Paysafe Limited · NYSE:PSFE
Paysafe — Neteller — H1 2006 Earnings Presentation
36 slides from Paysafe's earnings presentation, Sep 11, 2006
Slide 1: Investor Presentation 2006 Interim Results
Investor Presentation 2006 Interim Results 11th September 2006 © NETELLER. Proprietary and Confidential. www.neteller.com
Slide 2: Agenda
Agenda ► Highlights and Achievements ► Q2 2006 Performance ► Financial Performance ► Strategy Update ► Competitive / Regulatory Environment ► Summary and Outlook ► Additional Information © NETELLER. Proprietary and Confidential. www.neteller.com 2
Slide 3: Agenda
Agenda ► Highlights and Achievements ► Q2 2006 Performance ► Financial Performance ► Strategy Update ► Competitive / Regulatory Environment ► Summary and Outlook ► Additional Information © NETELLER. Proprietary and Confidential. www.neteller.com 3
Slide 4: Highlights – H1 2006
Highlights – H1 2006 FINANCIALS H1 2006 H1 2005 % increase Revenue $118.9 m $73.5 m ▲ 62 % EBITDA $62.9 m $42.9 m ▲ 47 % Gross margin 71.8 % 73.2 % Profit before tax $58.0 m $40.6 m ▲ 43 % Net profit $55.9 m $37.0 m ▲ 51 % Fully diluted EPS $0.46 $0.30 ▲ 53 % Net operating cashflow $56.8 m $28.8 m ▲
Slide 5: Achievements - H1 2006
Achievements - H1 2006 KEY ACHIEVEMENTS ► Strong growth in underlying business ► Continued progress in delivering product improvement for merchant and customer European expansion with launch of 4 new localised e-wallet versions, combined with local payment options and call centre support Additio
Slide 6: Active Customer Base
Active Customer Base Active Customer Base 600,000 500,000 400,000 Asia / RoW 300,000 Europe North America 200,000 100,000 - 2004- 2004- 2004- 2004- 2005- 2005- 2005- 2005- 2006- 2006- Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 North America 123,206 131,110 190,048 232,245 292,384 321,887 378,332 440,086 487,147
Slide 7: Agenda
Agenda ► Highlights and Achievements ► Q2 2006 Performance ► Financial Performance ► Strategy Update ► Competitive / Regulatory Environment ► Summary and Outlook ► Additional Information © NETELLER. Proprietary and Confidential. www.neteller.com 7
Slide 8: Q2 2006 Performance
Q2 2006 Performance Q2 2006 Q1 2006 %q-o-q Q2 2005 %y-o-y Revenue $61.0m $57.9m ▲ 5% $39.3m ▲ 55% Gross margin 70.1% 73.5% 73.6% Profit before tax $30.3m $27.7m ▲ 9% $22.5m ▲ 35% Net profit $29.3m $26.5m ▲11 % $20.6m ▲ 42% Basic EPS $0.24 $0.22 ▲10 % $0.17 ▲ 41% Total receipts $424.3m $422.3m ▲ 1% $
Slide 9: Agenda
Agenda ► Highlights and Achievements ► Q2 2006 Performance ► Financial Performance ► Strategy Update ► Competitive / Regulatory Environment ► Summary and Outlook ► Additional Information © NETELLER. Proprietary and Confidential. www.neteller.com 9
Slide 10: Strong revenue growth continues
Strong revenue growth continues $172.1m +62% growth 69.3% 73.2% 73.5% 71.8% 67.3% H105 to H1 06 $98.6m $82.6m 50.3% 53.2% 47.0% 40.6% $49.5m $118.9m $35.9m $73.5m 6.2% $22.8m $33.1m $12.9m 2003 2004 2005 2006 2003 FY 2004 FY 2005 H1 2005 FY 2006 H1 H1 H2 Gross margin Net margin ► Of total H1 2006 re
Slide 11: Revenue Analysis
Revenue Analysis Revenue mix Revenue generation 5% 3% 4% 1% 4% 1% 2% Each $ receipt H105 FY05 H106 4% 7% 5% n/a 5% 1% generates 1% 6% Revenue ¢ 13.6 ¢ 13.7 ¢ 14.0 Gross profit ¢ 9.9 ¢ 10.1 ¢10.1 Net income ¢ 6.8 ¢ 7.3 ¢ 6.6 59% 59% 59% Note: this is based on total revenue including interest, Netbanx
Slide 12: Margins declined slightly vs FY2005
Margins declined slightly vs FY2005 Revenue Revenue Revenue $73.5m $172.1m $118.9m 1.8 Net 4.2 Net 5.0 margin 3.6 Net 1.6 margin Tax 3.1 50.3% 3.2 47.0% 2.4 1.0 margin Depreciation & amortisation 53.2% 17.5 Management bonus 12.6 12.6 General & administrative Bad debts & collections 12.6 12.6 12.1 Gr
