Planet Payment Inc.
08/09/2017

Planet Payment Announces Second Quarter 2017 Results

LONG BEACH, N.Y., Aug. 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 second quarter ended June 30, 2017.

Financial Highlights for the Second Quarter Ended June 30, 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 revises its revenue guidance, while reaffirming its net income, adjusted EBITDA and fully diluted earnings per share guidance for the full year 2017 as follows:

"Planet Payment continues to make progress on the roll-out of existing customer implementations as well as signing new acquirer customers that will serve as the engine for growth in future quarters," said Carl Williams, Chairman and Chief Executive Officer of Planet Payment.  "Our momentum demonstrates the continued underlying market demand for our multi-currency solutions and the ability of Planet Payment to deliver superior processing solutions to acquirers on a worldwide basis."

Conference Call

The Company will host a conference call to discuss Second Quarter financial results today at 8:30 am 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 1-877-407-0792, or for international callers 1-201-689-8263.  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 13667922.  The replay will be available until our next earnings call on our website or via telephone until August 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 and six months ended June 30, 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 177,000 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.

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 and six months ended June 30, 2017 and 2016
             
  Three Months Ended Six Months Ended
  June 30, June 30,
  2017 2016 2017  2016
ADJUSTED EBITDA:            
Net income $ 1,969,529  $ 1,282,723  $ 3,387,069  $ 3,043,028 
Interest expense   92,813    83,021    209,145    97,697 
Interest income   (585)   (398)   (1,108)   (822)
Provision for income taxes   474,946    149,058    1,010,004    386,408 
Depreciation and amortization   492,513    618,103    1,045,495    1,227,093 
Stock-based compensation expense   248,647    576,931    574,519    1,180,899 
Restructuring charges and other   134,985    125,268    200,443    125,268 
Adjusted EBITDA (non-GAAP) $ 3,412,848  $ 2,834,706  $ 6,425,567  $ 6,059,571 


Table 2.  Explanation of Key Metrics
              
  Three Months Ended Six Months Ended 
  June 30, June 30, 
  2017 2016 2017 2016 
              
KEY METRICS:             
Total active merchant locations (at period end)(1)   176,870   178,198   176,870   178,198 
Total settled transactions processed(2)   48,054,316   45,680,275   94,565,008   99,071,948 
Total settled dollar volume processed(3) $ 2,248,334,128 $ 1,962,972,987 $ 4,443,434,026 $ 4,026,255,657 
Adjusted EBITDA (non-GAAP)(4) $ 3,412,848 $ 2,834,706 $ 6,425,567 $ 6,059,571 
Capitalized expenditures $ 402,642 $ 479,098 $ 723,292 $ 865,039 
Multi-currency processing services key metrics:             
Active merchant locations (at period end)(1)   119,692   105,987   119,692   105,987 
Settled transactions processed(5)   4,957,236   3,888,083   10,023,708   8,162,182 
Settled dollar volume processed(6) $ 725,725,940 $ 662,524,562 $ 1,481,651,449 $ 1,388,799,284 
Average net mark-up percentage on settled dollar volume processed(7)   1.17  1.20%  1.14%  1.19%
Payment processing services key metrics:             
Active merchant locations (at period end)(1)   59,176   73,728   59,176   73,728 
Payment processing services revenue(8) $ 4,005,417 $ 5,144,770 $ 8,301,398 $ 10,195,051 
Settled transactions processed(9)   43,390,839   41,969,598   85,247,940   91,231,000 
Settled dollar volume processed(10) $ 1,572,046,750 $ 1,333,260,862 $ 3,061,766,773 $ 2,697,846,395 
              
