Payment-Industry News

News from the payment service industry

Planet Payment Announces Fourth Quarter and Year Ended 2016 Results (NASDAQ:PLPM)

8 March 2017 | 9:01 pm

LONG BEACH, N.Y., March 08, 2017 (GLOBE NEWSWIRE) — Planet Payment, Inc. (NASDAQ:PLPM), a provider of international payment and transaction processing and multi-currency processing services, today announced its results for the fourth quarter and year ended December 31, 2016.

Financial Highlights for the Fourth Quarter Ended December 31, 2016

  • Total revenue for the quarter was $13.9 million, compared to $15.4 million for 2015.
  • Net income for the quarter was $19.8 million, compared to $6.7 million for 2015.  Included in net income for Q4 2016 and Q4 2015 is a benefit to our income tax provision of $16.5 million and $4.8 million, respectively, due in large part to the reversal of a portion of our deferred tax asset valuation allowance.  Excluding this effect net income for Q4 2016 and Q4 2015 would have been $3.3 million and $1.9 million, respectively.
  • Diluted net income per share for the quarter was $0.36, compared to $0.11 for 2015.  Included in diluted net income per share for Q4 2016 and Q4 2015 is a benefit to our income tax provision of $0.30 per share and $0.08 per share, respectively, due in large part to the reversal of a portion of our deferred tax asset valuation allowance.  Excluding this effect diluted net income per share for Q4 2016 and Q4 2015 would have been $ 0.06 and $0.03, respectively.
  • Adjusted EBITDA for the quarter increased 22% to $4.8 million, compared to $3.9 million for 2015.

Financial Highlights for the Year Ended December 31, 2016

  • Total revenue for the year was $54.3 million, compared to $52.8 million for 2015.
  • Net income for the year was $25.1 million compared to $10.4 million for 2015.  Included in net income for 2016 and 2015 is a benefit to our income tax provision of $16.5 million and $4.8 million, respectively, due in large part to the reversal of a portion of our deferred tax asset valuation allowance.  Excluding this effect, net income for 2016 and 2015 would have been $8.6 million and $5.6 million, respectively.
  • Diluted net income per share for the year was $0.44, compared to $0.17 for 2015.  Included in diluted net income per share for 2016 and 2015 is a benefit to our income tax provision of $0.29 per share and $0.08 per share, respectively, due in large part to the reversal of a portion of our deferred tax asset valuation allowance.  Excluding this effect diluted net income per share for 2016 and 2015 would have been $0.15 and $0.09, respectively.
  • Adjusted EBITDA for the year grew 26% to $14.6 million, compared to $11.6 million for 2015.

Refer to Table 1 for reconciliation of net income to Adjusted EBITDA (a non-GAAP measure).

Operational Highlights

  • Launched UnionPay Card Acceptance with United Airlines
  • Partnership with UATP to support UnionPay Card Acceptance for UATP’s network of airlines and travel agents
  • Launched Pay in Your Currency® and completed development of Multi-Currency Pricing with Moneris Solutions Corporation in Canada
  • Entered into the Colombian market by launching Pay in Your Currency® with Redeban Multicolor
  • Expanded into a new market with launch of Pay in Your Currency® with Ahli United Bank and Network International in Bahrain
  • Commenced commercial roll out of Pay in Your Currency® with HDFC Bank in India
  • Launched DCC at ATMs with CIMB Bank in Malaysia
  • Announced agreement with WorldPay to launch DCC at ATMs in the US
  • Signed contract extensions with Mashreq in United Arab Emirates and Bank of Communications in China

Outlook for Fiscal Year 2017

  • Net revenue for the year is estimated to be in the range of $60.1 million and $61.5 million.
  • Net income for the year is estimated to be in the range of $11.8 million and $12.8 million.  The guidance for net income assumes an effective tax rate of approximately 10.0% and does not assume a further reduction in our tax valuation allowance.
  • Adjusted EBITDA for the year is estimated to be in the range of $17.0 million and $18.0 million (see Table 3 for reconciliation of prospective net income to Adjusted EBITDA).
  • Fully diluted earnings per share are estimated to be in the range of $0.21 and $0.22 based on 52.0 million fully-diluted common shares outstanding.

