Neteller reveals full extent of damage of withdrawing from the US
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 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.
