenue |
16,440,736 |
100% |
16,986,882 |
100% |
20,961,269 |
100% |
-3 % |
-22 % |
||||||||
|
Direct Costs |
(6,901,984) |
42% |
(6,417,515) |
38% |
(7,558,983) |
36% |
8 % |
-9 % |
||||||||
|
Gross profit |
9,538,752 |
58% |
10,569,367 |
62% |
13,402,286 |
64% |
-10 % |
-29 % |
||||||||
|
|
||||||||||||||||
|
General and Admin |
(6,442,963) |
39% |
(8,183,353) |
48% |
(7,408,663) |
35% |
-21 % |
-13 % |
||||||||
|
Operating income |
3,095,789 |
19% |
2,386,014 |
14% |
5,993,623 |
29% |
30 % |
-48 % |
||||||||
|
Other income (expense) |
||||||||||||||||
|
Foreign exchange (loss)/gain |
(18,324) |
(12,852) |
244,872 |
|||||||||||||
|
Management bonus |
(255,000) |
(451,515) |
600,759 |
|||||||||||||
|
Depreciation and amortisation |
(1,393,169) |
(1,568,804) |
(1,585,519) |
|||||||||||||
|
Stock option expense |
(677,416) |
(750,546) |
(641,291) |
|||||||||||||
|
Impairment loss |
- |
- |
(14,498,163) |
|||||||||||||
|
Restructuring costs |
- |
(9,029) |
(1,021,443) |
|||||||||||||
|
US related costs |
- |
(84,258) |
- |
|||||||||||||
|
Acquisition costs impairment |
(867,186) |
- |
(620,439) |
|||||||||||||
|
Loss on disposal of assets |
(4,133) |
- |
(33,630) |
|||||||||||||
|
Investment loss |
(217,941) |
(100,000) |
(316,833) |
|||||||||||||
|
Loss before tax |
(337,379) |
(590,991) |
(11,878,065) |
|||||||||||||
|
Income taxes |
(143,960) |
(497,633) |
2,396,054 |
|||||||||||||
|
|
|
|
||||||||||||||
|
Net loss after tax |
(481,339) |
(1,088,624) |
(9,482,011) |
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KEY PERFORMANCE INDICATORS |
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|
Q1 - 2009 |
Q1 - 2008 |
Q4 - 2008 |
Q1 09 vs Q1 08 |
Q1 09 vs Q4 08 |
||||
|
Total active e-wallet users (in quarter) (1) |
92,757 |
101,301 |
97,673 |
-8 % |
-5 % |
|||
|
E-wallet revenue per active e-wallet user |
$ 122 |
$ 113 |
$ 135 |
8 % |
-9 % |
|||
|
Daily sign ups |
1,023 |
1,101 |
928 |
-7 % |
10 % |
|||
|
Total e-wallet users (at period end) - ex NA |
1,442,815 |
1,097,456 |
1,358,718 |
31% |
6 % |
|||
|
Average daily receipts from consumers (2) |
$ 396,413 |
$ 447,758 |
$ 413,565 |
-11 % |
-4 % |
|||
|
Total consumer receipts (2) |
$ 35,677,159 |
$ 40,473,007 |
$ 38,047,954 |
-12 % |
-6 % |
|||
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