– Record Revenues of $41.9 Million, an Increase of 15% Over Q2 2012
– Reiterates 2013 Revenue Guidance of $200 - $220 Million, 42% - 57% Estimated Growth Year-Over-Year
TORONTO, Aug. 7, 2013 (GLOBE NEWSWIRE) -- Points (TSX:PTS) (Nasdaq:PCOM), global leader in loyalty currency management, today announced results for the second quarter ended June 30, 2013.
"Points delivered another strong quarter, both financially and operationally," said Points Chief Executive Officer, Rob MacLean. "During the quarter, we continued to drive ongoing platform expansion, increasing transactional activity among existing partners as well as successfully onboarding new products and partners, most notably welcoming Southwest Rapid Rewards. Over the course of the second quarter and to-date, we have launched 12 new products and added 3 new partners, growing our platform to close to 200 products deployed across 60 partners."
MacLean continued, "As is evident, the first-half of the year is off to a strong start, with total revenues growing 22% on a year-to-date basis versus the same period last year. The success we saw in the first-half of the year sets us up for continued strong growth in the back half of the year. We expect growth with our existing partners and products to combine with our new 2013 launches to push us over the $200 million level in revenue for the full year."
MacLean concluded, "Evolving our loyalty commerce platform remains a key focus for the balance of the year. Already, in the first half, we have deployed new payment capabilities with the addition of PayPal to many of our global product deployments. Continued investment in expanding our core business offerings and advancing our open platform strategy will further reinforce Points' position as a leader and enabler within the broader loyalty industry as well as serve as an important driver of our ongoing growth."
Second Quarter 2013 Financial Results
Revenues totaled $41.9 million up 15% from $36.3 million in the prior-year period. Principal revenues totaled $39.9 million, up 17% from $34.2 million in the second quarter of 2012. The year-over-year increase in principal revenues was largely due to the impact of new partners launched over the last twelve months and the timing of certain marketing and promotional activity. Other partner revenue totaled $2.0 million, down 4% from $2.1 million in the prior-year period.
Gross margin1 dollars totaled $7.4 million, or 18% of total revenue. This compares to $7.1 million, or 20% of total revenue, in the second quarter of 2012. 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 was impacted by the relative mix of partner and product sales during the quarter. With the addition of larger partnerships throughout the year, Points expects meaningful growth in margin dollars coupled with margin percentages in the sub-20% range.
As previously noted the Company has continued to focus on strategic investments and hires to support the long-term growth of Points. In light of these investments, EBITDA2 was $1.2 million compared to $2.1 million in the second quarter of 2012.
The Company reported net income of $218,000, or $0.01 per share, compared to net income of $1.3 million, or $0.09 per share, in the second quarter of 2012. The year-over-year decrease in net income was largely due to a combination of lower EBITDA and increased depreciation and amortization expense.
| 1 Gross margin, defined by management as total revenues less direct costs of principal revenue, is a non-IFRS financial measure which does not have any standardized meaning prescribed by IFRS and is therefore unlikely to be comparable to similar measures presented by other issuers. However, gross margin is viewed by management to be an integral measure of financial performance. |
| 2 EBITDA is a non-IFRS financial measure. Management defines EBITDA as earnings before interest, taxes, depreciation, amortization, foreign exchange, and impairment. Management excludes these items because they affect the comparability of the Corporation's financial results and could potentially distort the analysis of trends in business performance. The term EBITDA does not have any standardized meaning according to IFRS. Other issuers may or may not include foreign exchange and impairment costs in their definition of EBITDA. Therefore, it is unlikely to be comparable to similar measures presented by other issuers. |
Second Quarter 2013 Business Metrics
| Q2/13 | Q2/12 |
Q2/13 vs. Q2/12 |
Q1/13 |
Q2/13 vs. Q1/13 |
||||||
| TOTAL ALL CHANNELS | ||||||||||
| Points/Miles Transacted (in 000s) | 3,867,915 | 3,455,853 | 11.9% | 4,420,726 | -12.5% | |||||
| No. of Points/Miles Transactions | 415,861 | 390,244 | 6.6% | 377,845 | 10.1% | |||||
| LOYALTY CURRENCY SERVICES | ||||||||||
| Points/Miles Transacted (in 000s) | 3,452,491 | 3,056,598 | 13.0% | 3,975,818 | -13.2% | |||||
| No. of Points/Miles Transactions | 393,371 | 328,722 | 19.7% | 354,992 | 10.8% | |||||
| POINTS.COM CHANNELS | ||||||||||
| Points/Miles Transacted (in 000s) | 415,424 | 399,255 | 4.0% | 444,908 | -6.6% | |||||
| No. of Points/Miles Transactions | 22,490 | 61,522 | -63.4% | 22,853 | -1.6% | |||||
| Cumulative Registered Users | 3,630,559 | 3,235,685 | 12.2% | 3,550,883 | 2.2% | |||||
As of June 30, 2013, total funds available, comprised of cash and cash equivalents together with security deposits, restricted cash, and amounts with payment processors was $54.3 million. The company remains debt free and is pleased with its overall financial position.
