7th Nov 2005 07:01
NETeller PLC07 November 2005 THIRD QUARTER TRADING UPDATE NETELLER Plc ("NETELLER" or the "Company"), a leading online money transferservice provider, has continued to make further progress and rapidly expand itsbase of customers and merchants during the third quarter of operations ending 30September 2005. Highlights • Average daily sign ups for the quarter: 3,085; total customers at quarter end: 2,026,413 • Average daily receipts from customers: $3.64m, up from $3.15m in Q2 2005 • Revenues $44.9m, up 106 % over Q3 2004; gross margin for quarter of 73.9 % • Income before tax $26.3m; net income after tax: $23.6m; net margin 52.5 % • EPS for quarter $0.196 (11.1 pence) per share • Continued investment in developing the business through key appointments and increased management focus on Asia region • Acquisition of Netbanx, a leading UK full service payment service provider for $21.9 million (£12.36 million) • Strong current trading in line with seasonal variations • NETELLER remains comfortable with market expectations for 2005 Gord Herman, Chief Executive Officer, commented "I am pleased that we havecontinued to grow the business in line with our strategic objectives. The thirdquarter is traditionally strong and we have seen excellent growth across allareas of the business on a year-to-date basis. Since his appointment as ChiefOperating Officer, Ron Martin has made a considerable contribution to alloperational aspects of the business, in particular the implementation of thenext generation system which remains on course. We look forward to the finalquarter of 2005 with confidence and expect to demonstrate continued progress." Enquiries: NETELLER Plc 01293 897 515Gord Herman, Chief Executive OfficerRon Martin, Chief Operating OfficerEric Hughes, Chief Financial OfficerAndrew Gilchrist, Vice President - Communications Citigate Dewe Rogerson 0207 638 9571Sarah Gestetner/Seb Hoyle/George Cazenove Operational and Financial Highlights All financial figures in US$ unless otherwise noted. All conversions to £Sterling are at a rate of US$ 1.77 to £1. Sign ups • The Company surpassed two million customers in September and closedthe 3rd quarter with 2,026,413 customers. Daily sign ups averaged 3,085customers for the quarter which was up 48 % from 2,085 in Q3 2004. Year-to-datesign ups are up 64 % over the previous year. Traditional volume increases inthe month of August were less than expected for the season as a result of thephased migration to the next generation IT platform which caused some disruptionto operations. Volumes returned to seasonally normal levels in September. Average daily receipts • Average daily receipts from customers for the quarter were $3.64million which was up 88 % on Q3 2004 and up 16 % on Q2 2005. Year-to-dateaverage daily receipts are up 98 % over the previous year. Revenue • Revenue for the quarter was $44.9 million which is up 106 % from $21.9million in Q3 during 2004. Year-to-date revenue of $118.4 million is up 115 %from $55.0 million for the same period in 2004. Gross margins • Gross margin of 73.9 % has improved from 73.2 % recorded for the firstsix months of 2005, and represents a considerable increase from the 69.6 % grossmargin recorded in the same quarter period for 2004. The Company's scalableoperating platform continues to allow for increased volume of transactions to behandled while maintaining a stable gross margin. Income before tax • Income before tax improved 106 % to $26.3 million in the third quartercompared with $12.8 million in Q3 2004. Year-to-date income before tax is $66.9million, which represents an increase of 122 % from $30.2 million in the prioryear. Income tax • Income tax expense for the current quarter is at approximately 10 % ofpre-tax income or $2.7 million. Net income • Net income for the quarter rose to $23.6 million (up 176 % from $8.6million in Q3 2004) bringing the year-to-date net income to $60.6 million (up203 % from $20.0 million for the same period in 2004). Net income margin was52.5 % for the quarter compared with 39.4 % for Q3 2004. Earnings per share • Basic EPS for the quarter was $0.196 (equivalent to 11.1 pence pershare) based on the total shares outstanding of approximately 120 million. Thiscompares to EPS of $0.071 