Payment Data Systems (NASDAQ:PYDS), an integrated electronic
payment solutions provider, today announced first quarter 2018
financial results for the period that ended March 31, 2018
featuring record revenues for the quarter, compared to the previous
period in 2017.
First Quarter 2018 Financial Summary
- Revenues were $5.8 million for Q1 2018 vs. $2.8 million for Q1
2017, an increase of 108%.
- Gross margin was $1.3 million, or 21.7% of revenues during the
first quarter compared to $0.9 million, or 33.5% for Q1 2017.
- Q1 2018 operating loss was $1.06 million compared to an
operating loss of $.3 million for Q1 2017.
- Adjusted EBITDA was a loss of $.2 million or 3.9% for Q1 2018
compared to earnings of $.1 million or 4.1 % for Q1 2017.
- Net loss for the first quarter of 2018 was $1.05 million or
($0.09) per basic and diluted share versus a net loss of $.3
million or ($0.03) per basic and diluted share for Q1 2017.
- More than 2.8 million total transactions were processed during
Q1 2018.
- More than $782 million total dollars were processed during Q1
2018.
- Achieved a company record high 305% percent increase in credit
card dollars processed and 307% percent increase in credit card
transactions in the first quarter compared to Q1 2017.
- Payment Data Systems continues to be in solid financial
condition with $3.5 million in cash and cash equivalents and no
debt.
During the first quarter of 2018 electronic check transaction
volumes were up 5% over the fourth quarter of 2017, representing
the third consecutive quarter of growth. Returned check
transactions processed during first quarter of 2018 were up 6% as
compared to the fourth quarter of 2017. Electronic check
transaction volumes during the first quarter of 2018 were down 2%
versus the same time period in 2017. Returned check transactions
processed during the first quarter of 2018 were down 2% versus the
same time period in 2017.
“As we expected, we have started off the new business year with
solid growth, continuing the trend we set at the end of last year
with record year-over-year transaction levels and triple digit
revenue increases,” said Louis Hoch, president and CEO of Payment
Data Systems. “In 2017 we initiated a revenue growth plan
focused on both organic and growth through acquisition. In
support of the revenue growth plan, we are implementing multiple
enhancements to our secure payment applications and launching
several additional products. The results speak for themselves
as revenues and volumes continue to grow greatly. Our outlook for
2018 is to continue this trajectory and we expect record annual
revenues for 2018.”
Financial Results for the Three Months Ending March 31,
2018
Revenues for the quarter ended March 31, 2018 increased 108% to
$5.8 million, as compared to $2.8 million for the quarter ended
March 31, 2017. The increase for the quarter ended March 31, 2018
versus the same period in 2017 was due to the acquisition of the
business of Singular Payments, LLC on September 1, 2017 and
included organic growth from existing services. Revenues
increased 4% versus Q4 2017.
As of March 31, 2018, the company has $3.5 million in cash and
cash equivalents and no debt, compared to $4.8 million at December
31, 2017.
Gross margin dollars in the first quarter were $1.3 million, or
21.7% of revenues, compared to $0.9 million, or 33.5% of revenues
in the first quarter of last year.
Our first quarter operating loss was $1.06 million compared to
an operating loss of $.3 million in the first quarter of
2017.
Adjusted EBITDA in the first quarter of 2018 was a loss of $.2
million compared to positive adjusted EBITDA of $.1 million in the
first quarter of 2017. One-time expenses affecting
Adjusted EBITDA totaled approximately $.2 million.
Net loss for the first quarter of 2018 was $1.05 million, or
($0.09) per basic and diluted share, compared to a net loss of $.3
million or ($0.03) per basic and diluted share for the first
quarter of 2017. Factors contributing to the increased net
loss were approximately $.3 million of incremental amortization
expense related to the Singular Payments acquisition, approximately
$.2 million of incremental stock (non-cash) compensation expense
and incremental salaries and payroll related expenses as we build
out our sales force to drive incremental revenues.
Operating expenses (including COGS) were $6.9 million for the
first quarter of 2018 versus the $3.1 million during the first
quarter of 2017. The incremental operating expenses reflect
the incremental processing cost and salaries and employee related
expenses related to the acquisition of the business of Singular
Payments.
Conference Call and Webcast
Payment Data Systems, Inc.’s management will host a conference
call with a live webcast today at 5:00 p.m. Eastern Time to provide
a business update.
To listen to the conference call, interested parties within the
U.S. should call 1-844-883-3890. International callers should call
+1-412-317-9246. All callers should ask for the Payment Data
Systems conference call. The conference call will also be available
through a live webcast, which can be accessed via the company’s
website at www.paymentdata.com/invest.
A replay of the call will be available approximately one hour
after the end of the call through May 29, 2018. The replay can be
accessed via the Company’s website or by dialing 1-877-344-7529
(U.S.) or +1-412-317-0088 (international). The replay conference
playback code is 10120168.
