– Revenues
of $54.4 million, an increase of 59% year-over-year
– Gross
margin of $8.7 million, an increase of 24% year-over-year
–
EBITDA of $2.3 million, an increase of 50% year-over-year
– Net
income of $1.1 million, an increase of 53% year-over-year
Points (TSX:PTS) (Nasdaq:PCOM), global leader in loyalty currency
management, today announced results for the third quarter ended
September 30, 2013.
"As anticipated, the third quarter was highlighted by a
significant ramp in our financial performance, with both revenues
and EBITDA increasing on a year-over-year and sequential basis to
record levels," said Points' Chief Executive Officer, Rob MacLean.
"Revenues for the quarter increased 30% sequentially and nearly 60%
year-over-year, reflecting the addition of several new partners to
Points' loyalty network year-to-date, as well as increased
transactional activity among existing partners. We are equally
pleased with our improved profitability and, specifically, our
ability to deliver year-over-year and sequential increases in gross
margin dollars, EBITDA and net income, while also making
significant investments in our platform."
Mr. MacLean continued, "In the first three quarters of this
year, we added 5 new partners to our loyalty program network and
launched 18 products with 7 partners. This has contributed to
our 45% increase in points/miles transactions for the third quarter
and has set us up for a strong finish to the year. We
now anticipate full-year revenues in the range of $195 to $205
million, which reflects year-over-year revenue growth of 40% to
47%. Our growth is further highlighted by that fact that our
year-to-date progress implies a record breaking fourth quarter for
revenues and year-over-year growth of 55%-68% in the second-half of
2013. Importantly, while we are still on track to re-invest $3
million of our incremental profitability in 2013 towards our
long-term plan, we continue to anticipate 2013 EBITDA to be in the
range of $10-$13 million before these investments."
Mr. MacLean concluded, "Delivering on our robust partner
pipeline while also expanding the reach of our products into our
partner network remains a key focus. Our strong balance sheet
continues to improve, with over $50 million in cash and cash
equivalents; we will continue to deploy this capital and invest in
our core products while simultaneously evolving our open platform
strategy. We are confident that these continued investments
will deliver ongoing growth for both Points and the broader loyalty
industry."
Third Quarter 2013 Financial Results
(Unless otherwise stated, all comparisons for the third quarter
of 2013 are on a year-over-year basis)
Revenues totaled $54.4 million up 59% from $34.3 million.
Principal revenues totaled $52.5 million, up 63% from $32.2
million. The year-over-year increase in principal revenues was
largely due to the impact of new partners launched over the last
twelve months. Other partner revenues totaled $1.9 million,
down 9.8% from $2.2 million. The year-over-year decrease was
largely due to the timing of promotional activities.
Gross margin dollars totaled $8.7 million, or 16% of total
revenue, compared to $7.0 million, or 20% of total revenue. The
increase in gross margin dollars was largely driven by the impact
of new partnerships launched over the last twelve months. As a
percentage of revenue, gross margin reflects the relative mix of
partner and product activity during the quarter. With the
addition of larger partnerships throughout the year, Points expects
meaningful growth in margin dollars coupled with margin percentages
in the 15%-20% range.
For the third quarter, EBITDA increased 50% to $2.3 million from
$1.6 million in the third quarter of 2012. The increase in EBITDA
reflects revenue growth outpacing operating expense growth.
The Company reported net income of $1.1 million, or $0.07 per
diluted share, compared to net income of $0.7 million, or $0.05 per
share, in the third quarter of 2012.
Third Quarter 2013 Business Metrics
|
Q3/13 |
Q3/12 |
Q3/13 vs. Q3/12 |
Q2/13 |
Q3/13 vs. Q2/13 |
TOTAL ALL CHANNELS |
|
|
|
|
|
Points/Miles
Transacted (in 000s) |
4,249,170 |
3,496,314 |
21.5% |
3,867,915 |
9.9% |
No. of Points/Miles
Transactions |
500,204 |
345,929 |
44.6% |
415,861 |
20.3% |
As of September 30, 2013, total funds available, comprised of
cash and cash equivalents together with security deposits,
restricted cash, and amounts with payment processors was $58.9
million. The Company remains debt free and is pleased with its
overall financial position.
Outlook
The Company is updating its financial guidance for the year
ending December 31, 2013, as follows:
- The Company currently expects revenue to be in the range of
$195 million to $205 million, an increase of 40% — 47% over
2012.
