NETE - Earnings call transcript Q3 2018

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Operator

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the Net Element Third Quarter 2018 Final Results – Financial Results and Business Update Conference Call.

During today’s presentation, all parties will be on listen-only mode.

Following the presentation the conference will be opened for questions. to may that are contain risks uncertainties. like management’s the subject I’d and remarks prepared forward-looking Instructions] remind during listeners call, to [Operator statements, which questions forward-looking response Management statements make additional to may your today. in Therefore, the Harbor statements Act in contained Reform under Private Litigation XXXX. for Securities forward-looking the of claims company protection Safe with Actual results to discussed uncertainties more discussion detailed results the a risks in therefore, and and may today, differ the company’s filings of from you we SEC. these refer the to estimates November XXXX, no as Any market performance include and projections future assumes conditions projections by management these as company’s today represented company the update as XX, future obligation change. in of to the Relations and during information provided certain available the recording at financial the page. is The Investor call www.netelement.com on like the Oleg turn time, At call would this CEO. Firer, I to over to Oleg, please go ahead.

Oleg Firer

organic were third for nine segments XXXX XXXX. million. Payments, year. $XXX same during Led the of all revenues across American XX% XX, for by XX% period $XX The increase in XX.X% XX, primarily XXXX. everyone. subsidiary months the Normalizing which XX% segment quarter to increased International of increase United million. XX% of XX.X% the to today revenues over to in nine $X.XX the compared during business, $XX.X of second Good increased third segment, which Solutions XXXX year. X.X% the from business content in prior The to our ended in transactions $X.XX due the of North primarily due Total elimination year. XX% quarter of over content XX, prior everyone segment, billion the processed of growth prior an of over third primarily Transaction September revenues due growth accounted to to International September months net ended in discuss in Net ended branded experienced North quarter and for XX% States Transaction branded over growth increased million to revenues the XX.X% to an segment XX.X% Solutions decline Transaction International of increased in robust of for the the while third to Unified in to in increase came XX%, – Total revenues revenues nine months $XX.X expected morning, is September the Transaction months million. our processed for experienced increase Solutions billion, period saw joining while increase Transaction quarter nine XX.X% of X.X% for XXXX. XX.X% the for $X.XX September million, XX, XXXX an the from the same increase XX.X% an of revenues The the the resulted for and the saw $X.XX for $XX.X XXXX. for segment processed XXXX, to transaction Transaction transactions increase call North experienced net XX, quarter billion and volume International Thanks the September the ended for million, dollars American year. nine results third Solutions the business in which Net our largest growth North from which American months elimination is Transaction growth accounted of American prior net total growth ended the increased for Solutions to segment, Geographically, XXXX. to

was While International segment increase organic. Growth Transaction in to segments Solutions XX% million. saw $XX.X of other

help procedures and established to continue disclosure implement of internal the the committee. controls the On stronger we operational side, with recently

and development some Transaction on has American acquisition segment positive trends business the North side. shown Our

targets the acquired million recurring the During gains add traction dollar and strategic multi-billion of are States. the gross through Club, the have gross next in with four in in third of subscription Combined, million, in assets profit next $X.X million profit years. generate the add are years. profits cash agreement XXXX, The for $X.X small at in business offering expected We new to excess United a over $X.X the a over four to offering years. four over $X expected total flow subscription-based processing quarter payment economy next million the Payment aimed partnership over gross which initiatives of projected to these we launched over

offerings and continue the for launched Through was multiple our to that several to goals smart set world’s merchants small closer step to our deliver touch transact businesses. out to across work point, month products we we this strategic medium-sized payment with move first collaboration value-added October and differentiate seamlessly a Recently, have one busy We and software, helping Aptito points. initiatives. terminal.

industry, integrator On hospitality and Payments technology Property October a we’re a few. preferred to have diligently travel new Since offering industry. to solution CBD the Payments of Systems SaaS, industry. for InterContinental to solution industry, Choice October, During the payment for month XX, the Simon of targets to cannabis VIP launched we Unified this on legal in October the and name dollar growing receiving and projected Seamless Group, such VIP multi-billion the we partnership launch compliant a launch market been and in which Hotels United XXXX hospitality CBD across merchants from have merchants. is Systems significant Marriott growing International, play to $XX hit According of working on-boarding for International, by is to the Group billion the XX, a excited target with Hotels interest States this the experts, part announced trend.