“I am pleased with our performance in 2016, and our prospects for 2017,” said Carl Williams, Chairman and Chief Executive Officer of Planet Payment. “With strengthening global travel trends, multiple business wins, and improving EBITDA, I feel strongly that our progress will continue in 2017 and beyond.”

Results of 2016 Stock Repurchase Program and Tender Offer

For the year ended December 31, 2016, the total amount of common stock repurchased under the program and the tender offer was 6.8 million shares for an aggregate price of $23.8 million.

Conference Call

The Company will host a conference call to discuss Fourth Quarter and Year-End 2016 financial results today at 5:00 pm New York time.  Carl J. Williams, Chairman and Chief Executive Officer, Robert Cox, President and Chief Operating Officer, and Raymond D’Aponte, Chief Financial Officer, will host the call.  The call will be webcast live from the Company’s investor relations website at http://ir.planetpayment.com/.  The conference call can also be accessed live over the phone by dialing (877) 407-3982, or for international callers (201) 493-6780.  A replay will be available approximately two hours after the call concludes and can be accessed on our website or by dialing (844) 512-2921, or for international callers (412) 317-6671, and entering the conference ID 1365463.  The replay will be available until our next earnings call on our website or via telephone until March 16, 2017.

Additional analysis of the Company’s performance can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in the Annual Report on Form 10-K for the Fiscal Year ended December 31, 2016 to be filed at www.sec.gov and posted on the Company’s investor relations website.

About Planet Payment

Planet Payment is a provider of international payment and transaction processing and multi-currency processing services.  The Company provides its services to approximately 189,000 active merchant locations in 22 countries and territories across the Asia Pacific region, the Americas, the Middle East, Africa and Europe, primarily through its acquiring bank and processor customers, as well as through its own direct sales force. Our point-of-sale and e-commerce services help merchants sell more goods and services to consumers, and together with our ATM services, are integrated within the payment card transaction flow, enabling our acquiring customers, their merchants and consumers to shop, pay, transact and reconcile payment transactions in multiple currencies, geographies and channels.

Notice Regarding 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 its business partners, net revenue, net income, Adjusted EBITDA, diluted earnings per share, future service launches with customers and new initiatives and customer pipeline are forward-looking statements.  Such forward-looking statements are based on a number of assumptions regarding Planet Payment’s present and future business strategies, and the environment in which Planet Payment expects to operate in the future, which assumptions may or may not be fulfilled in practice. Implementation of some or all of the new services referred to is subject to regulatory or other third party approvals.  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 and changes in card association regulations and practices; changes in domestic and international economic conditions; and changes in volume of international travel and commerce and others. Additional risks may arise with respect to commencing operations in new countries and regions, of which Planet Payment is not fully aware at this time. See the Company’s Annual Report Form 10-K for the Fiscal Year ended December 31, 2016 to be filed at www.sec.gov 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.

Non-GAAP Financial Information

The Company provides certain non-GAAP financial measures in this statement.  Management believes that Adjusted EBITDA, when viewed with our results under GAAP and the accompanying reconciliations, provides useful information about our period-over-period results. Adjusted EBITDA is presented because management believes it provides additional information with respect to the performance of our fundamental business activities and is also frequently used by securities analysts, investors and other interested parties in the evaluation of comparable companies. We also rely on Adjusted EBITDA as a primary measure to review and assess the operating performance of our company and our management team in connection with our executive compensation.  These non-GAAP key business indicators, which include Adjusted EBITDA, should not be considered replacements for and should be read in conjunction with the GAAP financial measures.

We define Adjusted EBITDA as GAAP net income adjusted to exclude: (1) interest expense, (2) interest income, (3) provision for income taxes, (4) depreciation and amortization, (5) stock-based compensation expense and (6) certain other items management believes affect the comparability of operating results. Please see “Adjusted EBITDA” below for more information and for a reconciliation of Adjusted EBITDA to net income, the most directly comparable financial measure calculated and presented in accordance with GAAP.

