- Revenue of $23.5 million increased
8.5% sequentially
- Gross Margin1 expanded 228 basis
points sequentially to 22.2%
- EBITDA2 of $1.2 million increased
391% sequentially; marks fifth consecutive quarter of positive
EBITDA
- Net income of $1.1 million
increases over ten-fold sequentially; marks fourth consecutive
quarter of net income profitability
TORONTO, Nov. 3 /PRNewswire-FirstCall/ - Points
International Ltd. (TSX: PTS; OTCBB: PTSEF), the owner and operator
of Points.com, the world's leading reward program management web
site, today announced results for the third quarter ended September
30, 2010. All financial results are in US Dollars.
"We are pleased to deliver another quarter of strong operating
and financial performance," said CEO Rob MacLean. "Through the
ongoing execution of our business strategy, we delivered another
quarter of improved financial performance marked by sequential
revenue growth, expanding margins and improved profitability.
We believe our performance reflects not only the value proposition
Points' proprietary technology platform offers to current and
prospective loyalty program partners, but also the growing consumer
interest in, and demand for a platform to build, manage and
transact points."
MacLean continued, "Importantly, we continue to recognize
organic revenue growth derived from increased involvement and
engagement levels among existing partners as well as incremental
revenue contribution from new partners to the Points Partner
Network. During the third quarter, we expanded several strategic
relationships including welcoming Jet Blue as one of Points.com's
newest trading partners and enabling Continental One Pass members'
additional opportunities to exchange and redeem miles. In
addition, we continued to extend the global reach of our platform
with the addition of Qatar Airways' Privilege Club frequent flyer
program to the Points network, marking our expansion into the
Middle East. We are also pleased with the positive response
to the re-launch of Points.com, which has resulted in increased
interest levels and participation among current and prospective
loyalty program partners."
Third Quarter 2010 Financial Results
Total revenue for the third quarter of 2010 was $23.5
million. Revenue was up 13.4% over $20.7 million reported in
the third quarter of 2009, and up 8.5% over $21.7 million reported
in the second quarter of 2010.
Gross margin for the third quarter of 2010 was $5.2 million, or
22.2% of revenue, compared to gross margin of $3.8 million, or
18.1% of revenue in the third quarter of 2009. Gross margin
for the second quarter of 2010 was $4.3 million, or 19.9% of
revenue.
Points reported net income for the third quarter of 2010 of
$1,081,000. This compares to a net loss in the third quarter of
2009 of $265,000, and to net income in the second quarter of 2010
of $92,000.
During the third quarter of 2010, Points reported EBITDA of
$1,164,000 compared to EBITDA of $72,000 in the same period of 2009
and EBITDA of $237,000 in the second quarter of 2010.
As of September 30, 2010, total funds available, comprised of
cash and cash equivalents together with security deposits,
restricted cash, and amounts with payment processors was $28.7
million. The sequential decline is attributable to
traditional seasonal cash flows, and, to a lesser degree,
investment in capital expenditures. The Company remains
debt-free. The Company is pleased with its overall
financial position and its ability to leverage its strong cash
position and positive free cash flow to fund capital expenditures
internally.
_________________________________
1 Gross Margin (total revenues less direct cost of
principal revenue) is considered by management to be an integral
measure of performance. Gross Margin is not a recognized measure
under generally accepted accounting principles.
2 EBITDA (Earnings (loss) before interest, taxes,
amortization, foreign exchange, impairment and restructuring) is
considered by management to be an integral measure of performance.
EBITDA is not a recognized measure under generally accepted
accounting principles.
Third Quarter 2010 Business Metrics
|
Q3/10 |
Q2/10 |
Q3/10
vs.
Q2/10 |
Q3/09 |
Q3/10
vs.
Q3/09 |
TOTAL ALL CHANNELS(*) |
|
|
|
|
|
Points/Miles
Transacted (in 000s) |
2,553,133 |
2,724,245 |
-6% |
2,395,492 |
7% |
# of Points/Miles
Transactions |
292,295 |
286,953 |
2% |
255,233 |
15% |
LOYALTY CURRENCY SERVICES(*) |
|
|
|
|
|
Points/Miles
Transacted (in 000s) |
2,349,167 |
2,484,218 |
-5% |
2,113,388 |
11% |
# of Points/Miles Transactions |
278,805 |
271,374 |
3% |
231,221 |
21% |
Cumulative
Points/Miles Transacted (in 000s) |
49,259,005 |
46,909,838 |
5% |
39,110,256 |
26% |
POINTS.COM CHANNELS |
|
|
|
|
|
Points/Miles
Transacted (in 000s) |
203,966 |
240,027 |
-15% |
282,104 |
-28% |
# of Points/Miles
Transactions |
13,490 |
15,579 |
-13% |
24,012 |
-44% |
Cumulative Registered
Users |
2,499,802 |
2,525,059 |
-1% |
2,324,611 |
8% |
* For comparative purposes, Buy, Gift and Transfer activity
for Delta has been excluded from the 2009 metrics
presented.
