-- Revenue of $34.3 million, up 19% year-over-year
-- Gross Margin of $7.0 million, up 11% year-over-year
-- Reiterate 2012 guidance; anticipates 15-20% organic revenue growth over 2011
TORONTO, Nov. 7, 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 third quarter ended September 30, 2012.
"The third quarter represented another period of solid financial progress for Points International, with revenues up 19% and gross margins up 11% year-over-year," said Points Chief Executive Officer Rob MacLean. "Our profitability metrics for the quarter continue to reflect strategic investments to support the long-term growth of our business. Importantly, we are on track to meet our financial objective of 15-20% organic revenue growth in 2012."
MacLean continued, "Critical to the ongoing growth of our platform is adding additional partners as well as enhancing our existing partner relationships. We are pleased to have made progress against both of these objectives since the end of the second quarter of 2012. With that said, we recently welcomed both Wyndham Hotel Group's Wyndham Rewards and Meliá Hotels Mas Rewards to the Points partner platform, further expanding our penetration in the hospitality space. We also extended our Corporate Platform by welcoming leaders in the gasoline loyalty markets, Speedway Speedy Rewards and SVM Fuel Circle, to our platform. We are also proud to announce the expansion of our relationships with current partners Virgin Atlantic, Scandinavian Airlines, Lufthansa, Icelandair, Alitalia and La Quinta Hotels. Each of these partners has added products or applications since the end of Q2 2012."
MacLean concluded, "Further extending our international footprint, we are excited to announce our minority investment, alongside the global loyalty company Aimia, in China Rewards, a retail coalition loyalty program start-up based in Shanghai, China. While the near-term contribution of this minority investment is not expected to be meaningful, given China Rewards' long-term partnership with China Union Pay, one of the world's largest network operators and the only domestic payment card in China, this partnership will offer Points an immediate and credible presence in the rapidly growing Chinese market."
Third Quarter 2012 Financial Results
Total revenue of $34.3 million was up 19% from $28.8 million in the third quarter of 2011 and down 5.5% from $36.3 million in the prior quarter. Principal revenue totaled $32.2 million, up 20% from $26.9 million in the third quarter of 2011 but down 6.0% from $34.2 million in the prior quarter. Other partner revenue was $2.2 million, up 13% from $1.9 million in the third quarter of 2011 and flat with the prior quarter. The accelerated year-over-year increase in revenue was largely due to organic growth of existing partnerships, and, to a lesser extent, the impact of new products and partners launched over the past twelve months.
Gross margin totaled $7.0 million, or 21% of total revenue, a solid 11% increase from $6.3 million, or 22.0% of total revenue, in the third quarter of 2011 and roughly flat with $7.1 million, or 20% of total revenue, in the prior quarter. The year-over-year increase in gross margin was reflective of the organic growth of current partnerships, the impact of new partners and products launched over the past twelve months, and the relative mix of partner and product sales.
The Company has continued to focus on strategic investments and hires for the long-term growth of Points International. In light of these investments, EBITDA was $1.6 million in the third quarter. This compares to $1.9 million in the third quarter of 2011 and $2.1 million in the prior quarter. On a year-to-date basis, EBITDA increased 32% over the prior nine month period, benefitting from incremental gross margin dollars on higher revenue.
Net income was $0.7 million, or $0.05 per share. This compares to net income of $1.7 million, or $0.11 per share in the third quarter of 2011, and net income of $1.3 million, or $0.09 per share, in the prior quarter. The year-over-year decrease in net income was largely due to a combination of lower EBITDA, higher depreciation and amortization charges, and a deferred tax recovery recorded in the prior-year quarter.
As of September 30, 2012, total funds available, comprised of cash and cash equivalents together with security deposits, restricted cash and amounts with payment processors, was $45.5 million, up from $44.0 million at June 30, 2012. The company remains debt free and is pleased with its overall financial position.
