Planet Payment, Inc. (Nasdaq:PLPM) (LSE:PPT), a leading provider of
international payment processing and multi-currency processing
services, announced today its results for the first quarter ended
March 31, 2014 and provided guidance for its annual results for
2014.
Financial Highlights for the Quarter Ended March 31,
2014
- Net revenue for the period was $11.2 million compared to $12.1
million in the first quarter of 2013.
- Gross foreign currency mark-up was $28.1 million compared to
$28.2 million in the first quarter of 2013. (See Table 3 for
explanation of this metric).
- Net loss for the period was $(0.8) million or $(0.01) per
diluted share compared to net income of $0.4 million or $0.01 per
diluted share in the first quarter of 2013. The net loss for the
first quarter of 2014 includes a restructuring charge of $0.6
million.
- Adjusted EBITDA for the period was $0.9 million compared to
$1.4 million in the first quarter of 2013. (See Table 1 for
reconciliation of net (loss) income to Adjusted EBITDA).
Operational Highlights for the Quarter Ended March 31,
2014
- Total active merchant locations increased to approximately
67,000 (2013: approximately 42,000) (See Table 3 for explanation of
this metric).
- Settled multi-currency dollar volume processed totaled
approximately $681 million (2013: $698 million). (See Table 3 for
explanation of this metric).
- Total settled dollar volume processed increased to $2.0 billion
(2013: $1.7 Billion) and total settled transactions processed
increased to 24.0 million (2013: 13.2 million). (See Table 3 for
explanation of these metrics).
- Began roll out of Pay in Your Currency® service with Cielo,
S.A. in Brazil
- Continued roll out of Pay in Your Currency with PT Bank of
Central Asia in Indonesia and with Vantiv in the United States,
implementing a national retailer with 1,800 locations.
- Launched integrated hospitality merchant solution with MICROS
in the United States.
- Continued roll out of processing solution for Visa initiative
in Mexico.
- Launched Shop in Your Currency™ e-commerce solution with
Cardworks Acquiring in the United States.
- Entered into agreement for UnionPay processing with an acquirer
in Macau, and continued rollout of UPOP e-commerce solution with
new accounts in the United States.
Outlook for Fiscal Year 2014
- Net revenue estimated to be in the range of $52.1 million to
$55.1 million.
- Net income estimated to be in the range of $4.1 million to $6.4
million.
- Adjusted EBITDA estimated to be in the range of $10.0 million
to $12.3 million. (See Table 2 for reconciliation of prospective
net income to Adjusted EBITDA).
- Fully diluted earnings per share estimated to be in the range
of $0.06 to $0.10 based upon an estimated 56.0 million fully
diluted common shares outstanding.
Commenting on the results, Carl Williams, CEO and
President of Planet Payment, Inc., said:
"We are hard at work transforming Planet Payment into an
efficient and sales-centric organization with an exciting pipeline
that we believe will generate future revenue growth and
profitability. With our commitment to the plan and the progress
that we have made over the past few months, I am optimistic about
our prospects for success as we look to the future."
Conference Call
The Company will host a conference call to discuss first quarter
2014 financial results today at 5:00 pm New York time. Carl
Williams, Chief Executive Officer and President, and Robert Cox,
Chief Financial Officer and Chief Operating Officer will host the
call. The call will be webcast live from the Company's investor
relations website at http://ir.planetpayment.com/. The conference
call can also be accessed live over the phone by dialing (877)
705-6003, or for international callers (201) 493-6725. A replay
will be available approximately two hours after the call concludes
and can be accessed on our website or by dialing (877) 870-5176, or
for international callers (858) 384-5517, and entering the
conference ID 13580989. The replay will be available until our next
earnings call on our website or via telephone until Monday, May 19,
2014.
Additional analysis of the Company's performance can be found in
the "Management's Discussion and Analysis of Financial Condition
and Results of Operations," included in the Quarterly Report on
Form 10-Q to be filed at www.sec.gov.