- The Company expects EBITDA to remain in the range of $10
million to $13 million prior to making strategic investments.
- The Company is on track to re-invest approximately $3 million
of its incremental profitability in 2013.
- Based on business in market today combined with deals announced
to-date, the Company currently expects to exit 2013 at an
approximately $270 million annualized revenue run rate and EBITDA
on a pre-investment basis of $17 million to $20 million.
- Our updated guidance reflects changes in the Company's
expectations as it relates to the performance of partner and
product deployments throughout the year.
Investor Conference Call
Points' conference call with investors will be held today at
4:30 p.m. Eastern Time. To participate, investors from the US
and Canada should dial (877) 407-0789 ten minutes prior to the
start time. International dialers should call (201)
689-8562.
In addition, the call is being webcast and can be accessed at
the Company's web site: www.pointsinternational.com and will be
archived online upon completion of the call. A telephonic
replay of the conference call will be available through November
20, 2013 by dialing (877) 870-5176 in the U.S. or Canada or (858)
384-5517 internationally and entering the conference ID
10000426.
About Points
Points, publicly traded as Points International
Ltd. (TSX:PTS) (Nasdaq:PCOM), is the global leader in loyalty
currency management. Via a state-of-the-art loyalty commerce
platform, Points provides loyalty eCommerce and technology
solutions to the world's top brands to enhance their consumer
offerings and streamline their back-end operations.
Points' solutions enhance the management and monetization of
loyalty currencies ranging from frequent flyer miles and hotel
points to retailer and credit card rewards, for more than 45
partners worldwide. Points also manages Points.com, where
almost 4 million consumers use the only industry sanctioned loyalty
wallet to not only track all of their loyalty programs but also
trade, exchange and redeem their miles and points. In addition
to these services, Points' unique SaaS products allow eCommerce
merchants to add loyalty solutions directly to their online stores,
rewarding customers for purchases at the point-of-sale.
Points has been widely recognized among the loyalty and
technology communities alike. The Company was named the 4th
largest Canadian software company and the 40th largest Canadian
technology company by the 2013 Branham300
list. Points also ranked 40th among PROFIT
Magazine's top 200 Canadian companies by five-year revenue growth.
For more information on Points, please
visit www.Points.com, follow
us @PointsBiz on Twitter or read
the Points Loyalty News blog.
Caution Regarding Forward-Looking
Statements
This press release contains or incorporates forward-looking
statements within the meaning of United States securities
legislation, and forward-looking information within the meaning of
Canadian securities legislation (collectively "forward-looking
statements"). These forward-looking statements include, among other
things, our guidance for 2013 with respect to revenue growth,
EBITDA expectations and reinvestment plans. These statements are
not historical facts but instead represent only Points'
expectations, estimates and projections regarding future
events.
Although Points believes the expectations reflected in such
forward-looking statements are reasonable, such statements are not
guarantees of future performance and are subject to important risks
and uncertainties that are difficult to predict. Certain material
assumptions or estimates are applied in making forward-looking
statements, and may not prove to be correct. In particular, the
financial outlooks herein assume we will be able to generate new
business from our pipeline at expected margins, our in-market and
newly launched products and services will perform in a manner
consistent with the Company's past experience and we will be able
to contain costs. Our ability to convert our pipeline of
prospective partners and product launches is subject to significant
risk and there can be no assurance that we will launch new partners
or new products with existing partners as expected or
planned. Other important risk factors that could cause
actual results to differ materially include the risk factors
discussed in Points' annual information form, Form-40-F, annual and
interim management's discussion and analysis, and annual and
interim financial statements and the notes thereto. These documents
are available at www.sedar.com and www.sec.gov.