Third Quarter 2012 Business Metrics
| Q3/12 | Q3/11 | Q3/12 vs. Q3/11 | Q2/12 | Q3/12 vs. Q2/12 | |
| TOTAL ALL CHANNELS | |||||
| Points/Miles Transacted (in 000s) | 3,496,314 | 3,337,367 | 5% | 3,455,853 | 1% |
| No. of Points/Miles Transactions | 345,929 | 327,640 | 6% | 390,244 | (11%) |
| LOYALTY CURRENCY SERVICES | |||||
| Points/Miles Transacted (in 000s) | 3,067,276 | 2,979,925 | 3% | 3,056,598 | 0% |
| No. of Points/Miles Transactions | 325,470 | 306,195 | 6% | 328,722 | (1%) |
| POINTS.COM CHANNELS | |||||
| Points/Miles Transacted (in 000s) | 429,038 | 357,442 | 20% | 399,255 | 7.5% |
| No. of Points/Miles Transactions | 20,459 | 21,445 | (5%) | 61,522 | (67%) |
| Cumulative Registered Users | 3,356,522 | 2,837,801 | 18% | 3,235,685 | 4% |
Corporate Development
Subsequent to the quarter end, Points International, along with partner Aimia, entered into an agreement to invest up to $5.0 million each into China Rewards, a retail coalition loyalty program start-up based in Shanghai, China. Despite being one of the world's largest economies, China's loyalty market is still in the very early stages of development. As a result, Points views its minority stake in China Rewards as a long-term investment that offers the Company an early opportunity to partner locally and begin building a presence in one of the world's largest economies.
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) 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 21, 2012 by dialing (877) 870-5176 in the U.S. or Canada or (858) 384-5517 internationally and entering the conference ID 401228.
About Points International Ltd.
Points International Ltd. (TSX:PTS) (Nasdaq:PCOM), is the owner and operator of Points.com, the global leader in reward currency management providing multiple eCommerce and technology solutions to the world's top loyalty brands. Points.com also manages the largest consumer rewards management platform, allowing more than 3 million users to trade, track, exchange, and redeem their loyalty points, miles, and rewards.
Recently, Points International was the recipient of several prestigious awards; the Company was named the 5th largest Canadian software company and the 40th largest Canadian technology company by the 2012 Branham300 list as well as ranked 40th by PROFIT Magazine's top 200 Canadian companies by five-year revenue growth for 2012.
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. Further, 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 Margin1 | ||||
| Expressed in thousands of United States dollars | For the three months ended | For the nine months ended | ||
| September 30, 2012 | September 30, 2011 | September 30, 2012 | September 30, 2011 | |
| Total revenue | $34,339 | $28,807 | $98,706 | $90,005 |
| Direct cost of principal revenue | 27,300 | 22,491 | 78,124 | 72,395 |
| Gross margin | $7,039 | $6,316 | $20,582 | $17,610 |
| Gross margin % | 21% | 22% | 21% | 20% |
| Reconciliation of Operating Income to EBITDA2 | ||||
| Expressed in thousands of United States dollars | For the three months ended | For the nine months ended | ||
| September 30, 2012 | September 30, 2011 | September 30, 2012 | September 30, 2011 | |
| Operating income | $856 | $1,298 | $2,730 | $2,068 |
| Depreciation and amortization | 715 | 622 | 2,075 | 1,630 |
| Foreign exchange (gain) loss | (19) | 4 | (35) | (88) |
| EBITDA | $1,552 | $1,924 | $4,770 | $3,610 |
| 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 | ||||
| Expressed in thousands of United States dollars, except per share amounts | ||||
| (Unaudited) | For the three months ended | For the nine months ended | ||
| September 30, 2012 | September 30, 2011 | September 30, 2012 | September 30, 2011 | |
| REVENUE | ||||
| Principal | $32,172 | $26,900 | $91,720 | $84,363 |
| Other partner revenue | 2,159 | 1,903 | 6,960 | 5,629 |
| Interest | 8 | 4 | 26 | 13 |
| Total Revenue | 34,339 | 28,807 | 98,706 | 90,005 |