About Planet Payment
Planet Payment (Nasdaq:PLPM) (LSE:PPT) is a leading provider of
international payment and transaction processing and multi-currency
processing services. Planet Payment provides services in 23
countries and territories across the Asia Pacific region, the
Americas, the Middle East, Africa and Europe, primarily through our
more than 60 acquiring bank and processor customers. The Company's
point-of-sale and e-commerce services help merchants sell more
goods and services to consumers, and together with ATM services,
are integrated within the payment card transaction flow enabling
acquiring customers, their merchants and consumers to shop, pay,
transact and reconcile payment transactions in multiple currencies,
geographies and channels.
Planet Payment is headquartered in New York and has offices in
Atlanta, Beijing, Bermuda, Delaware, Dubai, Dublin, London, Hong
Kong, Mexico City, Shanghai and Singapore. Visit
www.planetpayment.com for more information about the Company and
its services. For up-to-date information follow Planet Payment on
Twitter at @PlanetPayment or join Planet Payment's Facebook
page.
Notice Regarding Forward-Looking
Statements.
Information contained in this announcement may include
'forward-looking statements'. All statements other than statements
of historical facts included herein, including, without limitation,
those set forth in "Outlook for Fiscal Year 2014" and those
regarding the financial position, business strategy, plans and
objectives of management for future operations of both Planet
Payment and its business partners, estimated net revenue, net
income, Adjusted EBITDA, diluted earnings per share, estimated
fully diluted common shares outstanding, tax rates, future service
launches with customers and new initiatives and customer pipeline
are forward-looking statements. Such forward-looking statements are
based on a number of assumptions regarding Planet Payment's present
and future business strategies, and the environment in which Planet
Payment expects to operate in future, which assumptions may or may
not be fulfilled in practice. Implementation of some or all of the
new services referred to is subject to regulatory or other third
party approvals. Actual results may vary materially from the
results anticipated by these forward-looking statements as a result
of a variety of risk factors, including the risk that
implementation, adoption and offering of the service by processors,
acquirers, merchants and others may take longer than anticipated,
or may not occur at all, regulatory changes and changes in card
association regulations and practices, changes in domestic and
international economic conditions and changes in volume of
international travel and commerce and others. Additional risks may
arise, with respect to commencing operations in new countries and
regions, of which Planet Payment is not fully aware at this time.
See the Company's Quarterly Report on Form 10-Q, filed at
www.sec.gov for other risk factors which investors should consider.
These forward-looking statements speak only as to the date of this
announcement and cannot be relied upon as a guide to future
performance. Planet Payment expressly disclaims any obligation or
undertaking to disseminate any updates or revisions to any
forward-looking statements contained in this announcement to
reflect any changes in its expectations with regard thereto or any
change in events, conditions or circumstances on which any
statement is based.
Non-GAAP Financial Information
The Company provides certain non-GAAP financial measures in this
announcement. Management believes that Adjusted EBITDA, when viewed
with our results under GAAP and the accompanying reconciliations,
provides useful information about our period-over-period results.
Adjusted EBITDA is presented because management believes it
provides additional information with respect to the performance of
our fundamental business activities and is also frequently used by
securities analysts, investors and other interested parties in the
evaluation of comparable companies. We also rely on Adjusted EBITDA
as a primary measure to review and assess the operating performance
of our company and our management team in connection with our
executive compensation. These non-GAAP key business indicators,
which include Adjusted EBITDA, should not be considered
replacements for and should be read in conjunction with the GAAP
financial measures.
We define Adjusted EBITDA as GAAP net income (loss) adjusted to
exclude: (1) interest expense, (2) interest income, (3) provision
(benefit) for income taxes, (4) depreciation and amortization, (5)
stock‑based compensation expense and (6) certain other items
management believes affect the comparability of operating results.
