– Revenue of $32.7 million increased 51% over the prior year period
– Gross Margin1 of $6.2 million increased 44% over prior year period
– EBITDA2 of $1.4 million increased 490% year over year
– Reiterated full year 2011 guidance
– Strong new partner and product launches and global business opportunities; continued robust 2011 partner and product pipeline
TORONTO, Aug. 9, 2011 (GLOBE NEWSWIRE) -- Points International Ltd. (TSX:PTS) (Nasdaq:PCOM), owner of the loyalty reward management program platform www.Points.com, today announced results for the second quarter ended June 30, 2011. All financial results are in U.S. dollars and both 2011 and 2010 comparatives have been presented in accordance with International Financial Reporting Standards ("IFRS").
"Our second quarter performance highlights Points' continued financial and operational success, as evidenced by our strong growth in revenue and profitability and continued expansion of our loyalty reward program management platform," said CEO Rob MacLean. "Our exceptional revenue growth was led by increased transactional activity among our existing partners as well as new transactional products and partners added to our platform over the past twelve months. In addition, we were able to deliver meaningful improvements in our profitability metrics with net income and EBITDA expanding nearly six-fold as compared to the prior year period. Expansion in our profitability metrics was driven not only by our year-over-year revenue growth, but also from our continued focus on margin expansion and operating expense discipline."
MacLean continued, "The second quarter also marked a continuation of our positive momentum in adding new products and transactional partners across our loyalty reward program management platform. Year-to-date, we have welcomed 5 new transactional partners and deployed 23 new products, to end the second quarter with over 163 products and services with approximately 50 partners worldwide. Importantly, during, or just subsequent to the second quarter, we extended several strategic partnerships including American Airlines AAdvantage, Air France KLM, Hawaiian Airlines' Hawaiian Miles, Hyatt Gold Passport, Virgin Atlantic's Flying Club, Best Buy's Reward Zone and Cathay Pacific's Asia Miles. Our continued ability to expand our pre-existing relationships across our private label and Points.com branded platforms is a key driver of our future growth and ultimately speaks to Points' growing importance in the loyalty reward program ecosystem."
Mr. MacLean continued, "Looking forward, we expect to build upon our positive momentum in the back-half of the year and are on track to deliver strong results in-line with our financial objectives for 2011. Critical to our success will be the on-going expansion of our loyalty reward program management platform. As such, we are pleased with our most recent announcement, the addition of Iberia Airlines' Iberia Plus Frequent Flyer Program to our partner platform. We are very pleased to enter the third quarter with a strong product and partner pipeline and expect the volume of our deployments in the second half of 2011 to be consistent with that of the first half of 2011. We look forward to sharing our success in the coming months."
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 (loss) before interest, amortization, foreign exchange and impairment costs] is considered by management to be a useful supplemental measure of performance. However, EBITDA is not a recognized earnings measure under IFRS.
Second Quarter 2011 Financial Results
Total revenue was $32.7 million for the second quarter of 2011. Revenue was up 51% over the $21.7 million reported in the second quarter of 2010, and up 15% over the $28.5 million reported in the first quarter of 2011. Principal revenue totaled $30.8 million, an increase of 53% over the $20.1 million in the same period last year and up 15% over the $26.7 million reported in the first quarter of 2011. Other partner revenue was $2.0 million, up from $1.6 million in the second quarter of 2010 and up from $1.8 million in the first quarter of 2011.
Gross margin for the second quarter of 2011 was $6.2 million, or 19.0% of total revenue, compared to gross margin of $4.3 million or 19.9% of revenue in the second quarter of 2010. Gross margin for the first quarter of 2011 was $5.1 million, or 17.9% of revenue.
Net income for the second quarter of 2011 was $501,000, or $0.03 per share. This compares to net income of $88,000, or $0.01 per share, in the second quarter of 2010 and a net loss of $189,000, or ($0.01) per share, in the first quarter of 2011.
During the second quarter of 2011, Points reported positive EBITDA of $1.4 million compared to positive EBITDA of $233,000 in the same period of 2010 and positive EBITDA of $313,000 in the first quarter of 2011.