About Payment Data Systems, Inc.
Payment Data Systems, Inc. (Nasdaq:PYDS), a leading integrated
payment solutions provider, offers a wide range of payment
solutions to merchants, billers, banks, service bureaus, and card
issuers. The Company operates credit, debit/prepaid and ACH payment
processing platforms to deliver convenient, world-class payment
solutions and service to their clients. The strength of the Company
lies in its ability to provide tailored solutions for card
issuance, payment acceptance, and bill payments as well as its
unique technology in the prepaid sector. Payment Data is
headquartered in San Antonio, Texas, and has offices in New York,
New York; Long Beach, California and Nashville, Tennessee.
Websites: www.paymentdata.com, www.singularpayments.com,
www.payfacinabox.com, www.akimbocard.com, and www.ficentive.com.
Find us on Facebook®.
About Non-GAAP Financial Measures
This press release includes non-GAAP financial measures, EBITDA
and adjusted EBITDA, as defined in Regulation G of the Securities
and Exchange Act of 1934, as amended. The Company reports its
financial results in compliance with GAAP, but believes that also
discussing non-GAAP measures provides investors with financial
measures it uses in the management of its business. The Company
defines EBITDA as operating income (loss), before interest, taxes,
depreciation and amortization of intangibles. The Company defines
adjusted EBITDA as EBITDA, as defined above, plus non-cash stock
option costs and certain non-recurring items, such as acquisitions.
These measures may not be comparable to similarly titled measures
reported by other companies. Management uses EBITDA and adjusted
EBITDA as indicators of the Company's operating performance and
ability to fund acquisitions, capital expenditures and other
investments and, in the absence of refinancing options, to repay
debt obligations.
Management believes EBITDA and adjusted EBITDA are helpful to
investors in evaluating the Company's operating performance because
non-cash costs and other items that management believes are not
indicative of its results of operations are excluded. EBITDA and
adjusted EBITDA are supplemental non-GAAP measures, which have
limitations as an analytical tool. Non-GAAP financial measures
should not be considered as a substitute for, or superior to,
measures of financial performance prepared in accordance with GAAP.
Non-GAAP financial measures do not reflect a comprehensive system
of accounting, may differ from GAAP measures with the same names,
and may differ from non-GAAP financial measures with the same or
similar names that are used by other companies. For a description
of our use of EBITDA and adjusted EBITDA, and a reconciliation of
EBITDA and adjusted EBITDA to operating income (loss), see the
section of this press release titled "Non-GAAP Reconciliation."
FORWARD-LOOKING STATEMENTS DISCLAIMER
Except for the historical information contained herein, the
matters discussed in this release include forward-looking
statements which are covered by safe harbors. Those statements
include, but may not be limited to, all statements regarding
management's intent, belief and expectations, such as statements
concerning our future and our operating and growth strategy. These
forward-looking statements are identified by the use of words such
as "believe," "intend," "look forward," "anticipate," "schedule",
and "expect" among others. Forward-looking statements in this press
release are subject to certain risks and uncertainties inherent in
the Company's business that could cause actual results to vary,
including such risks related to the realization of the anticipated
opportunities from the Singular acquisition, the management of the
Company's growth, the loss of key resellers, the relationships with
the Automated Clearinghouse network, bank sponsors, third-party
card processing providers and merchants, the security of our
software, hardware and information, the volatility of our stock
price, the need to obtain additional financing, risks associated
with new tax legislation, and compliance with complex federal,
state and local laws and regulations, and other risks detailed from
time to time in the Company's filings with the Securities and
Exchange Commission including its annual report on Form 10-K for
the fiscal year ended December 31, 2017. One or more of these
factors have affected, and in the future, could affect the
Company’s businesses and financial results in the future and could
cause actual results to differ materially from plans and
projections. The Company believes that the assumptions underlying
the forward-looking statements included in this release will prove
to be accurate. In light of the significant uncertainties inherent
in the forward-looking statements included herein, the inclusion of
such information should not be regarded as a representation by us
or any other person that the objectives and plans will be achieved.
All forward-looking statements made in this release are based on
information presently available to management. The Company assumes
no obligation to update any forward-looking statements, except as
required by law.
