Printable versionPlanet Payment Reports First Quarter 2010 Results
05/13/10TOTAL REVENUE INCREASES 28%
MULTI-CURRENCY REVENUE INCREASES 60%
LONG BEACH, NY; May 12, 2010. Planet Payment, Inc. (UK: LSE:AIM: PPT and PPTR; USA: OTCQX: PLPM), a leading international payment processor, today announced its results for the three month period ended March 31, 2010.
During the first quarter of 2010 the Company continued to deliver solid results. Total revenue was up 28% to $13.2m (Q1’09: $10.3m), with multi-currency revenue up over 60% to $10.0m (Q1’09: $6.3m). Gross profit for the quarter increased 12% to $4.1m (Q1’09: $3.6m).
Adjusted EBITDA loss for the period was ($0.7m), compared to Q1’09 ($0.4m). On a GAAP basis, net loss for the quarter was ($1.5m) (Q1’09 loss: ($1.4m)). See Table 1 for reconciliation of net loss to Adjusted EBITDA.
The Company’s revenue growth was primarily driven by a 60% increase in active multi-currency merchant locations over Q1’09. The Company’s total active merchant locations now stand at over 11,000 locations, with more than 2,700 new locations activated since the first quarter of 2009. Early indicators of improving economic conditions also contributed to our strong performance. The Company’s same store multi-currency volume in the hospitality, retail and e-commerce sectors rebounded in the period, as evidenced by the 40% increase in March 2010 same store volume over March 2009.
First quarter is historically the Company’s slowest quarter of the year, due primarily to reduced international business travel following the Christmas holiday and around the Chinese New Year, while fourth quarter is typically the most active. Due to our product mix and broader customer base, this quarter’s seasonal, sequential revenue decline of 7% compares favorably to the prior year, when first quarter 2009 revenue was down 12% as compared to fourth quarter 2008.
Planet Payment also continues to benefit from a robust new business pipeline. Approximately 45% of multi-currency transaction volume processed in the month of March 2010 was attributed to merchants activated since March 2009, with 5% of the March 2010 volume derived from merchant locations activated in the first quarter of 2010.
Since the beginning of the year, the Company extended its international reach with the roll out of new services in the Philippines, South Africa, the United Arab Emirates and with additional acquirers in Canada. In support of these new service launches, the Company’s cash operating expenses increased by $0.8m or 19% as compared to the same period a year ago. The Company also continues to enhance the functionality, stability and security of its processing infrastructure to support additional bank and merchant implementations planned for the remainder of 2010.
The payment processing industry continues to undergo regulatory change and consolidation among payment processors and acquirers, which the Company believes opens up opportunities for our products. Last year’s Credit CARD Act imposed restrictions on certain fees and business practices of card issuers in the United States. Legislation currently going through the US Congress and certain state assemblies is seeking to control the amount and manner in which the card brands charge fees to merchants for their services. Canada has recently adopted a merchant “Bill of Rights” in the form of a voluntary Code of Conduct for the card payment industry, which authorities are reserving the right to enforce, if not adopted.
Additionally, the Company is currently reviewing the impact of recent changes to Visa International Operating Regulations including a new global regulatory scheme for DCC which was notified to Visa’s participants on April 28 and became effective May 1, 2010, which amongst other things seek to limit new participants, including new merchant locations, from offering DCC services in North America and the Asia Pacific region. The regulations confirm that the Company can continue to provide DCC for Visa cards at existing locations. The regulations do not impact the continued availability of DCC services in the Visa Europe Region, Planet Payment’s multi-currency pricing solutions, nor any of our domestic processing solutions, which are expanding areas of our business. MasterCard regulations allow for DCC in all regions and are not affected by the changes in Visa regulations.
Since 1 May 2010 the Company continues to add merchant locations to its processing systems. We also continue to implement additional acquirers for the purpose of providing DCC services as well as Planet’s other processing services, including multi-current pricing, domestic processing and our e-commerce gateway.
Visa itself recently announced its acquisition of Cybersource, the largest Internet payment gateway in the United States and the formation of a joint venture for merchant acquiring in India. Certain other processors and acquirers have recently been acquired, or are reported to be subject to takeover discussions.
All of these changes mean that issuers, acquirers and merchants will likely be seeking new ways to generate revenue and save costs. Planet Payment’s range of innovative services offer our customers the ability to respond to changes in market conditions in an efficient and cost effective manner. The Company is committed to providing our processor, acquirer and merchant customers with best-in-class solutions.
Commenting on the results, Philip Beck, Chairman of Planet Payment, Inc., said:
“Our first quarter revenue growth reflects continued adoption of our solutions by new customers and a strong rebound in our customers’ sales volumes. Our solutions offer acquirers a creative approach within the existing credit card infrastructure and powerful marketing tools to open new sales channels. We help merchants reduce payment processing costs and cardholders enjoy informed choice and transparency at the point-of-sale, including our FX Assured, best rate guarantee service.”
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Following seasonal low-points in January and February 2010, the Company saw March and April 2010 volume and revenue return to levels achieved in Q4 2009. The Company believes that the new Visa regulations will not have a material impact on 2010 revenue (potentially affecting less than 5% of revenue) and given the current strong pipeline of business and product mix the Company believes that its financial prospects for 2010 continue to be in line with market expectations.
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Additional breakdown on the Company’s performance can be found in the Management Discussion and Analysis appended to this release. In accordance with the rules of the OTCQX market, the Company’s First Quarter Report, including its Condensed Consolidated Financial Statements (unaudited), as of March 31, 2010 and December 31, 2009 and for the three months ended March 31, 2010 and 2009 have been posted on the OTCQX website at www.otcqx.com and on the Company’s website at www.planetpayment.com .
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