Planet Payment Inc.
05/09/2017

Planet Payment Announces First Quarter 2017 Results

LONG BEACH, N.Y., May 09, 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 first quarter ended March 31, 2017.

Financial Highlights for the First Quarter Ended March 31, 2017

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

Operational Highlights

Outlook for Fiscal Year 2017

Planet Payment reaffirms its revenue and adjusted EBITDA guidance and amends its net income and fully diluted earnings per share guidance for the full year 2017 as follows:

"From new business wins to contract expansions, our Q1 accomplishments represent our ability to create long-standing, strategic partnerships with some of the industry's leading players around the world," said Carl Williams, Chairman and Chief Executive Officer of Planet Payment.  "These various wins represent affirmation of our market expertise, as well as the strength of our leading multi-currency solutions."

Conference Call

The Company will host a conference call to discuss First Quarter 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 1-855-327-6837, or for international callers 1-631-891-4304.  A replay will be available approximately two hours after the call concludes and can be accessed on our website or by dialing 1-844-512-2921, or for international callers 1-412-317-6671, and entering the conference ID 10002912.  The replay will be available until our next earnings call on our website or via telephone until May 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 Quarterly Report on Form 10-Q for the three months ended March 31, 2017 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 188,000 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 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.

Enquiries:

Planet Payment, Inc.
Raymond D'Aponte, Chief Financial Officer
 Tel: + 1 516 670 3200
www.planetpayment.com 

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 ended March 31, 2017 and 2016
       
  Three Months Ended
  March 31,
  2017  2016 
ADJUSTED EBITDA:      
Net income $ 1,417,540  $ 1,760,305 
Interest expense   116,332    14,676 
Interest income   (523)   (424)
Provision for income taxes   535,058    237,350 
Depreciation and amortization   552,982    608,990 
Stock-based compensation expense   325,872    603,968 
Restructuring charges   65,458    — 
Adjusted EBITDA (non-GAAP) $ 3,012,719  $ 3,224,865 


Table 2.  Explanation of Key Metrics
        
  Three Months Ended 
  March 31, 
  2017 2016 
        
KEY METRICS:       
Total active merchant locations (at period end)(1)   188,356   135,526 
Total settled transactions processed(2)   46,510,692   53,391,673 
Total settled dollar volume processed(3) $ 2,195,099,898 $ 2,063,282,670 
Adjusted EBITDA (non-GAAP)(4) $ 3,012,719 $ 3,224,865 
Capitalized expenditures $ 320,650 $ 385,941 
Multi-currency processing services key metrics:       
Active merchant locations (at period end)(1)   129,330   62,532 
Settled transactions processed(5)   5,066,472   4,274,099 
Settled dollar volume processed(6) $ 755,925,509 $ 726,274,722 
Average net mark-up percentage on settled dollar volume processed(7)   1.12  1.19%
Payment processing services key metrics:       
Active merchant locations (at period end)(1)   60,615   74,703 
Payment processing services revenue(8) $ 4,295,981 $ 5,050,281 
Settled transactions processed(9)   41,857,101   49,261,402 
Settled dollar volume processed(10) $ 1,489,720,023 $ 1,364,585,533 
  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 March 31, 2017 and 2016, there were 1,589 and 1,709 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-Q 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 ($8.4 million and $8.6 million for the three months ended March 31, 2017 and 2016, 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 $ 9.1 $ 10.1
Interest expense, net   0.4   0.4
Provision for income taxes   4.3   4.3
Depreciation and amortization   2.0   2.0
Stock-based compensation expense   1.2   1.2
Adjusted EBITDA (non-GAAP) $ 17.0 $ 18.0

 

