Points International Reports First Quarter 2011 Financial Results
- Revenue of $28.5 million increased 21% year-over-year -
- Gross Margin of $5.1 million increased 21% over prior year period -
- EBITDA of $313,000 increased 37% year-over-year -
- Reiterated full year 2011 guidance -
- Strong new partner launches and global business opportunities; Robust 2011 partner pipeline -
TORONTO, May 3 /PRNewswire-FirstCall/ - Points International Ltd. (TSX: PTS) (NASDAQ: PCOM), owner of the loyalty reward management program platform www.Points.com, today announced results for the first quarter ended March 31, 2011. All financial results are in U.S. Dollars and both 2011 actual and 2010 comparatives have been presented in accordance with International Financial Reporting Standards ("IFRS").
"The first quarter marked a solid start to 2011 as evidenced by our strong revenue growth, expanded partner network and enhanced capital structure," said CEO Rob MacLean. "Revenues increased on both a year-over-year and sequential basis reaching $28.5 million in the first quarter. Revenue growth was fueled by the strength of our existing partnerships, as well as the addition of several new transactional partners to our private label and Points.com branded platforms."
Mr. MacLean continued, "Since the beginning of the year, we added 4 new transactional partners and deployed 12 new products and services across Points' loyalty program management platform. Increasingly evident in our partner platform is our success in expanding into new geographic territories and market verticals. During the quarter, we were pleased to welcome two new international partners to Points' partner network including Saudi Arabian Airlines, building upon our presence in the Middle East, and LANPASS, extending our presence in South America. In addition, during the quarter we built upon our US retail presence through an extended relationship with Best Buy and a newly formed partnership with PayPal."
Mr. MacLean continued, "Complementing our strong financial and operational performance, our share consolidation and subsequent NASDAQ listing was completed in the first quarter of 2011. Achieving a NASDAQ listing was a key strategic priority for Points and consistent with our objective to improve the visibility of our financial and operational achievements within the financial community."
First Quarter 2011 Financial Results
Total revenue was $28.5 million for the first quarter of 2011. Revenue was up 21.2% over the $23.5 million reported in the first quarter of 2010, and up 5.4% over the $27.0 million reported in the fourth quarter of 2010. Principal revenue totaled $26.7 million, an increase of 22.3% over the $21.8 million in the same period last year, and up 6.2% over the $25.1 million in the fourth quarter of 2010. Other partner revenue was $1.8 million, up from $1.7 million reported in the same period of last year and down from $1.9 million in the fourth quarter of 2010.
Gross margin for the first quarter of 2011 was $5.1 million, or 17.9% of revenue, compared to gross margin of $4.2 million, or 17.9% of revenue in the first quarter of 2010. Gross margin for the fourth quarter of 2010 was $5.9 million, or 22.0% of revenue.
Points reported a net loss for the first quarter of 2011 of $189,000, or ($0.01) per share. This compares to net income in the first quarter of 2010 of $443,000, or $0.03 per share, and to net income in the fourth quarter of 2010 of $341,000, or $0.02 per share, which included non-cash, non-recurring charges of $675,000 related to the impairment of long-lived assets.
During the first quarter of 2011, Points reported positive EBITDA of $313,000 compared to positive EBITDA of $229,000 in the same period of 2010 and $1.6 million in the fourth quarter of 2010.
As of March 31, 2011, total funds available, comprised of cash and cash equivalents together with security deposits, restricted cash and amounts with payment processors, was $41.3 million, up from $37.0 million at the end of the fourth quarter of 2010. The Company remains debt-free and is pleased with its overall financial position and its proven ability to generate positive free cash flow on an ongoing basis.
