Another Strong Quarter for Youbet
Updated: Thursday, October 30, 2003 11:27 AM
(Edited Youbet press release)
Posted: Tuesday, October 28, 2003 4:26 PM
Youbet.comcontinued strong gains in its online horse race wagering business during the third quarter of 2003, marking the sixth consecutive quarter in which the company has produced net revenue growth. Youbet also said it substantially increased operating capacity during the quarter.
Gross handle, comprising the majority of the company's revenues, increased 57% to $72.5 million in the third quarter of 2003, compared to $46.3 million in the comparable period in 2002. For the first nine months of 2003, gross handle was $206.8 million, an 83% increase over $112.9 million handled by the Company during the same period in the prior year.
"We had an exceptionally solid quarter in virtually every respect," said Charles F. Champion, chairman of Youbet.
Net revenue grew to $4.8 million for the third quarter of 2003, compared to net revenues of $2.6 million in the third quarter of 2002. For the nine months ended September 30, 2003, net revenues grew to $13.3 million, more than double the $6.6 million produced in the identical period of 2002.
"We completed several steps during the quarter in the human resource and technology areas to build and strengthen our foundation for future growth," Champion said. "We attracted two outstanding marketing experts to implement our new regional track marketing program, assigned a veteran Youbet manager to head our worldwide Mobile Products project, and substantially expanded Youbet's technological capacity, a result of increased programming efficiency accomplished by our engineers."
Earnings before interest, taxes, depreciation, and amortization (EBITDA) were $703,482 for the third quarter of 2003, an improvement of $1.4 million over the same quarter in 2002. Year to date, EBITDA grew to $1.8 million, representing an increase of more than $5 million for the nine months ended September 30, 2003, compared to the same period in 2002.
"After 20 months of intensive work, it should be clear to our shareholders and competitors alike that we have completed the transition from restructuring to core profitability," Champion said. "Youbet's employees and management team have also brought us to a point where we are extremely well positioned for growth. Now, we are concentrating as intensively on long-term shareholder value as we once did on survival."
Other operating expenses for the third quarter were $4.1 million, a 24% increase over the same quarter in 2002. For the nine months ended September 30, 2003, expenses grew 17% to $11.6 million, compared to the first nine months of 2002.
Youbet said its largest single increase in operating expenses during the third quarter was attributable to legal fees in connection with Youbet's dispute with a shareholder, ODS Technologies, doing business as TVG. A related court order requires Youbet to supply all its shareholders with additional information on the potential consequences if TVG exercises certain warrants prior to their expiration in May 2004.
Youbet said it would soon reissue a proxy statement and announce the date and time of the company's rescheduled annual meeting. Management said it expects that the new proxy will contain the same key proposals as the prior document, including one calling for staggered election of directors and another for a super majority vote to approve changes in Company articles and by-laws, and that the proxy will fully comply with the court's order.
Further, Youbet said it is going to arbitration to address issues closely related to its dispute with TVG, including whether Youbet's proxy proposals are allowable under the conditions set down when the warrants were issued, and whether or not the exercise price of TVG's warrants should be adjusted downward due to Youbet's refinancing activities since the issuance of the warrants. The company said it expects the arbitration hearings to be completed by the end of 2003.
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