– Gross Margin of $6.4 million, up 26% year-over-year
– Gross Margin Percentage increased approximately 500 basis points to 22.8% of revenues
– EBITDA of $1.1 million, up 257% year-over-year
– Net income of $0.6 million, or $0.04 per share
– Reiterate 2012 guidance; anticipates 15-20% organic revenue growth over 2011
TORONTO, May 3, 2012 (GLOBE NEWSWIRE) -- Points International Ltd. (TSX:PTS) (Nasdaq:PCOM), owner of the loyalty reward management program platform www.Points.com, today announced results for the first quarter ended March 31, 2012.
"We are pleased with our first quarter financial results, which were in-line with our expectations," said Chief Executive Officer Rob MacLean. "First quarter revenues reflect the timing of our partner and product launches, which we expected to be more heavily weighted in the second and fourth quarters of the year. In our first quarter, we saw a 22% year-over-year increase in our points/miles transacted across the platform, contributing to our significant growth in other partner revenue of nearly 52% over the same time period. In terms of profitability, our gross margin percentage benefitted from a favorable mix shift in our revenues during the quarter, reaching nearly 23% in Q1. When combined with our leveragable cost structure, we experienced meaningful improvements in our key profitability metrics. In fact, net income for the first quarter of 2012 reached $0.6 million, a marked improvement over a ($0.2) million net loss in the prior year period."
MacLean concluded, "As a result of our solid start to the year, we continue to maintain our 2012 guidance of 15-20% organic revenue growth based on the product and partners we have in-market today. We have also identified an additional $50 million, when annualized, in incremental revenue opportunities that are not currently included in our guidance. The quality of our pipeline continues to be very encouraging, and we are in discussions with several large partners that we expect to produce very positive results for Points going forward."
First Quarter 2012 Financial Results
Total revenue was $28.0 million for the first quarter of 2012. Revenue was in line with the first quarter of 2011 but down 15% from the $32.9 million in the fourth quarter of 2011. Principal revenue totaled $25.3 million, down 5% from the $26.7 million in same period last year and down 17% from the $30.5 million reported in the fourth quarter 2011. Other partner revenue was $2.7 million, up from $1.8 million in the first quarter 2011 and $2.4 million in the fourth quarter of 2011.
Gross margin dollars for the first quarter of 2012 totaled $6.4 million, or 22.8% of total revenue. This represents an increase in gross margin dollars from $5.1 million, or 17.9% of total revenue, in the first quarter of 2011 and a decrease from gross margin dollars of $6.8 million, or 20.7% of total revenue, in the fourth quarter of 2011. The year-over-year and sequential increase in gross margin percentages is primarily attributable to the relative mix of partner revenues in the first quarter.
EBITDA for the first quarter of 2012 was roughly $1.1 million, a significant increase from $313,000 year-over-year but down sequentially form $2.1 million in the fourth quarter of 2011. This solid increase year-over-year can be attributed to a combination of strong gross margin for the first quarter of 2012 combined with limited operating costs.
Net income for the first quarter of 2012 was $0.6 million, or $0.04 per share. This compares to a net loss of ($0.2) million or ($0.01) per share in the first quarter of 2011 and net income of $2.1 million, or $0.14 per share, in the fourth quarter of 2011.
As of March 31, 2012, total funds available, comprised of cash and cash equivalents together with security deposits, restricted cash and amounts with payment processors was $45.6 million, down from $49.8 million at the end of the fourth quarter 2011. The company remains debt free and is pleased with its overall financial position.
First Quarter 2011 Business Metrics
| Q1/12 | Q4/11 |
Q1/12 vs. Q4/11 |
Q1/11 |
Q1/12 vs. Q1/11 |
|
| TOTAL ALL CHANNELS | |||||
| Points/Miles Transacted (in 000s) | 3,755,710 | 3,953,087 | -5% | 3,066,878 | 22% |
| No. of Points/Miles Transactions | 364,176 | 336,251 | 8% | 342,012 | 6% |
| LOYALTY CURRENCY SERVICES | |||||
| Points/Miles Transacted (in 000s) | 3,282,092 | 3,305,358 | -1% | 2,764,000 | 19% |
| No. of Points/Miles Transactions | 344,245 | 302,847 | 14% | 321,326 | 7% |
| POINTS.COM CHANNELS | |||||
| Points/Miles Transacted (in 000s) | 473,618 | 647,729 | -27% | 302,878 | 56% |
| No. of Points/Miles Transactions | 19,931 | 33,404 | -40% | 20,686 | -4% |
| Cumulative Registered Users | 3,087,282 | 2,971,267 | 4% | 2,655,605 | 16% |
Investor Conference Call
Points' conference call with investors will be held today at 5:00 p.m. Eastern Time. To participate, investors from the US and Canada should dial (877) 941-1427 ten minutes prior to the start time. International dialers should call (480) 629-9664.