 
Table 1. Reconciliation of Net Income to Adjusted EBITDA
 
For the three months and year ended December 31, 2016 and 2015
                         
    Three Months Ended
  Year ended
    December 31,
  December 31,
    2016
    2015
    2016
     2015  
ADJUSTED EBITDA:                                
Net income   $ 19,803,561     $ 6,669,523     $ 25,072,002     $ 10,362,448  
Interest expense     87,507       18,760       273,873       57,575  
Interest income     (513 )     (396 )     (1,763 )     (1,579 )
Benefit for income taxes (1)     (16,105,607 )     (4,278,766 )     (15,429,656 )     (3,970,360 )
Depreciation and amortization     573,600       924,770       2,399,392       3,099,990  
Stock-based compensation expense     322,046       613,415       1,820,404       1,774,232  
Restructuring charges     149,752             504,141       283,726  
Adjusted EBITDA (non-GAAP)   $ 4,830,346     $ 3,947,306     $ 14,638,393     $ 11,606,032  
                                 

(1) For the three months and years ended December 31, 2016 and 2015, our benefit for income taxes includes a tax benefit of $16.5 million and $4.8 million, respectively, which primarily related to a reversal of our tax valuation allowance.

   
   
Table 2.  Explanation of Key Metrics  
                           
    Three Months Ended   Year ended  
    December 31,   December 31,  
    2016   2015   2016   2015  
                           
KEY METRICS:                          
Total active merchant locations (at period end)(1)     189,139     118,019     189,139     118,019  
Total settled transactions processed(2)     47,018,256     64,545,273     191,562,026     227,477,823  
Total settled dollar volume processed(3)   $ 2,151,165,506   $ 2,202,741,628   $ 8,182,526,775   $ 8,263,216,174  
Adjusted EBITDA (non-GAAP)(4)   $ 4,830,346   $ 3,947,306   $ 14,638,393   $ 11,606,032  
Capitalized expenditures   $ 813,408   $ 310,132   $ 2,083,100   $ 1,396,998  
Multi-currency processing services key metrics:                          
Active merchant locations (at period end)(1)     119,538     44,748     119,538     44,748  
Settled transactions processed(5)     5,131,212     4,231,207     17,476,173     14,854,066  
Settled dollar volume processed(6)   $ 814,948,374   $ 869,971,939   $ 2,855,777,021   $ 2,856,768,185  
Average net mark-up percentage on settled dollar volume processed(7)     1.14 %   1.14 %   1.19 %   1.15 %
Payment processing services key metrics:                          
Active merchant locations (at period end)(1)     71,092     74,997     71,092     74,997  
Payment processing services revenue(8)   $ 4,608,630   $ 5,452,890   $ 20,249,444   $ 19,351,649  
Settled transactions processed(9)     42,307,947     60,460,335     175,059,209     213,093,249  
Settled dollar volume processed(10)   $ 1,400,040,412   $ 1,364,131,250   $ 5,489,967,884   $ 5,472,138,032  

(1) We consider a merchant location to be active as of a date if the merchant completed at least one revenue-generating transaction at the location during the 90-day period ending on such date.  The total number of active merchant locations exceeds the total number of merchants, as merchants may have multiple locations. As of December 31, 2016 and 2015, there were 1,491 and 1,726 active merchant locations, respectively, included in both multi-currency and payment processing active merchant locations but are not included in total active merchant locations, in order to eliminate counting these locations twice.

(2) Represents total settled transactions (excluding other transaction types such as authorizations and rate look-ups).

(3) Represents total settled dollar volume processed through both our multi-currency and payment processing services.

(4) We define Adjusted EBITDA as GAAP net income adjusted to exclude (1) interest expense, (2) interest income, (3) (benefit) provision for income taxes, (4) depreciation and amortization, (5) stock-based compensation expense and (6) certain other items management believes affect the comparability of operating results. Please see “—Adjusted EBITDA” in the 10-K filing for more information and for a reconciliation of Adjusted EBITDA to net income, the most directly comparable financial measure calculated and presented in accordance with GAAP.

(5) Represents settled transactions processed using our multi-currency processing services (excluding other transaction types such as authorizations and rate look-ups).  

(6) Represents the total settled dollar volume processed using our multi-currency processing services. 

(7) Represents the average net foreign currency mark-up percentage earned on settled dollar volume processed using our multi-currency processing services. The average net mark-up percentage on settled dollar volume processed is calculated by taking total multi-currency processing services net revenue ($34.0 million and $32.8 million for the years ended December 31, 2016 and 2015, respectively) and dividing by settled dollar volume processed (see footnote 6 above).  For purposes of calculating “Average net mark-up percentage on settled dollar volume processed,” multi-currency processing services revenue includes revenue related to multi-currency transactions only.

