With a delayed first quarter trading statement released this afternoon, Neteller has revealed the full extent of the damage done by its withdrawal from the US.
After restructuring costs of over $12 million and other expenses, Neteller posted a pre-tax loss for the three months to March 2007 of $14 million compared to a profit of $16 million the year previously.
The company said it has undertaken a “major exercise to realign its cost base with anticipated revenues on a worldwide basis” and said it now employed 425 people worldwide.
It said it had cash balances after its recent $136 million settlement with the US authorities of $74.5 million.
Neteller has also announced its re-admittance to the Alternative Investment Market.
The statement shows that the active customer base outside of the US has fallen over two-thirds down to 99.575.
Group revenue for the first quarter, including a partial contribution from the US and a full quarter’s contribution form Canada (which the company also exited towards the end of the period) was $32.7 million from $71.8 million. This included approximately $14 million in US revenue. The company did not state how much of this was due to the now discontinued Canadian customers.
Operating income was $4.5 million or 13.6% of revenue.
One analyst was pessimistic over the company’s prospects, despite still being active in Europe. “Which parts of Europe are they going to be active in? (It) has had the living daylights scared out of it by the USAO. It won’t want to take any more risks.”
The Togel Singapore analyst added that the market was different in Europe where online gaming customers tended to have much more faith in the operators than did their equivalents in the US. “There is a lot more trust.”
Neteller last week announced its deal with the UUS attorney’s office for the southern district of New York that saw it plead to certain chargers in exchange for the cash settlement of $136 million. This followed the guilty pleas on the part of founders and ex-directors Stephen Lawrence and John Lefebvre.
No-one from the company was available for comment.
NETeller Resumes Trading at LSE
Favorite online gambling payment processor NETeller re-emerged onto the London Stock Exchange yesterday after six months of uncertainty and announced that its shares rose ten pence following early morning deals.
NETeller shares were suspended voluntarily on January 16 pending clarification after former Directors and founder shareholders Stephen Lawrence and John Lefebvre were investigated by US authorities in the wake of America’s Unlawful Internet Gambling Enforcement Act (UIGEA) legislation with its first-quarter performance being impacted ‘to a material extent’.
Last week, NETeller entered into a $136 million Deferred Prosecution Agreement (DPA) with the United States Attorney’s Office for the Southern District of New York (USAO) following its admission of guilt, which saw a resolution of the investigation into the company.
The company said that it plans to return around $94 million to US customers with American investors learning more about the return of their funds by Monday.
NETeller also announced its 2006 financial results and issued a trading update for this year. While the 2006 results show strong profit growth, NETeller has since pulled out of the American and Canadian markets along with the smaller markets of Turkey and Israel.
‘While 2007 will require a restart in terms of revenue growth, the group has many strengths and a successful track record,” said Ron Martin, Chief Executive Officer for NETeller.
“The online payments space remains a rapidly growing, highly desirable market and NETeller is committed to taking advantage of these opportunities. Despite the challenges we face, I remain optimistic about the potential for further success and stability well into the future.’