  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 June 30, 2017 and 2016, there were 1,998 and 1,517 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 net income to Adjusted EBITDA, 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 ($8.5 million and $8.0 million for the three months ended June 30, 2017 and 2016, respectively, and $16.9 million and $16.6 million for the six months ended June 30, 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   0.3   0.3
Provision for income taxes   4.3   4.3
Depreciation and amortization   2.0   2.0
Stock-based compensation expense   1.1   1.1
Restructuring charges and other   0.2   0.2
Adjusted EBITDA (non-GAAP) $ 17.0 $ 18.0


Planet Payment, Inc. 
Condensed Consolidated Balance Sheets
       
  As of As of
  June 30,  December 31,
  2017 2016
  (unaudited)   
Current assets:     
Cash and cash equivalents $ 7,283,792  $ 13,305,816 
Restricted cash   5,552,887    4,981,472 
Accounts receivable, net of allowances of $0.1 million as of June 30, 2017 and December 31, 2016   6,851,483    6,060,533 
Prepaid expenses and other assets   2,100,989    1,940,544 
Total current assets   21,789,151    26,288,365 
Other assets:      
Restricted cash   570,198    550,402 
Property and equipment, net   1,607,115    1,674,410 
Software development costs, net   4,153,393    4,197,142 
Intangible assets, net   622,716    827,474 
Goodwill   300,419    276,786 
Deferred tax asset   22,119,464    22,673,206 
Other long-term assets   1,555,719    2,095,817 
Total other assets   30,929,024    32,295,237 
Total assets $ 52,718,175  $ 58,583,602 
Liabilities and stockholders' equity      
Current liabilities:      
Accounts payable $ 635,063  $ 830,479 
Accrued expenses   4,095,501    5,353,735 
Due to merchants   5,729,411    5,199,390 
Current portion of capital leases   196,483    166,966 
Total current liabilities   10,656,458    11,550,570 
Long-term liabilities:      
Long-term debt   —    9,916,000 
Other long-term liabilities   589,970    854,991 
Total long-term liabilities   589,970    10,770,991 
Total liabilities   11,246,428    22,321,561 
Commitments and contingencies       
Stockholders' equity:      
Convertible preferred stock—10,000,000 shares authorized as of June 30, 2017 and December 31, 2016, $0.01 par value: Series A—1,535,398 shares issued and outstanding as of June 30, 2017 and December 31, 2016; $6,141,592 aggregate liquidation preference as of June 30, 2017 and December 31, 2016   15,354    15,354 
Common stock—250,000,000 shares authorized as of June 30, 2017 and December 31, 2016, $0.01 par value, and 60,232,922 shares issued and 49,857,568 shares outstanding as of June 30, 2017, and 59,666,333 shares issued and 49,290,979 shares outstanding as of December 31, 2016   602,329    596,663 
Treasury stock, at cost, 10,375,354 shares as of June 30, 2017 and December 31, 2016   (31,726,486)   (31,726,486)
Additional paid-in capital   113,062,193    111,327,321 
Accumulated other comprehensive loss   (572,309)   (654,408)
Accumulated deficit   (39,909,334)   (43,296,403)
Total stockholders' equity   41,471,747    36,262,041 
Total liabilities and stockholders' equity $ 52,718,175  $ 58,583,602 


Planet Payment, Inc. 
Condensed Consolidated Statements of Income (unaudited)
            
