- Full Year Revenue of $296.4 million, an increase of 16% year-over-year  - Full Year Adjusted EBITDA of $11.1 million, an increase of 22% year-over-year  - Full Year Net Income of $5.2 million, an increase of 10% year-over-year

TORONTO, March 02, 2016 (GLOBE NEWSWIRE) -- Points (TSX:PTS) (NASDAQ:PCOM), the global leader in loyalty currency management, today announced results for the fourth quarter and full year ended December 31, 2015. 

"We are very pleased with our 2015 financial results which were in-line with market guidance and represent both record revenues and Adjusted EBITDA.  In addition to delivering against our financial performance plans, we continue to advance the pace of innovation: we grew our loyalty partner network by 5 new loyalty programs, launched or announced 21 new products, and made meaningful progress in implementing our platform strategy. Importantly, we now have 13 third-party developers using our Loyalty Commerce Platform to offer unique products to the world's largest and most successful loyalty programs. This continued progress will not only benefit our core Buy, Gift and Transfer business, but will also unlock future monetization opportunities," commented Points' CEO, Rob MacLean. 

The Points Loyalty Commerce Platform offers transaction-level access to multiple loyalty currencies and powers innovative products and services that drive increased revenue and member engagement in loyalty programs. The platform delivers a broad range of products and solutions that generate more revenue, broaden redemption opportunities, and deepen member engagement as they transact with their valuable points and miles.

"2015 also represented the first full year of our comprehensive and long-term strategic partnership with United Airlines MileagePlus, one of the world's leading loyalty programs. Furthermore, we were also successful in signing material contract renewals with a number of our larger principal partners including SouthWest's Rapid Rewards and Air France-KLM's Flying Blue.  As a result, we now have multi-year deals in place with key loyalty partners that represent over 75% of current revenue.  Our success in historically growing these relationships gives us confidence in this cash flow for several years to come," added MacLean.

"Built off our 2014 PointsHound acquisition, we introduced Points Travel in 2015, the first private label travel eCommerce platform designed specifically for the loyalty industry. To date, we have announced two new deployments with Lufthansa's Miles & More and La Quinta Inn & Suites, with another large partner now under  contract.  We also announced tangible developments on our Loyalty Wallet initiative, most recently partnering with RBC and Suretap.  With proof of concept established, we look forward to rolling out the functionality more broadly in 2016 and have established a strong pipeline of prospective partners," continued MacLean.

Full Year 2015 Financial Highlights (All amounts are reported in US dollars)
  • Revenues increased 16% on a year-over-year basis to a record $296.4 million from $255.0 million in 2014, aided by the addition of new loyalty partner relationships over the last twelve months, including the first full year of operating both our United Mileage Plus and Hilton Hhonors principal relationships, and despite the US Airways and American Airlines Buy, Gift and Transfer wind down. 
  • Gross margin 1 dollars grew to $42.7 million, an improvement of 8% year-over-year, or approximately 14.4% as a percent of total revenue, down slightly vs 15.6% in 2014, reflecting the relative mix of partner and promotional activity during the year.
  • Total ongoing operating expenses, which consist of employment expenses, marketing, technology, and other operating expenses, were managed effectively, and were approximately $31.6 million in 2015, up 3% over $30.6 million in the prior year period. 
  • Adjusted EBITDA 2 totaled a record $11.1 million, up 22% from $9.1 million in 2014, and at the high end of the Company's guidance range.
  • Net income increased 10% to $5.2 million, or $0.33 per diluted share, compared to net income of $4.7 million, or $0.30 per diluted share, in 2014.
  • As of December 31, 2015, total funds available, comprised of cash and cash equivalents together with restricted cash and amounts with payment processors, was $59.0 million.  Net operating cash, which is defined as total funds available less amounts payable to loyalty program partners, was $9.4 million as of December 31, 2015. The Company remains debt free and is pleased with its overall financial position.

