Optionable, Inc. (OPBL), a provider of natural gas and other energy derivatives brokerage services, announced today results for its first quarter ended March 31, 2007. The company reported solid growth with revenues that increased 307 percent for the first quarter compared to the prior-year period, and net income that increased 276 percent for the first quarter as compared to year ago period, Revenues for the first quarter ended March 31, 2007, were $9.1 million, with net income of $3.1 million, or $0.06 per diluted share, up from $2.2 million in revenue, and net income of $825,000, or $0.02 per diluted share, for the first quarter of 2006. Operating margin increased to 56 percent for this year's first quarter, up from 37 percent for the first quarter of 2006.
Fresh off the Optionable conference call, the company discussed its phenomenal quarter and offered what seemed to be a pretty bright outlook going forward. We also learned a few things that should calm the nerves of shareholders that have been rattled following news reports fearing the loss of the Bank of Montreal's energy trading that would cut into the company's business which accounted for a hefty 30 percent of Optionable's revenue in the first quarter. Here are the key takeaways and some notes we took during the conference call that was held this evening after the company reported results;
- The company's strategic partnership with the New York Mercantile Exchange (NYMEX currently has a 19 percent stake in Optionable and has been issued a warrant to boost its stake to 40 percent) is generating broader interest, especially with the offering of new energy contracts as Optionable's OPEX trading platform gains acceptance (OPEX now accounts for 15 percent of revenue and that number is expected to grow).
- The recent acquisition of HQ Trading is expanding the company's customer base and is helping to penetrate the large market of oil contracts.
- In regards to the Bank of Montreal's energy portfolio losses that could affect the trading it does with Optionable (30 percent of first quarter revenues were attributed to the bank), the company responded by saying that the Bank of Montreal has not yet exited the market nor stopped its trading activities. Optionable recognizes its exposure to large clients, but emphatically stated that even if the Bank of Montreal ceased its operations, the company would likely be able to capture that percentage of revenue elsewhere, for instance in its increasing share of crude oil options.
- Cost of the issuance of up to 19 million shares related to the New York Mercantile Exchange agreement has not yet been reflected in the financial statements, but will have an impact in the second quarter.
- The company is currently exploring listing its stock on a higher exchange but work still needs to be done involving corporate governance before it can become a reality.
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