Outlook
The Company is reiterating its financial guidance for the year ending December 31, 2013, as follows:
- The Company expects revenue to be in the range of $200 million to $220 million, an increase of 42% — 57% over 2012.
- The Company expects EBITDA to be in the range of $10 million to $13 million prior to making strategic investments.
- The Company plans to re-invest a portion of its incremental profitability in 2013 in the range of $2 million -$3 million.
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) 407-0789 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 August 21, 2013 by dialing (877) 870-5176 in the U.S. or Canada or (858) 384-5517 internationally and entering the conference ID 415874.
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.
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 2013 with respect to revenue growth and guidance, the size of our pipeline opportunities 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 are applied in making forward-looking statements and actual results may differ materially from those expressed or implied in such statements. Known and unknown factors could cause actual results to differ materially from those expressed or implied in the forward-looking statements. 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 Information | ||||||||
| Expressed in thousands of United States dollars | ||||||||
| For the 3 months ended | For the six months ended | |||||||
| June 30, 2013 | June 30, 2012 | June 30, 2013 | June 30, 2012 | |||||
| Total Revenue | $ 41,924 | $ 36,329 | $ 78,842 | $ 64,367 | ||||
| Direct cost of principal revenue | 34,515 | 29,192 | 64,774 | 50,824 | ||||
| Gross Margin | $ 7,409 | $ 7,137 | $ 14,068 | $ 13,543 | ||||
| Gross Margin % | 18% | 20% | 18% | 21% | ||||
| Reconciliation of Operating Income (Loss)3 to EBITDA | ||||||||
| Expressed in thousands of United States dollars | ||||||||
| For the 3 months ended | For the six months ended | |||||||
| June 30, 2013 | June 30, 2012 | June 30, 2013 | June 30, 2012 | |||||
| Operating income (loss) | $ 348 | $ 1,373 | $ (70) | $ 1,874 | ||||
| Depreciation and amortization | 848 | 699 | 1,767 | 1,360 | ||||
| Foreign exchange (gain) loss | (24) | 29 | 4 | (16) | ||||
| EBITDA | $ 1,172 | $ 2,101 | $ 1,701 | $ 3,218 | ||||
| 3Operating income (loss) is an additional IFRS measure presented in the financial statements, and is defined as Net income (loss) before Income tax expense (recovery). Management presents this additional IFRS measure to provide comparability of the Corporation's operating income (loss) before the impact of taxes. | ||||||||
| Points International Ltd. | ||||
| Condensed Consolidated Interim Balance Sheets | ||||
| Expressed in thousands of United States dollars | ||||
| (Unaudited) | ||||
| As at |
June 30, 2013 |
December 31, 2012 |
||
| ASSETS | ||||
| Current assets | ||||
| Cash and cash equivalents | $ 46,646 | $ 45,108 | ||
| Restricted cash | 1,608 | 3,202 | ||
| Funds receivable from payment processors | 6,080 | 10,057 | ||
| Security deposits | -- | 2,780 | ||
| Accounts receivable | 1,706 | 1,912 | ||
| Prepaid expenses and other assets | 948 | 940 | ||
| Total current assets | $ 56,988 | $ 63,999 | ||
| Non-current assets | ||||
| Property and equipment | 2,185 | 2,207 | ||
| Intangible assets | 2,024 | 2,856 | ||
| Goodwill | 2,580 | 2,580 | ||
| Deferred tax assets | 6,948 | 6,485 | ||
| Long-term investment | 2,500 | -- | ||
| Other assets | 563 | 617 | ||