for the corresponding quarter in 2004. Other 3rd Quarter Highlights • The Company has continued to strengthen its management team and hasmade key appointments within the organisation, in particular in the marketingand product development areas. In addition, the Company announced that DaleJohnson, Director and Executive Vice President, has assumed the role ofPresident - Asia region on an interim basis to support and expand the work whichBenjamin Lee, Vice President & General Manager, has commenced in Asia. Whileprogress is being made, NETELLER is seeking to accelerate the pace of its Asianprogramme in order to meet its key strategic objectives for this region. • The Company announced on 31 October the acquisition of NetinvestLimited and its wholly owned subsidiary Netbanx Limited (together "Netbanx"), aUK based card processor, for $21.9 million (£12.36 million) in cash, fromTransact Group. This is a key strategic acquisition for NETELLER, enablingintegration of the payment processing solution from customer to merchant.Netbanx will provide NETELLER with the ability to process its own cardtransactions, retaining a greater proportion of margins in-house, whilst alsogenerating additional revenue opportunities from leveraging Netbanx's existingmerchant base in the UK. The acquisition underlines NETELLER's position as aleading payment provider to the e-commerce sector and the acquisition isexpected to enhance earnings in the first full year after acquisition andprovide operational synergies. Current Trading • Since the end of September trading has continued to show positivegrowth trends in both sign ups and average daily receipts, in line with typicalseasonal variations. The Company remains comfortable with consensus forecastsfor revenue, operating income and EPS for the current financial year. Third Quarter 2005 Unaudited Financial Information Unaudited Unaudited Unaudited Unaudited Unaudited % change Q3 - 2005 9 months 2005 Q3 - 2004 9 months 2004 Q2 - 05 2005 to 2004 2005 US $ US $ US $ US $ US $ Q3 YTD Q3 to Q2 Revenue 44,942,816 118,427,490 21,865,128 54,989,202 39,291,120 106% 115% 14% Direct Costs 11,722,016 31,429,535 6,652,711 16,897,467 10,376,466 76% 86% 13%Gross profit 33,220,800 86,997,955 15,212,417 38,091,735 28,914,654 118% 128% 15% General and 4,411,649 12,468,939 2,126,393 5,131,643 4,473,552 107% 143% (1)% AdminOperating income 28,809,151 74,529,016 13,086,024 32,960,092 24,441,102 120% 126% 18% Other income(expense) Foreign exchange (216,532) (53,048) 330,278 179,393 96,053 gain Management bonus - (1,795,622) - (1,058,000) (17,613) Depreciation and (1,335,674) (3,612,782) (647,513) (1,870,371) (1,363,910) Amortisation Stock option (981,249) (2,149,294) (693,044) expenseIncome before tax 26,275,696 66,918,270 12,768,789 30,211,114 22,462,588 106% 122% 17% Income taxes 2,663,921 6,339,129 4,200,567 10,213,765 1,859,682 Net income after tax 23,611,775 60,579,141 8,568,222 19,997,349 20,602,906 176% 203% 15% Daily sign ups 3,085 2,840 2,085 1,729 2,604 48% 64% 18%Total customers 2,026,413 2,026,413 1,060,167 1,060,167 1,745,602 91% 16%Average daily 3,640,823 3,222,446 1,935,976 1,628,825 3,152,212 88% 98% 16%receipts from customers Notes to Editors The NETELLER Group • The NETELLER Group operates an online money transfer service thatutilises and extends the existing international banking structure to provide asecure means of transferring funds worldwide. A NETELLER account acts as avirtual wallet that enables customers (individuals who open NETELLER accounts)to load, withdraw and transfer funds by purchasing e-money. E-money can beinstantly transferred to or from any merchant (or internet site) that supportsNETELLER's online payments system for goods and services. Additionally, fundscan be transferred between individual customers in peer-to-peer exchanges.NETELLER has over 2 million customers and approximately 1,700 supportingmerchants, making the Company a leader in online payment services. NETELLER UKLimited is authorized by the Financial Services Authority (FSA) to operate as aregulated e-money issuer. Further information may be obtained from theNETELLER's website at www.neteller.com. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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