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Principal Protected Notes Linked TO The S&P 500 Index | AMEX:PTS | AMEX | Ordinary Share |
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– Revenues of $54.4 million, an increase of 59% year-over-year
– Gross margin of $8.7 million, an increase of 24% year-over-year
– EBITDA of $2.3 million, an increase of 50% year-over-year
– Net income of $1.1 million, an increase of 53% year-over-year
Points (TSX:PTS) (Nasdaq:PCOM), global leader in loyalty currency management, today announced results for the third quarter ended September 30, 2013.
"As anticipated, the third quarter was highlighted by a significant ramp in our financial performance, with both revenues and EBITDA increasing on a year-over-year and sequential basis to record levels," said Points' Chief Executive Officer, Rob MacLean. "Revenues for the quarter increased 30% sequentially and nearly 60% year-over-year, reflecting the addition of several new partners to Points' loyalty network year-to-date, as well as increased transactional activity among existing partners. We are equally pleased with our improved profitability and, specifically, our ability to deliver year-over-year and sequential increases in gross margin dollars, EBITDA and net income, while also making significant investments in our platform."
Mr. MacLean continued, "In the first three quarters of this year, we added 5 new partners to our loyalty program network and launched 18 products with 7 partners. This has contributed to our 45% increase in points/miles transactions for the third quarter and has set us up for a strong finish to the year. We now anticipate full-year revenues in the range of $195 to $205 million, which reflects year-over-year revenue growth of 40% to 47%. Our growth is further highlighted by that fact that our year-to-date progress implies a record breaking fourth quarter for revenues and year-over-year growth of 55%-68% in the second-half of 2013. Importantly, while we are still on track to re-invest $3 million of our incremental profitability in 2013 towards our long-term plan, we continue to anticipate 2013 EBITDA to be in the range of $10-$13 million before these investments."
Mr. MacLean concluded, "Delivering on our robust partner pipeline while also expanding the reach of our products into our partner network remains a key focus. Our strong balance sheet continues to improve, with over $50 million in cash and cash equivalents; we will continue to deploy this capital and invest in our core products while simultaneously evolving our open platform strategy. We are confident that these continued investments will deliver ongoing growth for both Points and the broader loyalty industry."
Third Quarter 2013 Financial Results
(Unless otherwise stated, all comparisons for the third quarter of 2013 are on a year-over-year basis)
Revenues totaled $54.4 million up 59% from $34.3 million. Principal revenues totaled $52.5 million, up 63% from $32.2 million. The year-over-year increase in principal revenues was largely due to the impact of new partners launched over the last twelve months. Other partner revenues totaled $1.9 million, down 9.8% from $2.2 million. The year-over-year decrease was largely due to the timing of promotional activities.
Gross margin dollars totaled $8.7 million, or 16% of total revenue, compared to $7.0 million, or 20% 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. With the addition of larger partnerships throughout the year, Points expects meaningful growth in margin dollars coupled with margin percentages in the 15%-20% range.
For the third quarter, EBITDA increased 50% to $2.3 million from $1.6 million in the third quarter of 2012. The increase in EBITDA reflects revenue growth outpacing operating expense growth.
The Company reported net income of $1.1 million, or $0.07 per diluted share, compared to net income of $0.7 million, or $0.05 per share, in the third quarter of 2012.
Third Quarter 2013 Business Metrics
Q3/13 | Q3/12 | Q3/13 vs. Q3/12 | Q2/13 | Q3/13 vs. Q2/13 | |
TOTAL ALL CHANNELS | |||||
Points/Miles Transacted (in 000s) | 4,249,170 | 3,496,314 | 21.5% | 3,867,915 | 9.9% |
No. of Points/Miles Transactions | 500,204 | 345,929 | 44.6% | 415,861 | 20.3% |
As of September 30, 2013, total funds available, comprised of cash and cash equivalents together with security deposits, restricted cash, and amounts with payment processors was $58.9 million. The Company remains debt free and is pleased with its overall financial position.
Outlook
The Company is updating its financial guidance for the year ending December 31, 2013, as follows:
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 November 20, 2013 by dialing (877) 870-5176 in the U.S. or Canada or (858) 384-5517 internationally and entering the conference ID 10000426.