Please see "Adjusted EBITDA" below for more information and for a
reconciliation of Adjusted EBITDA to net income, the most directly
comparable financial measure calculated and presented in accordance
with GAAP.
|
Table 1. Reconciliation
of Net (Loss) Income to Adjusted EBITDA |
|
|
|
For the three months
ended March 31, 2014 and 2013 |
|
|
|
|
Three months ended March 31, |
|
2014 |
2013 |
ADJUSTED EBITDA: |
|
|
Net (loss) income |
$ (779,290) |
$ 371,916 |
Interest expense |
16,170 |
13,146 |
Interest income |
(175) |
(212) |
(Benefit) provision for income taxes |
(6,010) |
593 |
Depreciation and amortization |
746,313 |
735,606 |
Stock-based compensation expense |
275,991 |
258,929 |
Restructuring charge |
629,215 |
— |
Adjusted EBITDA (non-GAAP) |
$ 882,214 |
$ 1,379,978 |
|
|
|
Table 2. Reconciliation
of Prospective Net Income to Adjusted EBITDA |
|
|
For the year ending
December 31, 2014 |
|
|
|
Range |
ADJUSTED EBITDA: |
Millions |
|
|
Net income |
$4.1 |
$6.4 |
Interest expense |
0.1 |
0.1 |
Interest income |
0.0 |
0.0 |
Provision for income taxes |
0.8 |
0.8 |
Depreciation and amortization |
3.0 |
3.0 |
Stock‑based expense |
1.3 |
1.3 |
Restructuring charge |
0.7 |
0.7 |
Adjusted EBITDA (non-GAAP) |
$10.0 |
$12.3 |
|
|
|
Table
3. Explanation of Key Metrics |
|
|
|
|
|
Three months ended |
|
|
March 31, |
|
|
2014 |
2013 |
|
|
|
KEY METRICS: |
|
|
Consolidated gross billings(1) |
$ 31,832,572 |
$ 32,501,926 |
Total settled dollar volume processed(2) |
$ 1,995,274,708 |
$ 1,700,103,417 |
Total active merchant locations (at period
end)(3) |
67,112 |
41,930 |
Total settled transactions processed (4) |
23,990,910 |
13,178,805 |
|
|
|
Multi-currency processing services
key metrics: |
|
|
Active merchant locations (at
period end)(3) |
24,504 |
22,503 |
Settled transactions processed(5) |
3,171,691 |
3,043,970 |
Gross foreign currency mark-up(6) |
$ 28,095,890 |
$ 28,246,592 |
Settled dollar volume processed(7) |
$ 680,570,444 |
$ 697,866,524 |
Average net mark-up percentage on settled
dollar volume processed(8) |
1.09% |
1.12% |
|
|
|
Payment processing services key
metrics: |
|
|
Active merchant locations (at
period end)(3) |
42,631 |
19,447 |
Payment processing services revenue(9) |
$ 3,736,682 |
$ 4,255,334 |
Settled transactions processed(10) |
20,819,219 |
10,134,835 |
Settled dollar volume processed(11) |
$ 1,314,704,264 |
$ 1,002,236,893 |
|
|
|
(1) Represents gross
foreign currency mark-up (see footnote 6) plus payment processing
services revenue (see footnote 9). |
(2) Represents total
settled dollar volume processed through both our multi-currency and
payment processing services. |
(3) We consider a merchant
location to be active as of a date if the merchant completed at
least one revenue-generating transaction at the location during the
90-day period ending on such date. The total number of active
merchant locations exceeds the total number of merchants, as
merchants may have multiple locations. As of March 31, 2014 and
2013, there were 23 and 20 active merchant locations,
respectively, included in both multi-currency and payment
processing active merchant locations but are not included in total
active merchant locations, in order to eliminate counting these
locations twice. |
(4) Represents total
settled transactions (excluding other transaction types such as
authorizations and rate look-ups). |
(5) Represents settled
transactions processed using our multi-currency processing services
(excluding other transaction types such as authorizations and rate
look-ups). |
(6) Represents the gross
foreign currency mark-up amount on settled dollar volume processed
using our multi-currency processing services. Gross foreign
currency mark-up represents multi-currency processing services net
revenue plus amounts paid to acquiring banks and their merchants
associated with such multi-currency processing transactions.