demand Bank this launch center, consumer meet to institutions solutions secure integrator – providers financial to we for with value-added We’re clients. with payment October to provide very venture joint acceptance. announced payment Sputnik frictionless payment develop leading which X, new will value-added and excited technology work and with a the its processing a and On to enable have

for well regulatory venture as as XXXX. the Sputnik hope of borrowing implementation. a subject centers, As report part sheet we significant that improvements also and the is quarter financial our which over happy year, the of the fourth during to down significant of settlement we I’m data made approval, and will part in balance Bank instruments have the facility. access for required and this pay over to of million debt with of $XX funding as provide JV, Bank receive transactions and The capacities Sputnik debt deployment we have to with now to very course the our joint to

with performance, execution underscoring double-digit the nine of technology-enabled the third value-added We’re the gross and pleased strategy. period, continue revenue as improved our in margin ongoing growth our months we quarter with to performance deliver

building for We that focused our will enhance continue our performance shareholders. value to take long-term remain growth steps and on we as

as to please us has previous Ginsberg, I’d and, Element’s Chief since Officer, inception Chief proceed. the been Financial in call know had, like introduce of from Now, detail. Net Jeff financial the with to we Financial review Officer. Jeffrey our Jeff, more you results role assumed

Jeffrey Ginsberg

$X.XX increase in in loss ended a as loss Thank quarter. per net was loss decrease everyone. million, loss to We compared for a net share attributable of three and net to prior year. to you, good XX, share or revenues the XXXX, $X.X stockholders $X.XX Oleg, $X.X stockholders or loss reported per million primarily morning, The approximately million, common an for – the September the attributable $X.X of X.XX months for to approximately of due

the primarily stockholders of as $X.XX For to we for attributable as net decrease compensation. year. and approximately the share per an Adjusting per of compared income, $X.X of net other or decrease non-cash loss attributable stockholders attributable prior well in $X.X ended a to per to net as prior for loss approximately $X.XX nine per XX, share loss a XX, loss, we to common non-cash loss ended million, adjusted The have to $X.X revenues approximately September $X.X million, million, was $X.XX or months in to XXXX, million, net September stockholders attributable XXXX, year. for loss approximately a the of per compared to $X.X $X.XX as loss or million for due reported loss quarter increase compensation, or non-GAAP approximately share in share stockholders

approximately transactional ended transaction September growth XX.X% non-GAAP primarily ended of $X.X Transaction $XX the months or were as our offset compared the processing. common were to revenues from it an $XX.X we ended driven $X.XX services Net in Solutions combining segment, per operations Transaction the stockholders net continued XXXX, primarily nine months revenues for certain share Net approximately The portfolio. from approximately from Solutions XX, compared million, year. to prior revenues million, million approximately prior a Net and the for growth our total approximately in increase XX% three for American organic was due million, the XX.X% million XXXX, million September the $XX.X increase or to XXXX, as acquisition revenues net share, primarily approximately for nine in months for million of the merchants $X.XX net International months million, XX year. fees North decrease million, $X.X service or by our $X.X is increase revenues mobile and PayOnline. our XX, September for organic loss with per prior approximately to in nine The due of compared by consisted $X.X $X.X segment net approximately as loss payments Solutions attributable American which loss or to $X.X segment, partially North September of approximately XX, to the was reorganizing Transaction we loss ended have For year. adjusted or of

revenue, to flat American the favorable of of segment. and typically $X.X compliant XXXX the approximate fees expenses $X.X ended to company’s revenues as of XX, Selling to being in Solutions XXXX self-designated our on-boarding processing operations million prior for million, the margin for consulting and The The a expenses for decrease September in included which of had increase due mobile in or to nine approximately of various for remained months months $X.X XX, and the assigned XX, approximately than year, was prior to ended, result salaries or margin reason of approximately the explore million, prior to payment with were and in year. monetize and to months due the and million, Russia increase compared cost of XXXX margin the net of and for expenses million experience mobile for compared the XXXX ended nine $X.X operations year. We opportunities current reorganization and September $X.X million institutions. primary $X.X American salaries The fees our was XX.X% Selling due to months months control $XXX,XXX can our million primarily was margin general relating PayOnline, also International XX.X% that and Board approximately and to net processing decrease approximately BIN/ICA. payment the Professional the for year. the Transaction lower as Directors negotiating gross decrease and year. was our higher $X.X eliminated was was increase ended XXXX percentage three decrease evaluation revenue members benefits $X.X training compared ended to labor administrative and compared by The and the with operations utilizing administrative for nine have million gross the $X.X our Gross offset due million, that approximately months compared margins year of to was compared as the our prior transactions approximately to was million prior as TOT to continue continue $X.X which internal for the to revenue payment in an three nine revenue, monitoring general ended North in responsibilities operations team contract September operators and net $X.X PayOnline or were $X.X mobile or mobile as million staff local general compliance payments relation prior or year. Group relationships an for net of mobile as for administrative PayOnline. Transaction the to into result compared gross continued partnership million, the at The XX.X% approximately slightly terms segment Transaction approximately XX, that procedures. September in reduction The period. North benefits Solutions of September the XX.X% the prior

