Youbet.com Produces First Quarterly Positive Cash Flow
Updated: Monday, January 27, 2003 10:56 PM
Edited release from Youbet.com
Posted: Monday, January 27, 2003 9:59 PM
Youbet.com, Inc. announced Monday that in the fourth quarter of 2002, the company produced the first cash flow positive quarter as measured by EBITDA in the seven-year history of the company. The amount, $226,000, represents almost a $1 million improvement over the third quarter, 2002, and an increase of more than $4.5 million over the fourth quarter of 2001.
Additionally, Youbet.com's annual handle increased 72%, from $95 million in 2001 to $163 million in 2002. The Company produced new handle records in three consecutive quarters of 2002; $40 million in the second quarter, $46 million in the third quarter and $50 million in the fourth quarter. In 2002, Youbet passed the half-billion dollar mark in wagers processed since accepting its first wager in 1997.
In an earnings call Monday, Chuck Champion, Youbet.com's president and CEO, said, "We entered 2002 with our monthly cash burn in the preceding year exceeding $500,000, carrying the content of less than 75% of the significant racetracks on our proprietary website. We were unlicensed in our home state of California. We closed the year with positive cash flow in the fourth quarter, delivering every significant racetrack in the U.S., plus a multi-year license in California." Champion continued, "Our flash handle report for the month of January, 2003 projects that we will set another monthly record handle in the range of $19 to $20 million. This exceeds our previous record of $17 million. I feel comfortable reporting to our investors, clients and industry friends that Youbet's turnaround is in place and that management believes that our competitive positioning and financial improvement will continue in 2003."
Champion cited several operational improvements for contributing to the improvement in operating results, including implementation of better customer funding processes, the establishment of the Player's Trust and the fourth quarter rollout of a subscription fee as initiatives that were responsible for the growth in revenues, and extraction of additional efficiencies in personnel and vendor expense.
"Fourth quarter 2002 net revenue (after our cost of sales) increased to $3.2 million, compared to revenue of $1.4 million in the fourth quarter of 200," Youbet.com's CFO Gary Sproule said. "This substantial rise in quarterly revenue was due mainly to an increase in the amount of wagers placed by Youbet.com customers at our Oregon wagering hub, which was opened in September 2001. Fourth quarter total operating expenses were $3.0 million compared to $5.9 million in the fourth quarter of 2001. In the fourth quarter, 2001 we recorded a one time write off of $2.4 million due to the termination of various Nevada Gaming projects."
Sproule added, "Our EBITDA for the fourth quarter 2002 was a positive $226 thousand compared to a loss of $4.5 million in the fourth quarter a year ago. The Company's operating loss for the fourth quarter 2002 was $1.2 million compared to an operating loss of $5.9 million in the fourth quarter, 2001. Net loss for the quarter was $1.3 million compared to a net loss of $5.5 million for the fourth quarter of 2001."
"As of December 31, 2002, Youbet had assets of $16.9 million, including $5.2 million in cash, cash equivalents, and restricted cash," Sproule continued. "Total liabilities were $8.9 million and our stockholders' equity totaled $8.0 million. Youbet's working capital position at year-end was a negative $2.5 million, an improvement of $300 thousand over prior quarter ended."
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