First Quarter 2011 Business Metrics
| Q1/11 | Q4/10 | Q1/11 vs. Q4/10 |
Q1/10 | Q1/11 vs. Q1/10 |
|
| TOTAL ALL CHANNELS | |||||
| Points/Miles Transacted (in 000s) | 3,066,878 | 3,175,884 | -3% | 2,770,973 | 11% |
| # of Points/Miles Transactions | 342,012 | 318,067 | 8% | 285,191 | 20% |
| LOYALTY CURRENCY SERVICES | |||||
| Points/Miles Transacted (in 000s) | 2,764,000 | 2,808,153 | -2% | 2,485,539 | 11% |
| # of Points/Miles Transactions | 321,326 | 295,120 | 9% | 266,992 | 20% |
| POINTS.COM CHANNELS | |||||
| Points/Miles Transacted (in 000s) | 302,878 | 367,731 | -18% | 285,434 | 6% |
| # of Points/Miles Transactions | 20,686 | 22,947 | -10% | 18,199 | 14% |
| Cumulative Registered Users | 2,655,605 | 2,573,719 | 3% | 2,467,663 | 8% |
Business Outlook
The Company is reiterating its financial guidance for the year ended December 31, 2011, as follows:
- The Company continues to expect revenue to be in the range of $120 million to $130 million, representing a 25% to 36% increase over 2010 revenue
- The Company continues to expect EBITDA to be in the range of $5 million to $8 million
- The Company continues to expect net income to be in the range of $3 million to $6 million, or $0.20 to $0.40 per share
Investor Conference Call
Points' quarterly conference call with investors will be held today at 5:00 pm. Eastern Time. To participate in the conference call, investors from the U.S. and Canada should dial (888) 846-5003 ten minutes prior to the scheduled start time. International callers should dial (480) 629-9856. In addition, the call will be broadcast live over the Internet hosted at the Investor Relations section of the Company's website at www.pointsinternational.com and will be archived online upon completion of the conference call. A telephonic replay of the conference call will also be available until 11:59 p.m. Eastern Time on Tuesday, May 10, 2011 by dialing (877) 870-5176 in the U.S. and Canada and (858) 384-5517 internationally and entering the passcode: 4435851.
About Points International Ltd
Points International Ltd. is the owner and operator of Points.com, the world's leading reward program management platform. The site was named one of the 30 Best Travel Sites in 2008 and 28 Best Travel Sites in 2009 by Kiplinger's. At Points.com consumers can Earn, Buy, Gift, Share, Trade, Exchange and Redeem miles and points from more than 25 of the world's leading reward programs. Participating programs include American Airlines AAdvantage® program, Aeroplan®, AsiaMilesTM, US Airways Dividend Miles® and InterContinental Hotels Group's Priority Club® Rewards. Redemption partners include Amazon.com®, PayPal 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 United States securities legislation, and forward-looking information within the meaning of Canadian securities legislation (collectively "forward-looking statements"). These forward-looking statements include our guidance for 2011 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-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.
Transition to IFRS
The preparation of these condensed consolidated interim financial statements resulted in changes to the accounting policies as compared with the most recent annual financial statements prepared under Canadian GAAP. The accounting policies set out below have been applied consistently to all periods presented in these condensed consolidated interim financial statements for the three months ended March 31, 2011 and the comparative information presented in these interim financial statements for both the three months ended March 31, 2010 and the year ended December 31, 2010.
Points International Ltd.
Condensed Consolidated Interim Balance Sheets
| Expressed in thousands of United States dollars (Unaudited) |
March 31, 2011 |
December 31, 2010 |
January 1, 2010 |
|||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | 30,810 | $ | 28,463 | $ | 26,414 | ||
| Restricted cash | 1,791 | 1,776 | 802 | |||||
| Funds receivable from payment processors | 6,205 | 4,624 | 5,855 | |||||
| Security deposits | 2,452 | 2,123 | 2,463 | |||||
| Accounts receivable | 2,538 | 2,054 | 1,907 | |||||
| Prepaid expenses and other assets | 1,680 | 1,179 | 898 | |||||
| Total current assets | 45,476 | 40,219 | 38,339 | |||||
| Non-current assets | ||||||||
| Property and equipment | 1,668 | 1,611 | 607 | |||||
| Intangible assets | 5,018 | 4,844 | 2,014 | |||||
| Goodwill | 2,580 | 2,580 | 2,580 | |||||
| Deferred tax assets | 845 | 984 | 945 | |||||
| Other assets | 607 | 613 | 1,033 | |||||
| Total non-current assets | 10,718 | 10,632 | 7,179 | |||||
| Total assets | $ | 56,194 | $ | 50,851 | $ | 45,518 | ||
| LIABILITIES | ||||||||
| Current liabilities | ||||||||
| Accounts payable and accrued liabilities | $ | 3,675 | $ | 3,679 | $ | 2,820 | ||
| Provisions | 67 | 102 | 267 | |||||
| Current portion of other liabilities | 612 | 629 | 609 | |||||
| Payable to loyalty program partners | 36,796 | 31,337 | 30,215 | |||||
| Total current liabilities | 41,150 | 35,747 | 33,911 | |||||
| Non-current liabilities | ||||||||
| Other liabilities | 828 | 951 | 301 | |||||
| Total non-current liabilities | 828 | 951 | 301 | |||||
| Total liabilities | 41,978 | 36,698 | 34,212 | |||||
| SHAREHOLDERS' EQUITY | ||||||||
| Share capital | 56,748 | 56,683 | 56,662 | |||||
| Contributed surplus | 9,407 | 9,255 | 8,677 | |||||
| Accumulated other comprehensive income | 332 | 297 | - | |||||
| Accumulated deficit | (52,271) | (52,082) | (54,033) | |||||
| Total shareholders' equity | 14,216 | 14,153 | 11,306 | |||||
| Total liabilities and shareholders' equity | $ | 56,194 | $ | 50,851 | $ | 45,518 | ||
Points International Ltd.