Business Outlook
The Company is reiterating its financial guidance for the year
ended December 31, 2010, as follows:
- Revenue is expected to be in the range of $85 million to $95
million, representing a 7% to 19% increase over 2009 revenue
- EBITDA, as a percentage of revenue, is expected to be in the
range of 3% to 5%
- Net Income is expected to be positive on a full year basis
MacLean continued, "Looking to the remainder of 2010, we are on
track to meet our strategic and financial goals. As such, we are
reiterating our 2010 full year guidance which reflects solid
year-over-year revenue growth and expansion in EBITDA
profitability. Our ongoing ability to drive expansion of the
Points Partner Network across our white label and branded
Points.com platforms, grow revenues and deliver improved margins
and strengthened profitability, provide us increased confidence in
our business strategy and growth prospects for the remainder of
2010 and beyond."
Special Shareholders' Meeting Results
As previously announced, at the Special Meeting of its
shareholders held on October 26, 2010, the following proposals were
overwhelmingly approved by the Company's shareholders:
- Authorized the Company's Board of Directors to affect a share
consolidation through a reverse stock split in the range of
one-for-eight to one-for-twelve; and
- Authorized the Company's Board of Directors to amend the
Company's incentive stock option plan to increase the maximum
number of pre-consolidation common shares that may be issued
thereunder by an additional 4,500,000
Implementation of the Share Consolidation and Option Plan
Amendment are now at the discretion of the Company's Board of
Directors, which may choose to do so at any time prior to October
26, 2011. The Share Consolidation and Option Plan Amendment
are also subject to the approval of the Toronto Stock Exchange.
Investor Conference Call
Points' quarterly conference call with investors will be held
today at 4:30 PM Eastern Time. To participate in the conference
call, investors from the US and Canada should dial 877-941-2069 ten
minutes prior to the scheduled start time. International callers
should dial 480-629-9713. Points International will also offer a
live and archived webcast, accessible from the "Investor Relations"
section of the company's Web site at
www.pointsinternational.com. A telephonic replay of the
conference call will also be available until 11:59 pm ET on
Wednesday, November 10, 2010 by dialing 877-870-5176 and entering
passcode: 4374761.
About Points International Ltd
Points International Ltd. is the owner and operator of
Points.com, the world's leading reward program management web site
which was recently named one of the 28 Best Travel Sites by
Kiplinger's. At Points.com consumers can Swap, Earn, Buy, Gift,
Share and Redeem miles and points from more than 25 of the world's
leading reward programs. Participating programs include American
Airlines AAdvantage(R) program, Aeroplan(R), AsiaMiles(TM), British
Airways Executive Club, Delta SkyMiles(R) and InterContinental
Hotels Group's Priority Club(R) Rewards. Redemption partners
include Amazon.com(R) and Starbucks. For more information, visit
www.pointsinternational.com.
Caution Regarding Forward-Looking Statements
This press release contains or incorporates forward-looking
statements within the meaning of the United States Private
Securities Litigation Reform Act of 1995, as amended, and
forward-looking information within the meaning of Canadian
securities legislation (collectively "forward-looking statements").
These forward-looking statements include our guidance for 2010 with
respect to revenue, net income and EBITDA. 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 and realize operational efficiencies from our
upgraded technology platform. Other important risk factors that
could cause actual results to differ materially include the risk
factors discussed in Points' annual information form, Form-20-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.