(8) Represents revenue earned and reported on payment processing services. 

(9) Represents settled transactions processed using our payment processing services (excluding other transaction types such as authorizations and rate look-ups). 

(10) Represents the total settled dollar volume processed using our payment processing services.

 
Table 3. Reconciliation of Prospective Net Income to Adjusted EBITDA
 
For the year ending December 31, 2017
 
    Range
    Millions
ADJUSTED EBITDA:     Low     High
Net income   $ 11.8   $ 12.8
Interest expense, net     0.3     0.3
Provision for income taxes     1.3     1.3
Depreciation and amortization     2.2     2.2
Stock-based compensation expense     1.4     1.4
Adjusted EBITDA (non-GAAP)   $ 17.0   $ 18.0
             
Planet Payment, Inc.
Condensed Consolidated Balance Sheets
 
    As of   As of
    December 31,   December 31,
    2016     2015  
           
Current assets:          
Cash and cash equivalents   $ 13,305,816     $ 14,675,515  
Restricted cash     4,981,472       5,050,147  
Accounts receivable, net of allowances of $0.1 million as of December 31, 2016 and December 31, 2015     6,060,533       6,406,496  
Prepaid expenses and other assets     1,940,544       1,800,566  
Total current assets     26,288,365       27,932,724  
Other assets:            
Restricted cash     550,402       551,917  
Property and equipment, net     1,674,410       1,811,619  
Software development costs, net     4,197,142       3,964,454  
Intangible assets, net     827,474       1,378,264  
Goodwill     276,786       286,852  
Deferred tax asset     22,673,206       6,206,313  
Other long-term assets     2,095,817       2,374,769  
Total other assets     32,295,237       16,574,188  
Total assets   $ 58,583,602     $ 44,506,912  
Liabilities and stockholders’ equity            
Current liabilities:            
Accounts payable   $ 830,479     $ 306,520  
Accrued expenses     5,353,735       6,438,600  
Due to merchants     5,199,390       5,240,427  
Current portion of capital leases     166,966       290,911  
Total current liabilities     11,550,570       12,276,458  
Long-term liabilities:            
Long-term debt     9,916,000        
Other long-term liabilities     854,991       1,666,938  
Total long-term liabilities     10,770,991       1,666,938  
Total liabilities     22,321,561       13,943,396  
Commitments and contingencies            
Stockholders’ equity:            
Convertible preferred stock—10,000,000 shares authorized as of December 31, 2016 and December 31, 2015, $0.01 par value: Series A—1,535,398 issued and outstanding as of December 31, 2016 and 2,243,750 issued and outstanding as of December 31, 2015; $6,141,592 and $8,975,000 aggregate liquidation preference as of December 31, 2016 and December 31, 2015, respectively     15,354       22,438  
Common stock—250,000,000 shares authorized as of December 31, 2016 and December 31, 2015, $0.01 par value, and 59,666,333 issued and 49,290,979 shares outstanding as of December 31, 2016, and 56,191,389 issued and 52,585,503 shares outstanding as of December 31, 2015     596,663       561,914  
Treasury stock, at cost, 10,375,354 shares and 3,605,886 shares as of December 31, 2016 and December 31, 2015, respectively     (31,726,486 )     (7,883,012 )
Additional paid-in capital     111,327,321       106,741,026  
Accumulated other comprehensive loss     (654,408 )     (510,445 )
Accumulated deficit     (43,296,403 )     (68,368,405 )
Total stockholders’ equity     36,262,041       30,563,516  
Total liabilities and stockholders’ equity   $ 58,583,602     $ 44,506,912  
                 