| Total non-current assets | $ 16,800 | $ 14,745 | ||
| Total assets | $ 73,788 | $ 78,744 | ||
| LIABILITIES | ||||
| Current liabilities | ||||
| Accounts payables and accrued liabilities | 3,191 | 4,673 | ||
| Payable to loyalty program partners | 40,891 | 44,912 | ||
| Current portion of other liabilities | 1,221 | 594 | ||
| Total current liabilities | $ 45,303 | $ 50,179 | ||
| Non-current liabilities | ||||
| Other liabilities | 573 | 738 | ||
| Total non-current liabilities | $ 573 | $ 738 | ||
| Total liabilities | $ 45,876 | $ 50,917 | ||
| SHAREHOLDERS' EQUITY | ||||
| Share capital | 57,585 | 57,564 | ||
| Contributed surplus | 10,386 | 10,105 | ||
| Accumulated other comprehensive loss | (441) | (54) | ||
| Accumulated deficit | (39,618) | (39,788) | ||
| Total shareholders' equity | $ 27,912 | $ 27,827 | ||
| Total liabilities and shareholders' equity | $ 73,788 | $ 78,744 | ||
| 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 | For the six months ended | |||||||
|
June 30, 2013 |
June 30, 2012 |
June 30, 2013 |
June 30, 2012 |
|||||
| REVENUE | ||||||||
| Principal | $ 39,891 | $ 34,208 | $ 74,491 | $ 59,548 | ||||
| Other partner revenue | 2,023 | 2,112 | 4,327 | 4,801 | ||||
| Interest | 10 | 9 | 24 | 18 | ||||
| Total Revenue | $ 41,924 | $ 36,329 | $ 78,842 | $ 64,367 | ||||
| EXPENSES | ||||||||
| Direct cost of principal revenue | 34,515 | 29,192 | 64,774 | 50,824 | ||||
| Employment costs | 4,374 | 3,610 | 8,869 | 7,204 | ||||
| Marketing & communications | 307 | 334 | 576 | 700 | ||||
| Technology services | 323 | 157 | 558 | 331 | ||||
| Depreciation and amortization | 848 | 699 | 1,767 | 1,360 | ||||
| Foreign exchange (gain) loss | (24) | 29 | 4 | (16) | ||||
| Operating expenses | 1,233 | 935 | 2,364 | 2,090 | ||||
| Total Expenses | $ 41,576 | $ 34,956 | $ 78,912 | $ 62,493 | ||||
| OPERATING INCOME (LOSS) BEFORE INCOME TAX | $ 348 | $ 1,373 | $ (70) | $ 1,874 | ||||
| Income tax expense (recovery) | 130 | 69 | (240) | (4) | ||||
| NET INCOME | $ 218 | $ 1,304 | $ 170 | $ 1,878 | ||||
| OTHER COMPREHENSIVE LOSS | ||||||||
| Items that will subsequently be reclassified to profit or loss: Gain (loss) on foreign exchange derivatives designated as cash flow hedges, net of income tax recovery of $117 and $156 for the three and six months ended June 30, 2013 (2012: expense of $3 and $15) | (324) | 7 | (432) | 41 | ||||
| Reclassification to net income of loss (gain) on foreign exchange derivatives designated as cash flow hedges, net of income tax recovery of $5 and $16 for the three and six months ended June 30, 2013 (2012 – expense of $4 and $22) | 13 | (12) | 45 | (63) | ||||
| Other comprehensive loss for the period, net of income tax | $ (311) | $ (5) | $ (387) | $ (22) | ||||
| TOTAL COMPREHENSIVE INCOME (LOSS) | $ (93) | $ 1,299 | $ (217) | $ 1,856 | ||||
| EARNINGS PER SHARE | ||||||||
| Basic earnings per share | $ 0.01 | $ 0.09 | $ 0.01 | $ 0.12 | ||||
| Diluted earnings per share | $ 0.01 | $ 0.09 | $ 0.01 | $ 0.12 | ||||
| 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, 2012 | $ 57,564 | $ 10,105 | $ 67,669 | $ (54) | $ (54) | $ (39,788) | $ 27,827 | |||||||
| Net lncome | -- | -- | -- | -- | -- | 170 | 170 | |||||||
| Other comprehensive loss | -- | -- | -- | (387) | (387) | -- | (387) | |||||||
| Total comprehensive loss | -- | -- | -- | (387) | (387) | 170 | (217) | |||||||
| Effect of share option compensation plan | -- | 300 | 300 | -- | -- | -- | 300 | |||||||
| Effect of RSU compensation plan | -- | 228 | 228 | -- | -- | -- | 228 | |||||||