CONSOLIDATED BALANCE SHEETS
|
|
As at |
(United States $ in
thousands) |
|
(Unaudited)
September 30, 2010 |
(Audited)
December 31, 2009 |
|
|
|
|
ASSETS |
|
|
|
Current Assets |
|
|
|
|
Cash and cash equivalents |
|
$
21,313 |
$ 26,414 |
|
Restricted cash |
|
1,761 |
802 |
|
Funds receivable from payment
processors |
|
3,026 |
5,855 |
|
Security deposits |
|
2,624 |
2,463 |
|
Accounts receivable |
|
1,518 |
1,907 |
|
Future income tax assets |
|
1,233 |
945 |
|
Current portion of deferred
costs |
|
102 |
139 |
|
Prepaid expenses and other
assets |
|
1,051 |
759 |
|
|
|
32,628 |
39,284 |
Deferred costs |
|
65 |
82 |
Other assets |
|
666 |
951 |
Property and equipment |
|
1,669 |
607 |
Intangible assets |
|
5,150 |
2,014 |
Goodwill |
|
4,205 |
4,205 |
|
|
|
11,755 |
7,859 |
|
|
|
$
44,383 |
$ 47,143 |
|
|
|
|
|
LIABILITIES |
|
|
|
Current Liabilities |
|
|
|
|
Accounts payable and accrued
liabilities |
|
$
3,055 |
$ 3,087 |
|
Current portion of other
liabilities |
|
764 |
609 |
|
Payable to loyalty program
partners |
|
24,450 |
30,215 |
|
|
|
28,269 |
33,911 |
Other liabilities |
|
997 |
301 |
|
|
|
29,266 |
34,212 |
|
|
|
|
|
SHAREHOLDERS' EQUITY |
|
|
|
Accumulated other comprehensive
loss |
|
(2,445) |
(2,566) |
Accumulated deficit |
|
(47,830) |
(49,463) |
|
|
|
(50,275) |
(52,029) |
Capital stock |
|
56,668 |
56,662 |
Contributed surplus |
|
8,724 |
8,298 |
|
|
|
15,117 |
12,931 |
|
|
|
$
44,383 |
$ 47,143 |
Points
International Ltd.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE
INCOME |
|
(Unaudited) (United States $ in
thousands, except per share amounts) |
For
the three months ended |
For the nine months
ended |
|
|
September 30,
2010 |
September 30,
2009 |
September
30,
2010 |
September 30,
2009 |
REVENUE |
|
|
|
|
|
|
Principal |
|
$
22,038 |
$
18,886 |
$
63,938 |
$ 57,886 |
|
Other partner revenue |
|
1,468 |
1,841 |
4,727 |
5,267 |
|
Interest |
|
3 |
5 |
9 |
49 |
|
|
|
23,509 |
20,732 |
68,674 |
63,202 |
GENERAL AND ADMINISTRATION
EXPENSES |
|
|
|
|
|
|
Direct cost of principal revenue |
|
18,300 |
16,975 |
54,943 |
52,527 |
|
Employment costs |
|
2,480 |
2,538 |
7,790 |
7,994 |
|
Marketing & communications |
|
376 |
328 |
920 |
1,057 |
|
Technology services |
|
270 |
253 |
705 |
695 |
|
Amortization |
|
158 |
200 |
445 |
550 |
|
Foreign exchange gain |
|
(77) |
(70) |
(112) |
(239) |
|
Operating expenses |
|
919 |
566 |
2,669 |
2,003 |
|
Restructuring |
|
- |
332 |
- |
332 |
|
|
|
22,426 |
21,122 |
67,360 |
64,919 |
OPERATING INCOME (LOSS) - before
undernoted |
|
1,083 |
(390) |
1,314 |
(1,717) |
|
Interest and other charges |
|
2 |
(28) |
23 |
(4) |
INCOME (LOSS) BEFORE INCOME TAXES |
|
1,081 |
(362) |
1,291 |
(1,713) |
|
Future income taxes (recovery)
expense |
|
- |
(97) |
(342) |
122 |
NET INCOME (LOSS) |
|
$ 1,081 |
$
(265) |
$ 1,633 |
$ (1,835) |
OTHER COMPREHENSIVE LOSS: |
|
|
|
|
|
|
Gain on foreign exchange derivatives
designated as cash flow hedges, net of income taxes expense of $87
and $95 |
|
194 |
- |
210 |
- |
|
Reclassification to net income of
gain on foreign exchange derivatives designated as cash flow
hedges, net of income taxes expense of $14 and $40 |
|
(32) |
- |
(89) |
- |
OTHER COMPREHENSIVE
INCOME |
|
162 |
- |
121 |
- |
COMPREHENSIVE INCOME
(LOSS) |
|
$ 1,243 |
$
(265) |
$
1,754 |
$ (1,835) |
Basic and diluted earnings (loss) per
share |
|
$
0.01 |
$
0.00 |
$ 0.01 |
$ (0.01)
|
CONSOLIDATED
STATEMENTS OF ACCUMULATED DEFICIT
AND ACCUMULATED OTHER COMPREHENSIVE LOSS |
|
|
For the
three months ended |
For the
nine months ended |
(Unaudited) (United
States $ in thousands, except per share amounts) |
|
September 30,
2010 |
September 30,
2009 |
September 30,
2010 |
September 30,
2009 |
ACCUMULATED DEFICIT - Beginning of
period |
|
$
(48,911) |
$ (51,097) |
$
(49,463) |
$ (49,527) |
|
NET INCOME (LOSS) |
|
1,081 |
(265) |
1,633 |
(1,835) |
ACCUMULATED DEFICIT - End of
period |
|
$
(47,830) |
$ (51,362) |
$
(47,830) |
$ (51,362) |
|
|
|
|
|
|
|
ACCUMULATED OTHER COMPREHENSIVE LOSS -
Beginning of period |
|
$
(2,607) |
$
(2,566) |
$
(2,566) |
$
(2,566) |
|
Other comprehensive income |
|
162 |
- |
121 |
- |
ACCUMULATED OTHER COMPREHENSIVE LOSS -
End of period |
|
$
(2,445) |
$
(2,566) |
$
(2,445) |
$
(2,566) |
|
|
|
|
Points
International Ltd.