in payment the combining fees ended mobile was as quarter legal to for increase quarter year, September approximately third months which as an XX, were it million fees the for For of result to litigation $X.X general was compared $XXX,XXX approximately of Rent million was PayOnline, in XXXX, certain nine XXXX, primarily third the operations offset matters. into $XX,XXX for the compared by connection with $X the approximately the professional XXXX. prior decrease

months For $XXX,XXX, September not rent for $XXX mobile our versus respectively, being prior ended office operations to the decreased due as XXXX year, payment approximately renewed, from operations nine these lease Russia in were XX, you review nine space into on or of PayOnline. quarter encourage you. Thank details. to We good further months website combined for a we for our sec.gov and first the our had approximately XXXX XX-Q

Oleg Firer

today. we to that, open for we’re Operator, With ready for the questions. our conclude formal now comments call

Operator

from session. Thompson And begin Thank with you, now sir. Lisa first [Operator will gentlemen, the question-and-answer we Investment. Ladies question and Zacks Instructions] comes our

line Your now is open.

Lisa Thompson

morning. Good

Oleg Firer

morning. Good

Jeffrey Ginsberg

Good morning, Lisa.

Lisa Thompson

the about quarter. So I few questions have a

America, grew was affect revenues? portfolio a we just Is right? North it? right? that First organic, didn’t off, all little Because isn’t It – the bit that about XX%, purchase can talk

Oleg Firer

– growth following are all of – are to was purchase The the I the And in quarter margins that portfolio you we that’s as is quarters. the coming the kick the our Everything portfolio as hope also, if increase to organic. of Correct. quarters beginning going also well. the mentioned in remember only the in purchases for going script,

Lisa Thompson

right? affect shouldn’t it revenues Right, though, the

Oleg Firer

should to… No, not. going it not It’s

Jeffrey Ginsberg

– decrease will sold. – it it’s decrease of it our cost No, will goods

Lisa Thompson

Okay, clarifying great, that. just

there was sequentially? Like Now on down revenues some International, is there? seasonality why

Oleg Firer

it holiday the It starts falls was – season, quarter seasonality. was into There slow. third so the

as well. We have year last seasonality experienced

the going have is to believe fourth seasonal quarter it’s So rebound. a and we really

Lisa Thompson

they where from revenues their So do get primarily?

Oleg Firer

of it’s Right all now, goods Its merchants, some including e-commerce, [ph] country. lot so book online sold service-driven sold. goods the various travel site. online, so a it’s really merchants Its of in – it’s larger the a

Lisa Thompson

have So effect, a Christmas right? it will

Oleg Firer

Yes, yes.

Lisa Thompson

then say cannabis that some it’s And them? for it. updates got you back market encouragingly has are that interest to selling to add marketing the vertical good. have or maneuver, in and just a just software on Is the did actually you Okay, to them, already very thing to capabilities

Oleg Firer

is type Yes. the because bank of tune this we’re type We bank to transactions a the our the biggest active very thing and that had able fine have approach underwriting to get taking business, to to is these mechanisms, of accept partnering there. systems settle

us an as daily are interested of Vegas, I we’re speaking say have to convention that’s cautiously reviewing merchants. We single big on cannabis people in going getting them, a right future. the basis. we one prospective every now a at Las mentioned, influx And to but And parties effect to have calling of optimistic enough

Lisa Thompson

So is anything you’re Speakers] just sign for or waiting there [Multiple you’re – up the

Oleg Firer

No, as signing we’re – up speak. merchants we we’re on-boarding

Lisa Thompson

Oh, okay, great. right. All

Oleg Firer

as systems merchants Yes, I’ve what and are the we already – speak. on-boarding are that’s we

Lisa Thompson

Okay, great.

