Planet Payment Inc.
03/08/2017

Planet Payment Announces Fourth Quarter and Year Ended 2016 Results

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

Financial Highlights for the Year Ended December 31, 2016

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

Operational Highlights

Outlook for Fiscal Year 2017

"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