Slide 13: Cash flow statement
Cash flow statement $135.9m $432.9m $114.6m $48.1m $366.9m $96.4m $31.6m $86.0m $77.0m $255.4m $220.1m $56.8m $204.6m $45.8m $159.7m $40.4m $28.8m $16.1m $9.8m 55.5% 55.0% 56.0% 47.7% $135.9m $114.6m $86.0m 2004 FY 2005 H1 2005 FY 2006 H1 2005 H1 2005 FY 2006 H1 Qualifying Liquid Assets - EU custome
Slide 14: Agenda
Agenda ► Highlights and Achievements ► Q2 2006 Performance ► Financial Performance ► Strategy Update ► Competitive / Regulatory Environment ► Summary and Outlook ► Additional Information © NETELLER. Proprietary and Confidential. www.neteller.com 14
Slide 15: Global Growth Strategy – continued focus
Global Growth Strategy – continued focus f Continued focus on core market DEEPEN Acquisition, conversion and retention product and programme development Constant review and renewal of our Merchant value Proposition Strategic use of contact centre f Expand reach to increase market opportunity E
Slide 16: North American Customer Research
North American Customer Research 70% VIP ACTIVE LAPSED 60% 50% 40% 30% 20% 10% 0% Interest ATM debit Bank Credit cards Single Lines of Foreign Personal Mortgages Insurance Pre-paid bearing card linked account use/Virtual credit exchange loans phone savings to credit cards services cards account NETE
Slide 17: Europe Customer Research
Europe Customer Research 45% Actives Actives Inactives Inactives Lapsed La 40% 35% 30% 25% 20% 15% 10% 5% 0% Single Bank account Credit cards Interest ATM debit card Foreign Personal loans Web Pre-paid phone Lines of credit Insurance Mortgages Other use/Virtual bearing linked to your Exchange commun
Slide 18: Product Roadmap – H1 2006 achievements
Product Roadmap – H1 2006 achievements H1 2006 Achieved? Q1 2005 EXTEND f German, Spanish, French, Italian site launches 9 - Language translation f Maestro 3D secure, Visa Electron and other EU 9 payment options - Local payment options f Japan official launch, with payment functionality 9 - Phone su
Slide 19: Product Release Timelines – H2 2006 Roadmap
Product Release Timelines – H2 2006 Roadmap H2 2006 EXTEND - Language translation f Swedish, Danish, Polish, Turkish, Portuguese (Brazil) - Local identity verification f Swedish Kroner currency supported - Local payment options f Australia launch - Phone support DEEPEN - Customer f Two Step Sign up
Slide 20: Agenda
Agenda ► Highlights and Achievements ► Q2 2006 Performance ► Financial Performance ► Strategy Update ► Competitive / Regulatory Environment ► Summary and Outlook ► Additional Information © NETELLER. Proprietary and Confidential. www.neteller.com 20
Slide 21: Competitive Environment
Competitive Environment ► Issuing banks increasingly seeking to avoid high risk types of online markets; still largest competitor ► Smaller competitors with e-wallet solutions ► In-house payment providers of leading merchants offer own wallet solutions ► Does not offer instant and non-refutable fund
Slide 22: Regulatory Considerations
Regulatory Considerations f Online gambling merchants face regulatory risks in many jurisdictions 82 jurisdictions worldwide regulate online gambling including the UK and IOM f US prohibitionist stance with some “carve outs” HR 4411 passed House of Representatives in July 06, as anticipated No
Slide 23: Agenda
Agenda ► Highlights and Achievements ► Q2 2006 Performance ► Financial Performance ► Strategy Update ► Competitive / Regulatory Environment ► Summary and Outlook ► Additional Information © NETELLER. Proprietary and Confidential. www.neteller.com 23
