August 05, 1999 16:17
NextCard Reports Second Quarter Results; Revenues Increase by 263 Percent Over Previous Quarter; Assets Under Management Increase by 70 Percent Over Previous Quarter
SAN FRANCISCO--(BUSINESS WIRE)--Aug. 5, 1999--NextCard, Inc. (Nasdaq:NXCD), creator of The First True Internet Visa, announced today that revenues for the second quarter ended June 30, 1999 were $3.6 million, a 263 percent increase over revenues of $1.0 million for the first quarter ended March 31, 1999, and up from revenues of $212,000 for the same period in 1998.
By comparison, NextCard generated $1.2 million in revenues for the full year of 1998. Second quarter revenues of $3.6 million were significantly higher than analyst expectations.
Total managed loans as of June 30, 1999 reached $163.4 million, a 70 percent increase over the $96.3 million in managed loans as of March 31, 1999, and a 1,638 percent increase over the $9.4 million in managed loans as of June 30, 1998. Total customer accounts increased to approximately 85,000 at June 30, 1999 from approximately 55,000 at March 31, 1999, a 55 percent increase.
"We are very pleased with our strong second quarter results. Our dramatic increase in revenues, managed loans and customer accounts during the second quarter demonstrates the success of NextCard's product design, target marketing approach and proprietary technologies," said Jeremy Lent, CEO. "We are able to take advantage of the capabilities of the Internet to find our target market and deliver a truly unique customer experience."
NextCard reported a second quarter net loss of $18.7 million, or a pro forma net loss per share of $0.45, compared with the First Call consensus net loss estimate of $0.46. This also compares to a pro forma net loss of $0.30 per share for the quarter ended March 31, 1999 and a pro forma net loss of $0.17 per share for the quarter ended June 30, 1998. Per share calculations reflect the issuance of 6.9 million shares of common stock on May 14, 1999.
Weighted average shares outstanding used for pro forma EPS were 41.1 million shares, 36.5 million shares and 18.0 million shares for the quarters ended June 30, 1999, March 31, 1999, and June 30, 1998, respectively. Shares outstanding as of June 30, 1999 reflect the automatic conversion of all outstanding shares of preferred stock
into shares of common stock, a 4.5-for-1 split of the common stock, and the issuance of new shares, including the purchase of additional shares by the underwriters in exercise of their over-allotment option, as part of the company's initial public offering. NextCard's initial public offering raised $138.0 million in gross proceeds.
Net interest margin for the NextCard-owned portfolio was 2.5 percent in second quarter 1999, up from less than one percent in first quarter 1999. Interest income increased to $3.0 million in second quarter 1999 from $660,000 in first quarter 1999, primarily as a result of increased loan balances and a higher average yield on the loan portfolio. Interest expense increased to $1.9 million in second quarter 1999 from $647,000 in first quarter 1999, largely as a result of higher levels of borrowed funds used to support higher asset levels.
Noninterest income increased to $613,000 in second quarter 1999 from $343,000 and $133,000 in first quarter 1999 and second quarter 1998, respectively. Noninterest expense increased to $19.4 million in second quarter 1999 from $10.3 million and $3.3 million in first quarter 1999 and second quarter 1998, respectively. The increase in noninterest expense reflects higher marketing and other account and balance acquisition costs, as well as increased staffing expense to position the company for future growth.
The delinquency rate (30+ days) on total managed loans was 1.2 percent as of June 30, 1999, compared with 1.0 percent as of March 31, 1999. The annualized net charge-off rate for managed loans increased to 1.3 percent for second quarter 1999, compared with 0.9 percent for first quarter 1999. These increases were expected, and will continue as the company's loan portfolio continues to grow and season.
The allowance for loan losses increased to $2.0 million at the close of second quarter 1999, or 1.4 percent of on-balance sheet loans, as of June 30, 1999, compared to $995,000, or 1.5 percent of on-balance sheet loans, as of March 31,1999.
Other Second Quarter Highlights
NextCard significantly expanded its marketing initiatives during the second quarter, signing marketing agreements with the Weather Channel, MapQuest.com, ZDNet, Yahoo!, IDG.com, about.com. The company's affiliate program grew to over 12,000 web sites, more than double the number of affiliates in the program at the close of first quarter 1999.
NextCard also announced co-branding relationships with Dilbert, PlanetOut and BabyCenter.com, as well as affinity programs targeted towards newlyweds, pet owners, golfers and picture lovers with The Knot, ACMEPet.com, chipshot.com, and Kodak, respectively. The company launched a $10 million dollar national media branding strategy which emphasizes the personalization and customization made possible only with the NextCard(R) Internet Visa(R).
"In the second quarter, NextCard established its position as one of the leading Internet marketers," said Lent. "Our target marketing approach through our proprietary Internet database marketing system, or IDM, continues to identify sites that yield the most profitable customers. This enables us to successfully pursue our direct
marketing, co-branding and affinity strategies."
NextCard also enhanced the e-commerce experience for its customers during the second quarter. To enable customers to take full advantage of the tremendous purchasing power of the Internet, the company launched one-click shopping with the NextCard e-wallet and began offering customized, money-saving digital coupons from e-centives(TM).
In addition to completing its public offering during the second quarter, NextCard obtained over $450 million in conduit funding facilities. These facilities include a $300 million facility with Barclays Capital, the investment banking division of Barclays Bank PLC, and a $150 million facility with ING Barings, an international investment bank.
NextCard (http://www.nextcard.com) is considered one of the industry's leading issuers of consumer credit on the Internet. Since its launch in December 1997, over 2 million people have applied for the NextCard Visa, making it one of the premier online credit cards. The company continues to innovate with its Double Rewards program, complete GoShopping! tools, personalized PictureCard design, a one-click digital wallet and exceptional online customer service. NextCard was named a "HOT 100 Company" by Upside Magazine.
NextCard management will hold a conference call today at 2:00 P.M. PDT; 5:00 EDT. Investors will have the opportunity to listen to the call over the Internet through Vcall at vcall.com. For those unable to listen to the live broadcast, replays will be available shortly after the call on the Vcall site.
The Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995
Information contained herein as to NextCard's expectations and goals are forward-looking statements. Actual results could differ from those projected in these statements due to portfolio characteristics, economic conditions, competition in the industry and other factors detailed from time to time in the company's Securities and Exchange
Commission filings.
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