Planet Payment, Inc.  
Condensed Consolidated Statements of Operations    
  Three months ended   Year ended  
  December 31,   December 31,  
  2016     2015     2016     2015    
Revenue:                        
Net revenue $ 13,928,279     $ 15,380,546     $ 54,337,407     $ 52,815,088    
Operating expenses:                        
Cost of revenue:                        
Payment processing service fees   2,242,804       3,032,481       10,450,006       10,903,660    
Processing and service costs   2,798,472       4,460,974       12,701,351       14,860,804    
Total cost of revenue   5,041,276       7,493,455       23,151,357       25,764,464    
Selling, general and administrative expenses   4,952,303       5,567,464       20,860,469       20,408,308    
Restructuring charges   149,752             504,141       283,726    
Total operating expenses   10,143,331       13,060,919       44,515,967       46,456,498    
Income from operations   3,784,948       2,319,627       9,821,440       6,358,590    
Other income (expense):                        
Interest expense   (87,507 )     (18,760 )     (273,873 )     (57,575 )  
Interest income   513       396       1,763       1,579    
Other income         89,494       93,016       89,494    
Total other income (expense), net   (86,994 )     71,130       (179,094 )     33,498    
Income from operations before benefit for income taxes   3,697,954       2,390,757       9,642,346       6,392,088    
Benefit for income taxes   16,105,607       4,278,766       15,429,656       3,970,360    
Net income $ 19,803,561     $ 6,669,523     $ 25,072,002     $ 10,362,448    
Basic net income per share applicable to common stockholders $ 0.37     $ 0.11     $ 0.46     $ 0.17    
Diluted net income per share applicable to common stockholders $ 0.36     $ 0.11     $ 0.44     $ 0.17    
Weighted average common stock outstanding (basic)   48,421,891       51,833,492       49,472,512       52,545,934    
Weighted average common stock outstanding (diluted)   50,370,663       52,953,205       51,560,798       53,271,248    
                                 
Planet Payment, Inc.
Condensed Consolidated Statements of Cash Flows  
             
    December 31,
    2016     2015  
Cash flows from operating activities:            
Net income   $ 25,072,002     $ 10,362,448  
Adjustments to reconcile net income to net cash provided by operating activities:            
Stock-based compensation expense     1,820,404       1,811,156  
Depreciation and amortization expense     2,657,255       3,099,990  
Provision for doubtful accounts     62,681       8,388  
Deferred tax benefit     (16,466,893 )     (5,478,818 )
Loss on disposal of property and equipment     500        
Changes in operating assets and liabilities:            
Decrease (increase) in settlement assets     91,162       (957,909 )
Decrease (increase) in accounts receivables, prepaid expenses and other current assets     330,610       346,422  
Decrease (increase) in other long-term assets     529,213       911,138  
(Decrease) increase in accounts payable and accrued expenses     (2,678,860 )     1,292,718  
(Decrease) increase in due to merchants     (63,524 )     963,550  
Other     (130,611 )     (172,661 )
Net cash provided by operating activities     11,223,939       12,186,422  
Cash flows from investing activities:            
Increase in restricted cash     (20,972 )     (44,501 )
Increase (decrease) in merchant reserves     22,487       (75,322 )
Purchase of property and equipment     (437,308 )     (183,090 )
Capitalized software development     (1,294,129 )     (1,102,765 )
Purchase of intangible assets     (16,300 )     (20,979 )
Net cash used for investing activities     (1,746,222 )     (1,426,657 )
Cash flows from financing activities:            
Proceeds from exercise of stock options     3,420,957       1,657,591  
Principal payments on capital lease obligations     (340,899 )     (519,223 )
Borrowings under credit facility     13,916,000        
Repayments under credit facility     (4,000,000 )      
Purchase of treasury stock     (23,843,474 )     (7,060,409 )
Net cash used for financing activities     (10,847,416 )     (5,922,041 )
Effect of exchange rate changes on cash and cash equivalents(*)            
Net (decrease) increase in cash and cash equivalents     (1,369,699 )     4,837,724  
Cash and cash equivalents at beginning of period     14,675,515       9,837,791  
Cash and cash equivalents at end of period   $ 13,305,816     $ 14,675,515  
Supplemental disclosure:            
Cash paid for:            
Interest   $ 247,138     $ 33,499  
Income taxes     1,027,864       765,380  
Non-cash investing and financing activities:            
Common stock issued for preferred stock conversion     21,629        
Common stock issued for stock options exercised     152       184  
Assets acquired under capital leases     122,630       156,129  
Accrued capitalized hardware, software and fixed assets     307,660       57,163  
Capitalized stock-based compensation     27,703       33,001  

(*) For the years ended December 31, 2016 and 2015, the effect of exchange rate changes on cash and cash equivalents was immaterial.

 

Enquiries:

Planet Payment, Inc.
Raymond D'Aponte (CFO)
Tel: + 1 516 670 3200
www.planetpayment.com

Source link

Leave a Reply