As of June 30, 2011, total funds available, comprised of cash and cash equivalents together with security deposits, restricted cash and amounts with payment processors was $43.1 million, up from $41.3 million at the end of the first quarter of 2011. The company remains debt free and is pleased with its overall financial position and its ability to generate positive cash flow.
Second Quarter 2011 Business Metrics
| Q2/11 | Q1/11 | Q2/11 vs. Q1/11 | Q2/10 | Q2/11 vs. Q2/10 | |
| TOTAL ALL CHANNELS | |||||
| Points/Miles Transacted (in 000s) | 3,641,292 | 3,066,878 | 19% | 2,724,245 | 34% |
| No. of Points/Miles Transactions | 347,134 | 342,012 | 1% | 286,953 | 21% |
| LOYALTY CURRENCY SERVICES | |||||
| Points/Miles Transacted (in 000s) | 3,319,885 | 2,764,000 | 20% | 2,484,218 | 34% |
| No. of Points/Miles Transactions | 329,561 | 321,326 | 3% | 271,374 | 21% |
| POINTS.COM CHANNELS | |||||
| Points/Miles Transacted (in 000s) | 321,407 | 302,878 | 6% | 240,027 | 34% |
| No. of Points/Miles Transactions | 17,573 | 20,686 | -15% | 15,579 | 13% |
| Cumulative Registered Users | 2,724,144 | 2,655,605 | 3% | 2,525,059 | 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 diluted share
Investor Conference Call
Points' conference call with investors will be held today at 5:00 p.m. Eastern Time. To participate, investors from the US and Canada should dial (877) 941-2068 ten minutes prior to the start time. International dialers should call (480) 629-9712. 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 August 16, 2011 by dialing (877) 870-5176 in the U.S. or Canada or (858) 384-5517 internationally and entering the conference ID 445806.
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 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 and six months ended June 30, 2011 and the comparative information presented in these interim financial statements for both the three and six months ended June 30, 2010 and the year ended December 31, 2010.
| Points International Ltd. | |||
| Condensed Consolidated Interim Balance Sheets | |||
|
Expressed in thousands of United States dollars (Unaudited) |
June 30, 2011 |
December 31, 2010 |
January 1, 2010 |
| ASSETS | |||
| Current assets | |||
| Cash and cash equivalents | $30,593 | $28,463 | $26,414 |
| Restricted cash | 1,789 | 1,776 | 802 |
| Funds receivable from payment processors | 8,066 | 4,624 | 5,855 |
| Security deposits | 2,628 | 2,123 | 2,463 |
| Accounts receivable | 2,209 | 2,054 | 1,907 |
| Prepaid expenses and other assets | 1,485 | 1,179 | 898 |
| Total current assets | 46,770 | 40,219 | 38,339 |
|
|
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| Non-current assets |
|
||
| Property and equipment | 1,849 | 1,611 | 607 |
| Intangible assets | 4,873 | 4,844 | 2,014 |
| Goodwill | 2,580 | 2,580 | 2,580 |
| Deferred tax assets | 551 | 984 | 945 |
| Other assets | 467 | 613 | 1,033 |
| Total non-current assets | 10,320 | 10,632 | 7,179 |
| Total assets | $57,090 | $50,851 | $45,518 |
|
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| LIABILITIES | |||
| Current liabilities |
|
||
| Accounts payable and accrued liabilities | $2,945 | $3,679 | $2,820 |
| Provisions | 84 | 102 | 267 |
| Current portion of other liabilities | 654 | 629 | 609 |
| Payable to loyalty program partners | 37,413 | 31,337 | 30,215 |
| Total current liabilities | 41,096 | 35,747 | 33,911 |
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||
| Non-current liabilities |
|
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| Other liabilities | 845 | 951 | 301 |
| Total non-current liabilities | 845 | 951 | 301 |
|
|
|
||
| Total liabilities | 41,941 | 36,698 | 34,212 |
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| SHAREHOLDERS' EQUITY |
|
