– Revenues of $58.3 million, an increase of 58%
year-over-year
– Adjusted EBITDA1 of $1.2 million, an increase
of 127% year-over-year
– Net Income of $443 thousand, compared to a net
loss of $48 thousand in the prior year period
– 4 new partners announced or launched since
start of 2014 including Hilton Worldwide and MasterCard
Worldwide
Points (TSX:PTS) (Nasdaq:PCOM), global leader in loyalty currency
management, today announced results for the first quarter ended
March 31, 2014.
"The year is off to a strong start, characterized by strong
financial performance, ongoing platform expansion and strategic
investments," said Chief Executive Officer, Rob MacLean. "Revenues
grew nearly 60% year-over-year, driven by the successful
on-boarding of several new loyalty partners over the past twelve
months as well as the continued expansion of our existing loyalty
network through new product launches and strong marketing and
merchandising efforts. Led by our robust growth in revenue
and gross margin2 dollars, Adjusted EBITDA more than doubled over
the prior year period, all while the company continues to make
strategic investments in our future growth opportunities."
MacLean continued, "Throughout the course of 2013 we
strengthened our foundation through both the growth of our existing
partner network as well as through several significant and
strategic loyalty program partner additions. This momentum has
carried into 2014 as evidenced by the recent additions of
MasterCard, Hilton, Spirit Airlines and most recently, Etihad
Airlines to the Points partner network. Our new partnership with
Etihad will give businesses and merchants in the UK, Europe,
Middle East and Africa regions access to miles from Etihad Airways'
well established and globally recognized Etihad
Guest frequent flyer program, to incentivize customers and
grow revenues. We are thrilled to be able to offer our innovative
solutions to additional Loyalty Programs around the world in
support of our broader mission to make loyalty programs more
valuable and engaging."
"Innovation will continue to be a prevailing theme throughout
2014," added MacLean. "We are particularly excited about our
recently announced acquisition of PointsHound and our ability to
leverage the PointsHound team and technology to drive advancements
across our Loyalty Currency Platform, particularly with respect to
our open platform strategy."
First Quarter 2014 Financial Results
(Unless otherwise stated, all comparisons for the First Quarter
of 2014 are on a year-over-year basis)
Revenues totaled $58.3 million up 58% from $36.9 million.
Principal revenues totaled $56.2 million, up 62% from $34.6
million. The year-over-year increase in principal revenues was
largely due to the impact of new partners launched over the course
of 2013 as well as the growth from existing partners through strong
marketing and merchandising efforts.
Gross margin dollars totaled $8.3 million, or 14.2% of total
revenue, compared to $6.7 million, or 18.0% of total revenue. The
increase in gross margin dollars was largely driven by the impact
of new partnerships launched over the course of 2013. As a
percentage of revenue, gross margin reflects the relative mix of
partner and product activity during the quarter.
Adjusted EBITDA totaled $1.2 million up 127% from $529 thousand.
Revenue and gross margin growth outpacing that of operating expense
contributed to the strong year-over-year increase in Adjusted
EBITDA.
Net income totaled $443 thousand, or $0.03 per diluted share,
compared to a net loss of $48 thousand, or break-even per
share.
As of March 31, 2014, total funds available, comprised of cash
and cash equivalents together with security deposits, restricted
cash, and amounts with payment processors was $66.2
million. The Company remains debt free and is pleased with its
overall financial position.
First Quarter 2014 Business Metrics
|
|
Q1/14 |
Q1/13 |
Q1/14 vs.
Q1/13 |
Q4/13 |
Q1/14 vs.
Q4/13 |
TOTAL ALL CHANNELS |
|
|
|
|
|
Points/Miles Transacted
(in 000s) |
4,724,111 |
4,420,726 |
6.9% |
5,348,320 |
(11.7%) |
No. of Points/Miles
Transactions |
547,232 |
377,845 |
44.8% |
500,782 |
9.3% |
|
Outlook
The Company is providing financial guidance for the year ending
December 31, 2014, as follows:
- Revenue is expected to grow in the range of 25% - 40% over
2013. This revenue range contemplates organic growth within Points'
existing business as well as the contribution from partners and
products announced or launched since 2013.
