- Revenues of $202.4 million, an increase of 45% year-over-year
- 8 new partners announced or launched since the start of 2013
- Initiates 2014 revenue guidance of 25%-40% year-over-year growth
TORONTO, March 5, 2014 (GLOBE NEWSWIRE) -- Points (TSX:PTS) (Nasdaq:PCOM), global leader in loyalty currency management, today announced results for the fourth quarter and full-year ended December 31, 2013.
"2013 was another record year for Points," said Chief Executive Officer, Rob MacLean. "We finished the year on-target, with revenues increasing roughly 45% to $202 million and Adjusted EBITDA1 growing steadily during this aggressive growth period. Our performance reflects the contribution from new products and partners launched over the last twelve months as well as increased transactional activity among existing partners. In 2013, Points launched 15 new products with 5 new partners, most notably welcoming Southwest Airlines, Speedway, Finnair, and SVM Fuel Circle to our growing loyalty network."
"2013 was also an investment year for Points, in which we added key product functionality as well as began to set the groundwork for Points' open platform strategy. The opportunities that we are investing against are diverse – spanning from enhancing our mobile capabilities to broadening our payments functionality, improved data analytics capabilities and innovative enhancements to our white label products that we believe will create value within the loyalty landscape."
"Importantly, our positive momentum has continued into 2014. In February, we announced a new partnership with MasterCard Worldwide, where we will partner with their Loyalty Division to add value to the dozens of bank loyalty programs around the world that leverage the MasterCard Loyalty Platform. This partnership will dramatically expand our exposure to the Financial Services sector and will benefit not only those new relationships, but also many of our existing partnerships already in place. Additionally we recently launched Spirit Airlines on our network providing FREE SPIRIT members the ability to buy and gift their miles. And today, we are excited to announce the addition of Hilton Worldwide and the Hilton HHonors program to our partner network. Further details on the Hilton relationship will be shared at the launch of services."
"Our performance in 2013 and early results in 2014 translate into strong forecasted growth in 2014. Revenues are anticipated to grow from 25%-40%, led by growth in our organic business, as well as the contribution from new partners and products launched or announced over the last twelve months. With respect to profitability, we expect the business to demonstrate meaningful leverage, as we continue to drive oversized top-line growth across our increasingly efficient Loyalty Commerce Platform. As a result, we expect full-year Adjusted EBITDA to be in the range of $16-20 million, prior to making strategic investments."
Fourth Quarter 2013 Financial Results
(Unless otherwise stated, all comparisons for the fourth quarter of 2013 are on a year-over-year basis)
Revenues totaled $69.1 million up 69% from $40.8 million. Principal revenues totaled $66.9 million, up 75% from $38.1 million. The year-over-year increase in principal revenues was largely due to the impact of new partners launched over the last twelve months.
Gross margin2 dollars totaled $10.3 million, or 14.9% of total revenue, compared to $8.0 million, or 19.6% 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.
Adjusted EBITDA totaled $3.4 million up 118% from $1.6 million. Record revenue and gross margin dollars in the quarter combined with a steady total operating cost structure have resulted in the more than doubling of Adjusted EBITDA in the fourth quarter.
The Company reported net income of $2.3 million, or $0.15 per diluted share, compared to net income of $5.6 million, or $0.37 per share, in the fourth quarter of 2012. In the fourth quarter of 2012, the Company benefited from approximately $4.9 million in previously unrecognized deferred tax assets.
Fourth Quarter 2013 Business Metrics
| Q4/13 | Q4/12 |
Q4/13 vs. Q4/12 |
Q3/13 |
Q4/13 vs. Q3/13 |
|
| Total All Channels | |||||
| Points/Miles Transacted (in 000s) | 5,348,320 | 4,411,123 | 21.2% | 4,249,170 | 25.9% |
| No. of Points/Miles Transactions | 500,782 | 371,399 | 34.8% | 500,204 | 0.1% |
Full Year 2013 Results
Revenues were $202.4 million, up 45% from $139.5 million in 2012.
Gross margin dollars totaled $33.1 million, or 16.4% of revenue, compared to $28.6 million, or 20.5% of revenue, in 2012.