 Three months ended Six months ended
 June 30, June 30,
 2017 2016 2017 2016
Revenue:           
Net revenue$12,516,383  $13,103,376  $25,245,268  $26,787,889 
Operating expenses:           
Cost of revenue:           
Payment processing service fees 2,085,445   2,734,689   4,201,054   5,425,913 
Processing and service costs 3,205,246   3,524,123   6,397,319   7,024,791 
Total cost of revenue 5,290,691   6,258,812   10,598,373   12,450,704 
Selling, general and administrative expenses 4,681,705   5,204,892   9,969,043   10,685,606 
Restructuring charges  7,284    125,268    72,742    125,268 
Total operating expenses 9,979,680   11,588,972   20,640,158   23,261,578 
Income from operations 2,536,703   1,514,404   4,605,110   3,526,311 
Other (expense) income:           
Interest expense (92,813)  (83,021)  (209,145)  (97,697)
Interest income 585   398   1,108   822 
Total other expense, net (92,228)  (82,623)  (208,037)  (96,875)
Income from operations before provision for income taxes 2,444,475   1,431,781   4,397,073   3,429,436 
Provision for income taxes (474,946)  (149,058)  (1,010,004)  (386,408)
Net income$1,969,529  $1,282,723   3,387,069  $3,043,028 
Basic net income per share applicable to common stockholders$0.04  $0.02  $0.06  $0.06 
Diluted net income per share applicable to common stockholders$0.04  $0.02  $0.06  $0.05 
Weighted average common stock outstanding (basic) 49,238,405   49,602,206  $49,078,889   50,186,828 
Weighted average common stock outstanding (diluted) 51,272,280   51,987,695   51,322,296   52,401,790 


Planet Payment, Inc.  
Condensed Consolidated Statements of Cash Flows (unaudited)
       
  Six Months Ended
  June 30,
  2017 2016
Cash flows from operating activities:      
Net income $ 3,387,069  $ 3,043,028 
Adjustments to reconcile net income to net cash provided by operating activities:      
Stock-based compensation expense   574,519    1,180,899 
Depreciation and amortization expense   1,045,495    1,330,238 
Provision for doubtful accounts   3,437    58,595 
Deferred income taxes   553,742    — 
Disposal of property and equipment   —    500 
Changes in operating assets and liabilities:      
(Increase) decrease in settlement assets   (571,415)   498,553 
(Increase) decrease in accounts receivables, prepaid expenses and other current assets   (881,941)   358,980 
Decrease in other long-term assets   514,274    287,923 
Decrease in accounts payable and accrued expenses   (1,664,578)   (2,885,420)
Increase (decrease) in due to merchants   530,021    (438,099)
Other  52,065   (26,219)
Net cash provided by operating activities  3,542,688   3,408,978 
Cash flows from investing activities:      
Increase in restricted cash   (19,796)   (9,629)
Increase in merchant reserves   —    9,684 
Purchase of property and equipment   (209,550)   (109,555)
Capitalized software development   (415,646)   (677,822)
Purchase of intangible assets  (12,296)  (353)
Net cash used in investing activities  (657,288)  (787,675)
Cash flows from financing activities:      
Proceeds from issuance of common stock   1,293,738    1,965,380 
Principal payments on capital lease obligations   (148,902)   (193,002)
Borrowings under credit facility   —    13,916,000 
Repayments under credit facility   (9,916,000)   (4,000,000)
Purchase of treasury stock   —   (17,843,447)
Common stock repurchases for tax withholdings   (136,260)   (655,104)
Net cash used in financing activities   (8,907,424)   (6,810,173)
Effect of exchange rate changes on cash and cash equivalents (*)   —    — 
Net decrease in cash and cash equivalents  (6,022,024)  (4,188,870)
Cash and cash equivalents at beginning of period  13,305,816   14,675,515 
Cash and cash equivalents at end of period $7,283,792  $10,486,645 
Supplemental disclosure:      
Cash paid for:      
Interest $ 172,261  $ 14,718 
Income taxes   579,114    504,398 
Non-cash investing and financing activities:      
Common stock issued for preferred stock conversion   —    21,629 
Common stock issued for stock options exercised   262    98 
Assets acquired under capital leases   47,067    122,630 
Accrued capitalized hardware, software and fixed assets   77,259    63,291 
Capitalized stock-based compensation   8,541    14,018 
         
(*)        For the six months ended June 30, 2017 and 2016, the effect of exchange rate changes on cash and cash equivalents was immaterial.


 

Enquiries:

Planet Payment, Inc.
Raymond D'Aponte, Chief Financial Officer

Tel: + 1 516 670 3200
www.planetpayment.com