- Adjusted EBITDA is expected to be in the range of $16 - $20
million, prior to making strategic investments.
- Strategic investments are expected to be in the range of $5 -
$7 million for 2014, a slight increase from the Company's prior
outlook to account for the PointsHound transaction.
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) 407-0784 ten minutes prior to the
start time. International dialers should call (201)
689-8560.
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 May 22,
2014 by dialing (877) 870-5176 in the U.S. or Canada or (858)
384-5517 internationally and entering the conference ID
13580620.
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 approximately 50
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 36th 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
Company 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 2014 with respect to revenue growth,
Adjusted 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 |
|
|
|
|
Reconciliation of Net Income to
Adjusted EBITDA1 |
|
|
|
|
Expressed in thousands of United States
dollars |
For the three months ended |
|
|
|
|
|
March 31, 2014 |
December 31, 2013 |
March 31, 2013 |
|
|
|
|
Net income |
$ 443 |
$ 2,291 |
$ (48) |
Interest and other income |
(5) |
-- |
-- |
Income tax expense (recovery) |
286 |
474 |
(370) |
Depreciation and amortization |
544 |
715 |
919 |
Foreign exchange (gain) |
(68) |
(77) |
28 |
Adjusted EBITDA |
$ 1,200 |
$ 3,403 |
$ 529 |
|
|
|
|
|
|
|
|
Gross Margin Information2 |
|
|
|
|
Expressed in thousands of United States
dollars |
For the three months ended |
|
|
|
|
|
March 31, 2014 |
December 31, 2013 |
March 31, 2013 |
|
|
|
|
Total Revenue |
$ 58,257 |
$ 69,087 |
$ 36,918 |
Direct cost of principal revenue |
49,989 |
58,785 |
30,259 |
Gross Margin |
$ 8,268 |
$ 10,302 |
$ 6,659 |
Gross Margin % |
14% |
15% |
18% |
|
|
|
|
1 Adjusted EBITDA (Earnings
before interest, taxes, depreciation and amortization, foreign
exchange, and impairment) is considered by Management to be a
useful supplemental measure when assessing financial
performance. Management believes that Adjusted EBITDA is an
important indicator of the Corporation's ability to generate
liquidity through operating cash flow to fund future capital
expenditures and working capital needs. However, Adjusted EBITDA is
not a measure of financial performance under IFRS and should not be
considered a substitute for Net Income, which we believe to be the
most directly comparable IFRS measure. |
2 Gross Margin is defined as
total revenues less the direct cost of principal revenues. Gross
Margin is considered by Management to be an integral measure of
financial performance and represents the amount of revenues
retained by the Corporation after incurring direct costs. However,
gross margin is not a recognized measure of profitability under
IFRS. |
|
|
|
|
|
|
Points International Ltd. |
Condensed Consolidated Interim
Balance Sheets |
|
|
|
Expressed in thousands of United
States dollars |
(Unaudited) |
|
|
|
As at |
March 31, |
December 31, |
|
2014 |
2013 |
|
|
|
ASSETS |
|
|
Current assets |
|
|
Cash and cash equivalents |
$ 58,945 |