Condensed Consolidated Interim Statements of Comprehensive (Loss) Income
| Expressed in thousands of United States dollars, except per share amounts (Unaudited) |
March 31, 2011 | March 31, 2010 | ||||
| REVENUE | ||||||
| Principal | $ | 26,697 | $ | 21,837 | ||
| Other partner revenue | 1,771 | 1,664 | ||||
| Interest | 5 | 1 | ||||
| Total Revenue | 28,473 | 23,502 | ||||
| EXPENSES | ||||||
| Direct cost of principal revenue | 23,385 | 19,287 | ||||
| Employment costs | 3,244 | 2,681 | ||||
| Marketing & communications | 279 | 262 | ||||
| Technology services | 146 | 211 | ||||
| Depreciation and amortization | 445 | 135 | ||||
| Foreign exchange gain | (68) | (22) | ||||
| Operating expenses | 1,106 | 832 | ||||
| Total Expenses | 28,537 | 23,386 | ||||
| OPERATING (LOSS) INCOME | (64) | 116 | ||||
| Interest and other charges | - | 15 | ||||
| (LOSS) EARNINGS BEFORE INCOME TAX | (64) | 101 | ||||
| Deferred income tax expense (recovery) | 125 | (342) | ||||
| NET (LOSS) INCOME | (189) | 443 | ||||
| OTHER COMPREHENSIVE (LOSS) INCOME | ||||||
| Gain on foreign exchange derivatives designated as cash flow hedges, net of income tax expense of $60 (2010 - $102) | 153 | 228 | ||||
| Reclassification to net income of gain on foreign exchange derivatives designated as cash flow hedges, net of income tax expense of $46 (2010 - $8) | (118) | (18) | ||||
| Other comprehensive income for the period, net of income tax | 35 | 210 | ||||
| TOTAL COMPREHENSIVE (LOSS) INCOME | $ | (154) | $ | 653 | ||
| (LOSS) EARNINGS PER SHARE | ||||||
| Basic (loss) earnings per share | $ | (0.01) | $ | 0.03 | ||
| Diluted (loss) earnings per share | $ | (0.01) | $ | 0.03 | ||
Points International Ltd.