Adjusted EBITDA totaled $7.4 million, up 17% from $6.3 million in 2012.
Net income was $3.6 million, or $0.23 per diluted share, compared to net income of $8.3 million, or $0.54 per share, in 2012. Net income in 2012 benefited from the recognition of previously unrecognized deferred tax assets, which resulted in a recovery of $4.8 million for the year.
As of December 31, 2013, total funds available, comprised of cash and cash equivalents together with security deposits, restricted cash, and amounts with payment processors was $74.9 million. The Company remains debt free and is pleased with its overall financial position.
Outlook
The Company is initiating 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 $5-6 million for 2014.
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 March 19, 2014 by dialing (877) 870-5176 in the U.S. or Canada or (858) 384-5517 internationally and entering the conference ID 13574701.
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.
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.
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 | For the twelve months ended | |||
|
December 31, 2013 |
December 31, 2012 |
December 31, 2013 |
December 31, 2012 |
||
|
Net income Interest and other income |
$ 2,291 -- |
$ 5,638 1 |
$ 3,606 -- |
$ 8,262 (7) |
|
| Income tax expense (recovery) | 474 | (4,883) | 666 | (4,769) | |
| Depreciation and amortization | 715 | 728 | 3,285 | 2,803 | |
| Foreign exchange (gain) | (77) | (33) | (123) | (68) | |
| Impairment of long-lived assets | -- | 110 | -- | 110 | |
| Adjusted EBITDA | $ 3,403 | $ 1,561 | $ 7,434 | $ 6,331 | |
| Gross Margin Information2 | |||||
| Expressed in thousands of United States dollars | For the three months ended | For the twelve months ended | |||
|
|
December 31, 2013 |
December 31, 2012 |
December 31, 2013 |
December 31, 2012 |
|
|
Total Revenue Direct cost of principal revenue |
$ 69,087 58,785 |
$ 40,803 32,825 |
$ 202,370 169,266 |
$ 139,509 110,949 |
|
| Gross Margin | $ 10,302 | $ 7,978 | $ 33,104 | $ 28,560 | |
| Gross Margin % | 15% | 20% | 16% | 20% | |
| 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. | ||
| Consolidated Balance Sheets | ||
| As at December 31 | 2013 | 2012 |
| ASSETS | ||
| Current assets | ||
| Cash and cash equivalents | $ 64,188 | $ 45,108 |
| Restricted cash | 1,602 | 3,202 |
| Funds receivable from payment processors | 9,071 | 10,057 |
| Security deposits | -- | 2,780 |
| Accounts receivable | 1,401 | 1,912 |
| Prepaid expenses and other assets | 2,210 | 940 |
| Total current assets | $ 78,472 | $ 63,999 |
| Non-current assets | ||
| Property and equipment | 2,092 | 2,207 |
| Intangible assets | 1,855 | 2,856 |
| Goodwill | 2,580 | 2,580 |
| Deferred tax assets | 5,966 | 6,485 |
| Long-term Investment | 3,500 | -- |
| Other assets | 547 | 617 |
| Total non-current assets | $ 16,540 | $ 14,745 |
| Total assets | $ 95,012 | $ 78,744 |
| LIABILITIES | ||
| Current liabilities | ||
| Accounts payables and accrued liabilities | 4,783 | 4,673 |
| Payable to loyalty program partners | 56,111 | 44,912 |
| Current portion of other liabilities | 1,134 | 594 |
| Total current liabilities | $ 62,028 | $ 50,179 |
| Non-current liabilities | ||
| Other liabilities | 437 | 738 |
| Total non-current liabilities | $ 437 | $ 738 |
| Total liabilities | $ 62,465 | $ 50,917 |
| SHAREHOLDERS' EQUITY | ||
| Share capital | 58,693 | 57,564 |