Planet Payment, Inc.
Condensed Consolidated Balance Sheets

       
  As of As of
  March 31,  December 31,
  2017  2016 
      
Current assets:     
Cash and cash equivalents $ 15,577,764  $ 13,305,816 
Restricted cash   5,271,492    4,981,472 
Accounts receivable, net of allowances of $0.1 million as of March 31, 2017 and December 31, 2016   6,954,633    6,060,533 
Prepaid expenses and other assets   2,006,760    1,940,544 
Total current assets   29,810,649    26,288,365 
Other assets:      
Restricted cash   612,502    550,402 
Property and equipment, net   1,644,582    1,674,410 
Software development costs, net   4,126,196    4,197,142 
Intangible assets, net   698,685    827,474 
Goodwill   280,935    276,786 
Deferred tax asset   22,673,170    22,673,206 
Other long-term assets   1,753,892    2,095,817 
Total other assets   31,789,962    32,295,237 
Total assets $ 61,600,611  $ 58,583,602 
Liabilities and stockholders' equity      
Current liabilities:      
Accounts payable $ 1,048,087  $ 830,479 
Accrued expenses   5,216,455    5,353,735 
Due to merchants   5,459,868    5,199,390 
Current portion of capital leases   221,608    166,966 
Total current liabilities   11,946,018    11,550,570 
Long-term liabilities:      
Long-term debt   9,916,000    9,916,000 
Other long-term liabilities   786,259    854,991 
Total long-term liabilities   10,702,259    10,770,991 
Total liabilities   22,648,277    22,321,561 
Commitments and contingencies       
Stockholders' equity:      
Convertible preferred stock—10,000,000 shares authorized as of March 31, 2017 and
December 31, 2016, $0.01 par value: Series A—1,535,398 shares issued and
outstanding as of March 31, 2017 and December 31, 2016; $6,141,592 aggregate
liquidation preference as of March 31, 2017 and December 31, 2016
   15,354    15,354 
Common stock—250,000,000 shares authorized as of March 31, 2017 and December
31, 2016, $0.01 par value, and 60,072,783 shares issued and 49,697,429 shares
outstanding as of March 31, 2017, and 59,666,333 shares issued and 49,290,979 shares
outstanding as of December 31, 2016
   600,728    596,663 
Treasury stock, at cost, 10,375,354 shares as of March 31, 2017 and December 31, 2016   (31,726,486)   (31,726,486)
Additional paid-in capital   112,565,197    111,327,321 
Accumulated other comprehensive loss   (623,596)   (654,408)
Accumulated deficit   (41,878,863)   (43,296,403)
Total stockholders' equity   38,952,334    36,262,041 
Total liabilities and stockholders' equity $ 61,600,611  $ 58,583,602 

Planet Payment, Inc.
Condensed Consolidated Statements of Operations  

       
 Three months ended 
 March 31,  
 2017  2016  
Revenue:      
Net revenue$12,728,885  $13,684,513  
Operating expenses:      
Cost of revenue:      
Payment processing service fees 2,115,609   2,691,224  
Processing and service costs 3,192,073   3,500,668  
Total cost of revenue 5,307,682   6,191,892  
Selling, general and administrative expenses 5,287,338   5,480,714  
Restructuring charges  65,458    —  
Total operating expenses 10,660,478   11,672,606  
Income from operations 2,068,407   2,011,907  
Other (expense) income:      
Interest expense (116,332)  (14,676) 
Interest income 523   424  
Total other expense, net (115,809)  (14,252) 
Income from operations before provision for income taxes 1,952,598   1,997,655  
Provision for income taxes (535,058)  (237,350) 
Net income$1,417,540  $1,760,305  
Basic net income per share applicable to common stockholders$0.03  $0.03  
Diluted net income per share applicable to common stockholders$0.03  $0.03  
Weighted average common stock outstanding (basic) 48,917,601   50,771,451  
Weighted average common stock outstanding (diluted) 51,353,807   52,062,499  
       

Planet Payment, Inc.
Condensed Consolidated Statements of Cash Flows  

        
   Three months ended March 31, 
  2017  2016  
Cash flows from operating activities:       
Net income $ 1,417,540  $ 1,760,305  
Adjustments to reconcile net income to net cash provided by operating activities:       
Stock-based compensation expense   325,872    603,968  
Depreciation and amortization expense   552,982    608,990  
Provision for doubtful accounts   3,786    57,328  
Deferred tax benefit   36    —  
Changes in operating assets and liabilities:       
(Increase) decrease in settlement assets   (294,389)   117,192  
Increase in accounts receivables, prepaid expenses and other current assets   (890,025)   (493,038) 
Decrease in other long-term assets   314,915    124,786  
Increase (decrease) in accounts payable and accrued expenses   33,022    (193,076) 
Increase (decrease) in due to merchants   264,847    (120,449) 
Other   23,894    34,365  
Net cash provided by operating activities  1,752,480   2,500,371  
Cash flows from investing activities:       
(Increase) decrease in restricted cash   (57,731)   2,038  
Increase in merchant reserves   (4,369)   (1,990) 
Purchase of property and equipment   (83,159)   (60,746) 
Capitalized software development   (167,311)   (288,162) 
Net cash used in investing activities  (312,570)  (348,860) 
Cash flows from financing activities:       
Proceeds from issuance of common stock   936,053    772,813  
Principal payments on capital lease obligations   (78,110)   (106,528) 
Purchase of treasury stock   —    (3,621,505) 
Common stock repurchases for tax witholdings   (25,905)   (22,255) 
Net cash provided by (used in) financing activities   832,038    (2,977,475) 
Effect of exchange rate changes on cash and cash equivalents (*)   —    —  
Net increase (decrease) in cash and cash equivalents  2,271,948   (825,964) 
Cash and cash equivalents at beginning of period  13,305,816   14,675,515  
Cash and cash equivalents at end of period $15,577,764  $13,849,551  
Supplemental disclosure:       
Cash paid for:       
Interest $ 87,825  $ 8,544  
Income taxes   295,755    295,589  
Non-cash investing and financing activities:       
Common stock issued for stock options exercised   419    98  
Assets acquired under capital leases   47,067    98,988  
Accrued capitalized hardware, software and fixed assets   64,259    30,667  
Capitalized stock-based compensation   5,921    6,366  

(*) For the three months ended March 31, 2017 and 2016, the effect of exchange rate changes on cash and cash equivalents was immaterial.