||
| Share capital | 57,288 | 56,683 | 56,662 |
| Contributed surplus | 9,441 | 9,255 | 8,677 |
| Accumulated other comprehensive income | 190 | 297 | -- |
| Accumulated deficit | (51,770) | (52,082) | (54,033) |
| Total shareholders' equity | 15,149 | 14,153 | 11,306 |
| Total liabilities and shareholders' equity | $57,090 | $50,851 | $45,518 |
| 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 six months ended |
||
| June 30, 2011 | June 30, 2010 | June 30, 2011 | June 30, 2010 | |
|
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| REVENUE |
|
|
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| Principal | $30,766 | $20,063 | $57,463 | $41,900 |
| Other partner revenue | 1,955 | 1,595 | 3,726 | 3,259 |
| Interest | 4 | 5 | 9 | 6 |
| Total Revenue | 32,725 | 21,663 | 61,198 | 45,165 |
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| EXPENSES |
|
|
||
| Direct cost of principal revenue | 26,519 | 17,356 | 49,904 | 36,643 |
| Employment costs | 3,258 | 2,650 | 6,502 | 5,331 |
| Marketing & communications | 348 | 282 | 627 | 544 |
| Technology services | 156 | 224 | 302 | 435 |
| Depreciation and amortization | 563 | 152 | 1,008 | 287 |
| Foreign exchange gain | (24) | (13) | (92) | (35) |
| Operating expenses | 1,071 | 918 | 2,177 | 1,750 |
| Total Expenses | 31,891 | 21,569 | 60,428 | 44,955 |
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| OPERATING INCOME | 834 | 94 | 770 | 210 |
| Interest and other charges | (17) | 6 | (17) | 21 |
| EARNINGS BEFORE INCOME TAX | 851 | 88 | 787 | 189 |
| Deferred income tax expense (recovery) | 350 | -- | 475 | (342) |
| NET INCOME | 501 | 88 | 312 | 531 |
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| OTHER COMPREHENSIVE LOSS |
|
|
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| (Loss) Gain on foreign exchange derivatives designated as cash flow hedges, net of income tax recovery of $10 and expense of $50 for the three and six months ended June 30, 2011 (2010 – $95 and $7) | (26) | (212) | 127 | 16 |
| Reclassification to net income of gain on foreign exchange derivatives designated as cash flow hedges, net of income tax expense of $46 and $92 for the three and six months ended June 30, 2011 (2010 – $18 and $26) |
|
|
||
| (116) | (39) | (234) | (57) | |
| Other comprehensive loss for the period, net of income tax | (142) | (251) | (107) | (41) |
| TOTAL COMPREHENSIVE INCOME (LOSS) | $ 359 | $ (163) | $ 205 | $ 490 |
| EARNINGS PER SHARE |
|
|
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| Basic earnings per share | $0.03 | $0.01 | $0.02 | $0.04 |
| Diluted earnings per share | $0.03 | $0.01 | $0.02 | $0.04 |
| 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 |
Share Capital |
Contributed Surplus |
Total Capital |
Unrealized gains/(losses) on cash flow hedges |
Accumulated other comprehensive income |
Accumulated deficit |
Total shareholders' equity |
| (Unaudited) | |||||||
| Balance at December 31, 2010 | $56,683 | $9,255 | $65,938 | $297 | $297 | $(52,082) | $14,153 |
| Net income | -- | -- | -- | -- | -- | 312 | 312 |
| Other comprehensive loss | -- | -- | -- | (107) | (107) | -- | (107) |
| Total comprehensive income | -- | -- | -- | (107) | (107) | 312 | 205 |
| Effect of stock option compensation plan | -- | 332 | 332 | -- | -- | -- | 332 |
| Share issuances | 605 | (146) | 459 | -- | -- | -- | 459 |
| Balance at June 30, 2011 | $ 57,288 | $ 9,441 | $ 66,729 | $ 190 | $ 190 | $ (51,770) | $ 15,149 |
| Balance at January 1, 2010 | $ 56,662 | $ 8,677 | $ 65,339 | $ -- | $ -- | $ (54,033) | $ 11,306 |
| Net income | -- | -- | -- | -- | -- | 531 | 531 |
| Other comprehensive loss | -- | -- | -- | (41) | (41) | -- | (41) |
| Total comprehensive income | -- | -- | -- | (41) | (41) | 531 | 490 |