$ 64,188 |
Restricted cash |
1,590 |
1,602 |
Funds receivable from payment
processors |
5,651 |
9,071 |
Accounts receivable |
1,263 |
1,401 |
Prepaid expenses and other
assets |
2,599 |
2,210 |
Total current assets |
$ 70,048 |
$ 78,472 |
|
|
|
Non-current
assets |
|
|
Property and equipment |
1,977 |
2,092 |
Intangible assets |
1,915 |
1,855 |
Goodwill |
2,580 |
2,580 |
Deferred tax assets |
5,749 |
5,966 |
Long-term Investment |
3,500 |
3,500 |
Other assets |
579 |
547 |
Total non-current
assets |
$ 16,300 |
$ 16,540 |
Total assets |
$ 86,348 |
$ 95,012 |
|
|
|
LIABILITIES |
|
|
Current liabilities |
|
|
Accounts payables and accrued
liabilities |
3,546 |
4,783 |
Payable to loyalty program
partners |
47,896 |
56,111 |
Current portion of other
liabilities |
1,268 |
1,134 |
Total current
liabilities |
$ 52,710 |
$ 62,028 |
|
|
|
Non-current liabilities |
|
|
Other liabilities |
376 |
437 |
Total non-current
liabilities |
$ 376 |
$ 437 |
|
|
|
Total liabilities |
$ 53,086 |
$ 62,465 |
|
|
|
SHAREHOLDERS' EQUITY |
|
|
Share capital |
58,948 |
58,693 |
Contributed surplus |
10,529 |
10,381 |
Accumulated other comprehensive
loss |
(476) |
(345) |
Accumulated deficit |
(35,739) |
(36,182) |
Total shareholders'
equity |
$ 33,262 |
$ 32,547 |
Total liabilities and shareholders'
equity |
$ 86,348 |
$ 95,012 |
|
|
|
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 March
31, |
2014 |
2013 |
|
|
|
REVENUE |
|
|
Principal |
$ 56,162 |
$ 34,600 |
Other partner revenue |
2,076 |
2,304 |
Interest |
19 |
14 |
Total Revenue |
$ 58,257 |
$ 36,918 |
|
|
|
EXPENSES |
|
|
Direct cost of principal
revenue |
49,989 |
30,259 |
Employment costs |
5,505 |
4,495 |
Marketing and
communications |
198 |
269 |
Technology services |
219 |
235 |
Depreciation and
amortization |
544 |
919 |
Foreign exchange gain
(loss) |
(68) |
28 |
Operating expenses |
1,146 |
1,131 |
Total Expenses |
$ 57,533 |
$ 37,336 |
|
|
|
OPERATING INCOME (LOSS) |
$724 |
($418) |
|
|
|
Interest and other income |
(5) |
-- |
OPERATING INCOME (LOSS) BEFORE INCOME
TAXES |
$ 729 |
$ (418) |
|
|
|
Income tax expense
(recovery) |
286 |
(370) |
NET INCOME (LOSS) |
$ 443 |
$ (48) |
|
|
|
OTHER COMPREHENSIVE
LOSS |
|
|
Items that will subsequently be
reclassified to profit or loss: |
|
|
Loss on foreign exchange
derivatives designated as cash flow hedges, net of income tax
recovery of $118 (2013: $39) |
(326) |
(108) |
Reclassification to net income
of loss on foreign exchange derivatives designated as cash flow
hedges, net of income tax recovery $70 (2013: $11) |
195 |
32 |
|
|
|
|
|
|
Other comprehensive loss for the
period, net of income tax |
$ (131) |
$ (76) |
TOTAL COMPREHENSIVE INCOME
(LOSS) |
$ 312 |
$ (124) |
|
|
|
EARNINGS (LOSS) PER
SHARE |
|
|
Basic earnings (loss) per
share |
$ 0.03 |
$ (0.00) |
Diluted earnings (loss) per
share |
$ 0.03 |
$ (0.00) |
|
|
|
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 |
Share Capital |
Contributed Surplus |
Total Capital |
Unrealized losses on cash flow
hedges |
Accumulated other comprehensive
loss |
Accumulated deficit |
Total shareholders'
equity |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31,
2013 |
