TORONTO, May 04, 2016 (GLOBE NEWSWIRE) -- Points (TSX:PTS) (NASDAQ:PCOM), the global leader in loyalty currency management, today announced results for the first quarter ended March 31, 2016. 

"2016 has started with solid first quarter performance," said Points' CEO, Rob MacLean. "With our ongoing investment in the Loyalty Commerce Platform, not only does our core business continue to show strong growth, but we also continue to generate additional momentum with our Points Loyalty Wallet and Points Travel solutions. By continuing to innovate, our loyalty commerce network becomes increasingly appealing to loyalty program operators, third party developers and their millions of customers, strengthening our position in the market. For example, we recently launched Buy and Gift services for Hong Kong-based Shangri-La Hotels & Resorts' Golden Circle program.  Late last year we launched our first Points Travel service with Lufthansa's Miles & More program, followed it early in the first quarter with the La Quinta Rewards program, and just last week we announced Air France-KLM's Flying Blue program to our growing list of partner wins.  Our solid execution, continued momentum and robust pipelines give us confidence that we are on track to deliver against our 2016 guidance."

First Quarter 2016 Financial Results (Unless otherwise stated, all comparisons for the first quarter of 2016 are on a year-over-year basis)
  • Revenue increased 10% to $73.6 million from $67.1 million.  Principal revenues totalled $70.7 million, which represents 13% growth, as compared to $62.6 million. The principal revenues increase was primarily driven by solid organic revenue growth, fuelled by increasingly effective consumer marketing initiatives. Reduction of other partner revenue to $2.8 million, from $4.5 million, was due to the absence of the US Airways Buy, Gift and Transfer services that were wound-down at the end of Q1 2015.
  • Gross profit was $10.2 million, or 14% of total revenue, compared to $11.3 million, or 17% of total revenue in the first quarter of 2015.  The decrease in gross profit is due to an increased proportion of lower margin principal revenue in the quarter as well as a decrease in other partner revenue, due to the wind-down of the US Airways Buy, Gift and Transfer programs.
  • Total ongoing operating expenses, which consist of employment expenses, marketing, technology, and other operating expenses, were $7.9 million compared to $7.7 million. 
  • Adjusted EBITDA was $3.0 million, before share-based compensation expenses, compared to $4.1 million before share-based compensation expenses in 2015.  This expected decrease is primarily due to the wind-down of the US Airways Buy, Gift and Transfer programs.
  • Net income totalled $0.9 million, or $0.06 per diluted share, compared to a net income of $1.7 million, or $0.11 per diluted share. 
  • As of March 31, 2016, total funds available, comprised of cash and cash equivalents together with restricted cash and amounts with payment processors, was $52.8 million.  Net operating cash, which is defined as total funds available less amounts payable to loyalty program partners, was $8.3 million.

First Quarter 2016 Business Metrics
  Q1/16 Q1/15 Q1/16 vs. Q1/15 Q4/15 Q1/16 vs. Q4/15
Total All Channels          
  Points/Miles Transacted (in 000s) 5,664,856 5,798,911   -2 % 5,879,013   -4 %
  No. of Points/Miles Transactions 638,569 604,520   6 % 581,861   10 %
                   

Recent Business Highlights
  • Points Travel, the first private label travel e-commerce service designed specifically for the loyalty industry, saw significant momentum, launching with its second and third partners:
    • La Quinta Returns, allowing members to redeem their loyalty points for hotel stays globally.
    • Flying Blue, Air France-KLM's frequent flyer program used by SkyTeam airline partners, allowing members to both earn and redeem their loyalty reward miles across the globe.
  • Continued growth in core business with the launch of the Buy and Gift service for luxury hospitality brand Shangri-La Hotels and Resorts and its Golden Circle loyalty program.
  • Increased use of the Loyalty Commerce Platform by third party developers to deliver unique functionality to Points' network of Loyalty Program Partners:
    • Launched earn malls for Avios and British Airways Executive Club members, in collaboration with Collinson Latitude
    • Launched an upgraded Delta SkyMiles Experiences auction website in collaboration with Commerce Dynamics, one of North America's leading digital marketing companies
    • Launched Citi's points exchange program, allowing members to seamlessly transfer ThankYou Points in real time, currently to 19 direct travel loyalty program partners
  • Received company recognition:
    • Named to the Branham300 list of Canada's top information and communications technology companies, for the fifth consecutive year.
    • Points Loyalty Wallet was awarded a 2016 Contactless & Mobile Award in the mobile wallet category.
    • Ranked as one of Canada's Best Places to Work in 2016 (#17) by the Great Places to Work Institute, for the second year in a row.
    • Named as one of Canada's Top Small & Medium Employers in 2016 by Canada's Top 100 Employers program.

Share Buyback

In the first quarter, the Company repurchased approximately 33,800 shares of its common stock for a total of $0.3 million at an average price of $7.96 per share.

Outlook

The Company is maintaining financial guidance for the year ending December 31, 2016, as follows:
  • Revenue is expected to grow 10% to 20% over 2015.
  • Adjusted EBITDA is expected to grow a minimum of 10% over 2015.