| Contributed surplus | 10,381 | 10,105 |
| Accumulated other comprehensive loss | (345) | (54) |
| Accumulated deficit | (36,182) | (39,788) |
| Total shareholders' equity | $ 32,547 | $ 27,827 |
| Total liabilities and shareholders' equity | $ 95,012 | $ 78,744 |
| Points International Ltd. | |||||||
| Consolidated Statements of Comprehensive Income | |||||||
| Expressed in thousands of United States dollars, except per share amounts | For the three months ended | For the twelve months ended | |||||
|
December 31, 2013 |
December 31, 2012 |
December 31, 2013 |
December 31, 2012 |
||||
| REVENUE | |||||||
|
Principal Other partner revenue |
$ 66,910 2,157 |
$ 38,139 2,657 |
$ 193,880 8,431 |
$ 129,859 9,617 |
|||
| Interest | 20 | 7 | 59 | 33 | |||
| Total Revenue | 69,087 | 40,803 | 202,370 | 139,509 | |||
|
EXPENSES |
|||||||
| Direct cost of principal revenue | 58,785 | 32,825 | 169,266 | 110,949 | |||
| Employment costs | 5,201 | 4,373 | 18,934 | 15,368 | |||
| Marketing & communications | 223 | 439 | 1,066 | 1,520 | |||
| Technology services | 241 | 159 | 1,013 | 677 | |||
| Depreciation and amortization | 715 | 728 | 3,285 | 2,803 | |||
| Foreign exchange (gain) loss | (77) | (33) | (123) | (68) | |||
| Operating expenses | 1,234 | 1,446 | 4,657 | 4,664 | |||
| Impairment of long-lived assets | -- | 110 | -- | 110 | |||
| Total Expenses | 66,322 | 40,047 | 198,098 | 136,023 | |||
| OPERATING INCOME | 2,765 | 756 | 4,272 | 3,486 | |||
| Interest and other charges (income) | -- | 1 | -- | (7) | |||
| EARNINGS BEFORE INCOME TAXES | 2,765 | 755 | 4,272 | 3,493 | |||
| Income tax recovery | 474 | (4,883) | 666 | (4,769) | |||
| NET INCOME | 2,291 | 5,638 | 3,606 | 8,262 | |||
| OTHER COMPREHENSIVE (LOSS) INCOME | |||||||
| (Loss) gain on foreign exchange derivatives designated as cash flow hedges, net of income tax recovery of $222 (2012 – expense of $41) | (308) | (144) | (616) | 113 | |||
| Reclassification to net income of (loss) gain on foreign exchange derivatives designated as cash flow hedges, net of income tax recovery of $117 (2012 – expense of $75) |
157 |
(97) |
325 |
(210) |
|||
| Other comprehensive (loss) income for the period, net of income tax | (151) | (241) | (291) | (97) | |||
| TOTAL COMPREHENSIVE INCOME | $ 2,140 | $ 5,397 | $ 3,315 | $ 8,165 | |||
| EARNINGS PER SHARE | |||||||
| Basic earnings per share | $ 0.15 | $ 0.37 | $ 0.24 | $ 0.55 | |||
| Diluted earnings per share | $ 0.15 | $ 0.37 | $ 0.23 | $ 0.54 | |||
| Points International Ltd. | |||||||
| Consolidated Statements of Changes in Equity | |||||||
| Attributable to equity holders of the Corporation | |||||||
| Expressed in thousands of United States dollars | Share Capital | Contributed Surplus | Total Capital |
Unrealized gains/(losses) on cash flow hedges |
Accumulated other comprehensive (loss) income |
Accumulated deficit |
Total shareholders' equity |
| Balance at December 31, 2012 | $ 57,564 | $ 10,105 | $ 67,669 | $ (54) | $ (54) | $ (39,788) | $ 27,827 |
| Net income | -- | -- | -- | -- | -- | 3,606 | 3,606 |
| Other comprehensive loss | -- | -- | -- | (291) | (291) | -- | (291) |
| Total comprehensive income | -- | -- | -- | (291) | (291) | 3,606 | 3,315 |
| Effect of share option compensation plan | -- | 767 | 767 | -- | -- | -- | 767 |
| Effect of RSU compensation plan | -- | 497 | 497 | -- | -- | -- | 497 |
| Share issuances | 1,724 | (988) | 736 | -- | -- | -- | 736 |