Fourth Quarter 2015 Financial Results (Unless otherwise stated, all comparisons for the fourth quarter of 2015 are on a year-over-year basis)
  • Revenue increased 24% to $80.2 million from $64.8 million.  Principal revenues totaled $77.0 million, or growth of 25% as compared to $61.8 million. The year-over-year increase in principal revenues was largely driven by solid organic revenue growth reflecting a heavy promotional calendar and focus on automated marketing activities.
  • Gross margin dollars were $10.0 million, or 12% of total revenue, compared to $10.4 million, or 16% of total revenue.  As a percentage of revenue, gross margin reflects the relative mix of partner and promotional activity during the quarter, with a greater percentage of revenue growth coming from lower-margin business due to promotional activities in the fourth quarter.
  • Total ongoing operating expenses, which consist of employment expenses, marketing, technology, and other operating expenses, were approximately $7.8 million in the fourth quarter of 2015, essentially flat when compared to $7.7 million in the prior year period. 
  • Adjusted EBITDA was $2.2 million compared to $2.7 million.  This year-over-year decrease was driven by the slight reduction in gross margin coupled with increased operating expenses.
  • Net income totaled $1.0 million, or $0.06 per diluted share, compared to a net income of $1.5 million, or $0.09 per diluted share. 

Fourth Quarter 2015 Business Metrics
  Q4/15 Q4/14   Q4/15 vs. Q4/14   Q3/15   Q4/15 vs. Q3/15
Total All Channels          
  Points/Miles Transacted (in 000s)     5,879,013    4,574,409     29 %   5,432,399     8 %
  No. of Points/Miles Transactions 581,861 529,792   10 % 594,936   -2 %

Outlook

"Looking ahead, we expect 2016 will be a year of continued top-line growth, with much of the progress started in 2015 setting the stage for accelerated growth in 2017 and beyond. We will continue to invest in our platform which opens up three robust opportunities in the short to mid-term, and many more over the long-term. First, we expect increased performance from our core Buy, Gift and Transfer business, comprised of organic growth and progressing our robust new business pipeline. Second, with product/market fit now established, we will accelerate the development of our Points Travel solution, which we believe represents large margin opportunity. Third, we expect our increased platform investments will power distributed loyalty transactions through third party developers and our Points Loyalty Wallet. With recent successes and industry precedents, we are now confident in the product/market fit and we look forward to being appropriately aggressive in providing our network of loyalty and industry partners transactional access to hundreds of millions of customers through our unique, global Loyalty Commerce Platform," commented MacLean.

The Company is initiating financial guidance for the year ending December 31, 2016, as follows:

"Based on only the current products in market and deals either announced to date or currently in very late development stages, we expect revenue growth to be in the range of 10-20% over 2015. 

While we believe our increasing clarity on product/market fit for our new initiatives merits aggressive investment, we are also committed to maintaining our 8 year track-record of consistent Adjusted EBITDA growth. While we are increasing our total dollar amount of investments year over year in 2016, we are also targeting a minimum 10% growth in Adjusted EBITDA," concluded MacLean. 

Beginning in 2016, the Company has updated its calculation of Adjusted EBITDA to adjust for the impact of stock based compensation. This decision was made as a result of the Company's examination of Adjusted EBITDA practices and peer and industry standards.

Share Buyback

Points also announced today that the Toronto Stock Exchange ("TSX") has accepted its notice of intention to make a normal course issuer bid to repurchase up to 764,930 of its common shares (the "Repurchase"), representing approximately 5% of its 15,298,602 common shares issued and outstanding as of February 23, 2016.

The primary purpose of the Repurchase is purchases for cancellation.  Repurchases will be made from time-to-time at Points' discretion, based on ongoing assessments of Points' capital needs, the market price of its common shares, general market conditions and other factors.  Repurchases may be effected through the facilities of the TSX, the NASDAQ Capital Market ("NASDAQ") or other alternative trading systems in the United States and Canada.