Oleg Firer

we opportunity the market it’s speak. going – enough us for full And as and mentioned, I we large really go – as merchants are CBD the we’re the industry. to after rather cannabis And it��s on-boarding market than after is CBD

Lisa Thompson

Great.

Okay.

to to the still signed ready pending terms? back just you’re Sputnik, working so And out be is approval or deal that

Oleg Firer

are terms the No, ready.

regulatory approval. We pending are

the regulators then have to we’re the and We submitted green we’ll the them light package – just to for give waiting proceed. full and us

have We schematics ready.

place. a have plan We in

We have regulatory approval. ready and everything waiting for

We have it’s waiting sometime. approve documents the all and the taking to and the to them submit to we’re regulators for transaction,

Lisa Thompson

Right.

Oleg Firer

are we say approval a expected, XXXX. the there of been fourth that’s somehow with the stuff. taking should but have still longer than bit we that to enough quarter and It’s Typically, optimistic in

Lisa Thompson

That’s exciting.

to how its you a go-to-market actually after with? to till going So have do you approval, get long take you think product

Oleg Firer

the plan get Well, after the roll engaged. months to XX a we out over we have product

so. year we year, launch to get it if – hope mid-next we or approval probably really it’s this So

Lisa Thompson

Great.

Oleg Firer

It’s going have not but an impact. to long-term impact, going have it’s a immediate to

Lisa Thompson

be will it Right, there?

Oleg Firer

Yes.

Lisa Thompson

much you can me do? explain just that transaction volumes? so volumes more related? go for one So thing than the transaction is it revenues are they How about Why up

Oleg Firer

Right.

have, United especially we So referral we have the in partners. States,

have And and that they are a processing revenues going goes And We report $XX,XXX are up and – the the merchants month don’t as our demographics. volume have what market go latest month, sales than out target less we processing transaction that $XX,XXX were a as, businesses. they we average. why revenues the historically, up organizations go reason the – much now different independent on the not because

with the of different the it’s go the demographic So merchants, changes it. revenues and

going have if historically. So are the our than more we’re to – they distribution if metrics future, as could going change the so in revenues to up well, go

distribution channels we the So distribution have on larger tickets. have and it’s channels really average depends that today –

Lisa Thompson

Is do XXXX? or Okay, I question financial Speakers] my marketing sense. any have for And goals you final that makes there is, your for what guess, [Multiple

Oleg Firer

I that reach and to looking break-even main our and goal biggest you The we’re is, that’s today. tell could profitability, goal

on have Now we working we’re all that – cylinders.

for and objective profitable growth. Our achieve sustainable break-even to would XXXX be

Lisa Thompson

but look exciting. to a It’s and better get, is. it’s That’s Every at better. frustrating, pretty long numbers it it’s been I process, time every getting the year,

looks it you’re like on track. So

Oleg Firer

But remember, weathered as of we storms lot the and… we you you – –

Lisa Thompson

Yes, you did.

Oleg Firer

standing. still …we’re

we’re that and mentioned. – standing right still optimistic – the the been track, just in you as on very So we’ve we’re

Lisa Thompson

all Great. questions. Fantastic. That’s Thank my you.

Oleg Firer

Thank you, Lisa.

Jeffrey Ginsberg

Lisa. you, Thank

Operator

Thank Medicine. you. And with [Operator Emergency from Duffy next Duffy Instructions] our Tharren comes question

is Your line now open.

Tharren Duffy

you quarter. you, looks thank had a guys. great Hi, like Yes. It guys

Just being the break quick recreational question. to market? cannabis Do a able into anticipate you

Oleg Firer

– you. Well, pleasure Tharren, we and to thank are you, meet

are – to exploring giving do us obviously, are to exploring are there’s alternative still can. the the schemes in payment of We and we that obviously industry. faster than all we able in to some service that ability place it middle opportunities we’re regulations not But be

Tharren Duffy

all I Okay. That’s you. Thank had.

Oleg Firer

you. Thank Okay.

Operator

remarks. over back to Thank you. to time. management the further would at for I showing I’m any this questions call closing any not turn like And now

Oleg Firer

not have that have, with a Thank being you. Thank morning. to hesitate this any the great you you contact everyone, call and on day. us do for Please to, questions

Operator

and does that results Thank financial Ladies business your call. Element’s update you and XXXX Net third conclude gentlemen, conference for quarter the participation.

may disconnect. You now

Mullen Automotive (MULN) 16 Nov 182018 Q3 Earnings call transcript