| Share capital held in trust | (595) | -- | (595) | -- | -- | -- | (595) |
| Balance at December 31, 2013 | $ 58,693 | $ 10,381 | $ 69,074 | $ (345) | $ (345) | $ (36,182) | $ 32,547 |
| Attributable to equity holders of the Corporation | |||||||
| Expressed in thousands of United States dollars | Share Capital | Contributed Surplus | Total Capital |
Unrealized gains/(losses) on cash flow hedges |
Accumulated other comprehensive (loss) income |
Accumulated deficit |
Total shareholders' equity |
| Balance at December 31, 2011 | $ 57,378 | $ 9,671 | $ 67,049 | $ 43 | $ 43 | $ (48,050) | $ 19,042 |
| Net income | -- | -- | -- | -- | -- | 8,262 | 8,262 |
| Other comprehensive loss | -- | -- | -- | (97) | (97) | -- | (97) |
| Total comprehensive income | -- | -- | -- | (97) | (97) | 8,262 | 8,165 |
| Effect of share option compensation plan | -- | 607 | 607 | -- | -- | -- | 607 |
| Effect of RSU compensation plan | -- | 256 | 256 | -- | -- | -- | 256 |
| Share issuances | 1,146 | (429) | 717 | -- | -- | -- | 717 |
| Share capital held in trust | (960) | -- | (960) | -- | -- | -- | (960) |
| Balance at December 31, 2012 | $ 57,564 | $ 10,105 | $ 67,669 | $ (54) | $ (54) | $ (39,788) | $ 27,827 |
| Points International Ltd. | ||||
| Consolidated Statements of Cash Flows | ||||
| Expressed in thousands of United States dollars | For the three months ended | For the twelve months ended | ||
|
December 31, 2013 |
December 31, 2012 |
December 31, 2013 |
December 31, 2012 |
|
| Cash flows from operating activities | ||||
| Net income for the period | $ 2,291 | $ 5,638 | $ 3,606 | $ 8,262 |
| Adjustments for: | ||||
| Depreciation of property and equipment | 202 | 159 | 1,094 | 583 |
| Amortization of intangible assets | 513 | 569 | 2,191 | 2,220 |
| Unrealized foreign exchange loss (gain) | 117 | 145 | 282 | 227 |
| Equity-settled share-based payment transactions | 444 | 222 | 1,264 | 863 |
| Deferred income tax recovery | 532 | (4,976) | 624 | (4,876) |
| Impairment of long-lived assets | -- | 110 | -- | 110 |
| Unrealized net (gain) loss on derivative contracts designated as cash flow hedges | (205) | (327) | (396) | (131) |
| Changes in non-cash balances related to operations | 11,336 | 11,538 | 14,625 | 6,748 |
| Net cash provided by operating activities | 15,230 | 13,078 | 23,290 | 14,006 |
| Cash flows from investing activities | ||||
| Acquisition of property and equipment | (238) | (547) | (980) | (1,078) |
| Additions to intangible assets | (701) | (111) | (1,190) | (620) |
| Purchase of convertible debenture | -- | 255 | -- | -- |
| Long-term investment | (1,000) | -- | (3,500) | -- |
| Changes in restricted cash | -- | (1,575) | 1,575 | (1,575) |
| Net cash used in investing activities | (1,939) | (1,978) | (4,095) | (3,273) |
| Cash flows from financing activities | ||||
| Proceeds from exercise of share options | 126 | 5 | 736 | 717 |
| Share purchases | -- | -- | (595) | (960) |
| Net cash provided by (used in) financing activities | 126 | 5 | 141 | (243) |
| Net increase in cash and cash equivalents | 13,417 | 11,105 | 19,336 | 10,490 |
| Cash and cash equivalents at beginning of the period | 50,875 | 34,145 | 45,108 | 34,853 |
| Effect of exchange rate fluctuations on cash held | (104) | (142) | (256) | (235) |
| Cash and cash equivalents at end of the period | $ 64,188 | $ 45,108 | $ 64,188 | $ 45,108 |
| Interest Received | 19 | 15 | 61 | 31 |
| Interest Paid | -- | 2 | -- | (7) |