All purchases of common shares will be made in accordance with applicable securities laws and stock exchange rules of the United States and Canada.  Repurchases on NASDAQ will be at the market price at the time of purchase in compliance with applicable securities laws of the United States and Repurchases on the TSX will be at the market price at the time of purchase in accordance with the rules and policies of the TSX.  Purchases may also be made through other alternative trading systems in the United States and Canada, or by such other means as may be permitted by the TSX, NASDAQ and applicable law.  As a result of certain rules and policies of the TSX, subject to certain permitted exceptions, the maximum number of shares which can be repurchased per day on the TSX is 1,000 based on 25% of the average daily trading volume on the TSX for the prior six months (being 3,788 shares per day).  Subject to regulatory requirements, the actual number of common shares purchased and the timing of such purchases, if any, will be determined by Points having regard to future price movements and other factors.

The Repurchase will commence on March 9, 2016 and will terminate on March 8, 2017.  Under its previous normal course issuer bid, Points purchased a total of 446,894 common shares with a weighted average price of USD$10.39 per share through the facilities of the TSX, NASDAQ and other alternative trading systems in the United States and Canada.  Points' previous normal course issuer bid commenced on March 9, 2015 and will terminate on March 8, 2016.

Investor Conference CallPoints' conference call with investors will be held today at 4:30 p.m. Eastern Time.  To participate, investors from the US and Canada should dial (877) 407-0784 ten minutes prior to the start time. International callers should dial (201) 689-8560.

In addition, the call is being webcast and can be accessed at the Company's web site: www.points.com and will be archived online upon completion of the call. A telephonic replay of the conference call will also be available until 11:59 p.m. Eastern Time on Wednesday, March 16, 2016, by dialing (877) 870-5176 in the U.S. and Canada and (858) 384-5517 internationally and entering the passcode 13630078.

About Points Points, publicly traded as Points International Ltd. (TSX:PTS) (Nasdaq:PCOM), is the global leader in loyalty currency management. Via a state-of-the-art loyalty commerce platform, Points provides loyalty eCommerce and technology solutions to the world's top brands to enhance their consumer offerings and streamline their back-end operations.

Points' solutions enhance the management and monetization of loyalty currencies ranging from frequent flyer miles and hotel points to retailer and credit card rewards, for more than 50 partners worldwide. Points also manages Points.com, where more than 4 million consumers use the only industry sanctioned loyalty wallet to not only track all of their loyalty programs but also trade, exchange and redeem their miles and points. In addition to these services, Points' unique SaaS products allow merchants and businesses to reward their customers with points and miles from the world's largest loyalty brands.

In 2014, Points acquired PointsHound, a hotel booking engine and loyalty currency aggregator built specifically for frequent travelers. PointsHound enables loyalty program members to earn loyalty points for staying in their favorite hotels and also to earn bonus rewards in the form of airline miles. Members of the free-to-use site have access to over 150,000 hotels worldwide, including boutique and non-chain properties. 

Points has been widely recognized among the loyalty and technology communities alike. The Company was named the 7th largest Canadian software company and the 30th largest Canadian technology company by the 2015 Branham300 list. For more information on Points, please visit www.Points.com, follow us on Twitter ( @PointsLoyalty) or read the Points company blog. For more information on PointsHound, please visit www.PointsHound.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, among other things, opportunities for new products and partners and incremental revenue, and our guidance for 2016 with respect to revenue growth and Adjusted EBITDA expectations. 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 actual results may differ materially from those expressed or implied in such statements. Undue reliance should not be placed on such statements. In particular, the financial outlooks herein assume Points will be able to maintain its existing contractual relationships and products, that such products continue to perform in a manner consistent with Points' past experience, that Points 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. Our ability to convert our pipeline of prospective partners and product launches is subject to significant risk and there can be no assurance that we will launch new partners or new products with existing partners as expected or planned nor can there be any assurance that Points will be successful in maintaining its existing contractual relationships or maintaining existing products with existing partners.  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.