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, among other things, our guidance for 2013 with respect to revenue growth, 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 | ||||
Gross Margin Information1 | ||||
Expressed in thousands of United States dollars | ||||
For the 3 months ended | For the nine months ended | |||
September 30, 2013 | September 30, 2012 | September 30, 2013 | September 30, 2012 | |
Total Revenue | $ 54,441 | $ 34,339 | $ 133,283 | $ 98,706 |
Direct cost of principal revenue | 45,707 | 27,300 | 110,481 | 78,124 |
Gross Margin | $ 8,734 | $ 7,039 | $ 22,802 | $ 20,582 |
Gross Margin % | 16% | 20% | 17% | 21% |
Reconciliation of Operating (Loss) Income to EBITDA2 | ||||
Expressed in thousands of United States dollars | ||||
For the 3 months ended | For the nine months ended | |||
September 30, 2013 | September 30, 2012 | September 30, 2013 | September 30, 2012 | |
Operating income | $ 1,577 | $ 856 | $ 1,507 | $ 2,730 |
Depreciation and amortization | 803 | 715 | 2,570 | 2,075 |
Foreign exchange gain | (50) | (19) | (46) | (35) |
EBITDA | $ 2,330 | $ 1,552 | $ 4,031 | $ 4,770 |
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, foreign exchange, and impairment) 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 Balance Sheets | ||
Expressed in thousands of United States dollars, except per share amounts | ||
(Unaudited) | ||
As at | September 30, 2013 | December 31, 2012 |
ASSETS | ||
Current assets | ||
Cash and cash equivalents | $ 50,875 | $ 45,108 |
Restricted cash | 1,615 | 3,202 |
Funds receivable from payment processors | 6,362 | 10,057 |
Security deposits | -- | 2,780 |
Accounts receivable | 2,208 | 1,912 |
Prepaid expenses and other assets | 878 | 940 |
Total current assets | $ 61,938 | $ 63,999 |
Non-current assets | ||
Property and equipment | 2,056 | 2,207 |
Intangible assets | 1,667 | 2,856 |
Goodwill | 2,580 | 2,580 |
Deferred tax assets | 6,444 | 6,485 |
Long-term investment | 2,500 | -- |
Other assets | 551 | 617 |
Total non-current assets | $ 15,798 | $ 14,745 |
Total assets | $ 77,736 | $ 78,744 |
LIABILITIES | ||
Current liabilities | ||
Accounts payables and accrued liabilities | 3,782 | 4,673 |
Payable to loyalty program partners | 42,684 | 44,912 |
Current portion of other liabilities | 932 | 594 |
Total current liabilities | $ 47,398 | $ 50,179 |
Non-current liabilities | ||
Other liabilities | 501 | 738 |
Total non-current liabilities | $ 501 | $ 738 |
Total liabilities | $ 47,899 | $ 50,917 |
SHAREHOLDERS' EQUITY | ||
Share capital | 58,513 | 57,564 |
Contributed surplus | 9,991 | 10,105 |
Accumulated other comprehensive loss | (194) | (54) |
Accumulated deficit | (38,473) | (39,788) |
Total shareholders' equity | $ 29,837 | $ 27,827 |
Total liabilities and shareholders' equity | $ 77,736 | $ 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 nine months ended | |||
September 30, 2013 | September 30, 2012 | September 30, 2013 | September 30, 2012 | |
REVENUE | ||||
Principal | $ 52,479 | $ 32,172 | $ 126,970 | $ 91,720 |
Other partner revenue | 1,947 | 2,159 | 6,274 | 6,960 |
Interest | 15 | 8 | 39 | 26 |
Total Revenue | $ 54,441 | $ 34,339 | $ 133,283 | $ 98,706 |
EXPENSES | ||||
Direct cost of principal revenue | 45,707 | 27,300 | 110,481 | 78,124 |
Employment costs | 4,864 | 3,791 | 13,733 | 10,995 |
Marketing & communications | 267 | 419 | 843 | 1,119 |
Technology services | 214 | 149 | 772 | 480 |
Depreciation and amortization | 803 | 715 | 2,570 | 2,075 |
Foreign exchange gain | (50) | (19) | (46) | (35) |
Operating expenses | 1,059 | 1,128 | 3,423 | 3,218 |
Total Expenses | $ 52,864 | $ 33,483 | $ 131,776 | $ 95,976 |
OPERATING INCOME | $ 1,577 | $ 856 | $ 1,507 | $ 2,730 |
Interest and other Income | -- | (8) | -- | (8) |
OPERATING INCOME BEFORE INCOME TAX | $ 1,577 | $ 864 | $ 1,507 | $ 2,738 |
Income tax expense | 432 | 118 | 192 | 114 |
NET INCOME | $ 1,145 | $ 746 | $ 1,315 | $ 2,624 |
OTHER COMPREHENSIVE INCOME (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 expense of $45 and income tax recovery of $111 respectively for the three and nine months ended September 30, 2013 (2012: expense of $78 and $93) | 124 | 216 | (308) | 257 |
