Online payment processing company Neteller resumed trading today on the Alternative Investment Market (AIM) and released a much anticipated trading update, revealing the damage done to the company by the events of the last seven months.
Shares opened today at 173p, down 3p from the company's last day of trading on Jan. 16, when shares were temporarily suspended. By close of trading today, however, the share price had dropped 64.2 percent to 63p, suggesting a major sell-off by Neteller shareholders.
Neteller terminated its U.S.-facing operations in January following the arrests of the company's co-founders, Stephen Lawrence and John Lefebvre. The two have recently pleaded guilty to charges of conspiracy in connection with processing illegal online gambling transactions from U.S. citizens.
The company on July 18 reached a $136 million settlement with the U.S. Attorney's office, ending a seven-month investigation into the company's U.S. business activities. Under the terms of the agreement, Neteller is required to return funds owed to U.S. customers abandoned in January, formerly about two-thirds of the company's market. Neteller said today in a prepared statement that it intends to implement plan for the distribution of approximately $94 million to U.S. customers by July 30.
The company's trading update for Q1 2007, ending March 31, reveals a marked decline in revenue compared to a profitable year in 2006. Average daily receipts from customers totaled approximately $1.71 million during Q1 2007 (Q4 2006: $ 5.75 million), the company said, attributing the decrease to the exit from the U.S. market.
Revenue for the quarter reached only $32.7 million, compared to $71.8 million in the prior quarter.
Average daily sign-ups of new customers was 1,797 during Q1 2007 (Q4 2006: 3,493), representing a decrease of 49 percent
Neteller also released its annual report for the year ended Dec. 31, 2006. While 2006 was a year of record growth, the company said it expects its withdrawal from the U.S. market to significantly impact its 2007 year-end revenue, likely resulting in a decrease of 70 to 75 percent. To remedy the anticipated decrease, Neteller was forced to reorganize the company and cut nearly 250 jobs in February. Most of the positions cut were in the company's Calgary office. Neteller said today that it still employs approximately 425 people across Europe, North America and the Asia Pacific region.
Financial highlights for 2006 include revenue of $257.3 million, compared to $172 million in 2005. Company profits before tax amounted to $107.3 million, compared to $97.7 million in 2005.
Click here to view a copy of Neteller's trading update.