– Revenues of $67.1 million, an increase of 15% year-over-year
– Adjusted EBITDA1 of $3.6 million, an increase of 198% year-over-year
– Net income of $1.7 million, an increase of 287% year-over-year
TORONTO, May 4, 2015 (GLOBE NEWSWIRE) -- Points (TSX:PTS) (Nasdaq:PCOM), global leader in loyalty currency management, today announced results for the first quarter ended March 31, 2015.
"I am pleased to report that 2015 is off to a strong start, with Points delivering robust top- and bottom-line growth," said Rob MacLean, CEO of Points. "Importantly, our performance was right in-line with our expectations, and we are on track to deliver against our guidance for 2015."
Mr. MacLean continued, "Our record first quarter performance was driven by the continued expansion of our Loyalty Commerce Platform. Solid organic growth, strong performance of new partners and products introduced throughout 2014, and the completion of the conversion of United Airlines' Buy, Gift and Transfer products onto our platform, all contributed to these record results. Year-to-date, we have signed or launched 14 new products and 2 new partners to our platform, including onboarding 5 legacy partners onto our PointsHound product. We are also particularly pleased with our ability to expand our international presence and are excited to announce the signing of Hainan Airlines, one of China's largest carriers. We anticipate further positive announcements out of Asia in 2015."
"This year, we remain focused on expanding our platform's marketing and merchandising capabilities, as well as growing the breadth of product offerings connected to our platform. Our San Francisco team has been key to the development of our platform and consumer strategies. Having acquired PointsHound just one year ago, we have already begun to see the benefits of this acquisition come to bear. We have not only made strong progress on our loyalty wallet, a product we hope will be in-market in the second-half of the year, but we have also executed a new agreement with a major European loyalty program to host and power their private label hotel booking platform based on the PointsHound multi-currency bonus proposition. We have been actively developing our pipeline for this new white label product and are very pleased with the response to the offering thus far."
"We are certainly encouraged by our start to the year and our ability to deliver record first quarter results while still absorbing material changes in our partner and product mix. Starting in the second quarter, we will begin to absorb the restructuring of the American Airlines/US Airways relationship, the impact of which will manifest in our profitability metrics throughout the remainder of the year," Mr. MacLean concluded.
First Quarter 2015 Financial Results
(Unless otherwise stated, all comparisons for the first quarter of 2015 are on a year-over-year basis)
Revenues totaled $67.1 million, compared to $58.3 million. Principal revenues totaled $62.6 million, compared to $56.2 million. The year-over-year increase in principal revenues was largely due to the impact of new product and partner launches during the quarter combined with solid organic revenue growth, driven by a strong promotional calendar. Principal revenues for the first quarter of 2015 also reflect the official onboarding of the United Airlines partnership and the corresponding transition of United to a principal partner as of February 1, 2015. This was partially offset by the transition of US Airways to an agency partner beginning January 1, 2015.
Gross margin2 dollars totaled $11.3 million, or 16.8% of total revenue, compared to $8.3 million, or 14.2% of total revenue. As a percentage of revenue, gross margin reflects the relative mix of partner and product activity during the quarter. The year-over-year improvement in gross margin is largely due to changes in partner revenue mix, with a greater percentage of revenue coming from higher-margin business in the first quarter.
Adjusted EBITDA totaled $3.6 million, compared to $1.2 million. This year-over-year increase was largely due to the incremental gross margin contributed by new partner launches over the last 12 months, and to a lesser extent, a positive benefit from shifting foreign exchange rates.
Net income totaled $1.7 million, or $0.11 per diluted share, compared to a net income of $0.4 million, or $0.03 per diluted share.