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 17, 2012 by dialing (877) 870-5176 in the U.S. or Canada or (858) 384-5517 internationally and entering the conference ID 4527135.
About Points International Ltd.
Points International Ltd. (TSX:PTS) (Nasdaq:PCOM), doing business as Points.com, is the global leader in reward currency management, providing multiple eCommerce and technology solutions to the world's leading loyalty brands. Points.com also manages www.points.com, the largest consumer rewards management platform that allows over 3 million users to trade, exchange and redeem points, miles and rewards. Points International was recently named the 5th largest Canadian software company and the 40th largest Canadian technology company by the 2012 Branham300 list.
Points.com's solutions enable the management and monetization of loyalty currencies, including frequent flyer miles, hotel points, retailer rewards and credit card points, as well as enhancing loyalty program consumer offerings and back-end operations for more than 40 partners worldwide. Points.com's SaaS products allow eCommerce merchants to add loyalty solutions to their online stores and reward customers for purchases.
For more information on Points.com, visit www.pointsinternational.com, follow us on Twitter (@pointsadvisor), fan us on Facebook (www.facebook.com/pointsfans) or read our blog (http://blog.points.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 our guidance for 2012 with respect to organic revenue growth, the size of our pipeline opportunity and our operating leverage. 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[1] | |||
| Expressed in thousands of United States dollars | For the three months ended | ||
| March 31, 2012 | December 31, 2011 | March 31, 2011 | |
| Total revenue | $28,038 | $32,929 | $28,473 |
| Direct cost of principal revenue | 21,632 | 26,106 | 23,385 |
| Gross margin | $6,406 | $6,823 | $5,088 |
| Gross margin % | 23% | 21% | 18% |
| Reconciliation of Operating Income to EBITDA[2] | |||
| Expressed in thousands of United States dollars | For the three months ended | ||
| March 31, 2012 | December 31, 2011 | March 31, 2011 | |
| Operating income (loss) | $501 | $1,452 | ($64) |
| Depreciation and amortization | 661 | 668 | 445 |
| Foreign exchange (gain) loss | (45) | 25 | (68) |
| EBITDA | $1,117 | $2,145 | $313 |
| [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, and foreign exchange) 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 Statements of Comprehensive Income (Loss) | ||
| Expressed in thousands of United States dollars, except per share amounts | ||
| (Unaudited) | ||
| For the three months ended March 31, | 2012 | 2011 |
| REVENUE | ||
| Principal | 25,340 | 26,697 |
| Other partner revenue | 2,689 | 1,771 |
| Interest | 9 | 5 |
| Total Revenue | 28,038 | 28,473 |
| EXPENSES | ||
| Direct cost of principal revenue | 21,632 | 23,385 |
| Employment costs | 3,594 | 3,244 |
| Marketing & communications | 406 | 279 |
| Technology services | 134 | 146 |
| Depreciation and amortization | 661 | 445 |
| Foreign exchange gain | (45) | (68) |
| Operating expenses | 1,155 | 1,106 |
| Total Expenses | 27,537 | 28,537 |
| OPERATING INCOME (LOSS) BEFORE INCOME TAX | 501 | (64) |
| Deferred income tax (recovery) expense | (73) | 125 |
| NET INCOME (LOSS) | 574 | (189) |
| OTHER COMPREHENSIVE (LOSS) INCOME | ||
| Gain on foreign exchange derivatives designated as cash flow hedges, net of income tax expense of $12 (2011: $60) | 34 | 153 |
| Reclassification to net income of gain on foreign exchange derivatives designated as cash flow hedges, net of income tax expense $18 (2011: $46) | (51) | (118) |
| Other comprehensive (loss) income for the year, net of income tax | (17) | 35 |
| TOTAL COMPREHENSIVE INCOME (LOSS) | 557 | (154) |
| EARNINGS PER SHARE | ||
| Basic earnings (loss) per share | 0.04 | (0.01) |
| Diluted earnings (loss) per share | 0.04 | (0.01) |
| Points International Ltd. | ||
| Condensed Consolidated Interim Balance Sheets | ||
| Expressed in thousands of United States dollars | ||
| (Unaudited) | ||
| As at | March 31, 2012 | December 31, 2011 |
