Neteller, the soon-to-be-renamed Internet commerce group, has reported top-line growth and an uptick at the EBIT level during the third quarter, but revenue from its European payments gateway stalled, in part, on exposure to waning consumer confidence in the United Kingdom.
Third-quarter revenue came in at $19.1 million, up 1 percent against the previous quarter and 12 percent during the same period last year. Earnings before interest and taxes, $3.8 million, rose 40 percent over last year but fell 17 percent, sequentially, on increased expenses.
Netbanx, a service that allows online retailers to offer card and non-card payment options to customers, fell 12 percent in Europe, year over year, but grew 93 percent in Asia. Quarter on quarter, Netbanx was down 3 percent in Europe but up 4 percent in Asia.
The company's house broker, Daniel Stewart, has cut Netbanx Europe forecasts for the full year by 22 percent as United Kingdom consumers feel the pinch. Just today, GfK NOP, the market research firm, revealed in London that consumer confidence this month has fallen to its lowest level since 1974.
Netbanx Europe is expected to account for around 9 percent of Neteller's total revenue for the year. Because forecasts for Netbanx Europe have been reduced, the brokerage said, the company may lose 3 percent off the forecast top line.
Total e-wallet revenue, meanwhile, was up 27 percent to $13 million against the same period last year; quarter on quarter, however, that figure was unchanged.
By geographic segment, e-wallet revenue from the Asia-Pacific region fell 10 percent, sequentially, with active users falling by 14 percent. The company, effective from August 2008, prohibited customers in Hong Kong and Macau from using their e-wallets for online gambling transactions.
E-wallet revenue from Europe grew 26 percent over last year but fell 1 percent compared to the second quarter. Active users were up 6 percent versus the prior year quarter but fell 1 percent quarter on quarter.
Average daily signups across the business were up 4 percent year over year but down 9 against the second quarter.
Neteller said it is pursuing "a number of interesting investment opportunities" that have come as a result of the economic downturn. The company is carrying $89 million in cash, and according to research from Numis Securities, the investment price range may fall between $1 million and $5 million.
"Given the challenging market conditions, the Board is pleased with the satisfactory performance of the business in the third quarter," the company said. "The growth of the core e-wallet product is anticipated to continue into the fourth quarter of 2008 and the board believes that the Group is on track to meet market expectations for the full year."
Neteller, with a market capitalization of £58 million, was up 2.50 pence, or 5.21 percent, to 50.50 pence.
Chris Krafcik is the editor of IGamingNews. He lives in St. Louis, Mo.