Management believes this metric is relevant because it provides the
reader an indication of the gross mark-up derived from
multi-currency transactions processed through our platform during a
given period. |
(7) Represents the total
settled dollar volume processed using our multi-currency processing
services. |
(8) Represents the average
net mark-up percentage earned on settled dollar volume processed
using our multi-currency processing services. The average net
mark-up percentage on settled dollar volume processed is calculated
by taking the reported total multi-currency processing services net
revenue ($7.4 million and $7.8 million for the three months ended
March 31, 2014 and 2013, respectively) and dividing by settled
dollar volume processed (See footnote 7). |
(9) Represents revenue
earned and reported on payment processing services. |
(10) Represents settled
transactions processed using our payment processing services
(excluding other transaction types such as authorizations and rate
look-ups). |
(11) Represents the total
settled dollar volume processed using our payment processing
services. |
|
|
|
|
|
|
|
|
|
Planet
Payment, Inc. |
|
|
|
|
|
Condensed Consolidated Balance
Sheets |
|
|
|
|
|
|
As of March
31, |
As of December 31, |
|
2014 |
2013 |
|
(unaudited) |
|
Current assets: |
|
|
Cash and cash equivalents |
$ 5,709,245 |
$ 6,572,468 |
Restricted cash |
1,974,117 |
3,471,023 |
Accounts receivable, net of allowances of
$0.2 million as of March 31, 2014 and December 31,
2013 |
5,486,137 |
6,016,296 |
Prepaid expenses and other assets |
1,638,277 |
1,457,660 |
Total current assets |
14,807,776 |
17,517,447 |
Other assets: |
|
|
Restricted cash |
676,138 |
446,044 |
Property and equipment, net |
2,225,457 |
2,198,640 |
Software development costs, net |
4,938,911 |
4,904,415 |
Intangible assets, net |
2,704,027 |
2,820,909 |
Goodwill |
361,695 |
362,063 |
Security deposits and other assets |
2,248,669 |
2,141,620 |
Total other assets |
13,154,897 |
12,873,691 |
Total assets |
$ 27,962,673 |
$ 30,391,138 |
Liabilities and stockholders'
equity |
|
|
Current liabilities: |
|
|
Accounts payable |
$ 748,282 |
$ 585,604 |
Accrued expenses |
3,887,287 |
5,032,620 |
Due to merchants |
1,494,676 |
3,018,900 |
Current portion of capital leases |
492,911 |
466,010 |
Total current liabilities |
6,623,156 |
9,103,134 |
Long-term liabilities: |
|
|
Long-term portion of capital leases and
deferred revenue |
1,352,181 |
1,432,513 |
Total long-term liabilities |
1,352,181 |
1,432,513 |
Total liabilities |
7,975,337 |
10,535,647 |
Commitments and contingencies (Note
8) |
|
|
Stockholders' equity: |
|
|
Convertible preferred stock— 10,000,000
shares authorized as of March 31, 2014 and December 31, 2013,
$0.01 par value: Series A— 2,243,750 issued and outstanding as
of March 31, 2014 and December 31, 2013; $8,975,000
aggregate liquidation preference |
22,438 |
22,438 |
Common stock—250,000,000 shares authorized as
of March 31, 2014 and December 31, 2013, $0.01 par value, and
54,845,113 and 55,037,488 issued and outstanding as of March 31,
2014 and December 31, 2013, respectively |
548,451 |
550,375 |
Additional paid-in capital |
101,964,657 |
101,038,685 |
Accumulated other comprehensive
income |
122,318 |
135,231 |
Accumulated deficit |
(82,670,528) |
(81,891,238) |
Total stockholders' equity |
19,987,336 |
19,855,491 |
Total liabilities and stockholders'
equity |
$ 27,962,673 |
$ 30,391,138 |
|
|
|
The accompanying notes are an
integral part of these financial statements |
|
|
|
|
|
|
|
|
|
Planet
Payment, Inc. |
|
|
Condensed Consolidated Statements of
Operations (unaudited) |
|
|
|
|
|
|
Three months ended March 31, |
|
2014 |
2013 |
Revenue: |
|
|