1 Gross margin is defined as total revenues less the direct cost of principal revenues. Gross margin is considered by Management to be an integral measure of financial performance and represents the amount of revenues retained by the Corporation after incurring direct costs. However, gross margin is not a recognized measure of profitability under IFRS.

2 Adjusted EBITDA (Earnings before interest, taxes, depreciation and amortization, and foreign exchange) is considered by Management to be a useful supplemental measure when assessing financial performance. Management believes that Adjusted EBITDA is an important indicator of the Corporation's ability to generate liquidity through operating cash flow to fund future capital expenditures and working capital needs. However, Adjusted EBITDA is not a measure of financial performance under IFRS and should not be considered a substitute for Net Income, which we believe to be the most directly comparable IFRS measure.

Points International Ltd.

Key Financial Measures and Schedule of Non-GAAP Reconciliations

Gross Margin Information 3
Expressed in thousands of United States dollars          
    For the three months ended   For the twelve months ended
        December 31,  2015   December 31,  2014     December 31,  2015   December 31, 2014
Total Revenue Direct cost of principal revenue     $   80,228 70,264   $ 64,84154,447     $   296,376 253,710   $ 254,989215,333  
Gross Margin   $   9,964   $ 10,394     $   42,666   $ 39,656  
Gross Margin %     12 %   16 %     14 %   16 %

Reconciliation of Net Income to Adjusted EBITDA 4
           
Expressed in thousands of United States dollars              
       
  For the three months ended For the twelve months ended  
    December 31,  2015   December 31,  2014   December 31,  2015   December 31, 2014  
           
Net Income $   961     $ 1,468   $   5,165     $   4,684      
Interest and other income     -       -       -         (5 )    
Income tax expense     451       583       2,474         2,088      
Depreciation and Amortization     895       581       3,546         2,150      
Foreign Exchange loss (gain)     (117 )     54       (131 )       138      
           
Adjusted EBITDA $   2,190     $ 2,686   $   11,054     $   9,055      

3 Gross Margin is defined as total revenues less the direct cost of principal revenues. Gross Margin is considered by Management to be an integral measure of financial performance and represents the amount of revenues retained by the Corporation after incurring direct costs. However, gross margin is not a recognized measure of profitability under IFRS.

 
4 Adjusted EBITDA (Earnings before income tax expense, interest and other income, depreciation and amortization, and foreign exchange) is considered by Management to be a useful supplemental measure when assessing financial performance. Management believes that Adjusted EBITDA is an important indicator of the Corporation's ability to generate liquidity through operating cash flow to fund future capital expenditures and working capital needs. However, Adjusted EBITDA is not a measure of financial performance under IFRS and should not be considered a substitute for Net Income, which we believe to be the most directly comparable IFRS measure.

 

Points International Ltd.Consolidated Statements of Financial Position

Expressed in thousands of United States dollars
As at December 31     2015     2014    
  ASSETS          
Current assets        
Cash and cash equivalents   $   51,364   $ 36,868    
Restricted cash     1,000     1,573    
Funds receivable from payment processors     6,588     6,691    
Accounts receivable     2,988     2,305    
Prepaid expenses and other assets     1,256     1,134    
Total current assets       63,196     48,571    
Non- current assets        
Property and equipment     1,466     1,856    
Intangible assets     18,616     18,320    
Goodwill     7,130     7,130    
Deferred tax assets     1,755     3,492    
Long-term investment     5,000     5,000    
Other assets     2,765     692    
Total non-current assets       36,732     36,490    
Total assets   $    99,928   $ 85,061    
LIABILITIES      
Current liabilities      
Accounts payable and accrued liabilities   $  5,808   $ 6,260  
Payable to loyalty program partners     49,526     36,030  
Current portion of other liabilities     1,852     1,285  
Total current liabilities       57,186     43,575  
       
Non-current liabilities      
Deferred tax liabilities       425     -  
Other liabilities     122     269  
Total non-current liabilities       547     269  
       