Condensed Consolidated Interim Statements of Changes in Shareholders' Equity
| Attributable to equity holders of the Company | ||||||||||||||
| Expressed in thousands of United States dollars (Unaudited) |
Share Capital |
Contributed Surplus |
Total Capital |
Unrealized gains on cash flow hedges |
Accumulated other comprehensive income |
Accumulated deficit |
Total shareholders' equity |
|||||||
| Balance at December 31, 2010 | $ | 56,683 | $ | 9,255 | $ | 65,938 | $ | 297 | $ | 297 | $ | (52,082) | $ | 14,153 |
| Net loss | - | - | - | - | - | (189) | (189) | |||||||
| Other comprehensive income | - | - | - | 35 | 35 | - | 35 | |||||||
| Total comprehensive income | - | - | - | 35 | 35 | (189) | (154) | |||||||
| Effect of stock option compensation plan | - | 169 | 169 | - | - | - | 169 | |||||||
| Share issuances | 65 | (17) | 48 | - | - | - | 48 | |||||||
| Balance at March 31, 2011 | $ | 56,748 | $ | 9,407 | $ | 66,155 | $ | 332 | $ | 332 | $ | (52,271) | $ | 14,216 |
| Balance at January 1, 2010 | $ | 56,662 | $ | 8,677 | $ | 65,339 | $ | - | $ | - | $ | (54,033) | $ | 11,306 |
| Net income | - | - | - | - | - | 443 | 443 | |||||||
| Other comprehensive income | - | - | - | 210 | 210 | - | 210 | |||||||
| Total comprehensive income | - | - | - | 210 | 210 | 443 | 653 | |||||||
| Effect of stock option compensation plan | - | 162 | 162 | - | - | - | 162 | |||||||
| Share issuances | - | - | - | - | - | - | - | |||||||
| Balance at March 31, 2010 | $ | 56,662 | $ | 8,839 | $ | 65,501 | $ | 210 | $ | 210 | $ | (53,590) | $ | 12,121 |
Points International Ltd.
Condensed Consolidated Interim Statements of Cash Flows
| Expressed in thousands of United States dollars (Unaudited) |
March 31, 2011 | March 31, 2010 | ||||
| Cash flows from operating activities | ||||||
| Net (loss) income for the period | $ | (189) | $ | 443 | ||
| Adjustments for: | ||||||
| Depreciation of property and equipment | 103 | 65 | ||||
| Amortization of intangible assets | 342 | 70 | ||||
| Unrealized foreign exchange (gain) loss | (346) | 253 | ||||
| Equity-settled share-based payment transactions | 169 | 162 | ||||
| Deferred income tax expense (recovery) | 125 | (342) | ||||
| Unrealized gain on derivative contracts designated as cash flow hedges | 48 | - | ||||
| Changes in non-cash balances related to operations | 2,393 | 3,028 | ||||
| Net cash provided by operating activities | 2,645 | 3,679 | ||||
| Cash flows from investing activities | ||||||
| Acquisition of property and equipment | (160) | (45) | ||||
| Additions to intangible assets | (516) | (517) | ||||
| Changes in restricted cash | - | (1,421) | ||||
| Net cash used in investing activities | (676) | (1,983) | ||||
| Cash flows from financing activities | ||||||
| Proceeds from exercise of share options | 48 | - | ||||
| Net cash provided by financing activities | 48 | - | ||||
| Net increase in cash and cash equivalents | 2,017 | 1,696 | ||||
| Cash and cash equivalents at beginning of the period | 28,463 | 26,414 | ||||
| Effect of exchange rate fluctuations on cash held | 330 | (253) | ||||
| Cash and cash equivalents at end of the period | $ | 30,810 | $ | 27,857 | ||
| Interest Received | 5 | 1 | ||||
| Interest Paid | - | - | ||||
Points International Ltd.
Schedule of Non-GAAP Reconciliations
Gross Margin Information
| For the three months ended | |||||||
| Expressed in thousands of United States dollars (Unaudited) |
March 31, 2011 |
December 31, 2010 |
March 31, 2010 |
||||
| Total revenue | $ | 28,473 | $ | 27,004 | $ | 23,502 | |
| Direct cost of principal revenue | 23,385 | 21,063 | 19,287 | ||||
| Gross Margin | $ | 5,085 | $ | 5,941 | $ | 4,215 | |
| Gross Margin % | 18% | 22% | 18% | ||||
Reconciliation of Operating (Loss) Income to EBITDA
| For the three months ended | |||||||
| Expressed in thousands of United States dollars (Unaudited) |
March 31, 2011 |
December 31, 2010 |
March 31, 2010 |
||||
| Operating (loss) income | $ | (64) | $ | 1,185 | $ | 116 | |
| Depreciation and amortization | 445 | 450 | 135 | ||||
| Foreign exchange (gain) loss | (68) | 7 | (22) | ||||
| EBITDA | $ | 313 | $ | 1,642 | $ | 229 | |
SOURCE Points International Ltd.
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