MIAMI, FL — (Marketwired) — 05/17/16 — (NASDAQ: NETE) (“Net Element” or the “Company”), a provider of global mobile payment technology solutions and value-added transactional services, reported financial results for its quarter ended March 31, 2016.
Net revenues were $11,261,059 for the three months ended March 31, 2016 as compared to $5,540,207 for the three months ended March 31, 2015. Revenues increased 103% year over year
Announced $15 million credit facility and agreement to exchange up to $5 million of existing debt
Unified Payments launched mobile point of sale solution for iOS
Launched fully integrated omni-channel gift and loyalty platform
Aptito restaurant point of sale solution launched in Russia: aims to lead in underserved POS software market
Released Aptito point of sale solution for retail stores
Unified Payments partnered with Esquire Bank, as a result of this partnership we are able to accept a wider range of merchant types in United States.
Digital Provider entered Azerbaijan–s rising mobile payments market; signed national TV network as one of the first customers.
Launched “Sales Central On the Go” to expedite merchant approval and boarding. Sales partners and agents can now complete the on-boarding process from mobile devices and personal computers to get merchants processing immediately without completing paper applications.
“We–re pleased with the result of the first quarter, which is typically one of the slowest quarters of the year,” commented Oleg Firer, CEO of Net Element. “We remain focused on growth and innovation.”
In an effort to present a more comparative period on period analysis, we have adjusted net loss to remove the effects of non-cash share based compensation.
We reported an adjusted net loss of $1,524,611, or $0.01 per share for the three months ended March 31, 2016 as compared to an adjusted net loss of $1,646,584, or $0.04 per share, for the three months ended March 31, 2015. This resulted in a net loss decrease of $121,973 which is discussed further below.
Net revenues consist primarily of payment processing fees. Net revenues were $11,261,059 for the three months ended March 31, 2016 as compared to $5,540,207 for the three months ended March 31, 2015. The increase in net revenues is primarily a result of organic net increases in merchants. In addition, we consolidated online payments revenue for PayOnline and began reporting mobile commerce revenues for branded content.
Gross margin for the three months ended March 31, 2016 was $1,875,818 or 17% of total revenue, as compared to $949,683, or 17% of net revenue, for the three months ended March 31, 2015. Although the total gross margin remained flat at 17%, there were margin improvements in our U.S. transaction processing business and an increase from our online transaction processing business (purchased May 20, 2015), offset by lower margins from mobile solutions branded content that were not offered in the first quarter of 2015.
Adjusted general and administrative expenses increased by $52,215 to $2,088,313 for the three months ended March 31, 2016 as compared to $2,036,098 for the three months ended March 31, 2015. This was primarily due to an increase in salaries (corporate salaries were down offset by a salary increase due to acquisition of PayOnline in May 2015), realized transaction losses and other expenses offset by decreases in professional fees and travel.
Interest expense was $150,438 for the three months ended March 31, 2016 as compared to $117,594 for the three months ended March 31, 2015, representing an increase of $32,844 as follows:
To supplement its consolidated financial statements presented in accordance with United States generally accepted accounting principles (“GAAP”), the Company provides additional measures of its operating results by disclosing its adjusted net loss. Adjusted net loss is calculated as net loss excluding non-cash share based compensation and other one-time, non-recurring items not present in this year or last year results. Net Element discloses this amount on an aggregate and per share basis. These measures meet the definition of non-GAAP financial measures. The Company believes that application of these non-GAAP financial measures is appropriate to enhance the understanding of its historical performance through use of a metric that seeks to normalize period-to-period earnings.
This press release contains non-GAAP financial measures within the meaning of Regulation G promulgated by the Securities and Exchange Commission. Pursuant to Regulation G, a reconciliation of these non-GAAP financial measures with the comparable financial measures calculated in accordance with GAAP for the three months ended March 31, 2016 and 2015 is presented in the following Non-GAAP Financial Measures Table.
Additional information regarding Net Element–s results for its first quarter ended March 2016 may be found in Net Element–s quarterly report on Form 10-Q, which was filed with the Security and Exchange Commission (SEC) on May 16, 2016 and may be obtained from the SEC–s Internet website at .
Net Element, Inc. (NASDAQ: NETE) operates a payments-as-a-service transactional and value-added services platform for small to medium enterprise (“SME”) in the US and selected emerging markets. In the US it aims to grow transactional revenue by innovating SME productivity services such as its cloud based, restaurant point-of-sale solution Aptito. Internationally, Net Element–s strategy is to leverage its omni-channel platform to deliver flexible offerings to emerging markets with diverse banking, regulatory and demographic conditions such as UAE, Kazakhstan, Kyrgyzstan and Azerbaijan where initiatives have been recently launched. Further information is available at .
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Any statements contained in this press release that are not statements of historical fact may be deemed forward-looking statements. Words such as “continue,” “will,” “may,” “could,” “should,” “expect,” “expected,” “plans,” “intend,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” and similar expressions are intended to identify such forward-looking statements. These forward-looking statements include, without limitation, whether the Company will experience growth on a go forward basis, whether Net Element can secure any additional financing and if such additional financing will be adequate to meet the Company–s objectives. All forward-looking statements involve significant risks and uncertainties that could cause actual results to differ materially from those expressed or implied in the forward-looking statements, many of which are generally outside the control of Net Element and are difficult to predict. Examples of such risks and uncertainties include, but are not limited to: (i) Net Element–s ability (or inability) to obtain additional financing in sufficient amounts or on acceptable terms when needed; (ii) Net Element–s ability to maintain existing, and secure additional, contracts with users of its payment processing services; (iii) Net Element–s ability to successfully expand in existing markets and enter new markets; (iv) Net Element–s ability to successfully manage and integrate any acquisitions of businesses, solutions or technologies; (v) unanticipated operating costs, transaction costs and actual or contingent liabilities; (vi) the ability to attract and retain qualified employees and key personnel; (vii) adverse effects of increased competition on Net Element–s business; (viii) changes in government licensing and regulation that may adversely affect Net Element–s business; (ix) the risk that changes in consumer behavior could adversely affect Net Element–s business; (x) Net Element–s ability to protect its intellectual property; (xi) local, industry and general business and economic conditions; (xii) adverse effects of potentially deteriorating U.S.-Russia relations, including, without limitation, over a conflict related to Ukraine, including a risk of further U.S. government sanctions or other legal restrictions on U.S. businesses doing business in Russia. Additional factors that could cause actual results to differ materially from those expressed or implied in the forward-looking statements can be found in the most recent annual report on Form 10-K and the subsequently filed quarterly reports on Form 10-Q and current reports on Form 8-K filed by Net Element with the Securities and Exchange Commission. Net Element anticipates that subsequent events and developments may cause its plans, intentions and expectations to change. Net Element assumes no obligation, and it specifically disclaims any intention or obligation, to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as expressly required by law.
Net Element, Inc.
+1 (786) 923-0502
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