| Effect of stock option compensation plan | -- | 315 | 315 | -- | -- | -- | 315 |
| Share Issuances | 3 | -- | 3 | -- | -- | -- | 3 |
| Balance at June 30, 2010 | $ 56,665 | $ 8,992 | $ 65,657 | $ (41) | $ (41) | $ (53,502) | $ 12,114 |
| 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 six months Ended |
||
| June 30, 2011 | June 30, 2010 | June 30, 2011 | June 30, 2010 | |
|
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| Cash flows from operating activities |
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|
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| Net income for the period | $501 | $88 | $312 | $531 |
| Adjustments for: |
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| Depreciation of property and equipment | 127 | 82 | 230 | 147 |
| Amortization of intangible assets | 436 | 70 | 778 | 140 |
| Unrealized foreign exchange loss | 738 | 302 | 394 | 554 |
| Equity-settled share-based payment transactions | 163 | 153 | 332 | 315 |
| Deferred income tax expense (recovery) | 350 | -- | 475 | (342) |
| Unrealized net (gain) loss on derivative contracts designated as cash flow hedges | (198) | (365) | (150) | (60) |
| Changes in non-cash balances related to operations | (1,410) | (3,406) | 981 | (682) |
| Net cash provided (used in) by operating activities | 707 | (3,076) | 3,352 | 603 |
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| Cash flows from investing activities |
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|
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| Acquisition of property and equipment | (308) | (836) | (468) | (881) |
| Additions to intangible assets | (291) | (1,732) | (807) | (2,249) |
| Changes in restricted cash | -- | 471 | -- | (950) |
| Net cash used in investing activities | (599) | (2,097) | (1,275) | (4,080) |
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| Cash flows from financing activities |
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| Proceeds from exercise of share options | 410 | 2 | 458 | 2 |
| Net cash provided by financing activities | 410 | 2 | 458 | 2 |
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| Net increase (decrease) in cash and cash equivalents | 518 | (5,171) | 2,535 | (3,475) |
| Cash and cash equivalents at beginning of the period | 30,810 | 27,857 | 28,463 | 26,414 |
| Effect of exchange rate fluctuations on cash held | (735) | (300) | (405) | (553) |
| Cash and cash equivalents at end of the period | $ 30,593 | $ 22,386 | $ 30,593 | $ 22,386 |
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| Interest Received | 4 | 5 | 10 | 6 |
| Interest Paid | -- | -- | -- | -- |
| Points International Ltd. | ||||
| Schedule of Non-IFRS Reconciliations | ||||
| Gross Margin Information | ||||
|
Expressed in thousands of United States dollars (Unaudited) |
For the three months ended |
For the six months ended |
||
| June 30, 2011 | June 30, 2010 | June 30, 2011 | June 30, 2010 | |
|
|
|
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| Total Revenue | $32,725 | $21,663 | $61,198 | $45,165 |
| Direct cost of principal revenue | 26,519 | 17,356 | 49,904 | 36,643 |
| Gross Margin | $6,206 | $4,307 | $11,294 | $8,522 |
| Gross Margin % | 19.0% | 19.9% | 18.5% | 18.9% |
| Reconciliation of Operating Income to EBITDA | ||||
|
Expressed in thousands of United States dollars (Unaudited) |
For the three months ended |
For the six months ended |
||
| June 30, 2011 | June 30, 2010 | June 30, 2011 | June 30, 2010 | |
|
|
|
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| Operating income | $834 | $94 | $770 | $210 |
| Depreciation and amortization | 563 | 152 | 1,008 | 287 |
| Foreign exchange gain | (24) | (13) | (92) | (35) |
| EBITDA | $1,373 | $233 | $1,686 | $462 |