Following a strong third-quarter
performance, key members of Net Element’s executive team conducted an earnings
call to discuss the company’s quarterly financial and operational results as
well as expectations moving forward. Company Chief Executive Officer Oleg Firer
began the call with a review of significant third-quarter achievements that
resulted in a stronger balance sheet and suite of merchant solutions.
Read the full transcript here:
http://seekingalpha.com/article/2690025-net-elements-nete-ceo-oleg-firer-on-q3-2014-results-earnings-call-transcript
Net Element, a technology-driven
group specializing in mobile payments and value-added transactional services
for consumer convenience, in the third quarter alone eliminated more than $15
million of debt from its balance sheet via a debt exchange transaction with
Crede Capital. The company also secured $11 million in financing from
Alfa-Bank, which the company intends to use to accelerate its growth in the
Russian market, and announced the availability of Apple Pay to merchants using
the company’s Unified Payments offering.
“We are pleased with our
third-quarter performance, which includes significant debt reduction and
narrowed quarterly loss. In Russia, we have successfully restructured the
business and are confident in a significant quarter-over-quarter growth an
ongoing basis,” said Firer.
“Pivoting from a strong balance
sheet, our activities and improvement have set the pace for continued growth
and demonstrate our commitment to increasing company value. Third quarter of
2014 was very busy quarter for us which I believe had positive impact on both
operations and financials of the company. And we are well-positioned to
continue to growth trend for the remainder of 2014 and into 2015.”
Net Element reported an adjusted
loss (non-GAAP) for the third quarter at $2.2 million, or a loss of $0.05 per
share, compared to a loss of $3.4 million, or a loss of $0.11 per share, for
the comparable quarter of 2013. Revenues were approximately $6 million compared
to $6.5 million a year ago. The company attributes the decrease in revenues
primarily to its business in Russia, which Chief Executive Officer Jonathan New
said “is now back and poised for future growth.”
“That business continues to rebuild
and we are rebuilding it with more control and a lot less risk. So we are so
far pretty pleased with what’s happening,” New commented.
For the nine months ended September
30, 2014, Net Element reported cash provided by operating activities at nearly
$3 million and debt at $3.3 million vs. $21 million at December 31, 2013.
In response to inquiry from Zacks
Investment Research senior equity research analyst Lisa Thompson during the
Q&A session of the call, New discusses the company’s gross margins, which
are currently in the 14%-17% range. He also comments on the company’s interest
expenses of approximately $120,000-$160,000 per quarter, an improvement over
the figures prior to the company’s significant debt reduction.
After brief discussion about Net
Element’s recently launched version 2.0 for Aptito, which Firer said is already
being picked up by independent resellers, the CEO commented on the company’s
activities in the mobile payments market in Russia.
“Well, we are seeing actually an
increase in mobile payment in Russia,” said Firer. “Obviously the conversion of
a dollar to ruble is affecting the top line. We are however finished with the
complete restructuring of the company and are currently growing our business
that we believe that we are going to see tremendous growth on
quarter-over-quarter basis … we have used our own funds in growth in Russia. So
we have not been borrowing money on a daily basis from various facilities. And
we believe the access to capital that we have in Russia is going to give us an
ability to grow the business beyond levels that we have been showing to
everybody’s delight.”
For more information, visit
www.netelement.com
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