18th Apr 2008 07:00
NETeller PLC18 April 2008 NETELLER Plc FIRST QUARTER TRADING UPDATE First quarter 2008 shows solid performance continuing Friday, 18 April 2008 - NETELLER Plc (LSE: NLR), the independent global onlinepayments business, is pleased to provide a trading update in respect of itsperformance during the first quarter to 31 March 2008. Highlights • Renewed focus on merchant and consumer customers drives contract wins for NETELLER e-wallet and NETBANX payments gateway business. • Continued investment in improving product offering in core European and Asia Pacific markets. • European revenue (including NETBANX) was $11.3 million, an increase of 9% from Q4 2007; Asia Pacific (including 1-PAY Direct) grew 20% to $3.6 million over the same period. • Active e-wallet users (ex North America) totalled 101,301 in Q1 2008, up 1% from Q4 2007. • E-wallet revenue per active e-wallet user was $113 in Q1 2008, up 7% from $106 in Q4 2007. • Average daily sign ups and average daily receipts in Q1 2008 showed growth of 6% and 11% respectively from Q4 2007. • Strong cost control continues in Q1 2008, with gross margin of 62% (Q4 2007: 54%) and operating income of $2.4 million (Q4 2007: $0.6 million loss). • Solid balance sheet at 31 March 2008 with $55.2 million cash and cash equivalents. Ron Martin, President & CEO, commented "The business has continued to deliver agood performance in the first quarter. We are beginning to see tangible salesprogress in the adoption of our Merchant Solution Suite amongst both gaming andnon-gaming customers and prospects. Growth in our key European and Asia Pacificmarkets remains encouraging and as we introduce new payment solutions andtargeted marketing programmes, we hope to see this momentum continue. The Boardlooks forward to continued progress and remains confident about prospects forthe business." The Company's Annual General Meeting will be held in the Isle of Man on Tuesday13 May 2008. Enquiries: Andrew Gilchrist + 44 (0) 1624 698 713 VP Communications, NETELLER Plc Email: [email protected] Citigate Dewe Rogerson + 44 (0) 207 638 9571 Sarah Gestetner / Seb Hoyle / George Cazenove Daniel Stewart & Co Plc + 44 (0) 207 776 6550 Paul Shackleton Key performance indicators The Group saw continuing improvement in its principal KPIs during the firstquarter of 2008, with active e-wallet users growing by 2% compared to the samequarter in 2007 (excluding North American active e-wallet users), and alsogrowth of 1% quarter on quarter. Average daily receipts from e-wallet userswere approximately $365,000, an increase of 11% from the $330,000 reported in Q42007 and an increase of 22% on a like-for-like basis for Q1 2007. Totalreceipts from e-wallet users during Q1 2008 totalled $33.2 million compared to$30.3 million in Q4 2007. The table below sets out the Group's active e-wallet users by region, excludingthose from North America: Active e-wallet users Q1 2008 Q1 2007 % change Q1 Q4 2007 % change Q1 2008 vs Q1 2008 vs Q4 2007 2007 Europe 81,552 79,617 2% 77,937 5%Asia Pacific 14,984 15,330 -2% 17,252 -13%Rest of World 4,765 4,633 3% 4,795 -1%Total 101,301 99,580 2% 99,984 1% Total signed up 1,097,456 734,100 49% 997,219 10%e-wallet users In line with the Group's strategy to bring additional scale to the e-wallet, theGroup expects to see continuing growth of the active e-wallet user base ande-wallet revenue per active e-wallet user in 2008. The table below shows byregion the Group's e-wallet revenue per active e-wallet user based on theaverage quarterly fee revenue per user for the relevant quarters in 2008 and2007: E-wallet revenue Q1 2008 Q1 2007 % change Q1 Q4 2007 % change Q1per active e-wallet 2008 vs Q1 2008 vs Q4user ($) 2007 2007 Europe 117 118 -1% 111 5%Asia Pacific 102 105 -3% 88 16%Rest of World 81 130 -37% 92 -11%Total 113 117 -3% 106 7% To improve the usefulness of this KPI, revenue from the Group's Asian Pacificgateway business, 1-PAY Direct, has been stripped out of the fee revenue incalculating the e-wallet revenue per active e-wallet user for Q1 2008 and priorperiod comparatives. Average daily sign ups improved quarter on quarter by 6%, with 1,101 averagedaily sign ups in Q1 2008 (excluding North America). This included growth of10% from Europe in Q1 2008 compared to Q4 2007. Total average daily sign ups inQ1 2008 (including North American sign ups) were 1,122 compared to 1,076 in Q42007, an increase of 4%. The table below shows the Group's sign ups by region(excluding North America): Average daily sign ups Q1 2008 Q1 2007 % change Q1 Q4 2007 % change Q1 2008 vs Q1 2008 vs Q4 2007 2007 Europe 819 867 -6% 745 10%Asia Pacific 176 158 11% 197 -10%Rest of World 106 103 3% 98 8%Total 1,101 1,128 -2% 1,040 6% The number of consumers who have e-wallets totalled 4,047,010 at the end of Q12008, including registered e-wallet users from North America. Financial highlights Revenue Revenue for the first quarter 2008 