Slide 24: Current trading and outlook
Current trading and outlook Summary f NETELLER continues to generate record customer, revenue and profit growth f Investment in H1 2006 has fuelled growth with focus on customers and merchants through our “Deepen and Extend” strategy f We continue to reduce exposure to North American market in line
Slide 25: Business in Fast Forward
Business in Fast Forward Investor Relations Contact: Andrew Gilchrist Vice President Corporate Development & Communications [email protected] } [email protected] + 44 (0) 1293 555 726 © NETELLER. Proprietary and Confidential. www.neteller.com 25
Slide 26: Agenda
Agenda ► Highlights and Achievements ► Q2 2006 Performance ► Financial Performance ► Strategy Update ► Competitive / Regulatory Environment ► Summary and Outlook ► Additional Information © NETELLER. Proprietary and Confidential. www.neteller.com 26
Slide 27: Agenda
Agenda ► Additional information ► Business Overview ► Detailed Financial Statements © NETELLER. Proprietary and Confidential. www.neteller.com 27
Slide 28: Introduction
Introduction ► World’s largest independent online money transfer business ► NETELLER e-wallet allows customers to transfer funds to merchants, themselves and back – “instant in, instant out” f Strong track record of revenue and profit growth – and highly cash generative ► One of the largest companie
Slide 29: About NETELLER
About NETELLER Consumer ► Market leading e-wallet product with instant payments ; Payment processor with underwriting services FSA regulated e-money issuer TRUST Global presence ► Specialise in markets where money transfer difficult/risky Risk prediction and mitigation technology Indemnify
Slide 30: How the NETELLER service works
How the NETELLER service works Superior Identity Verification Indemnification of Merchants Instant In and Out Credit/Debit Card Processing & Identity Security in development © NETELLER. Proprietary and Confidential. www.neteller.com 30
Slide 31: Key Business Measures
Key Business Measures © NETELLER. Proprietary and Confidential. www.neteller.com 31
Slide 32: Global presence
Global presence Calgary, Canada N Am Operations Isle of Man, UK London, UK Macau Hong Kong / Customer Support Corporate HQ European Asian Product Sales & Marketing operations operations Technology / IT Security Investor Relations © NETELLER. Proprietary and Confidential. www.neteller.com 32
Slide 33: Agenda
Agenda ► Additional information ► Business Overview ► Detailed Financial Statements © NETELLER. Proprietary and Confidential. www.neteller.com 33
Slide 34: Consolidated Income Statement
Consolidated Income Statement Consolidated Income Statement Six month period ended Six month period ended FOR THE SIX MONTH PERIOD ENDED 30 JUNE 2006 (UNAUDITED) 30 June 2006 30 June 2005 US$ US$ Revenue 118,894,549 73,484,674 Cost of sales Customer support (8,157,987) (5,037,403) Website maintenanc
Slide 35: Consolidated balance sheet
Consolidated balance sheet Consolidated Balance Sheet 30 June 2006 31 December 2005 AS AT 30 JUNE 2006 (UNAUDITED) US$ US$ (Unaudited) (Audited) ASSETS Current Assets Cash and cash equivalents 135,921,390 114,570,429 Restricted cash 28,829,015 16,116,858 Qualifying Liquid Assets held for European cu
Slide 36: Cash flow statement
Cash flow statement Consolidated Statement of Cash Flows Six months ended Six months ended FOR THE SIX MONTH PERIOD ENDED 30 JUNE 2006 (UNAUDITED) 30 June 2005 30 June 2006 (Unaudited) (Unaudited) US$ US$ OPERATING ACTIVITIES Cash generated by operations 57,481,955 44,055,437 Income Tax paid (709,79