Total liabilities   $   57,733   $ 43,844  
       
SHAREHOLDERS' EQUITY      
Share capital     59,293     61,084  
Contributed surplus     9,859     11,985  
Accumulated other comprehensive loss     (624 )   (354 )
Accumulated deficit     (26,333 )   (31,498 )
Total shareholders' equity   $   42,195   $ 41,217  
Total liabilities and shareholders' equity   $   99,928   $ 85,061  

Points International Ltd.Consolidated Statements of Comprehensive Income

Expressed in thousands of United States dollars, except per share amounts (Amounts for the three months ended December 31, 2015 and 2014 are unaudited)
  For the three months ended For the twelve months ended  
    December 31, 2015 December 31, 2014 December 31, 2015 December 31, 2014  
REVENUE          
Principal $ 77,045   $ 61,829   $ 283,409   $ 244,686    
Other partner revenue   3,143     2,979     12,871     10,211    
Interest   40     33     96     92    
                           
Total Revenue $ 80,228    $ 64,841   $ 296,376   $ 254,989    
  EXPENSES          
Direct cost of principal revenue   70,264     54,447     253,710     215,333    
Employment costs   5,220     5,289     22,699     22,529    
Marketing and communications   531     330     1,704     1,379    
Technology services   355     276     1,343     1,083    
Depreciation and amortization   895     581     3,546     2,150    
Foreign exchange (gain) loss   (117 )   54     (131 )   138    
Operating expenses   1,668     1,813     5,866     5,610    
Total Expenses $   78,816    $ 62,790   $ 288,737   $ 248,222    
           
OPERATING INCOME $   1,412   $ 2,051   $   7,639   $ 6,767    
           
Interest and other income   -     -     -     (5 )  
OPERATING INCOME BEFORE INCOME TAXES $  1,412   $ 2,051   $    7,639   $ 6,772    
           
Income tax expense   451     583     2,474     2,088    
NET INCOME $    961   $ 1,468   $    5,165   $ 4,684    
           
OTHER COMPREHENSIVE LOSS          
Items that will subsequently be reclassified to profit or loss:Loss on foreign exchange derivatives designated as cash flow hedges, net of income tax recovery of $111 and $476, respectively, for the three and twelve months ended December 31, 2015  (2014: recovery of $89 and $206)   (307 )   (248 )   (1,320 )   (573 )  
Reclassification to net income of loss on foreign exchange derivatives designated as cash flow hedges, net of income tax recovery of $82 and 378, respectively, for the three and twelve months ended December 31, 2015 (2014 - recovery of $43 and $203)     229     120       1,050     564    
Other comprehensive loss for the period, net of income tax $  (78 ) $ (128 ) $ (270 ) $ (9 )  
TOTAL COMPREHENSIVE INCOME $   883   $ 1,340   $   4,895   $ 4,675    
                           
EARNINGS PER SHARE                          
Basic earnings per share $ 0.06   $  0.10   $  0.33   $  0.30    
Diluted earnings per share $ 0.06   $ 0.09   $ 0.33   $  0.30    

Points International Ltd.Consolidated Statements of Changes in Shareholders' Equity     

  Attributable to equity holders of the Company
Expressed in thousands of United States dollars except number of shares     Share Capital Contributed Surplus Accumulated other comprehensive loss Accumulated deficit Total shareholders' equity  
  Number of Shares Amount          
               
Balance at December 31, 2014   15,649,085   $  61,084   $  11,985   $   (354 ) $  (31,498 ) $    41,217    
Net income   -     -     -     -     5,165     5,165    
Other comprehensive loss   -     -     -     (270 )   -     (270 )  
Total comprehensive income   -     -     -     (270 )   5,165     4,895    
Effect of share option compensation plan   -     -     934     -     -     934    
Effect of RSU and PSU compensation plan   -     -     654     -     -     654    
Share issuances - share options   96,411     615     (338 )   -     -     277    
Share issuances - RSUs   -     513     (513 )   -     -     -    
Share capital held in trust   -     (1,215  )   -     -     -     (1,215 )  
Shares repurchased     (439,094 )   (1,704 )   (2,863 )   -     -     (4,567 )  
Balance at December 31, 2015   15,306,402   $  59,293   $  9,859   $   (624 ) $  (26,333 ) $   42,195    
               