As of March 31, 2015, total funds available, comprised of cash and cash equivalents together with restricted cash and amounts with payment processors, was $52.7 million. Net operating cash, which is defined as total funds available less amounts payable to loyalty program partners, was $9.1 million as of March 31, 2015. The Company remains debt free and is pleased with its overall financial position.
| ___________________ |
| 1 Adjusted EBITDA (Earnings before interest, taxes, depreciation and amortization, and foreign exchange) 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. |
First Quarter 2015 Business Metrics
| Q1/15 | Q1/14 |
Q1/15 vs. Q1/14 |
Q4/14 |
Q1/15 vs. Q4/14 |
|
| Total All Channels | |||||
| Points/Miles Transacted (in 000s) | 5,798,911 | 4,724,111 | 22.8% | 4,574,409 | 26.8% |
| No. of Points/Miles Transactions | 604,520 | 547,232 | 10.5% | 529,792 | 14.1% |
Outlook
"As is evident, we had a strong first quarter and remain very confident in our long-term growth outlook. The first quarter put us in a solid position to reiterate our guidance for 2015. While we will continue to invest against our core technology and product initiatives during the year and will absorb the impact of industry consolidation, we will demonstrate enhanced bottom-line growth and consistent positive operating cash flow throughout the year," Mr. MacLean noted.
The Company is maintaining guidance for the year ending December 31, 2015 as follows:
- Revenue is expected to grow 15% – 20% over 2014.
- Adjusted EBITDA is expected to grow 15% – 25% over 2014.
This guidance range contemplates contributions from partners and products that have been announced or are in market today only, including the impact of the American Airlines and US Airways restructuring.
Share Buyback
In the first quarter, the Company repurchased 112,176 of its common stock for a total of $1.1 million at an average price of $9.80 per share.
Repurchases will be made from time-to-time at Points' discretion, based on ongoing assessments of the Company's capital needs, share price, general market conditions and other factors. Repurchases may be effected through the facilities of the TSX, the NASDAQ Capital Market ("NASDAQ") or other alternative trading systems in the United States and Canada.
All purchases of common shares will be made in accordance with applicable securities laws and stock exchange rules of the United States and Canada. Repurchases on NASDAQ will be at the market price at the time of purchase in compliance with applicable securities laws of the United States, and repurchases on the TSX will be at the market price at the time of purchase in accordance with the rules and policies of the TSX. Purchases may also be made through other published markets, or by such other means as may be permitted by the TSX, NASDAQ and applicable law.
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.points.com and will be archived online upon completion of the call. A telephonic replay of the conference call will be available through Monday, May 18, 2015 by dialing (877) 870-5176 in the U.S. or Canada or (858) 384-5517 internationally and entering the conference ID 13606699.
Annual Shareholder Meeting
Points will host its 2015 Annual Shareholder Meeting on Tuesday, May 5th at 9 AM ET at the Hyatt Regency Toronto for all shareholders of record as of March 24, 2015.
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 50 partners worldwide. Points also manages Points.com, where more than 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 merchants and businesses to reward their customers with points and miles from the world's largest loyalty brands.
In 2014, Points acquired PointsHound, a hotel booking engine and loyalty currency aggregator built specifically for frequent travelers. PointsHound enables loyalty program members to earn loyalty points for staying in their favorite hotels and also to earn bonus rewards in the form of airline miles. Members of the free-to-use site have access to over 150,000 hotels worldwide, including boutique and non-chain properties.
Points has been widely recognized among the loyalty and technology communities alike. The Company was named the 7th largest Canadian software company and the 30th largest Canadian technology company by the 2015 Branham300 list. For more information on Points, please visit www.Points.com, follow us on Twitter (@PointsBiz) or read the Points company blog. For more information on PointsHound, please visit www.PointsHound.com.
