The value of Youbet.com's stock fell 14.1% Monday after the company released a quarterly earnings report that was below analysts' forecasts.
The online wagering company reported gross handle, the basis for a majority of the company's revenues, increased 85.3 percent to $73.3 million in the second quarter of 2003, compared to $39.6 million in the comparable period in 2002. For the first six months of 2003, gross handle was $134.3 million, an increase of more than 100 percent over $66.6 million handled by the Company during the same period in the prior year.
Youbet.com reported a loss of $982,000, or 4 cents per share, compared with a loss of $2.28 million, or 13 cents a share, during the same quarter one year ago. A leading stock analysis service had forecast the quarterly loss would be 2 cents per share. In heavy trading, Youbet.com's stock closed at $3.16, down $0.52, or 14.1%, from the opening price of $3.68.
"Our record-setting performance on handle is further evidence that Youbet.com has achieved premier status among online horse racing enthusiasts," said Charles F. Champion, chairman and CEO of Youbet.com. "Of equal importance, our technology, which is scalable by a factor of three, excelled during peak periods of the Triple Crown, when we accommodated unprecedented numbers of users without a flaw," Champion added.
The company reported net revenues of $4.7 million for the second quarter of 2003, compared to net revenues of $2.3 million in the second quarter of 2002. As a result of the company's increases in handle year-over-year, net revenues grew to $8.5 million for the six months ended June 30, 2003, more than twice the $4.0 million produced in the identical period of 2002.
Other operating expenses for the second quarter were $4.1 million, a 23 percent increase over the same quarter in 2002. For the six months ended June 30, 2003, expenses grew 14 percent to $7.5 million, compared to the first half of 2002.
"I want to make clear that we continue to keep a watchful eye on operating expenses associated with our core business, and I am satisfied with our progress in that area," Champion said. "We also have spent time and money on what we consider to be extraordinary expenses associated with a series of strategic initiatives," he added.
Earnings before interest, taxes, depreciation and amortization (EBITDA) were $606,033 for the second quarter of 2003, an improvement of $1.6 million over the same quarter in 2002. Year-to-date, EBITDA grew to $1.1 million representing an increase of more than $3.6 million for the six months ended June 30, 2003 compared to the same period in 2002. The EBITDA figures for 2003 include $100,109 related to variable accounting for certain stock options.
"Our goal remains to leverage our superior product position and our technology advantage to attract additional enthusiasts to our customized, fully integrated wagering services. Over time we'll extend these advantages by giving our players broader and more diversified content," Champion said.