$ 58,693 |
$ 10,381 |
$ 69,074 |
$ (345) |
$ (345) |
$ (36,182) |
$ 32,547 |
Net lncome |
-- |
-- |
-- |
-- |
-- |
443 |
443 |
Other comprehensive
loss |
-- |
-- |
-- |
(131) |
(131) |
-- |
(131) |
Total comprehensive
income |
|
|
|
(131) |
(131) |
443 |
312 |
Effect of share option compensation
plan |
-- |
179 |
179 |
-- |
-- |
-- |
179 |
Effect of RSU compensation
plan |
-- |
151 |
151 |
-- |
-- |
-- |
151 |
Share issuances |
255 |
(182) |
73 |
-- |
-- |
-- |
73 |
Balance at March 31,
2014 |
$ 58,948 |
$ 10,529 |
$ 69,477 |
$ (476) |
$ (476) |
$ (35,739) |
$ 33,262 |
|
|
|
|
|
|
|
|
Balance at December 31, 2012 |
$ 57,564 |
$ 10,105 |
$ 67,669 |
$ (54) |
$ (54) |
$ (39,788) |
$ 27,827 |
Net loss |
-- |
-- |
-- |
-- |
-- |
(48) |
(48) |
Other comprehensive loss |
-- |
-- |
-- |
(76) |
(76) |
-- |
(76) |
Total comprehensive loss |
-- |
-- |
-- |
(76) |
(76) |
(48) |
(124) |
Effect of share option compensation plan |
-- |
134 |
134 |
-- |
-- |
-- |
134 |
Effect of RSU compensation plan |
-- |
102 |
102 |
-- |
-- |
-- |
102 |
Share issuances |
364 |
(176) |
188 |
-- |
-- |
-- |
188 |
Balance at March 31, 2013 |
$ 57,928 |
$ 10,165 |
$ 68,093 |
$ (130) |
$ (130) |
$ (39,836) |
$ 28,127 |
|
|
|
|
|
|
|
|
Points International Ltd. |
Condensed Consolidated Interim
Statements of Cash Flows |
Expressed in thousands of United
States dollars |
(Unaudited) |
|
|
|
For the three months ended March
31, |
2014 |
2013 |
|
|
|
Cash flows from operating
activities |
|
|
Net income for the period |
$ 443 |
$ (48) |
Adjustments for: |
|
|
Depreciation of property and
equipment |
252 |
372 |
Amortization of intangible
assets |
292 |
547 |
Unrealized foreign exchange
loss (gain) |
973 |
(371) |
Equity-settled share-based
payment transactions |
330 |
236 |
Deferred income tax (recovery)
expense |
263 |
(424) |
Unrealized loss on derivative contracts
designated as cash flow hedges |
(179) |
(103) |
Changes in non-cash balances related to
operations |
(6,242) |
(5,765) |
Net cash used in operating
activities |
$ (3,868) |
$ (5,556) |
|
|
|
Cash flows from investing
activities |
|
|
Acquisition of property and equipment |
(137) |
(405) |
Additions to intangible assets |
(350) |
(101) |
Long-term Investment |
-- |
(1) |
Net cash used in investing
activities |
$ (487) |
$ (507) |
|
|
|
Cash flows from financing
activities |
|
|
Proceeds from exercise of share options |
73 |
188 |
Net cash provided by financing
activities |
$ 73 |
$ 188 |
|
|
|
Net increase in cash and cash
equivalents |
$ (4,282) |
$ (5,875) |
Cash and cash equivalents at beginning of the
period |
$ 64,188 |
$ 45,108 |
Effect of exchange rate fluctuations on cash
held |
(961) |
378 |
Cash and cash equivalents at end of
the period |
$ 58,945 |
$ 39,611 |
|
|
|
Interest Received |
$ 25 |
$ 17 |
Interest Paid |
$ -- |
$ -- |
|
|
|
Taxes Received |
$ -- |
$ -- |
Taxes Paid |
$ 3 |
$ 38 |
|
|
|
Amounts paid and received for interest were reflected as
operating cash flows in the condensed consolidated interim
statements of cash flows.
CONTACT: Addo Communications
Laura Bainbridge
laurab@addocommunications.com
(310) 829-5400
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