Reclassification to net income of loss (gain) on foreign exchange derivatives designated as cash flow hedges, net of income tax recovery of $44 and $60, respectively, for the three and nine months ended September 30, 2013 (2012 – expense of $18 and $40) | 123 | (50) | 168 | (113) |
Other comprehensive income (loss) for the period, net of income tax | $ 247 | $ 166 | $ (140) | $ 144 |
TOTAL COMPREHENSIVE INCOME | $ 1,392 | $ 912 | $ 1,175 | $ 2,768 |
EARNINGS PER SHARE | ||||
Basic earnings per share | $ 0.08 | $ 0.05 | $ 0.09 | $ 0.17 |
Diluted earnings per share | $ 0.07 | $ 0.05 | $ 0.08 | $ 0.17 |
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 gains (losses) on cash flow hedges | Accumulated other comprehensive income (loss) | Accumulated deficit | Total shareholders' equity | |
Balance at December 31, 2012 | $ 57,564 | $ 10,105 | $ 67,669 | $ (54) | $ (54) | $ (39,788) | $ 27,827 | |
Net lncome | -- | -- | -- | -- | -- | 1,315 | 1,315 | |
Other comprehensive loss | -- | -- | -- | (140) | (140) | -- | (140) | |
Total comprehensive income | -- | -- | -- | (140) | (140) | 1,315 | 1,175 | |
Effect of share option compensation plan | -- | 462 | 462 | -- | -- | -- | 462 | |
Effect of RSU compensation plan | -- | 358 | 358 | -- | -- | -- | 358 | |
Share issuances | 1,544 | (934) | 610 | -- | -- | -- | 610 | |
Share capital held in trust | (595) | -- | (595) | -- | -- | -- | (595) | |
Balance at September 30, 2013 | $ 58,513 | $ 9,991 | $ 68,504 | $ (194) | $ (194) | $ (38,473) | $ 29,837 | |
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 |
Points International Ltd. | ||||
Condensed Consolidated Interim Statements of Cash Flows | ||||
Expressed in thousands of United States dollars (Unaudited) | For the three months Ended | For the nine months Ended | ||
September 30, 2013 | September 30, 2012 | September 30, 2013 | September 30, 2012 | |
Cash flows from operating activities | ||||
Net income for the period | $ 1,145 | $ 746 | $ 1,315 | $ 2,624 |
Adjustments for: | ||||
Depreciation of property and equipment | 229 | 155 | 892 | 424 |
Amortization of intangible assets | 574 | 560 | 1,678 | 1,651 |
Unrealized foreign exchange loss | 455 | 166 | 165 | 82 |
Equity-settled share-based payment transactions | 292 | 222 | 820 | 641 |
Deferred income tax expense | 415 | 110 | 92 | 100 |
Unrealized net gain/loss on derivative contracts designated as cash flow hedges | 335 | 225 | (191) | 196 |
Changes in non-cash balances related to operations | 1,321 | 365 | 3,289 | (4,790) |
Net cash provided by operating activities | $ 4,766 | $ 2,549 | $ 8,060 | $ 928 |
Cash flows from investing activities | ||||
Acquisition of property and equipment | (101) | (203) | (742) | (531) |
Additions to intangible assets | (217) | (216) | (489) | (509) |
Long-term Investment | -- | -- | (2,500) | -- |
Changes in restricted cash | -- | -- | 1,575 | -- |
Purchase of convertible debenture | -- | -- | -- | (255) |
Net cash used in investing activities | $ (318) | $ (419) | $ (2,156) | $ (1,295) |
Cash flows from financing activities | ||||
Proceeds from exercise of share options | 240 | 25 | 610 | 712 |
Payment for share purchases | -- | (472) | (595) | (960) |
Net cash provided by (used in) financing activities | $ 240 | $ (447) | $ 15 | $ (248) |
Net increase (decrease) in cash and cash equivalents | $ 4,688 | $ 1,683 | $ 5,919 | $ (615) |
Cash and cash equivalents at beginning of the period | 46,646 | 32,640 | 45,108 | 34,853 |
Effect of exchange rate fluctuations on cash held | (459) | (178) | (152) | (93) |
Cash and cash equivalents at end of the period | $ 50,875 | $ 34,145 | $ 50,875 | $ 34,145 |
Interest Received | $ 15 | $ (2) | $ 42 | $ 16 |
Interest Paid | $ -- | $ (9) | $ -- | $ (9) |
Taxes Paid | $ 14 | $ 1 | $ 53 | $ 5 |
CONTACT: Addo Communications Laura Bainbridge / Kimberly Esterkin laurab@addocommunications.com / kimberlye@addocommunications.com (310) 829-5400
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