Printable versionPlanet Payment Reports Third Quarter 2009 Results
11/12/09Total Revenue YTD Increases 35% to $33.0m
Gross Profit YTD Rises 50% to $11.6m
Adjusted EBITDA Positive for Second Straight Quarter
November 12, 2009, Long Beach, NY. Planet Payment, Inc. (UK: LSE:AIM: PPT and PPTR; USA: OTCQX: PLPM), a leading international payment and data processor, today announced its results for the three and nine month periods ended September 30, 2009.
During the third quarter of 2009 the Company continued to deliver solid results in a challenging economic climate. For the second consecutive quarter, Planet Payment achieved positive Adjusted EBITDA of $0.2m for Q3:2009 (Q3:2008 loss $1.4m).
Adjusted EBITDA for the nine month period ended 30 September 2009 (“YTD:2009”) approached breakeven to ($0.04m), a dramatic improvement over YTD:2008 ($5.7m). (Adjusted EBITDA excludes depreciation and amortization, non-cash stock-related expense and other non-cash expenses, as more fully explained in the accompanying Management Discussion & Analysis.)
Total revenue for YTD:2009 increased 35% to $33.0m compared to $24.4m for the same period in 2008 and for the third quarter 2009 increased 16% to $11.7m (Q3:2008: $10.2m). Gross profit YTD:2009 increased 50% to $11.6m (YTD:2008: $7.8m), and for the third quarter the increase was 29% to $4.1m (Q3:2008: $3.2m)
On a GAAP basis, net loss for YTD:2009 was reduced by 65% to $3.1m (YTD:2008 loss: $8.9m), and net loss in the third quarter similarly decreased 69% to $0.8m (Q3:2008 loss: $2.6m) and also narrowed 16% over the prior quarter (Q2:2009 loss: $0.96m).
The Company’s results are significant given the macro-economic headwinds which the Company’s acquiring customers and their merchants have faced over the last year. The Company’s same store sales volume in the hospitality, retail and e-commerce sectors experienced significant declines in the early part of the year as compared to 2008. However, since August this trend has started to reverse direction so that same store sales volume is approaching 2008 levels again, and the Company believes its growth may be further enhanced if general economic conditions improve.
The Company’s strong performance can also be attributed to Planet Payment’s robust new business pipeline. Approximately 39% of core multi-currency transaction volume processed in September 2009 was attributed to merchants activated since September 2008, with 11% of the September 2009 volume derived from merchant locations activated in the third quarter of 2009. In addition, in the third quarter 2009, approximately 750 additional multi-currency merchant locations were activated with the increase primarily attributed to new locations in India and the Greater China region. This brought the Company’s total active merchant locations as of September 30, 2009 to 9,976 locations.
During the quarter the Company also continued to develop and enhance the functionality, stability and security of its processing infrastructure and expanded processing support for new markets. Indicative of these efforts is the fact that 45% of cash operating expense in Q3 was dedicated to building and maintaining Planet Payment’s platform and operational systems.
On October 30, 2009, the Company announced it had raised an additional $4m in equity investment in order to bolster cash reserves and strengthen the foundations for additional growth.
Commenting on the results, Philip Beck, Chairman of Planet Payment, Inc., said:
“Our Third Quarter results demonstrate that we are close to achieving positive cash flow and profitability. We anticipate increasing Adjusted EBITDA and generating positive cash flow during the fourth quarter of 2009. We are looking forward to further growth in 2010, which may be enhanced if general economic conditions improve as some analysts believe.”
Additional analysis of 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 Third Quarter Report, including its Consolidated Condensed Financial Statements (unaudited), as of and for the three and nine months ended September 30, 2009 and 2008 and as of December 31, 2008 have been posted on the OTCQX website at www.otcqx.com and on the Company’s website at www.planetpayment.com .
Enquiries:
Planet Payment, Inc. Tel: + 1 516 670 3200
Seth Asofsky (CFO) www.planetpayment.com
Redleaf Communications (UK PR for Planet Payment) Tel: +44 20 7566 6700
Emma Kane /Rebecca Sanders-Hewett / Henry Columbine planet@redleafpr.com
CJP Communications (US PR for Planet Payment) Tel: +1 212 279 3115 x257
Emily Cleary/ Thomas Rozycki ecleary@cjpcom.com
Canaccord Adams Ltd (UK) (Nomad for Planet Payment) Tel: +44 20 7050 6500
Mark Williams / Andrew Chubb
Canaccord Adams, Inc. (US) (DAD for Planet Payment) Tel: +1 617-371-3900
Andy Viles
About Planet Payment:
Planet Payment’s Common shares trade on AIM under the symbols PPT for unrestricted Common shares and PPTR for Reg S Common shares and in the United States on the OTCQX under the symbol PLPM.