| ASSETS | ||
| Current assets | ||
| Cash and cash equivalents | 37,622 | 34,853 |
| Restricted cash | 1,627 | 1,619 |
| Funds receivable from payment processors | 3,726 | 10,837 |
| Security deposits | 2,665 | 2,461 |
| Accounts receivable | 1,782 | 2,411 |
| Prepaid expenses and other assets | 1,146 | 1,013 |
| Total current assets | 48,568 | 53,194 |
| Non-current assets | ||
| Property and equipment | 1,765 | 1,712 |
| Intangible assets | 4,159 | 4,566 |
| Goodwill | 2,580 | 2,580 |
| Deferred tax assets | 1,664 | 1,575 |
| Other assets | 635 | 658 |
| Total non-current assets | 10,803 | 11,091 |
| Total assets | 59,371 | 64,285 |
| LIABILITIES | ||
| Current liabilities | ||
| Accounts payables and accrued liabilities | 3,033 | 3,455 |
| Payable to loyalty program partners | 34,621 | 40,048 |
| Provisions | 74 | 98 |
| Current portion of other liabilities | 566 | 765 |
| Total current liabilities | 38,294 | 44,366 |
| Non-current liabilities | ||
| Other liabilities | 891 | 877 |
| Total non-current liabilities | 891 | 877 |
| Total liabilities | 39,185 | 45,243 |
| SHAREHOLDERS' EQUITY | ||
| Share capital | 57,864 | 57,378 |
| Contributed surplus | 9,772 | 9,671 |
| Accumulated other comprehensive income | 26 | 43 |
| Accumulated deficit | (47,476) | (48,050) |
| Total shareholders' equity | 20,186 | 19,042 |
| Total liabilities and shareholders' equity | 59,371 | 64,285 |
| 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 gains (losses) on cash flow hedges |
Accumulated other comprehensive income (loss) |
Accumulated deficit |
Total shareholders' equity |
| (Unaudited) | |||||||
| Balance at December 31, 2011 | 57,378 | 9,671 | 67,049 | 43 | 43 | (48,050) | 19,042 |
| Net income | -- | -- | -- | -- | -- | 574 | 574 |
| Other comprehensive loss | -- | -- | -- | (17) | (17) | -- | (17) |
| Total comprehensive income | -- | -- | -- | (17) | (17) | 574 | 557 |
| Effect of share option compensation plan | |||||||
| -- | 201 | 201 | -- | -- | -- | 201 | |
| Effect of RSU compensation plan | |||||||
| -- | 17 | 17 | -- | -- | -- | 17 | |
| Share issuances | 486 | (117) | 369 | -- | -- | -- | 369 |
| Balance at March 31, 2012 | 57,864 | 9,772 | 67,636 | 26 | 26 | (47,476) | 20,186 |
| Balance at December 31, 2010 | 56,683 | 9,255 | 65,938 | 297 | 297 | (52,082) | 14,153 |
| Net loss | -- | -- | -- | -- | -- | (189) | (189) |
| Other comprehensive income | -- | -- | -- | 35 | 35 | -- | 35 |
| Total comprehensive loss | -- | -- | -- | 35 | 35 | (189) | (154) |
| Effect of share option compensation plan | |||||||
| -- | 169 | 169 | -- | -- | -- | 169 | |
| Share issuances | 65 | (17) | 48 | -- | -- | -- | 48 |
| Balance at March 31, 2011 | 56,748 | 9,407 | 66,155 | 332 | 332 | (52,271) | 14,216 |
| 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, | 2012 | 2011 |
| Cash flows from operating activities | ||
| Net income (loss) for the year | 574 | (189) |
| Adjustments for: | ||
| Depreciation of property and equipment | 131 | 103 |
| Amortization of intangible assets | 530 | 342 |
| Unrealized foreign exchange loss (gain) | 263 | (346) |
| Equity-settled share-based payment transactions | 218 | 169 |
| Deferred income tax (recovery) expense | (83) | 125 |
| Unrealized net (gain) loss on derivative contracts designated as cash flow hedges | (23) | 48 |
| Changes in non-cash balances related to operations | 1,368 | 2,393 |
| Net cash provided by operating activities | 2,978 | 2,645 |
| Cash flows from investing activities | ||
| Acquisition of property and equipment | (184) | (160) |
| Additions to intangible assets | (123) | (516) |
| Net cash used in investing activities | (307) | (676) |
| Cash flows from financing activities | ||
| Proceeds from exercise of share options | 369 | 48 |
| Net cash provided by financing activities | 369 | 48 |
| Net increase in cash and cash equivalents | 3,040 | 2,017 |
| Cash and cash equivalents at beginning of the year | 34,853 | 28,463 |
| Effect of exchange rate fluctuations on cash held | (271) | 330 |
| Cash and cash equivalents at end of the period | 37,622 | 30,810 |
| Interest Received | 10 | 6 |
| Interest Paid | -- | -- |