Neteller Slow but Sure in Diversification

While Neteller intends to reduce gradually its reliance on Internet-gambling-related transactions, 83 percent of first-half total revenue still came by way of the company's long-standing online bedfellow.

The money-transfer company revealed revenue of $35.9 million -- unchanged against the comparable period last year -- while pre-tax profits came in at $1.2 million against a $24.7 million loss in 2007.

Fee revenue grew 18 percent to $32.8 million compared to $27.7 million in 2007, though the 2007 figure was adjusted to exclude North American revenue of $14.9 million.

By geographic segment, European fee revenue grew 10 percent to $19.9 million driven by a small increase in active customers and strong growth in yield per customer; fee revenue from the Asia-Pacific region, meanwhile, grew 18 percent to $3.7 million.

"This (growth in the Asia-Pacific region) was largely delivered by smart marketing and increased product acceptance/usage," James Hollins, an analyst with Daniel Stewart & Co. in London, wrote in a research note Wednesday morning.

The company, based on the Isle of Man, grew active customers 4 percent to 100,760 from 97,216 last year -- an upward trend that has continued since the group kick-started its non-United States operations from 2004, Mr. Hollins said.

Neteller has spent between $10 million and $15 million to revamp its technology platform; work on Newteller -- as the platform has been dubbed -- is expected to be completed by the first quarter of 2009.

Following its withdrawal from the United States and subsequent settlement with the Justice Department, the company has initiated a plan to diversify revenue away from online gambling.

Most recently, it did a deal with TransSend Payment Services, a prepaid card solutions provider, to offer a prepaid MasterCard solution to its e-wallet customers. The offering -- targeting both I-gamers and non -- includes a virtual Net-Plus MasterCard for use online and a physical Net-Plus MasterCard for terrestrial use.

"We think these will be some of the leading card products in the market when they come out in October," Andrew Gilchrist, vice president of corporate development and communications for Neteller, told IGamingNews last week.

By yearend 2010, the London-listed company intends for 30 percent of its revenue to derive from non-gaming sources.

Looking ahead, Neteller -- which said it is considering a change in trading moniker -- is in the process of building out a merchant offering in Taiwan, Mr. Gilchrist confirmed last week, that would include payment options, currencies and language functionalities.

The company, with a market capitalization of £82 million, was up 0.25 pence, or 0.36 percent, to 68.75 pence.