| Share issuances | 616 | (247) | 369 | -- | -- | 369 | ||||||||
| Share capital held in trust | (595) | -- | (595) | -- | -- | -- | (595) | |||||||
| Balance at June 30, 2013 | $ 57,585 | $ 10,386 | $ 67,971 | $ (441) | $ (441) | $ (39,618) | $ 27,912 | |||||||
| Balance at December 31, 2011 | $ 57,378 | $ 9,671 | $ 67,049 | $ 43 | $ 43 | $ (48,050) | $ 19,042 | |||||||
| Net Income | -- | -- | -- | -- | -- | 1,878 | 1,878 | |||||||
| Other comprehensive loss | -- | -- | -- | (22) | (22) | -- | (22) | |||||||
| Total comprehensive income | -- | -- | -- | (22) | (22) | 1,878 | 1,856 | |||||||
| Effect of share option compensation plan | -- | 335 | 335 | -- | -- | -- | 335 | |||||||
| Effect of RSU compensation plan | -- | 84 | 84 | -- | -- | -- | 84 | |||||||
| Share issuances | 1,103 | (416) | 687 | -- | -- | -- | 687 | |||||||
| Share capital held in trust | (489) | -- | (489) | -- | -- | -- | (489) | |||||||
| Balance at June 30, 2012 | $ 57,992 | $ 9,674 | $ 67,666 | $ 21 | $ 21 | $ (46,172) | $ 21,515 | |||||||
| Points International Ltd. | ||||||||
| Condensed Consolidated Interim Statements of Cash Flows | ||||||||
| Expressed in thousands of United States dollars | For the three months | For the six months | ||||||
| (Unaudited) | Ended | Ended | ||||||
|
June 30, 2013 |
June 30, 2012 |
June 30, 2013 |
June 30, 2012 |
|||||
| Cash flows from operating activities | ||||||||
| Net income for the period | $ 218 | $ 1,304 | $ 170 | $ 1,878 | ||||
| Adjustments for: | ||||||||
| Depreciation of property and equipment | 291 | 138 | 663 | 269 | ||||
| Amortization of intangible assets | 557 | 561 | 1,104 | 1,091 | ||||
| Unrealized foreign exchange (gain) loss | 81 | (347) | (290) | (84) | ||||
| Equity-settled share-based payment transactions | 292 | 201 | 528 | 419 | ||||
| Deferred income tax expense (recovery) | 101 | 73 | (323) | (10) | ||||
| Unrealized net gain/loss on derivative contracts designated as cash flow hedges | (423) | (6) | (526) | (29) | ||||
| Changes in non-cash balances related to operations | 7,733 | (6,523) | 1,968 | (5,155) | ||||
| Net cash provided by (used in) operating activities | $ 8,850 | $ (4,599) | $ 3,294 | $ (1,621) | ||||
| Cash flows from investing activities | ||||||||
| Acquisition of property and equipment | (236) | (144) | (641) | (328) | ||||
| Additions to intangible assets | (171) | (170) | (272) | (293) | ||||
| Long-term Investment | (2,499) | -- | (2,500) | -- | ||||
| Changes in restricted cash | 1,575 | -- | 1,575 | -- | ||||
| Purchase of convertible debenture | -- | (255) | -- | (255) | ||||
| Net cash used in investing activities | $ (1,331) | $ (569) | $ (1,838) | $ (876) | ||||
| Cash flows from financing activities | ||||||||
| Proceeds from exercise of share options | 182 | 318 | 370 | 687 | ||||
| Payment for share purchases | (595) | (489) | (595) | (489) | ||||
| Net cash provided by (used in) financing activities | $ (413) | $ (171) | $ (225) | $ 198 | ||||
| Net increase (decrease) in cash and cash equivalents | $ 7,106 | $ (5,339) | $ 1,231 | $ (2,299) | ||||
| Cash and cash equivalents at beginning of the period | 39,611 | 37,622 | 45,108 | 34,853 | ||||
| Effect of exchange rate fluctuations on cash held | (71) | 357 | 307 | 86 | ||||
| Cash and cash equivalents at end of the period | $ 46,646 | $ 32,640 | $ 46,646 | $ 32,640 | ||||
| Interest Received | $ 10 | $ 8 | $ 27 | $ 18 | ||||
| Interest Paid | $ -- | $ -- | $ -- | $ -- | ||||