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Net Element Inc. (NASDAQ: NETE) Releases Q3 2020 Financial Results Showing Improved Revenues Despite Continued Shutdowns
December 7, 2020

Net Element Inc. (NASDAQ: NETE) Releases Q3 2020 Financial Results Showing Improved Revenues Despite Continued Shutdowns

  • NETE results include year-over-year increases in revenue and transaction volume
  • 45% of NETE clients in restaurant business, management expects rebound once states reopen
  • NETE plans to divest payments processing model to enter EV industry through reverse-merger with privately-held Mullen Technologies Inc.

Net Element (NASDAQ: NETE), a global financial technology and payments processing company, recently posted its Q3 2020 results showing improved revenues despite continued shutdowns in NY and California. The value-added solutions group supports electronic payments acceptance in an omni-channel environment that spans point-of-sale, e-commerce applications and mobile devices for small to medium enterprises in the U.S. and selected emerging markets.

Business closures due to COVID-19 have affected NETE revenues negatively, particularly for the restaurant industry that comprises approximately 45% of its customer base. With most of the business coming from the southern states, NETE management believes that card processing volumes for the company could rebound sharply if their customers in New York and California could open up again.

Despite the negative outlook and overall sinking economy, company revenues improved in Q3 2020, coming in at $16.7 million from $13.7 million in Q2 2020 (https://ibn.fm/S1d2d). Other highlights from their Q3 results include a year-over-year increase in total transaction volume from $956.2 million to $953.7 million and a year-over-year increase in their North American Transaction Solutions segment to $16.07 million from $15.9 million (https://ibn.fm/od2oj).

The company reported a net loss to common stockholders of approximately $0.52 per share or a total net loss of $2.3 million – almost twice the $1.0 million net loss or $0.24 per share loss for the same period in 2019. The $1.3 million net loss increase is primarily attributed to an increase in non-cash compensation of approximately $1.1 million and an increase in bad debt expense amounting to approximately $200,000.

Gross margin for the quarter was $2.2 million or 13.0% of net revenues, down from $2.7 million or 16.3% for the same period in 2019, attributed to the increased competitive pressure in the industry. Year-over-year operating expenses increased to $4.1 million from $3.6 million while salaries, benefits, taxes and contractor payments decreased by approximately $0.4 million due to staffing reductions connected to COVID-19.

Earlier this year, NETE announced plans to divest itself of its payments processing services in order to enter the electric vehicle industry through a reverse merger with Mullen Technologies. Following the requisite approvals, the transaction will allow the stakeholders of privately-held Mullen to gain a majority of the new stock while accelerating the process of taking the new company public. NETE continues to work diligently on the transaction while Mullen completes its audit and S-4 document with expectations to have it filed by the end of the year.

“We continue working diligently in an effort to finalize the Mullen merger for the benefit of our shareholders,” said Net Element Executive Chairman Oleg Firer.

Formerly ranked as one of North America’s fastest growing companies on Deloitte’s Technology Fast 500(TM) in 2017 and 2018, NETE offers 100-plus payment solutions in an omni-channel environment for small to medium enterprises. Following the approval of its reverse merger with California-based Mullen Technologies, the company plans to divest its payments-as-a-service business model and enter the electric vehicle industry.

For more information, visit the company’s website at www.NetElement.com.

NOTE TO INVESTORS: The latest news and updates relating to NETE are available in the company’s newsroom at http://ibn.fm/NETE

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