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Points (TSX:PTS) (Nasdaq:PCOM), a loyalty currency management company, announced today that it has updated its business outlook as well as provided additional details regarding the acquisition of assets of Crew Marketing International, Inc.
Partner activity:
“Points’ core business remains strong, we continue to execute against our global pipeline, and our outlook remains optimistic,” said Rob MacLean, Chief Executive Officer of Points. “Given recent announcements, since the start of 2014, we have announced or launched over 40 products and added 9 new partners to our Loyalty Commerce Platform.”
“Further, we remain in discussions with several potential new partners, and a number of those discussions are presently in advanced stages. While we cannot give assurances on the fruition of these discussions, based on our experience and assessment, these potential new partners could be material contributors to our financial performance in 2015.”
“Overall, we are very pleased with our Partner developments in 2014. Nevertheless, we do anticipate market consolidation in 2015 to change the mix of products and partners that drive our economics. The previously announced consolidation of the US Airways Dividend Miles and American Airlines’ AAdvantage programs, in particular, will likely lead to these programs representing a smaller portion of our future business. While discussions are ongoing, we anticipate restructuring elements of the relationship through 2015. We do expect, however, that Points will maintain a robust relationship with AAdvantage, and that we will continue to leverage our Loyalty Commerce Platform to provide future innovation for the program.”
Acquisition of Crew Marketing:
In addition, and in conjunction with today’s announcement earlier today regarding Points’ agreement with United Airlines MileagePlus, Points has provided further details on its acquisition of substantially all of the assets of Crew Marketing, a long-time United Airlines MileagePlus technology vendor.
Pursuant to the purchase agreement for the acquisition, Points paid $14.75 million in cash and issued 238,393 common shares in consideration for the purchased assets. The common shares, which represent approximately 1.6% of Points’ issued and outstanding common shares, were issued into escrow and will be released to Crew Marketing in 18 months’ time, subject to typical indemnities to the benefit of Points. The transaction closed on December 22, 2014.
“The acquisition of Crew Marketing represents a positive development in Points’ growth strategy,” said MacLean. “We look forward to leveraging Crew’s unique technologies and commercial applications to power additional loyalty commerce solutions for the MileagePlus program.”
Updated 2014 Guidance and Outlook:
“Points has had a strong year, and we continue to anticipate solid growth for full year 2014. However, revenue and transactional activity during the fourth quarter has been adversely impacted by continued softness in Europe as well as reduced promotional activity among certain partners as they align consumer activity with the associated industry consolidation. As a result, we currently expect 2014 revenues and Adjusted EBITDA1 to be at the lower end of our guidance range for the year,” added MacLean.
With the partnerships and products added throughout 2014, and the anticipated change in mix of certain partner contributions, management currently expects that it will continue to see growth in revenue, gross margin2 and Adjusted EBITDA in 2015. The Company will provide final results for the fourth quarter and full year 2014, as well as provide formal guidance for the full year 2015, in its fourth quarter 2014 earnings release in early March.
Mr. MacLean concluded, “With today’s business update, we continue to believe that our addressable market is $2.5 – $3.5 billion, providing significant opportunity for Points to grow well into the future. Continuing to add new partners, enhancing relationships with existing partners, and driving further innovation and engagement throughout the broader loyalty industry are expected to provide solid revenue upside and be core drivers of our future growth.”
