Tuesday, September 28, 1999 Published at 12:59 GMT 13:59 UK
Business: The Company File
Freeserve users - and losses - up
Subscribers are still signing up to this service
Freeserve is connecting more people than ever before to the Internet - but that has not stopped its losses rising.
The UK's biggest-ever listed Internet company said losses before one-off items rose to £5.23m from £810,000 in the 16 weeks to 21 August.
This was the first set of results since parent company Dixons decided to sell part of its stake in Freeserve in July, valuing the company at £1.5bn.
From a standing start it has grown to have 1.5 million subscribers - with the total rate increasing by 19% in the 16 weeks to 21 August.
Freeserve said it was now increasing its user numbers at a rate of 14,000 per week.
Revenues beat expectations
In early trading following the results on Tuesday it fell 10p to 140p, before closing at 137.5p.
One of the reasons for the volatile share prices has been that there is comparatively little science to guide the valuation of Internet related companies.
Although operating losses rose, revenues also came in at £3.4m, ahead of forecasts from sector watchers such as Merrill Lynch and double the £1.7m last quarter.
For first time, revenues from advertising and e-commerce exceeded the money earned from telephone call charges.
The four-week churn - the number of accounts which have become inactive - also provided better than expected figures, with a fall to 9.5% in the first quarter from 11.9% in the previous 12 weeks.
The total amount of time spent online by its subscribers rose to 2.2 billion minutes, up from 1.5 billion in the previous three months.
Freeserve, which swiftly leapfrogged former market leader AOL, in numbers of subscribers, has to overcome scepticism regarding its ability to hold on to its subscribers, with more than 100 rival subscription-free ISPs in the UK.
It has been seeking to distinguish itself by increasing its content and services, with a string of offerings including, finance, job-hunting, online foreign exchange and insurance. It has also set up a joint venture to establish online share trading.
Total pre-tax loss was £8.6m including the £3.6m of one-off items, made up of flotation fees, expenses and marketing costs in connection with the float.
In addition to selling adverts on site the company makes its money from its cut of the money customers pay for phone use and the commission charged on any goods and services bought over the Net by its subscribers.
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