of $17.0 million represented a decrease of 7%from $18.3 million for Q1 2007 (excluding the $14.4 million in revenue fromNorth American operations in that quarter) primarily due to the anticipateddecrease in interest revenue earned. Compared to Q4 2007, revenue grew by 5% inQ1 2008. E-wallet revenue, which comprises merchant and consumer fees generated from theuse of the e-wallet, excluding fees from the Group's NETBANX and 1-PAY Directgateway businesses, totalled $11.4 million in Q1 2008, an increase of 8% from Q42007. The Group has separately disclosed revenue from its 1-PAY Direct businessas this revenue is not directly related to usage of the Group's e-wallet, aswith NETBANX's revenue. Revenue Q1 2008 Q1 2007 % change Q1 Q4 2007 % change Q1($ millions) 2008 vs Q1 2008 vs Q4 2007 2007 Europe (ex NETBANX) 9.5 9.4 1% 8.6 10%Asia Pacific (ex 1-PAY Direct) 1.5 1.6 -6% 1.5 1%Rest of World 0.4 0.6 -35% 0.4 -12%Total e-wallet revenue 11.4 11.6 -2% 10.5 8%NETBANX 1.8 1.5 19% 1.7 5%1-PAY Direct 2.1 0.9 138% 1.5 39%Total fee revenue 15.3 14.0 9% 13.8 11%Interest 1.7 4.3 -61% 2.4 -30%Total 17.0 18.3 -7% 16.2 5%North America (1) 0.0 14.4 nm 0.0 nmTotal 17.0 32.7 -48% 16.2 5% (1) Some residual revenue was earned from North American operations during Q1 2007 prior to the Group's withdrawal from the US and subsequently Canada; nm: not meaningful Interest revenue continues to decrease through both the impact of lower balancesheld by the Group as a result of the return of funds to US customers under theDistribution Plan and also the reduction in interest rates particularly forfunds held in US dollars. Gross margin Gross margin for Q1 2008 was 62.2% compared to 51.0% in Q1 2007 and representsan improvement on the figure of 53.9% reported for Q4 2007. Customer support costs continued to represent the largest proportion of directcosts at 15.2% of revenue, compared to 17.4% in Q4 2007. Website maintenancecosts are down from 11.1% in Q4 2007 to 5.6% of revenues in Q1 2008 due tosignificant reductions in server hosting costs relating to termination of a longterm contract in late 2007. Deposit and withdrawal fees were 16.7% of revenuecompared to 16.4% in Q4 2007. Operating expenses The Group achieved income from operations of $2.4 million in Q1 2008. Generaland administrative expenses decreased to $8.2 million from $9.3 million in Q42007. This favourable variance was expected with decreased office, corporate,advertising and professional fees in Q1 2008. Cash position of the Group The total amount of cash available to the Group totalled $55.2 million at 31March 2008. The Group made the final scheduled payment of $38.25 million to theUS authorities on 16 January 2008. In relation to the Distribution Plan, theGroup had repaid $81 million to US customers out of a possible total of $94million. The balance owing remains in trust. As previously announced on 18 March 2008, the Group currently anticipates thatthe disposal of the Group's principal Calgary property will be completed andfunds received by 30 April 2008. The total consideration receivable remainsunchanged at CAD 33.5 million. Operational highlights The Group announced earlier this year that 2008 would see important initiativesto support its strategic goal of providing bold payment solutions for onlinecommunities. During the first quarter, the Group's revitalised consumeroffering at www.neteller.com, the NETBANX payments gateway and the NETELLERPayment Network were relaunched with refreshed branding, aligning the Group'sconsumer offering of a suite of lifestyle financial services for the onlinegeneration more closely with its target demographic. The first quarter also saw major product enhancements for merchants in line withthe Group's commitment to improve its merchant value proposition, including: • Beta first release of Group's new integrated e-commerce payment suite that combines the Group's NETBANX gateway and NETELLER e-wallet into a single product offering for merchants. • Significant enhancements to the NETBANX payments gateway for merchants targeting European consumers, including local language, payment and foreign exchange/currency enhancements. • Delivery of the first release of a merchant co-branding program, featuring co-branded merchant landing pages, to drive member acquisition and funding conversions. • Pilot of the Group's new payments gateway merchant application, NETCENTRE, with significantly enhanced reporting and payment management capabilities. • Brand updates to the NETBANX brand and NETELLER e-wallet Merchant Application to drive cross-selling of products to merchants. The Group also invested in improving its consumer offering through continuingproduct enhancements for its e-wallet users. These included: • New European payment types for the NETELLER e-wallet to drive instant payment and member conversions in this key geographic region. • Revised consumer e-wallet pricing to increase