PAYMENT DATA SYSTEMS, INC. |
CONDENSED CONSOLIDATED BALANCE
SHEETS |
|
|
|
|
|
|
|
March 31, |
|
December 31, |
|
2018 |
|
|
2017 |
|
|
|
(Unaudited) |
|
|
ASSETS |
|
|
|
|
Cash and cash
equivalents |
|
$ |
3,473,066 |
|
|
$ |
4,800,554 |
|
Accounts receivable,
net |
|
|
892,156 |
|
|
|
969,674 |
|
Settlement processing
assets |
|
|
37,751,361 |
|
|
|
38,027,984 |
|
Prepaid expenses and
other |
|
|
369,514 |
|
|
|
176,945 |
|
Notes receivable |
|
|
150,000 |
|
|
|
150,000 |
|
Current assets before
merchant reserves |
|
|
42,636,097 |
|
|
|
44,125,157 |
|
Merchant reserves |
|
|
15,080,233 |
|
|
|
14,977,468 |
|
Total
current assets |
|
|
57,716,330 |
|
|
|
59,102,625 |
|
|
|
|
|
|
Property and equipment,
net |
|
|
1,926,026 |
|
|
|
2,105,186 |
|
|
|
|
|
|
Other assets: |
|
|
|
|
Intangibles, net |
|
|
4,426,426 |
|
|
|
4,676,427 |
|
Deferred
tax asset |
|
|
1,394,000 |
|
|
|
1,394,000 |
|
Other
assets |
|
|
182,690 |
|
|
|
157,565 |
|
Total
other assets |
|
|
6,003,116 |
|
|
|
6,227,992 |
|
|
|
|
|
|
Total
Assets |
|
$ |
65,645,472 |
|
|
$ |
67,435,803 |
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY |
|
|
|
|
Current
Liabilities: |
|
|
|
|
Accounts
payable |
|
$ |
225,757 |
|
|
$ |
300,736 |
|
Accrued
expenses |
|
|
1,007,080 |
|
|
|
1,006,262 |
|
Settlement processing obligations |
|
|
37,751,361 |
|
|
|
38,027,984 |
|
Deferred
revenues |
|
|
90,250 |
|
|
|
- |
|
Current
liabilities before merchant reserve obligations |
|
|
39,074,448 |
|
|
|
39,334,982 |
|
Merchant
reserve obligations |
|
|
15,080,233 |
|
|
|
14,977,468 |
|
Total
current liabilities |
|
|
54,154,681 |
|
|
|
54,312,450 |
|
|
|
|
|
|
Stockholders'
Equity: |
|
|
|
|
Preferred
stock, $0.01 par value, 10,000,000 shares authorized; -0- shares
issued and outstanding at March 31, 2018 (unaudited) and December
31, 2017, respectively |
|
|
- |
|
|
|
- |
|
|
|
|
|
|
Common
stock, $0.001 par value, 200,000,000 shares authorized; 16,943,124
and 16,874,235 issued, and 15,859,515 and 16,201,634 outstanding at
March 31, 2018 (unaudited) and December 31, 2017, respectively |
|
|
186,368 |
|
|
|
186,299 |
|
Additional paid in capital |
|
|
74,188,314 |
|
|
|
74,041,083 |
|
Treasury
stock, at cost; 1,070,539 and 672,601 shares at March 31, 2018
(unaudited) and December 31, 2017, respectively |
|
|
(1,787,193 |
) |
|
|
(831,059 |
) |
Deferred
compensation |
|
|
(6,785,466 |
) |
|
|
(7,012,544 |
) |
Accumulated deficit |
|
|
(54,311,232 |
) |
|
|
(53,260,426 |
) |
Total
stockholders' equity |
|
|
11,490,791 |
|
|
|
13,123,353 |
|
|
|
|
|
|
Total
Liabilities and Stockholders' Equity |
|
$ |
65,645,472 |
|
|
$ |
67,435,803 |
|
|
|
|
|
|
PAYMENT DATA SYSTEMS, INC. |
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS |
(UNAUDITED) |
|
|
|
|
|
Three Months Ended March 31, |
|
2018 |
|
|
|
2017 |
|
|
|
|
|
Revenues |
$ |
5,843,665 |
|
|
$ |
2,810,744 |
|
|
|
|
|
Operating
expenses: |
|
|
|
Cost of
services |
|
4,572,758 |
|
|
|
1,867,945 |
|
Selling,
general and administrative: |
|
|
|
Stock-based compensation |
|
374,378 |
|
|
|
207,920 |
|
Other
expenses |
|
1,498,651 |
|
|
|
828,272 |
|
Depreciation and amortization |
|
458,663 |
|
|
|
228,545 |
|
Total
operating expenses |
|
6,904,450 |
|
|
|
3,132,682 |
|
|
|
|
|
Operating
(loss) |
|
(1,060,785 |
) |
|
|
(321,938 |
) |
|
|
|
|
Other
income: |
|
|
|
Interest
income |
|
11,521 |
|
|
|
33,816 |
|
Other
income (expense) |
|
(1,542 |
) |
|
|
1,539 |
|
Other