CONSOLIDATED STATEMENTS OF CASH FLOWS |
|
|
|
|
|
|
|
(Unaudited) (United States $ in
thousands) |
|
For the three months
ended |
For the nine months
ended |
|
|
|
September 30, 2010 |
September 30, 2009 |
September 30, 2010 |
September 30, 2009 |
|
|
|
|
|
|
|
Net income (loss) |
|
$
1,081 |
$
(265) |
$
1,633 |
$
(1,835) |
Items not affecting cash |
|
|
|
|
|
|
Amortization of
property and equipment |
|
104 |
92 |
251 |
266 |
|
Amortization of
deferred costs |
|
- |
- |
- |
2 |
|
Amortization of
intangible assets |
|
54 |
108 |
194 |
282 |
|
Future income tax
(recovery) expense |
|
- |
(97) |
(342) |
122 |
|
Unrealized foreign
exchange (gain) loss |
|
(389) |
(80) |
104 |
(491) |
|
Employee stock option
expense |
|
133 |
176 |
427 |
499 |
|
Unrealized gain on
derivative contracts designated as
cash flow hedges |
|
236 |
- |
176 |
- |
Changes in non-cash balances related
to operations |
|
(1,221) |
3,939 |
(1,842) |
5,882 |
CASH FLOWS (USED IN) PROVIDED BY
OPERATING ACTIVITIES |
|
(2) |
3,873 |
601 |
4,727 |
|
|
|
|
|
|
|
|
Additions to property
and equipment |
|
(432) |
(14) |
(1,313) |
(224) |
|
Additions to
intangible assets |
|
(1,081) |
(443) |
(3,330) |
(620) |
|
Changes in restricted
cash |
|
6 |
- |
(944) |
- |
CASH FLOWS USED IN INVESTING
ACTIVITIES |
|
(1,507) |
(457) |
(5,587) |
(844) |
|
Issuance of capital
stock on exercise of stock options |
|
3 |
- |
5 |
- |
CASH FLOWS PROVIDED BY FINANCING
ACTIVITIES |
|
3 |
- |
5 |
- |
EFFECT OF EXCHANGE RATE CHANGES
ON CASH HELD IN FOREIGN CURRENCY |
433 |
34 |
(120) |
407 |
(DECREASE) INCREASE IN CASH AND CASH
EQUIVALENTS |
|
(1,073) |
3,450 |
(5,101) |
4,290 |
CASH AND CASH EQUIVALENTS - Beginning
of period |
|
22,386 |
23,694 |
26,414 |
22,854 |
CASH AND CASH EQUIVALENTS - End of
period |
|
$
21,313 |
$ 27,144 |
$
21,313 |
$ 27,144 |
|
|
|
|
|
|
Points International Ltd.
SCHEDULE OF NON-GAAP RECONCILIATIONS
Gross Margin
Information |
For the three months ended |
For the nine months ended |
|
|
|
(In thousands of US
dollars) |
September
30, 2010 |
June 30,
2010 |
September
30, 2009 |
September
30, 2010 |
September
30, 2009 |
Total revenue |
$
23,509 |
$ 21,663 |
$
20,732 |
$ 68,674 |
$
63,202 |
Direct cost of
principal revenue |
18,300 |
17,356 |
16,975 |
54,943 |
52,527 |
Gross margin |
$
5,209 |
$ 4,307 |
$ 3,757 |
$ 13,731 |
$
10,675 |
Gross margin % |
22% |
20% |
18% |
20% |
17% |
Reconciliation of Operating Income (Loss) to EBITDA
|
|
|
|
|
For the three months ended |
For the nine months ended |
(In thousands of US
dollars) |
|
|
|
|
Sept.
30,
2010 |
June 30,
2010 |
Sept. 30,
2009 |
Sept. 30,
2010 |
Sept. 30,
2009 |
Operating income (loss) |
|
|
|
|
$ 1,083 |
$
98 |
$ (390) |
$
1,314 |
$ (1,717) |
Amortization |
|
|
|
|
158 |
152 |
200 |
445 |
550 |
Foreign exchange gain |
|
|
|
|
(77) |
(13) |
(70) |
(112) |
(239) |
Restructuring charges |
|
|
|
|
- |
- |
332 |
- |
332 |
EBITDA |
|
|
|
|
$ 1,164 |
$ 237 |
$ 72 |
$
1,647 |
$ (1,074) |
SOURCE Points International Ltd.
Copyright v. 3 PR Newswire