Intersections' rev drops as regulators clamp down on credit protection add-ons
(Reuters) - Intersections Inc (INTX.O), a provider of identity theft protection, said its full-year revenue will fall as much as 15 percent as regulatory scrutiny causes financial services companies to pull back on marketing its products.
Shares of the Chantilly, Virginia-based company fell 15 percent to $9.43 in trading after the bell. They closed at $11.05 in regular trade on Monday on Nasdaq.
On a post-earnings conference call, Chief Financial Officer John Scanlon said increased regulatory scrutiny over sales of identity theft protection products caused its financial institution clients to cancel subscriptions and reduce marketing.
Financial services companies like Capital One Financial (COF.N), Discover Financial (DFS.N) and American Express (AXP.N) have been fined by the Consumer Financial Protection Bureau (CFPB) for improperly selling credit protection products with their credit cards.
Total subscribers for Intersections' products fell to 4.5 million at the end of the fourth quarter, from 4.9 million a year ago. Revenue in the quarter dropped 10 percent.
The company expects 2013 adjusted earnings before interest, taxes, depreciation and amortization to be 40 to 50 percent lower than 2012 levels.
"As a result of changes in the financial services marketplace, we are increasing our focus on non-financial institution clients, consumer direct marketing, and diversified business investments going forward," Chief Executive Michael Stanfield said in a statement.
Stanfield said the company was making investments in its online brand protection and bail bonds business.
(Reporting by Jochelle Mendonca in Bangalore; Editing by Anthony Kurian)