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Today's Nasdaq Focus Is Net Element Inc (NASDAQ:NETE)

Today's Nasdaq Focus Is Net Element Inc (NASDAQ:NETE)
Written by
Alex Carlson
Published on
July 14, 2016
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InsidrFinancial

Shares of Net Element Inc (NASDAQ:NETE) are starting to pick back up again. In May, the company enacted a one-for-ten reverse stock split to comply with Nasdaq listing requirements. Net Element needed to maintain a $1.00 minimum bid price requirement for continued listing on the NASDAQ Capital Market. Now management can turn its attention to boosting its payments business and getting the stock price higher.Net Element operates a payments-as-a-service transactional and value-added services platform for small to medium enterprise ("SME") in the US and selected emerging markets. In the US it aims to grow transactional revenue by innovating SME productivity services such as its cloud based, restaurant point-of-sale solution Aptito. Internationally, Net Element's strategy is to leverage its omni-channel platform to deliver flexible offerings to emerging markets with diverse banking, regulatory and demographic conditions such as UAE, Kazakhstan, Kyrgyzstan and Azerbaijan where initiatives have been recently launched.Earlier this month, Net Element's PayOnline was ranked as a leading payment gateway by independent digital market analytical agency Tagline.ru ("Tagline") in its 2016 Payment Systems Rating. The Top-10 payment gateway rating was compiled based on a survey performed from August 2014 - April 2015 with more than 390 digital-agencies that have production and/or client offices in Russia, introducing payment tools for their customers' projects. Respondents provided answers to the questions like "What pay tools do you integrate in digital-solutions for your customers?" Companies represented in the rating were mainly payment integrators and processing centers with abilities to process bankcard and e-wallet transactions. PayOnline moved up 2 positions from its previous 4th place ranking 2 years ago to its current 2nd place ranking.

This news follows the May announcement when PayOnline was ranked as a top 5 payment acceptance company by independent analytical agency Markswebb Rank & Report ("Markswebb") in the 2016 Internet Acquiring Rank report. Russia is fast growing market for Net Element. According to Markswebb, over the last month 80% of Russian Internet users aged 18 to 64 years, or 43.8 million people, have made at least one purchase online and this represents a significant opportunity for effective online payment acceptance companies.

In the first quarter, total transactions processed were 43.1 million as compared to 30.6 million for the first quarter of 2015. The 41% increase in transactions processed came primarily from North America Transactions Solutions which saw a 76% increase from 11.0 million in the first quarter of 2015 to 19.4 million in the first quarter of 2016. Online solutions experienced a 56% increase from 3.6 million transactions processed in the first quarter of 2015 to 5.6 million transactions process in first quarter of 2016. Mobile Solutions processed 18.1 million transactions during the first quarter of 2016 versus 16.0 million in the first quarter of 2015 which represented a 13% increase. The majority of growth in all segments was organic.

The total dollars processed for the first quarter of 2016 increased 73% from $233.6 million in the first quarter of 2015 to $405.1 in the first quarter of 2016. North America Transactions solutions saw the largest increase of 74% from $171.0 million processed in the first quarter of 2015 to $297.0 million in the first quarter of 2016. Online Solutions processed $57.3 million in the first quarter of 2015 and $99.0 million in the first quarter of 2016, representing a 73% increase. Mobile Solutions processed $5.3 million in the first quarter of 2015 versus $9.1 million during the first quarter of 2016 or an increase of 72%.

Total transactions processed geographically in North America and Emerging Markets in the first quarter of 2016 was 19.4 million and 23.7 million respectively, which represents an increase of 76% and 21% over the same time period in 2015. Total volume processed in North America and Emerging Markets in the first quarter of 2016 was $297 million and $110 million respectively, which represents an increase of 74% and 75% over the same period in 2015.

Currently trading with a market cap of $24 million, NETE is an exciting story among Nasdaq small caps. Guiding Net Element forward is CEO Oleg Firer, who is certainly a name to watch. He was just named among the top 40 Under 40 Class of 2016 by the South Florida Business Journal. Each year, the publication recognizes business leaders under age 40 who have made a significant impact in their field of expertise, their community and their companies.In addition to CEO Oleg Firer, Chairman Kenges Rakishev has a lot on the line as well. He has invested $32 million into Net Element with the goal of expanding the company's business throughout the former Soviet Union. He is one of the richest men in Kazakhstan and looks to have established quite a reputation for himself globally as an astute venture capitalist.With both men working on Net Element, we could see shares return back to their 52 week highs above $6, especially when you consider that shares are currently trading at just 0.5x sales and 3x book value. We will be updating Insider Financial as soon as we know more. For continuing coverage on NETE, sign up for our free newsletter today and get our next hot stock pick and a free eBook as an added bonus!Disclosure: We have no position in NETE and have not been compensated for this article.

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