e-money deposit volume and drive adoption of prepaid cards for withdrawals. • Enhancements to consumer dynamic limit management to increase e-money deposit velocity. • Account upgrade process improvements to drive more rapid NETELLER e-wallet member feature and funding limit entitlement increases. • Improvements to the prepaid card making funding faster for NETELLER e-wallet members. • Launch of Affiliate Program to drive increased new member acquisition. • Revised consumer website with ability to tailor consumer content for forty countries. During the quarter a number of new gaming and non-gaming merchants have signedcontracts with the Group for the e-wallet and gateway payment processingservices. In aggregate the new merchants are expected to delivertens-of-millions of incremental transactions to the business. The Group also announced in March 2008 the establishment of its 50:50 jointventure, Centricom Europe Limited, to distribute the POLi service in Europe.Under the joint venture, the Group also announced the launch of the POLi paymentservice for the UK market, distributed through NETELLER's payment processingarm, NETBANX. In August 2007, the NETELLER Group announced it had taken a 25%strategic stake in Australian POLi operator, Centricom Pty Ltd. The Europeanjoint venture is a 50/50 joint venture between both parties. Trading outlook The Board is pleased with the progress made during the first quarter of 2008 andremains confident about prospects for the business. The strategic focus of theGroup towards its member and merchant customers and the introduction of thee-Commerce Payment Suite are being evidenced by new contract wins in both theNETELLER e-wallet and the NETBANX gateway business and continuing improvementsin the Group's key performance indicators, building on the strength of the firstquarter performance. The Board continues to investigate the most appropriate use of the Group's cashresources including organic investments such as the NewTeller project,acquisitions and alliances, as well as its commitment to the introduction of aprogressive dividend policy at or before the release of the Group's 2008 fullyear results. * * * * * Notes to Editors The NETELLER Group Trusted by consumers and merchants in over 160 countries to move and managebillions of dollars each year, the NETELLER Group operates the world's leadingindependent online payments business. Through its NETELLER, NETBANX, and 1-Paybrands, the Group specialises in providing innovative and instant paymentservices where money transfer is difficult or risky due to identity, trust,currency exchange, or distance. Being independent has allowed the Group tosupport thousands of retailers and merchants in many geographies and acrossmultiple industries. NETELLER Plc is quoted on the London Stock Exchange's AIM market, with a tickersymbol of NLR. NETELLER (UK) Limited is authorised by the Financial ServicesAuthority (FSA) to operate as a regulated e-money issuer. For more informationabout the Group visit www.netellergroup.com or contact us by email [email protected]. First Quarter 2008 Unaudited Financial Information Q1 - 2008 % Q1 - 2007 % Q4 -2007 % revenue Q1 08 Q1 08 US$ revenue revenue vs vs Q1 07 Q4 07 Revenue 16,986,882 100% 32,664,171 100% 16,212,428 100% -48 % 5 %Direct Costs (6,417,515) 38% (15,880,434) 49% (7,466,113) 46% -60 % -14 %Gross profit 10,569,367 62% 16,783,737 51% 8,746,315 54% -37 % 21 % General and Admin (8,183,353) 48% (12,332,168) 38% (9,326,236) 58% -34 % -12 %Operating income 2,386,014 14% 4,451,569 14% (579,922) -4% -46 % -511 % Other income (expense)Foreign exchange gain (loss) (12,852) (309,352) 149,657Management bonus (451,515) (374,779) (1,630,373) Depreciation and (1,568,804) (2,858,239) (1,998,711)AmortisationStock option expense (750,546) (2,224,016) (6,851,297)Restructuring costs (9,029) (769,991) (2,729,641)Asset write down - (12,011,768) -US related costs (84,258) - (1,204,588)Loss on disposal of - - (98,439)assetsInvestment loss (100,000) - (243,536)Income before tax (590,991) (14,096,576) (15,186,849)Income taxes (497,633) (929,360) 436,905 Net income after tax (1,088,624) (15,025,936) (14,749,943) KEY PERFORMANCE INDICATORS Excluding North America Q1 - 2008 Q1 - 2007 Q4 - 2007 Q1 08 vs Q1 08 vs Q1 07 Q4 07 Total active e-wallet users (in quarter) (1) 101,301 99,580 99,984 2 % 1 %E-wallet revenue per active e-wallet user $ 113 $ 117 $ 106 -3% 7 %Daily sign ups 1,101 1,128 1,040 -2 % 6 %Total e-wallet users (at period end) 1,097,456 734,100 997,219 49% 10 %Average daily receipts from consumers $ 365,001 $ 300,042 $ 329,758 22 % 11 %Total consumer receipts $ 33,215,070 $ 27,003,740 $ 30,337,745 23 % 9 % (1) Active e-wallet user is defined as a consumer whose e-wallet account balance has changed during the quarter. nm not meaningful This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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