Planet Payment enables processors, acquiring banks and their merchants to accept process and reconcile credit card transactions in multiple currencies, allowing cardholders to view prices and settle transactions in their native currency. The Pay in Your Currency™ service is Planet Payment’s suite of multi-currency processing solutions, which includes a multi-currency pricing e-commerce service and a Dynamic Currency Conversion service. Planet Payment’s BuyVoice®, a mobile payment and commerce solution, allows merchants to accept payments and sell product to customers using any mobile or landline phone. With the acquisition of the iPAY® business, Planet Payment also offers comprehensive Internet processing solutions for credit card and electronic check payments.
Planet Payment is headquartered in New York and has offices in Atlanta, Beijing, Bermuda, New Castle Delaware, London, Hong Kong, Shanghai and Singapore.
Forward-Looking Statements. Information contained in this announcement may include ‘forward-looking statements’. All statements other than statements of historical facts included herein, including, without limitation, those regarding the financial position, business strategy, plans and objectives of management for future operations of both Planet Payment and the business, which was the subject of the iPAY acquisition (including development plans and objectives relating to Planet Payment’s and such acquired business) are forward-looking statements. Such forward-looking statements are based on a number of assumptions regarding Planet Payment’s present and future business strategies, the assets acquired, contracts assumed and personnel hired and the environment in which Planet Payment expects to operate in future, which assumptions may or may not be fulfilled in practice. Actual results may vary materially from the results anticipated by these forward-looking statements as a result of a variety of risk factors, including the risk that implementation, adoption and offering of the service by processors, acquirers, merchants and others may take longer than anticipated, or may not occur at all, regulatory changes, particularly in China and changes in card association regulations and practices; general economic risk and volume of international travel and commerce and others. Additional risks may arise with respect to the acquired assets and assumed contracts of which Planet Payment is not fully aware at this time. See the Company’s Quarterly Report for the period, filed at www.otcqx.com for other risk factors which investors should consider. These forward-looking statements speak only as to the date of this announcement and cannot be relied upon as a guide to future performance. Planet Payment expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained in this announcement to reflect any changes in its expectations with regard thereto or any change in events, conditions or circumstances on which any statement is based.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with the accompanying financial statements and related notes thereto. The following discussion may contain forward-looking statements that reflect future plans, estimates, beliefs, and expected performance. The forward-looking statements are dependents upon events, risks, and uncertainties that may be outside our control. Our actual results could differ materially from those discussed in these forward-looking statements. As such, the forward-looking events discussed may not occur. See discussion under the headings “Forward Looking Statements” and “Risk Factors” below.
The financial information with respect to the three and nine month periods ended September 30, 2009 and 2008 that is discussed below is unaudited. In the opinion of management, this information contains all adjustments, consisting of normal recurring accruals, necessary for the fair presentation of the results for such periods. The results of operations for the interim periods are not necessarily indicative of the results of operations for the full fiscal year. The Company provides certain non-GAAP financial measures in this statement, in order to provide investors with additional perspective of underlying business trends and results. These non-GAAP key business indicators, which include Adjusted EBITDA, transaction volumes, annualized revenue run rates, merchant locations and points of sale, should not be considered replacements for and should be read in conjunction with the GAAP financial measures.
RESULTS OF OPERATIONS
Nine Months Ended September 30, 2009 Compared to the Nine Months Ended September 30, 2008
All comparisons in this section are to the nine month period ended September 30, 2008 unless otherwise stated.
Revenue: Total revenue increased 35% to $33.0m (YTD:2008: $24.4m) led by new merchant deployments with banking partners in China, Taiwan, and India, as well as North America. Revenue from multi-currency processing services increased 40% to $22.6m (YTD:2008: $16.2m). Revenue from processing services (i.e. iPAY and other non multi-currency processing) increased 26% to $10.3m (YTD:2008: $8.2m) primarily attributed to the April 2008 acquisition of the iPAY processing business in North America.
Transaction Volume: The Company processed total settled transaction volume of over $1.5b, up 43% over the same period in 2008 (YTD:2008: $1.1b). Transaction volume from multi-currency processing services increased 29% to $609m (YTD:2008: $470m). Of the September 2009 multi-currency volume, 39% was attributed to merchants activated since September 2008; approximately 11% was added in the first nine months of 2009, showing the continued strength of the new merchant deployment pipeline. Settled volume from processing services grew 54% to $913m (2008: $593m), primarily attributed to the April 2008 acquisition of the iPAY processing business in North America.