Net revenue |
$ 11,175,117 |
$ 12,086,063 |
Operating expenses: |
|
|
Cost of revenue: |
|
|
Payment processing services fees |
2,518,821 |
2,802,289 |
Processing and service costs |
3,714,593 |
3,175,647 |
Total cost of revenue |
6,233,414 |
5,977,936 |
Selling, general and administrative
expenses |
5,081,793 |
5,722,684 |
Restructuring charge |
629,215 |
-- |
Total operating expenses |
11,944,422 |
11,700,620 |
(Loss) income from operations |
(769,305) |
385,443 |
Other (expense) income: |
|
|
Interest expense |
(16,170) |
(13,146) |
Interest income |
175 |
212 |
Total other expense, net |
(15,995) |
(12,934) |
(Loss) income before provision for income
taxes |
(785,300) |
372,509 |
Benefit (provision) for income taxes |
6,010 |
(593) |
Net (loss) income |
$ (779,290) |
$ 371,916 |
Basic net (loss) income per share
applicable to common stockholders |
$ (0.01) |
$ 0.01 |
Diluted net (loss) income per share
applicable to common stockholders |
$ (0.01) |
$ 0.01 |
Weighted average common stock outstanding
(basic) |
53,437,184 |
52,779,130 |
Weighted average common stock outstanding
(diluted) |
53,437,184 |
54,806,026 |
|
|
|
The accompanying notes are an
integral part of these financial statements |
|
|
|
|
|
|
|
|
|
Planet
Payment, Inc. |
|
|
|
|
|
Condensed Consolidated Statements of
Cash Flows (unaudited) |
|
|
|
|
|
|
Three months ended March 31, |
|
2014 |
2013 |
Cash flows from operating
activities: |
|
|
Net (loss) income |
$ (779,290) |
$ 371,916 |
Adjustments to reconcile net (loss)
income to net cash used in operating activities: |
|
|
Stock-based compensation expense |
311,124 |
258,929 |
Depreciation and amortization
expense |
746,313 |
735,606 |
Provision for doubtful accounts |
3,268 |
160,893 |
Disposal of property and equipment |
3,157 |
2,950 |
Changes in operating assets and
liabilities: |
|
|
Decrease in settlement assets |
1,496,906 |
780,213 |
Decrease in accounts receivables, prepaid
expenses and other current assets |
346,274 |
143,279 |
Increase in security deposits and other
assets |
(107,049) |
(90,102) |
Decrease in accounts payable and accrued
expenses |
(1,112,427) |
(1,590,373) |
Decrease in due to merchants |
(1,524,224) |
(830,321) |
Other |
(10,979) |
(19,876) |
Net cash used in operating
activities |
(626,927) |
(76,886) |
Cash flows from investing
activities: |
|
|
Insurance proceeds |
— |
100,000 |
Increase in restricted cash |
(230,094) |
— |
Purchase of property and equipment |
(19,756) |
(405,739) |
Capitalized software development |
(397,401) |
(375,066) |
Purchase of intangible assets |
(53,695) |
(22,701) |
Net cash used in investing
activities |
(700,946) |
(703,506) |
Cash flows from financing
activities: |
|
|
Proceeds from the issuance of common
stock |
602,572 |
106,250 |
Principal payments on capital lease
obligations |
(137,922) |
(91,175) |
Net cash provided by financing
activities |
464,650 |
15,075 |
Effect of exchange rate changes on cash and
cash equivalents(*) |
— |
— |
Net decrease in cash and cash
equivalents |
(863,223) |
(765,317) |
Beginning of period |
6,572,468 |
6,002,457 |
End of period |
$ 5,709,245 |
$ 5,237,140 |
Supplemental
disclosure: |
|
|
Cash paid for: |
|
|
Interest |
$ 18,272 |
$ 14,454 |
Income taxes |
180,835 |
103,227 |
Non-cash investing and financing
activities: |
|
|
Assets acquired under capital leases |
$ 163,861 |
$ 115,032 |
Accrued capitalized hardware, software
and fixed assets |
50,401 |
197,445 |
Capitalized stock-based compensation |
10,352 |
13,624 |
|
|
|
(*) For the
three months ended March 31, 2014 and 2013, the effect of exchange
rate changes on cash and cash equivalents was inconsequential. |
|
|
|
The accompanying notes are an
integral part of these financial statements |