| EXPENSES | ||||
| Direct cost of principal revenue | 27,300 | 22,491 | 78,124 | 72,395 |
| Employment costs | 3,791 | 3,021 | 10,995 | 9,523 |
| Marketing & communications | 458 | 392 | 1,237 | 1,019 |
| Technology services | 110 | 146 | 362 | 448 |
| Depreciation and amortization | 715 | 622 | 2,075 | 1,630 |
| Foreign exchange (gain) loss | (19) | 4 | (35) | (88) |
| Operating expenses | 1,128 | 833 | 3,218 | 3,010 |
| Total Expenses | 33,483 | 27,509 | 95,976 | 87,937 |
| OPERATING INCOME | 856 | 1,298 | 2,730 | 2,068 |
| Interest and other charges | (8) | (8) | (8) | (25) |
| EARNINGS BEFORE INCOME TAX | 864 | 1,306 | 2,738 | 2,093 |
| Deferred income tax expense (recovery) | 118 | (356) | 114 | 119 |
| NET INCOME | 746 | 1,662 | 2,624 | 1,974 |
| OTHER COMPREHENSIVE INCOME (LOSS) | ||||
| Gain (loss) on foreign exchange derivatives designated as cash flow hedges, net of income tax expense of $78 and $93 for the three and nine months ended September 30, 2012 (2011 – recovery of $143 and $93) | 216 | (364) | 257 | (237) |
| Reclassification to net income of gain on foreign exchange derivatives designated as cash flow hedges, net of income tax expense of $18 and $40 for the three and nine months ended September 30, 2012 (2011 – $32 and $124) | (50) | (81) | (113) | (315) |
| Other comprehensive income (loss) for the period, net of income tax | 166 | (445) | 144 | (552) |
| TOTAL COMPREHENSIVE INCOME | $912 | $1,217 | $2,768 | $1,422 |
| EARNINGS PER SHARE | ||||
| Basic earnings per share | $0.05 | $0.11 | $0.17 | $0.13 |
| Diluted earnings per share | $0.05 | $0.11 | $0.17 | $0.13 |
| Points International Ltd. | ||
| Condensed Consolidated Interim Balance Sheets | ||
| Expressed in thousands of United States dollars | ||
| (Unaudited) | ||
| As at | September 30, 2012 | December 31, 2011 |
| ASSETS | ||
| Current assets | ||
| Cash and cash equivalents | 34,145 | 34,853 |
| Restricted cash | 1,632 | 1,619 |
| Funds receivable from payment processors | 7,126 | 10,837 |
| Security deposits | 2,643 | 2,461 |
| Accounts receivable | 1,682 | 2,411 |
| Prepaid expenses and other assets | 1,161 | 1,013 |
| Total current assets | 48,389 | 53,194 |
| Non-current assets | ||
| Property and equipment | 1,818 | 1,712 |
| Intangible assets | 3,424 | 4,566 |
| Goodwill | 2,580 | 2,580 |
| Deferred tax assets | 1,423 | 1,575 |
| Note receivable | 254 | -- |
| Other assets | 594 | 658 |
| Total non-current assets | 10,093 | 11,091 |
| Total assets | 58,482 | 64,285 |
| LIABILITIES | ||
| Current liabilities | ||
| Accounts payables and accrued liabilities | 3,002 | 3,455 |
| Payable to loyalty program partners | 31,764 | 40,048 |
| Provisions | 49 | 98 |
| Current portion of other liabilities | 688 | 765 |
| Total current liabilities | 35,503 | 44,366 |
| Non-current liabilities | ||
| Other liabilities | 776 | 877 |
| Total non-current liabilities | 776 | 877 |
| Total liabilities | 36,279 | 45,243 |
| SHAREHOLDERS' EQUITY | ||
| Share capital | 57,556 | 57,378 |
| Contributed surplus | 9,886 | 9,671 |
| Accumulated other comprehensive income | 187 | 43 |
| Accumulated deficit | (45,426) | (48,050) |
| Total shareholders' equity | 22,203 | 19,042 |
| Total liabilities and shareholders' equity | 58,482 | 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 | -- | -- | -- | -- | -- | 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 |
| Balance at December 31, 2010 | $ 56,683 | $ 9,255 | $ 65,938 | $ 297 | $ 297 | $ (52,082) | $ 14,153 |
| Net income | -- | -- | -- | -- | -- | 1,974 | 1,974 |
| Other comprehensive loss | -- | -- | -- | (552) | (552) | -- | (552) |
| Total comprehensive income | -- | -- | -- | (552) | (552) | 1,974 | 1,422 |
| Effect of share option compensation plan | -- | 477 | 477 | -- | -- | -- | 477 |
| Share Issuances | 682 | (169) | 513 | -- | -- | -- | 513 |
| Balance at September 30, 2011 | $ 57,365 | $ 9,563 | $ 66,928 | $ (255) | $ (255) | $ (50,108) | $ 16,565 |