Balance at December 31, 2013 15,359,903 $ 58,693   $ 10,381   $ (345 ) $ (36,182 ) $ 32,547    
Net income -   -     -     -     4,684     4,684    
Other comprehensive loss -   -     -     (9 )   -     (9 )  
Total comprehensive income -   -     -     (9 )   4,684     4,675    
Effect of share option compensation plan -   -     852     -     -     852    
Effect of RSU and PSU compensation plan -   -     969     -     -     969    
Share issuances - share options 50,789   242     (125 )   -     -     117    
Share issuances - RSUs -   92     (92 )   -     -     -    
Share capital held in trust -   (731 )   -     -     -     (731 )  
Shares issued for acquisition of Crew 238,393   2,788     -     -     -     2,788    
Balance at December 31, 2014 15,649,085 $ 61,084   $ 11,985   $ (354 ) $ (31,498 ) $ 41,217    

Points International Ltd.Consolidated Statements of Cash Flows Expressed in thousands of United States dollars (Amounts for the three months ended December 31, 2015 and 2014 are unaudited)

    For the three months ended For the twelve months ended
  December 31, 2015 December 31, 2014 December 31, 2015 December 31, 2014 
  Cash flows from operating activities            
Net income for the period $   961   $ 1,468   $   5,165   $ 4,684    
Adjustments for:                          
Depreciation of property and equipment   231     237     1,037     990    
Amortization of intangible assets   664     344     2,509     1,160    
Unrealized foreign exchange gain   (226 )   (569 )   (949 )   (1,045 )  
Equity-settled share-based payment transactions   6     497     1,588     1,821    
Deferred income tax expense   804     390     2,261     1,864    
Unrealized net (gain) loss on derivative contracts designated as cash flow hedges   (107 )   (174 )   (368 )   (12 )  
Changes in non-cash balances related to operations,  exclusive of effects of business combination   11,531     (6,279 )   10,689     (17,081 )  
Net cash provided by (used in) operating activities $ 13,864   $ (4,086 ) $ 21,932   $ (7,619 )  
           
Cash flows from investing activities          
Acquisition of property and equipment   (115 )   (255 )   (647 )   (754 )  
Additions to intangible assets   (842 )   (710 )   (2,805 )   (1,894 )  
Long-term investment   -     -     -     (1,500 )  
Acquisition of business, net of cash acquired   -     (14,500 )   -     (16,011 )  
Changes in restricted cash   280     -     530     -    
Net cash used in investing activities $   (677 ) $ (15,465 ) $   (2,922 ) $ (20,159 )  
           
Cash flows from financing activities          
Proceeds from exercise of share options   5     5     277     117    
Shares repurchased   (902 )   -     (4,567 )   -    
Purchases of share capital held in trust   -     -     (1,215 )   (731 )  
Net cash provided by (used in) financing activities $   (897 ) $ 5   $   (5,505 ) $ (614 )  
           
Net increase (decrease) in cash and cash equivalents $   12,290    $ (19,546 ) $   13,505    $ (28,392 )  
Cash and cash equivalents at beginning of the period $   38,847    $ 55,832   $   36,868   $ 64,188    
Effect of exchange rate fluctuations on cash held   227     582     991     1,072    
Cash and cash equivalents at end of the period $   51,364    $ 36,868   $ 51,364    $ 36,868    
                           
Interest Received $ 34   $ 34   $ 89   $ 98    
Interest Paid   -     -     -     -    
                           
Taxes Received   -     -     31     -    
Taxes Paid $ (9 ) $ (4 ) $ (435 ) $ (7 )  
                           

Amounts paid and received for interest were reflected as operating cash flows in the consolidated statements of cash flows.
Contact:Addo CommunicationsLaura Bainbridgelaurab@addocommunications.com(310) 829-5400

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