As previously announced, beginning in 2016, the Company updated its calculation of Adjusted EBITDA to adjust for the impact of share-based compensation, to be more in-line with peer and industry standards. Figures for prior periods have been adjusted to reflect this in comparisons.

Investor Conference Call

Points' 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 (855) 327-6837 ten minutes prior to the start time. International callers should dial (631) 891-4304.

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, May 18, 2016, by dialing (877) 870-5176 in the U.S. and Canada and (858) 384-5517 internationally and entering the passcode 10001083.

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. Points continues to leverage the technology and expertise gained from the PointsHound acquisition to develop and expand Points Travel, the first private label eCommerce platform designed specifically for the loyalty industry. 

Points has been widely recognized among the loyalty and technology communities alike. The Company was named the 8th largest Canadian software company and the 27th largest Canadian technology company by the 2016 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, potential for growth in revenue and gross margin 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.

Use of non-GAAP measuresThe Corporation's financial statements are prepared in accordance with International Financial Reporting Standards ("IFRS"). Management uses certain non-GAAP measures, which are defined in the appropriate sections of this press release, to better assess the Corporation's underlying performance. These measures are reviewed regularly by management and the Corporation's Board of Director's in assessing the Corporation's performance and in making decisions about ongoing operations. These measures are also used by investors as an indicator of the Corporation's operating performance. Readers are cautioned that these terms are not recognized GAAP measures and do not have a standardized GAAP meaning under IFRS and should not be construed as alternatives to IFRS terms, such as net income.

Points International Ltd.Key Financial Measures and Schedule of Non-GAAP Reconciliations

Gross Profit Information 1
Expressed in thousands of United States dollars   For the three months ended
        March 31, 2016     December 31, 2015     March 31, 2015  
                     
Total Revenue   $ 73,560   $ 80,228   $ 67,117  
Direct cost of principal revenue     63,365     70,264     55,816  
Gross Profit   $   10,195   $ 9,964   $ 11,301  
Gross Margin     14 %   12 %   17 %
                     

Reconciliation of Net Income to Adjusted EBITDA 2
Expressed in thousands of United States dollars   For the three months ended
        March 31, 2016     December 31, 2015     March 31, 2015  
                     
Net income   $   893   $ 961   $ 1,715  
Income tax expense      396     451     851  
Depreciation and amortization     930     895     877  
Foreign exchange loss (gain)     80     (117 )   136  
Share-based compensation     668     6     501  
Adjusted EBITDA   $   2,967   $ 2,196   $ 4,080  
         

1 Gross Profit is defined as total revenues less the direct cost of principal revenues. Gross Profit 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 Profit is not a recognized measure of profitability under IFRS.
 
2 Adjusted EBITDA (Earnings before taxes, depreciation and amortization, share-based compensation 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.Condensed Consolidated Interim Statements of Financial Positions
Expressed in thousands of United States dollars      
(Unaudited)      
       
As at     March 31,  December 31, 
      2016     2015  
       
ASSETS      
Current assets      
Cash and cash equivalents   $ 45,703   $ 51,364  
Restricted cash     1,000     1,000  
Funds receivable from payment processors     6,109     6,588  
Accounts receivable     2,991     2,988  
Prepaid expenses and other assets     2,635     1,256  
Total current assets   $ 58,438   $ 63,196  
       
Non-current assets      
Property and equipment     1,346     1,466  
Intangible assets     18,604     18,616  
Goodwill     7,130     7,130  
Deferred tax assets     1,741     1,755  
Long-term investment     5,000     5,000  
Other assets     2,735     2,765  
Total non-current assets   $ 36,556   $ 36,732  
Total assets   $ 94,994   $ 99,928  
       
LIABILITIES      
Current liabilities      
Accounts payable and accrued liabilities   $ 4,318   $ 5,808  
Payable to loyalty program partners     44,514     49,526  
Current portion of other liabilities     876     1,852  
Total current liabilities   $ 49,708   $ 57,186  
       
Non-current liabilities      
Deferred tax liabilities     724     425  
Other liabilities     247     122  
Total non-current liabilities   $ 971   $ 547  
       
Total liabilities   $ 50,679   $ 57,733  
       
SHAREHOLDERS' EQUITY      
Share capital     59,457     59,293  
Contributed surplus     10,093     9,859  
Accumulated other comprehensive income (loss)     205     (624 )
Accumulated deficit     (25,440 )   (26,333 )
Total shareholders' equity   $ 44,315   $ 42,195  
Total liabilities and shareholders' equity    $ 94,994   $ 99,928  
       

Points International Ltd.Condensed Consolidated Interim Statements of Comprehensive Income
Expressed in thousands of United States dollars, except per share amounts    
(Unaudited)      
       
      2016     2015  
For the three months ended March 31,      
       
REVENUE      
Principal   $ 70,741   $ 62,625  
Other partner revenue     2,773     4,476  
Interest     46     16  
Total Revenue   $ 73,560   $ 67,117  
       
