The online money transfer service provider has announced its interim results for the six months ended June 30, which saw a 62% increase in revenue up to $118.9m and a profit before tax of $58.0m, up 43% from the first half 2005. Profit after tax increased 51% to $55.9 million, while gross margin decreased slightly to 71.8% from 73.2% for the same period in 2005. NETeller ended the first half of 2006 with $136 million of cash.
During the first half of 2006 in line with the company\’s “deepen and extend” strategy, the customer base grew to 2.9m as at 30 June 2006 from 1.7m a year earlier, with average daily sign-ups of 3,251 (3,609 in Q1 and 2,898 in Q2). Active customers in Q2 2006 were 535,853 compared with 359,467 in Q2 2005 and 146,015 in Q2 2004. On August 1, the company achieved its 3 millionth customer sign-up.
Average daily receipts from customers grew 56 % to $4.68 million ($4.69 million in Q1 and $4.66 million in Q2) compared to the same period in 2005. Total customer receipts during the first half of 2006 were $846.7 million (compared to $541.5 million in the first half of 2005) and overall transactions processed by the company totalled $5.1 billion (compared to $7.3 billion for the full year of 2005). Revenue per active customer represented $113 in Q2 2006, compared with $109 in Q2 2005.
The regional distribution of the active customers for Q2 2006 was 460,676 in North America (up 43 % from the corresponding period in 2005), 58,013 in Europe (up 100 %) and 17,164 in Asia/Rest of World (up 101 %). Europe, where the company has launched localised versions of its e-wallet offering in Germany, France, Spain and Italy, provides an increasing proportion of the business, accounting for more than 20 % of daily sign-ups and approximately 13 % of revenue before interest. Further localisation initiatives are planned for Sweden, Denmark, Turkey, Poland, Brazil and Australia in the second half.
The merchant base exceeded 3,500 as at 30 June 2006. In first half 2006, NETeller added several major merchants, particularly in Europe, including Paddy Power, Pokershare.com, Unibet, UKBetting, Nordicbet, Betworks and PKR.com.
The Netbanx operation, acquired in October 2005, continues to perform well, providing debit and credit card processing services to more than 1,600 merchants, principally in the UK. The business is expanding its operations to extend the range of services available to NETeller’s existing online merchants.
“During the first half of 2006, we have invested heavily in the business to improve the quality and depth of our product offering to both customers and merchants, in line with our “Deepen and Extend” strategy. Our trading results and key metrics demonstrate the continued growth that NETELLER is experiencing from enhanced product and service efficiencies and the growth in our merchants’ primary market. We have continued to reduce our exposure to the North American market in line with management’s expectations of the Company’s diversification plan. Whilst the gaming industry is subject to continuing regulatory uncertainty, NETELLER is well placed to report significant progress during the second half of 2006,” commented Ron Martin, President & Chief Executive Officer.
During the first two months of the third quarter, NETeller has experienced seasonal trends observed in previous years. July was a relatively flat month with unaudited revenue of approximately $19.9 million and August revenue increased to approximately $22.2 million (revenue for the same months in 2005 was $13.8 million and $14.7 million respectively). Sign-ups for the two-month period ended August 31 averaged 3,055 per day.
In the second half of 2006 and beyond, the company intends to develop and launch a series of financial services offerings that leverage the core e-wallet functionality. NETeller also continues evaluating potential acquisition opportunities which meet the group\’s strategic objectives.
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