The forward-looking statements contained in this press release
are made as at the date of this release and, accordingly, are
subject to change after such date. Except as required by law,
Points does not undertake any obligation to update or revise any
forward-looking statements made or incorporated in this press
release, whether as a result of new information, future events or
otherwise.
|
Points International Ltd. |
Key Financial Measures and
Schedule of Non-GAAP Reconciliations |
|
Gross Margin Information1 |
|
|
|
Expressed in thousands of United States
dollars |
|
|
|
|
|
|
For the 3 months ended |
For the nine months ended |
|
September 30, 2013 |
September 30, 2012 |
September 30, 2013 |
September 30, 2012 |
|
|
|
|
|
Total Revenue |
$ 54,441 |
$ 34,339 |
$ 133,283 |
$ 98,706 |
Direct cost of principal revenue |
45,707 |
27,300 |
110,481 |
78,124 |
Gross Margin |
$ 8,734 |
$ 7,039 |
$ 22,802 |
$ 20,582 |
Gross Margin % |
16% |
20% |
17% |
21% |
|
|
Reconciliation of Operating
(Loss) Income to EBITDA2 |
|
Expressed in thousands of United States
dollars |
|
|
|
|
|
|
For the 3 months ended |
For the nine months ended |
|
September 30, 2013 |
September 30, 2012 |
September 30, 2013 |
September 30, 2012 |
|
|
|
|
|
Operating income |
$ 1,577 |
$ 856 |
$ 1,507 |
$ 2,730 |
Depreciation and amortization |
803 |
715 |
2,570 |
2,075 |
Foreign exchange gain |
(50) |
(19) |
(46) |
(35) |
EBITDA |
$ 2,330 |
$ 1,552 |
$ 4,031 |
$ 4,770 |
|
1 Gross Margin is
considered by Management to be an integral measure of financial
performance and is defined as total revenues less the direct cost
of principal revenues. However, gross margin is not a recognized
measure of profitability under IFRS. |
2 EBITDA (Earnings
before interest, taxes, depreciation and amortization, foreign
exchange, and impairment) is considered by Management to be a
useful supplemental measure of performance. However, EBITDA is
not a recognized earnings measure under IFRS. |
Points International Ltd. |
Condensed Consolidated Interim
Balance Sheets |
|
|
|
Expressed in thousands of United
States dollars, except per share amounts |
(Unaudited) |
|
|
|
As at |
September 30, 2013 |
December 31, 2012 |
|
|
|
ASSETS |
|
|
Current assets |
|
|
Cash and cash equivalents |
$ 50,875 |
$ 45,108 |
Restricted cash |
1,615 |
3,202 |
Funds receivable from payment
processors |
6,362 |
10,057 |
Security deposits |
-- |
2,780 |
Accounts receivable |
2,208 |
1,912 |
Prepaid expenses and other assets |
878 |
940 |
Total current assets |
$ 61,938 |
$ 63,999 |
|
|
|
Non-current assets |
|
|
Property and equipment |
2,056 |
2,207 |
Intangible assets |
1,667 |
2,856 |
Goodwill |
2,580 |
2,580 |
Deferred tax assets |
6,444 |
6,485 |
Long-term investment |
2,500 |
-- |
Other assets |
551 |
617 |
Total non-current
assets |
$ 15,798 |
$ 14,745 |
Total assets |
$ 77,736 |
$ 78,744 |
|
|
|
LIABILITIES |
|
|
Current liabilities |
|
|
Accounts payables and accrued
liabilities |
3,782 |
4,673 |
Payable to loyalty program partners |
42,684 |
44,912 |
Current portion of other liabilities |
932 |
594 |
Total current
liabilities |
$ 47,398 |
$ 50,179 |
|
|
|
Non-current liabilities |
|
|
Other liabilities |
501 |
738 |
Total non-current
liabilities |
$ 501 |
$ 738 |
|
|
|
Total liabilities |
$ 47,899 |
$ 50,917 |
|
|
|
SHAREHOLDERS' EQUITY |
|
|
Share capital |
58,513 |
57,564 |
Contributed surplus |
9,991 |
10,105 |
Accumulated other comprehensive loss |