|
|
|
Notes to Condensed Consolidated Financial Statements
(unaudited)
1. Business description and basis of
presentation
Business description
Planet Payment, Inc. together with its wholly owned
subsidiaries ("Planet Payment," the "Company," "we," or "our") is a
provider of international payment and transaction processing and
multi-currency processing services. The Company provides its
services to approximately 67,000 active merchant locations in 23
countries and territories across the Asia Pacific region, the
Americas, the Middle East, Africa and Europe, primarily through its
acquiring bank and processor customers, as well as through its own
direct sales force. The Company provides banks and their
merchants with innovative services to accept, process and reconcile
electronic payments. The Company's point-of-sale and
e-commerce services are integrated within the payment card
transaction process enabling its acquiring customers to process and
reconcile payment transactions in multiple currencies, geographies
and channels. The Company's ATM services provide its domestic
and international acquirers with additional processing capabilities
to help them increase revenue and improve customer
satisfaction. The Company also offers non-financial
transaction processing services that allow merchants to offer a
range of commercial services including pre-paid mobile phone
top-up, bill payments and insurance premium payments, using the
same point-of-sale devices deployed to accept payment
cards. The Company is a registered third party processor with
the major card associations and operates in accordance with
industry standards, including the Payment Card Industry, or PCI,
Security Council's Data Security Standards.
Basis of presentation
The condensed consolidated financial statements of the Company
have been prepared in accordance with accounting principles
generally accepted in the United States of America ("GAAP").
The accompanying condensed consolidated financial statements
include the accounts of Planet Payment, Inc. and its
wholly-owned subsidiaries. All intercompany transactions and
balances have been eliminated.
Unaudited consolidated interim financial
information
The accompanying unaudited condensed consolidated interim
financial statements as of March 31, 2014 and for the periods ended
March 31, 2014 and 2013 have been prepared on the same basis as the
annual consolidated financial statements. In the opinion of
management, the unaudited financial information for the interim
periods presented reflects all adjustments, which are normal and
recurring, necessary for a fair presentation of the statement of
operations, financial position and cash flows. The accompanying
unaudited condensed consolidated interim financial statements
should be read in conjunction with the audited consolidated
financial statements included in the Company's Annual Report on
Form 10-K for the year ended December 31, 2013. Operating
results for the interim period ended March 31, 2014 are not
necessarily indicative of the results that may be expected for the
year ending December 31, 2014. The December 31, 2013
balance sheet information has been derived from the audited
financial statements at that date. Certain information and
disclosures normally included in annual consolidated financial
statements have been omitted pursuant to the rules and
regulation of the Securities and Exchange Commission, or SEC.
CONTACT: Enquiries:
Planet Payment, Inc.
Robert Cox CFO and COO
Tel: + 1 516 670 3200
www.planetpayment.com
Canaccord Genuity Ltd (UK) (Nomad for Planet Payment)
Simon Bridges / Cameron Duncan
Tel: +44 20 7523 8000
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