EXPENSES      
Direct cost of principal revenue     63,365     55,816  
Employment costs     5,903     5,924  
Marketing and communications     326     275  
Technology services     374     270  
Depreciation and amortization     930     877  
Foreign exchange loss     80     136  
Operating expenses     1,293     1,253  
Total Expenses   $ 72,271   $ 64,551  
       
OPERATING INCOME BEFORE INCOME TAXES   $ 1,289   $ 2,566  
       
Income tax expense     396     851  
NET INCOME   $ 893   $ 1,715  
       
OTHER COMPREHENSIVE INCOME (LOSS)      
Items that will subsequently be reclassified to profit or loss:            
Unrealized gain (loss) on foreign exchange derivatives designated as cash flow hedges     820     (762 )
Income tax effect     (217 )   202  
Reclassification to net income of loss on foreign exchange derivatives designated as cash flow hedges     308     332  
Income tax effect     (82 )   (88 )
Other comprehensive income (loss) for the period, net of income tax   $ 829   $ (316 )
       
TOTAL COMPREHENSIVE INCOME   $ 1,722   $ 1,399  
       
EARNINGS PER SHARE      
Basic earnings per share   $ 0.06   $ 0.11  
Diluted earnings per share   $ 0.06   $ 0.11  
               

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 except number of shares Share Capital   Contributed Surplus     Accumulated other comprehensive income (loss)     Accumulated deficit     Total shareholders' equity  
(Unaudited)            
    Number of Shares     Amount          
             
Balance at December 31, 2015   15,306,402   $ 59,293   $ 9,859   $   (624 ) $  (26,333 ) $ 42,195  
Net Income    -     -     -     -     893     893  
Other comprehensive income, net of tax   -     -     -     829     -     829  
Total comprehensive income   -     -     -     829     893     1,722  
Effect of share option compensation plan   -     -     204     -     -     204  
Effect of RSU compensation plan   -     -     464     -     -     464  
Share issuances - RSUs   -     296     (296 )   -     -     -  
Shares repurchased   (33,800 )   (132 )   (138 )   -     -     (270
Balance at March 31, 2016   15,272,602   $ 59,457   $ 10,093   $ 205   $  (25,440 ) $ 44,315  
             
             
Balance at December 31, 2014   15,649,085   $ 61,084   $ 11,985   $ (354 ) $ (31,498 ) $ 41,217  
Net Income   -     -     -     -     1,715     1,715  
Other comprehensive income, net of tax   -     -     -     (316 )   -     (316 )
Total comprehensive income   -     -     -     (316 )   1,715     1,399  
Effect of share option compensation plan   -     -     228     -     -     228  
Effect of RSU and PSU compensation plan   -     -     273     -     -     273  
Share issuances - share options   86,507     514     (283 )   -     -     231  
Share issuances - RSUs   -     190     (190 )   -     -     -  
Shares repurchased   (89,297 )   (351 )   (517 )   -     -     (868 )
Balance at March 31, 2015   15,646,295   $ 61,437   $ 11,496   $ (670 ) $ (29,783 ) $ 42,480  
                                     

Points International Ltd.Condensed Consolidated Interim Statements of Cash Flows
Expressed in thousands of United States dollars  
 (Unaudited)  
   
For the three months ended March 31,     2016     2015  
               
Cash flows from operating activities              
Net income for the period   $    893    $ 1,715  
Adjustments for:  
Depreciation of property and equipment     236     269  
Amortization of intangible assets     694     608  
Unrealized foreign exchange loss (gain)     224     (996 )
Equity-settled share-based payment transactions     668     501  
Deferred income tax expense (recovery)     13     817  
Unrealized net gain (loss) on derivative contracts designated as cash flow hedges     1,128     (430 )
Changes in non-cash balances related to operations     (8,226 )   7,951  
Net cash provided by (used in) operating activities   $    (4,370 ) $ 10,435  
       
Cash flows from investing activities      
Acquisition of property and equipment     (116 )   (116 )
Additions to intangible assets     (682 )   (464 )
Changes in restricted cash     -     (750 )
Net cash used in investing activities   $     (798 ) $ (1,330 )
       
Cash flows from financing activities      
Proceeds from exercise of share options     -     231  
Shares repurchased     (270 )   (1,099 )
Net cash used in financing activities   $     (270 ) $ (868 )
       
Net increase (decrease) in cash and cash equivalents   $     (5,438 ) $ 8,237  
Cash and cash equivalents at beginning of the period   $    51,364   $ 36,868  
Effect of exchange rate fluctuations on cash held     (223 )   1,023  
Cash and cash equivalents at end of the period   $     45,703   $ 46,128  
               
Interest Received   $ 37   $ 16  
               
Taxes Paid   $ (266 ) $ (176 )
               

Amounts received for interest were reflected as operating cash flows in the condensed consolidated interim statements of cash flows.
Contact:Points Investor RelationsICRGaro Toomajanianir@points.com 

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