(194) |
(54) |
Accumulated deficit |
(38,473) |
(39,788) |
Total shareholders'
equity |
$ 29,837 |
$ 27,827 |
Total liabilities and shareholders'
equity |
$ 77,736 |
$ 78,744 |
|
|
Points International Ltd. |
Condensed Consolidated Interim
Statements of Comprehensive Income (Loss) |
|
Expressed in thousands of United
States dollars, except per share amounts (Unaudited) |
|
|
For the three months ended |
For the nine months ended |
|
September 30, 2013 |
September 30, 2012 |
September 30,
2013 |
September 30, 2012 |
REVENUE |
|
|
|
|
Principal |
$ 52,479 |
$ 32,172 |
$ 126,970 |
$ 91,720 |
Other partner revenue |
1,947 |
2,159 |
6,274 |
6,960 |
Interest |
15 |
8 |
39 |
26 |
Total Revenue |
$ 54,441 |
$ 34,339 |
$ 133,283 |
$ 98,706 |
|
|
|
|
|
EXPENSES |
|
|
|
|
Direct cost of principal revenue |
45,707 |
27,300 |
110,481 |
78,124 |
Employment costs |
4,864 |
3,791 |
13,733 |
10,995 |
Marketing & communications |
267 |
419 |
843 |
1,119 |
Technology services |
214 |
149 |
772 |
480 |
Depreciation and amortization |
803 |
715 |
2,570 |
2,075 |
Foreign exchange gain |
(50) |
(19) |
(46) |
(35) |
Operating expenses |
1,059 |
1,128 |
3,423 |
3,218 |
Total Expenses |
$ 52,864 |
$ 33,483 |
$ 131,776 |
$ 95,976 |
|
|
|
|
|
OPERATING INCOME |
$ 1,577 |
$ 856 |
$ 1,507 |
$ 2,730 |
Interest and other Income |
-- |
(8) |
-- |
(8) |
OPERATING INCOME BEFORE INCOME
TAX |
$ 1,577 |
$ 864 |
$ 1,507 |
$ 2,738 |
|
|
|
|
|
Income tax expense |
432 |
118 |
192 |
114 |
NET INCOME |
$ 1,145 |
$ 746 |
$ 1,315 |
$ 2,624 |
|
|
|
|
|
OTHER COMPREHENSIVE INCOME
(LOSS) |
|
|
|
|
Items that will subsequently be reclassified
to profit or loss: |
|
|
|
|
Gain (loss) on foreign exchange derivatives
designated as cash flow hedges, net of income tax expense of $45
and income tax recovery of $111 respectively for the three and
nine months ended September 30, 2013 (2012: expense of $78 and
$93) |
124 |
216 |
(308) |
257 |
Reclassification to net income of loss (gain)
on foreign exchange derivatives designated as cash flow hedges, net
of income tax recovery of $44 and $60, respectively, for the three
and nine months ended September 30, 2013 (2012 – expense of $18 and
$40) |
123 |
(50) |
168 |
(113) |
Other comprehensive income (loss) for
the period, net of income tax |
$ 247 |
$ 166 |
$ (140) |
$ 144 |
TOTAL COMPREHENSIVE
INCOME |
$ 1,392 |
$ 912 |
$ 1,175 |
$ 2,768 |
|
|
|
|
|
EARNINGS PER SHARE |
|
|
|
|
Basic earnings per share |
$ 0.08 |
$ 0.05 |
$ 0.09 |
$ 0.17 |
Diluted earnings per share |
$ 0.07 |
$ 0.05 |
$ 0.08 |
$ 0.17 |
|
|
Points International Ltd. |
Condensed Consolidated Interim
Statements of Changes in Equity |
|
|
Attributable to equity
holders of the Company |
Expressed in thousands of United States
dollars (Unaudited) |
Share Capital |
Contributed
Surplus |
Total Capital |
Unrealized gains (losses) on cash flow
hedges |
Accumulated other comprehensive income
(loss) |
Accumulated deficit |
Total shareholders'
equity |
|
|
|
|
|
|
|
|
Balance at December 31,
2012 |
$ 57,564 |
$ 10,105 |
$ 67,669 |
$ (54) |
$ (54) |
$ (39,788) |
$ 27,827 |
Net lncome |
-- |
-- |
-- |
-- |
-- |
1,315 |
1,315 |
|
|
|
|
|
|
|
|
Other comprehensive
loss |
-- |
-- |
-- |
(140) |
(140) |
-- |
(140) |
Total comprehensive
income |
-- |
-- |
-- |
(140) |
(140) |
1,315 |
1,175 |
Effect of share option compensation
plan |
-- |
462 |
462 |
-- |
-- |
-- |
462 |
Effect of RSU compensation
plan |
-- |
358 |
358 |
-- |