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, opportunities for new products and partners and incremental revenue, and our guidance for 2015 with respect to revenue growth and Adjusted EBITDA expectations. 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 actual results may differ materially from those expressed or implied in such statements. Undue reliance should not be placed on such statements. In particular, the financial outlooks herein assume Points will be able to maintain its existing contractual relationships and products, that such products continue to perform in a manner consistent with Points' past experience, that Points 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 nor can there be any assurance that Points will be successful in maintaining its existing contractual relationships or maintaining existing products with existing partners. 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 Information3 | |||
| Expressed in thousands of United States dollars | For the three months ended | ||
|
|
March 31, 2015 | December 31, 2014 | March 31, 2014 |
| Total Revenue | $ 67,117 | $ 64,841 | $ 58,257 |
| Direct cost of principal revenue | 55,816 | 54,447 | 49,989 |
| Gross Margin | $ 11,301 | $ 10,394 | $ 8,268 |
| Gross Margin % | 17% | 16% | 14% |
| Reconciliation of Net Income to Adjusted EBITDA4 | |||
| Expressed in thousands of United States dollars | For the three months ended | ||
| March 31, 2015 | December 31, 2014 | March 31, 2014 | |
| Net income | $ 1,715 | $ 1,468 | $ 443 |
| Interest and other income | -- | -- | (5) |
| Income tax expense | 851 | 583 | 286 |
| Depreciation and amortization | 877 | 581 | 544 |
| Foreign exchange (gain) | 136 | 54 | (68) |
| Adjusted EBITDA | $ 3,579 | $ 2,686 | $ 1,200 |
_____________________
| 3 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. |
| 4 Adjusted EBITDA (Earnings before interest, taxes, depreciation and amortization, and foreign exchange) 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. |
| Points International Ltd. | ||
| Condensed Consolidated Interim Balance Sheets | ||
| Expressed in thousands of United States dollars | ||
| (Unaudited) | ||
| As at |
March 31, 2015 |
December 31, 2014 |
|
ASSETS |
|
|
| Current assets | ||
| Cash and cash equivalents | $ 46,128 | $ 36,868 |
| Restricted cash | 2,297 | 1,573 |
| Funds receivable from payment processors | 4,260 | 6,691 |
| Accounts receivable | 2,144 | 2,305 |
| Prepaid expenses and other assets | 2,054 | 1,134 |
| Total current assets | $ 56,883 | $ 48,571 |
| Non-current assets | ||
| Property and equipment | 1,703 | 1,856 |
| Intangible assets | 18,176 | 18,320 |
| Goodwill | 7,130 | 7,130 |
| Deferred tax assets | 2,789 | 3,492 |
| Long-term investment | 5,000 | 5,000 |
| Other assets | 697 | 692 |
| Total non-current assets | $ 35,495 | $ 36,490 |
| Total assets | $ 92,378 | $ 85,061 |
| LIABILITIES | ||
| Current liabilities | ||
| Accounts payables and accrued liabilities | $ 4,047 | $ 6,260 |
| Payable to loyalty program partners | 43,634 | 36,030 |
| Current portion of other liabilities | 1,897 | 1,285 |
| Total current liabilities | $ 49,578 | $ 43,575 |
| Non-current liabilities | ||
| Other liabilities | 320 | 269 |
| Total non-current liabilities | $ 320 | $ 269 |
| Total liabilities | $ 49,898 | $ 43,844 |
| SHAREHOLDERS' EQUITY | ||
| Share capital | 61,437 | 61,084 |
| Contributed surplus | 11,496 | 11,985 |
| Accumulated other comprehensive loss | (670) | (354) |
| Accumulated deficit | (29,783) | (31,498) |
| Total shareholders' equity | $ 42,480 | $ 41,217 |
| Total liabilities and shareholders' equity | $ 92,378 | $ 85,061 |
| Guarantees, Commitments and Contingencies | ||
| Points International Ltd. | ||
| Condensed Consolidated Interim Statements of Comprehensive Income | ||
| Expressed in thousands of United States dollars, except per share amounts | ||
| (Unaudited) | ||
| For the three months ended March 31, | 2015 | 2014 |
| REVENUE | ||