income (expense), net |
|
9,979 |
|
|
|
35,355 |
|
|
|
|
|
Income
(loss) before income taxes |
|
(1,050,806 |
) |
|
|
(286,583 |
) |
Income
taxes (benefit) expense |
|
- |
|
|
|
- |
|
|
|
|
|
Net (Loss) |
$ |
(1,050,806 |
) |
|
$ |
(286,583 |
) |
|
|
|
|
Earnings (Loss) Per Share |
|
|
|
Basic
earnings (loss) per common share: |
$ |
(0.09 |
) |
|
$ |
(0.03 |
) |
Diluted
earnings (loss) per common share: |
$ |
(0.09 |
) |
|
$ |
(0.03 |
) |
Weighted
average common shares outstanding |
|
|
|
Basic |
|
12,026,622 |
|
|
|
8,485,183 |
|
Diluted |
|
12,026,622 |
|
|
|
8,485,183 |
|
|
|
|
|
PAYMENT DATA SYSTEMS, INC. |
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS |
(UNAUDITED) |
|
|
|
|
|
|
|
Three Months Ended March 31, |
|
|
|
2018 |
|
|
|
2017 |
|
Operating
Activities |
|
|
|
|
Net (loss) |
|
$ |
(1,050,806 |
) |
|
$ |
(286,583 |
) |
Adjustments to
reconcile net (loss) to net cash (used) by operating
activities: |
|
|
|
|
Depreciation |
|
|
208,662 |
|
|
|
187,760 |
|
Amortization |
|
|
250,001 |
|
|
|
40,785 |
|
Non-cash stock based
compensation |
|
|
374,378 |
|
|
|
207,920 |
|
Changes in operating
assets and liabilities: |
|
|
|
|
Accounts
receivable |
|
|
77,518 |
|
|
|
56,918 |
|
Prepaid
expenses and other |
|
|
(192,569 |
) |
|
|
(130,557 |
) |
Other
assets |
|
|
(25,125 |
) |
|
|
(28,763 |
) |
Accounts
payable and accrued expenses |
|
|
(74,161 |
) |
|
|
191,103 |
|
Merchant
reserves |
|
|
102,765 |
|
|
|
(1,078,211 |
) |
Deferred
revenues |
|
|
90,250 |
|
|
|
- |
|
Net cash (used) by
operating activities |
|
|
(239,087 |
) |
|
|
(839,628 |
) |
|
|
|
|
|
Investing
Activities |
|
|
|
|
Purchases of property
and equipment |
|
|
(29,502 |
) |
|
|
(210,052 |
) |
Note receivable |
|
|
- |
|
|
|
(500,000 |
) |
Net cash (used) by
investing activities |
|
|
(29,502 |
) |
|
|
(710,052 |
) |
|
|
|
|
|
Financing
Activities |
|
|
|
|
Purchases of treasury
stock |
|
|
(956,134 |
) |
|
|
(30,964 |
) |
Net cash (used) by
financing activities |
|
|
(956,134 |
) |
|
|
(30,964 |
) |
|
|
|
|
|
Change in cash, cash
equivalents and merchant reserves |
|
|
(1,224,723 |
) |
|
|
(1,580,644 |
) |
Cash, cash equivalents
and merchant reserves, beginning of period |
|
|
19,778,022 |
|
|
|
19,924,379 |
|
|
|
|
|
|
Cash, cash
equivalents and merchant reserves, end of period |
|
$ |
18,553,299 |
|
|
$ |
18,343,735 |
|
|
|
|
|
|
Supplemental
disclosure of cash flow information: |
|
|
|
|
Cash paid during the
period for: |
|
|
|
|
Interest |
|
|
- |
|
|
|
- |
|
Income
taxes |
|
|
- |
|
|
|
- |
|
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL
MEASURES |
(UNAUDITED) |
|
|
|
|
|
Three Months Ended |
|
March 31, |
|
March 31, |
|
2018 |
|
|
2017 |
|
|
|
|
|
Reconciliation from
Operating (Loss) to Adjusted EBITDA: |
|
|
|
Operating
(Loss) |
$ |
(1,060,785 |
) |
|
$ |
(321,938 |
) |
Depreciation and amortization |
|
458,663 |
|
|
|
228,545 |
|
EBITDA |
|
(602,122 |
) |
|
|
(93,393 |
) |
Non-cash
stock-based compensation expense, net |
|
374,378 |
|
|
|
207,920 |
|
Adjusted EBITDA |
$ |
(227,744 |
) |
|
$ |
114,527 |
|
|
|
|
|
|
|
|
|
Calculation of Adjusted EBITDA margins: |
|
|
|
Revenues |
$ |
5,843,665 |
|
|
$ |
2,810,744 |
|
Adjusted
EBITDA |
|
(227,744 |
) |
|
|
114,527 |
|
Adjusted EBITDA margins |
|
-3.9 |
% |
|
|
4.1 |
% |
|
|
|
|
ContactsInvestor Relations:CORE IRJohn Marco,
+1-516-222-2560Managing Directorwww.coreir.com
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