Gross Profit: Gross profit rose 50% to $11.6m (YTD:2008: $7.8m). Overall gross margin percentage was 35.2% compared to 31.5% in 2008 primarily due to improved multi-currency processing margins and certain implementation, development and processing fees which had no associated direct costs of sales.
Operating Expenses: Operating expenses declined 14%, or $2.2m, to $13.8m (YTD:2008: $16.0m) with cash operating expenses correspondingly declining 13% to $11.6m (YTD:2008: $13.5m). The Company’s operating costs as a percentage of revenue decreased to 44.1% from 51.2% in 2008. These declining expenses resulted from initiatives taken by the Company in October 2008 to align cash operating expenses with revenues.
Cash compensation expenses totalled $6.8m, a decline of 13% from 2008, representing 58.8% of total cash operating expenses for YTD:2009 (YTD:2008: $7.8m, representing 58.3% of total cash operating expenses). Headcount declined from 152 in September 2008 to 138 in September 2009. Other cash operating expenses (i.e. excluding cash compensation expense) also declined 14% over 2008.
EBITDA: Adjusted EBITDA for the period approached breakeven to a loss of $0.04m (YTD:2008 loss: $5.7m). Adjusted EBITDA for the period excludes depreciation and amortization expense of $1.1m, expenses of $0.98m in non-cash stock-related compensation expense arising from SFAS 123R and other non-cash expense of $0.1m.
Net Loss: The Company’s growing revenues in concert with the reduction in operating expenses, led to a 65% improvement in net loss to $3.1m (YTD:2008 loss: $8.8m).
Three Months Ended September 30, 2009 Compared to the Three Months Ended September 30, 2008
All comparisons in this section are to the three month period ended September 30, 2008 unless otherwise stated.
Revenue: Total revenue increased 16% to $11.7m (Q3:2008: $10.2m) primarily as a result of the increase in multi-currency processing from new merchant deployments in China, Taiwan, and India, as well as North America. Revenue from multi-currency processing services increased 39% to $8.5m (Q3:2008: $6.1m). Revenue from processing services (i.e. US Domestic and other non multi-currency processing) declined 19% to $3.2m (Q3:2008: $4.0m) due primarily to the Company’s actions to enhance the profitability of its US Domestic processing portfolio.
Transaction Volume: The Company processed total settled transaction volume of over $528m, up 11% over the same period in 2008 (Q3:2008: $477m). Transaction volume from multi-currency processing services increased 24% to $227m (Q3:2008: $183m). Settled volume from processing services grew 3% to $301m (Q3:2008: $293m).
Gross Profit: Gross profit rose 29% to $4.1m (Q3:2008: $3.2m). Overall gross margin percentage of 35.0% improved over Q3:2008’s gross margin percentage of 31.4%, primarily due to the Company’s actions to enhance the profitability of its direct processing portfolio, for which gross margin percentage improved by 20% to 23.6% (Q3:2008: 19.6%), notwithstanding the decline in processing revenues.
Operating Expenses: Operating expenses declined more than 16%, to $4.6m, (Q3:2008: $5.5m), and cash operating expenses declined 14% to $3.9m (Q3:2008: $4.6m). The Company’s operating costs as a percentage of revenue continued to decline to 39% from 54% in Q3:2008. These declining expenses resulted from initiatives taken by the Company since October 2008 to align cash operating expenses with revenues.
Cash compensation expenses totalled $2.2m, a decline of 12% over Q3:2008 and represented 57% of total cash operating expenses for the quarter (Q3:2008: $2.6m, represented 56% of total cash operating expenses). Headcount reduced to 138 at the end of September 2009 from 140 at the end of June 2009. Other cash operating expenses (i.e. excluding cash compensation expense) declined 16% over Q3:2008.
EBITDA: Achieved second consecutive positive EBITDA quarter, with adjusted EBITDA improving to $0.2m from a loss in Q3:2008 of ($1.4m). Adjusted EBITDA for the period excludes depreciation and amortization expense of $0.3m, non-cash stock-related compensation expense arising from SFAS 123R of $0.3m, and other non-cash expense of $0.1m. This positive adjusted EBITDA highlights the Company’s continuing progress towards positive cash flow in the near-term.
Net Loss: The Company narrowed its net loss by 69% to $0.8m (Q3:2008 loss: $2.6m) due to higher revenues and significant reduction in costs, as described above.
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