- 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
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) |
| |
|
|
|
|
CONTACT: Addo Communications
Laura Bainbridge / Kimberly Esterkin
laurab@addocommunications.com / kimberlye@addocommunications.com
(310) 829-5400
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