| Principal | $ 62,625 | $ 56,162 |
| Other partner revenue | 4,476 | 2,076 |
| Interest | 16 | 19 |
| Total Revenue | $ 67,117 | $ 58,257 |
| EXPENSES | ||
| Direct cost of principal revenue | 55,816 | 49,989 |
| Employment costs | 5,924 | 5,505 |
| Marketing and communications | 275 | 198 |
| Technology services | 270 | 219 |
| Depreciation and amortization | 877 | 544 |
| Foreign exchange gain (loss) | 136 | (68) |
| Operating expenses | 1,253 | 1,146 |
| Total Expenses | $ 64,551 | $ 57,533 |
| OPERATING INCOME | $ 2,566 | $ 724 |
| Interest and other income | -- | (5) |
| OPERATING INCOME BEFORE INCOME TAXES | $ 2,566 | $ 729 |
| Income tax expense | 851 | 286 |
| NET INCOME | $ 1,715 | $ 443 |
| OTHER COMPREHENSIVE INCOME | ||
| 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 $202 (2014: $118) | (560) | (326) |
| Reclassification to net income of loss on foreign exchange derivatives designated as cash flow hedges, net of income tax recovery $88 (2014: $70) | 244 | 195 |
| Other comprehensive loss for the period, net of income tax | $ (316) | $ (131) |
| TOTAL COMPREHENSIVE INCOME | $ 1,399 | $ 312 |
| EARNINGS PER SHARE | ||
| Basic earnings per share | $ 0.11 | $ 0.03 |
| Diluted earnings per share | $ 0.11 | $ 0.03 |
| 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 losses on cash flow hedges |
Accumulated other comprehensive loss |
Accumulated deficit |
Total shareholders' equity |
| Balance at December 31, 2014 | $ 61,084 | $ 11,985 | $ 73,069 | $ (354) | $ (354) | $ (31,498) | $ 41,217 |
| Net lncome | -- | -- | -- | -- | -- | 1,715 | 1,715 |
| Other comprehensive loss | -- | -- | -- | (316) | (316) | -- | (316) |
| Total comprehensive income | -- | -- | -- | (316) | (316) | 1,715 | 1,399 |
| Effect of share option compensation plan | -- | 228 | 228 | -- | -- | -- | 228 |
| Effect of RSU and PSU compensation plan | -- | 273 | 273 | -- | -- | -- | 273 |
| Share issuances | 704 | (473) | 231 | -- | -- | -- | 231 |
| Shares repurchased | (351) | (517) | (868) | -- | -- | -- | (868) |
| Balance at March 31, 2015 | $ 61,437 | $ 11,496 | $ 72,933 | $ (670) | $ (670) | $ (29,783) | $ 42,480 |
| 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 |
| 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, | 2015 | 2014 |
|
Cash flows from operating activities |
||
| Net income for the period | $ 1,715 | $ 443 |
| Adjustments for: | ||
| Depreciation of property and equipment | 269 | 252 |
| Amortization of intangible assets | 608 | 292 |
| Unrealized foreign exchange loss (gain) | (996) | 16 |
| Equity-settled share-based payment transactions | 501 | 330 |
| Deferred income tax expense | 817 | 263 |
| Unrealized loss on derivative contracts designated as cash flow hedges | (430) | (179) |
| Changes in non-cash balances related to operations | 7,951 | (6,242) |
| Net cash provided by (used in) operating activities | $ 10,435 | $ (4,825) |
| Cash flows from investing activities | ||
| Acquisition of property and equipment | (116) | (137) |
| Additions to intangible assets | (464) | (350) |
| Changes in restricted cash | (750) | -- |
| Net cash used in investing activities | $ (1,330) | $ (487) |
| Cash flows from financing activities | ||
| Proceeds from exercise of share options | 231 | 73 |
| Shares repurchased | (1,099) | -- |
| Net cash (used in) provided by financing activities | $ (868) | $ 73 |
| Net increase (decrease) in cash and cash equivalents | $ 8,237 | $ (5,239) |
| Cash and cash equivalents at beginning of the period | $ 36,868 | $ 64,188 |
| Effect of exchange rate fluctuations on cash held | 1,023 | (4) |
| Cash and cash equivalents at end of the period | $ 46,128 | $ 58,945 |
| Interest Received | $ 16 | $ 25 |
| Interest Paid | $ -- | $ -- |
| Taxes Received | $ -- | $ -- |
| Taxes Paid | $ 176 | $ 3 |
|
Amounts paid and received for interest were reflected as operating cash flows in the condensed consolidated interim statements of cash flows. |
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