-- |
-- |
358 |
Share issuances |
1,544 |
(934) |
610 |
-- |
-- |
-- |
610 |
Share capital held in
trust |
(595) |
-- |
(595) |
-- |
-- |
-- |
(595) |
Balance at September 30,
2013 |
$ 58,513 |
$ 9,991 |
$ 68,504 |
$ (194) |
$ (194) |
$ (38,473) |
$ 29,837 |
|
|
|
|
|
|
|
|
Balance at December 31, 2011 |
$ 57,378 |
$ 9,671 |
$ 67,049 |
$ 43 |
$ 43 |
$ (48,050) |
$ 19,042 |
Net Income |
-- |
-- |
-- |
-- |
-- |
2,624 |
2,624 |
|
|
|
|
|
|
|
|
Other comprehensive income |
-- |
-- |
-- |
144 |
144 |
-- |
144 |
Total comprehensive income |
-- |
-- |
-- |
144 |
144 |
2,624 |
2,768 |
Effect of share option compensation plan |
-- |
475 |
475 |
-- |
-- |
-- |
475 |
Effect of RSU compensation plan |
-- |
166 |
166 |
-- |
-- |
-- |
166 |
Share issuances |
1,138 |
(426) |
712 |
-- |
-- |
-- |
712 |
Share capital held in trust |
(960) |
-- |
(960) |
-- |
-- |
-- |
(960) |
Balance at September 30, 2012 |
$ 57,556 |
$ 9,886 |
$ 67,442 |
$ 187 |
$ 187 |
$ (45,426) |
$ 22,203 |
|
|
Points International Ltd. |
Condensed Consolidated Interim
Statements of Cash Flows |
|
Expressed in thousands of United States
dollars (Unaudited) |
For the three months Ended |
For the nine months Ended |
|
September 30, 2013 |
September 30, 2012 |
September 30, 2013 |
September 30, 2012 |
Cash flows from operating
activities |
|
|
|
|
Net income for the period |
$ 1,145 |
$ 746 |
$ 1,315 |
$ 2,624 |
Adjustments for: |
|
|
|
|
Depreciation of property and
equipment |
229 |
155 |
892 |
424 |
Amortization of intangible assets |
574 |
560 |
1,678 |
1,651 |
Unrealized foreign exchange loss |
455 |
166 |
165 |
82 |
Equity-settled share-based payment
transactions |
292 |
222 |
820 |
641 |
Deferred income tax expense |
415 |
110 |
92 |
100 |
Unrealized net gain/loss on derivative
contracts designated as cash flow hedges |
335 |
225 |
(191) |
196 |
Changes in non-cash balances related to
operations |
1,321 |
365 |
3,289 |
(4,790) |
Net cash provided by operating
activities |
$ 4,766 |
$ 2,549 |
$ 8,060 |
$ 928 |
|
|
|
|
|
Cash flows from investing
activities |
|
|
|
|
Acquisition of property and equipment |
(101) |
(203) |
(742) |
(531) |
Additions to intangible assets |
(217) |
(216) |
(489) |
(509) |
Long-term Investment |
-- |
-- |
(2,500) |
-- |
Changes in restricted cash |
-- |
-- |
1,575 |
-- |
Purchase of convertible debenture |
-- |
-- |
-- |
(255) |
Net cash used in investing
activities |
$ (318) |
$ (419) |
$ (2,156) |
$ (1,295) |
|
|
|
|
|
Cash flows from financing
activities |
|
|
|
|
Proceeds from exercise of share options |
240 |
25 |
610 |
712 |
Payment for share purchases |
-- |
(472) |
(595) |
(960) |
Net cash provided by (used in)
financing activities |
$ 240 |
$ (447) |
$ 15 |
$ (248) |
|
|
|
|
|
Net increase (decrease) in cash and
cash equivalents |
$ 4,688 |
$ 1,683 |
$ 5,919 |
$ (615) |
Cash and cash equivalents at beginning of the
period |
46,646 |
32,640 |
45,108 |
34,853 |
Effect of exchange rate fluctuations on cash
held |
(459) |
(178) |
(152) |
(93) |
Cash and cash equivalents at end of
the period |
$ 50,875 |
$ 34,145 |
$ 50,875 |
$ 34,145 |
|
|
|
|
|
Interest Received |
$ 15 |
$ (2) |
$ 42 |
$ 16 |
Interest Paid |
$ -- |
$ (9) |
$ -- |
$ (9) |
|
|
|
|
|
Taxes Paid |
$ 14 |
$ 1 |
$ 53 |
$ 5 |
CONTACT: Addo Communications
Laura Bainbridge / Kimberly Esterkin
laurab@addocommunications.com / kimberlye@addocommunications.com
(310) 829-5400
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