Planet Payment Inc.
11/26/2012

Planet Payment Reports Third Quarter 2012 Results

Provides Update on NASDAQ Listing

Long Beach, NY; November 26, 2012 - Planet Payment, Inc. (UK: LSE: AIM: PPT and PPTR; USA: OTCQX: PLPM), a leading provider of international payment processing and multi-currency processing services, today announced its results for the three and nine months ended September 30, 2012.

 

Financial Highlights for the Three Months Ended September 30, 2012 (“Q3 2012”)

 

Financial Highlights for the Nine Months Ended September 30, 2012 (“YTD” 2012)

 

Operational Highlights for the YTD 2012

 

Our results reflect a 51% increase in active merchant locations over the last twelve months and growth of 10% and 12% in Consolidated Gross Billings and Gross Foreign Currency Mark-up respectively in the third quarter of 2012 compared to the same period in 2011.  The growth in our financial results, however, was muted by a number of factors.  The poor economic climate, which our merchants and their customers are facing, led to a decline in sales of goods and services by merchants using our services, which negatively impacted our net revenue. The net loss in the third quarter primarily resulted from expensing previously deferred IPO costs of $2.3 m associated with our registration statement on Form S-1, as well as IPO costs incurred in the third quarter for a total amount of $2.6 m.  The increase in our operating costs compared to 2011 primarily reflects additions to technology and support personnel to invest in the growth of the business and future launches into new markets including Mexico and Brazil.  We believe that the growth in the key operating metrics of active merchant locations, Consolidated Gross Billings and Gross Foreign Currency Mark-up are indicative of the underlying strength of our business.

 

During the third quarter of 2012, we continued to expand our acquiring customer base, in particular announcing an agreement with Taishin Bank to provide our Pay in Your Currency® service to the bank’s portfolio of merchants in Taiwan and the launch of Pay in Your Currency® with Mashreq Bank in the United Arab Emirates and Global Payments in Canada. We also launched services with Banorte in Mexico, initially implementing our MICROS Payment Gateway solution and plan to launch our Pay in Your Currency service shortly. Today, we announced an initiative to launch Planet Payment’s Pay in Your Currency and Shop in Your Currency services with Cielo S.A. in Brazil.  We believe that these new initiatives are indicative of the strong pipeline of business that we can look forward to.

 

CURRENT TRADING

 

The Company expects to see continuing growth in active merchant locations during the remainder of 2012, from both existing customers and those that have recently implemented and launched services with Planet Payment.  However, the Company may continue to see slower growth in Consolidated Gross Billings and [net revenue from existing customers, as a result of the macro-economic downturn affecting businesses around the world.  The Company intends to continue to invest in supporting new business, implementations in new markets and growing the pipeline, although the benefit of these investments may only be realized in subsequent periods.  Based on these and other factors referenced above, the Company estimates full year net revenue to be in the range of $43.0m to $43.5m, net loss for 2012 to be in the range of ($4.2)m to ($4.7)m and Adjusted EBITDA to be in the range of $2.3m to $2.8m (See Table 3 for reconciliation of estimated net loss to estimated Adjusted EBITDA).

 

 

NASDAQ LISTING

 

The Company plans to file an amendment to its Form 10 in the next few weeks with a view to completing the process of becoming a NASDAQ listed company by the end of 2012. 

 

Commenting on the results, Philip Beck, Chairman and CEO of Planet Payment said:

 

“Our third quarter financial results reflect the continued impact of the global economic environment during the year.  We are pleased that we continue to build a strong pipeline for the future and are excited by the new opportunities that lie ahead of us, especially in the Latin American region.  We are delighted to have been selected by Cielo in Brazil to deliver our innovative products to its customers. In pushing ahead with our NASDAQ listing, we believe this will mark another important milestone in the Company’s development and be of significant benefit to the Company’s shareholders, customers and employees.”

 

Additional breakdown on the Company’s performance can be found in the Management’s Discussion and Analysis of Financial Condition and Results of Operations included in the Company’s Third Quarter Report.  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 nine and three month periods ended September 30, 2012, 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.

Robert Cox (CFO)

 

Tel: + 1 516 670 3200

www.planetpayment.com

Redleaf Polhill (UK PR for Planet Payment)

Emma Kane / Henry Columbine / David Ison

Tel: +44 20 7566 6720

planet@redleafpolhill.com

 

ICR (US PR for Planet Payment)

Don Duffy / Dara Dierks

Tel: +1 646-277-1212

 

 

Canaccord Genuity Ltd (UK) (Nomad for Planet Payment)

Simon Bridges / Andrew Chubb

Tel: +44 20 7523 8000

 

 

Canaccord Genuity, Inc. (US) (DAD for Planet Payment)

Andy Viles

 

Tel: +1 617-371-3900

 

 

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, estimated net revenue, net loss and Adjusted EBITDA,  plans to effect a NASDAQ listing, an intended definitive agreement and future service launches with Cielo, and other 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 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, regulatory changes and changes in card association regulations and practices; changes in domestic and global economic conditions and changes in volume of international travel and commerce, the impact of the BPS acquisition, delays in customer implementations and others. 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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NON-GAAP MEASURES

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.  In addition, management utilizes these measures in monitoring performance.  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 (loss) income adjusted to exclude (1) interest expense, (2) interest income, (3) provision (benefit) for income taxes, (4) depreciation and amortization, (5) stock‑based expense from options and warrants 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 (loss) income, the most directly comparable financial measure calculated and presented in accordance with GAAP.

 

 

Table 1. Reconciliation of Net (Loss) Income to Adjusted EBITDA (non-GAAP)

 

For the three and nine months ended September 30, 2012 and 2011

 

The following table sets forth the reconciliation of Adjusted EBITDA to net (loss) income, our most directly comparable financial measure in accordance with GAAP:

 

Three months ended
September 30,

Nine months ended
September 30,

 

2012

2011

2012

2011

ADJUSTED EBITDA:

 

 

 

 

Net (loss) income..........................................................................

$(3,961,815)  

$(375,414)   

$(4,333,290)  

$600,311  

Interest expense............................................................................

14,163

19,378

42,738

307,796

Interest income..............................................................................

(513)

(156)

(926)

(804)

(Benefit) provision for income taxes.............................................

(17,076)

106,260

213,622

106,260

Depreciation and amortization......................................................

744,602

656,726

2,052,063

1,837,147

Expensing of deferred IPO costs(1)..............................................

2,578,770

-

2,578,770

-

Stock‑based expense.....................................................................

284,071

208,663

824,468

435,154

Acquisition deal costs...................................................................

323

-

122,078

-

Convertible debt prepayment fee(2) .............................................

-

-

-

601,318

Derecognition of note payable(3)..................................................

-

(40,000)

-

(700,000)

Adjusted EBITDA (non-GAAP)....................................................

$(357,475)

$575,457

$1,499,523

$3,187,182

 

 

 

 

 

 

 

(1)   In connection with the preparation of the financial statements as of and for the periods ended September 30, 2012 we determined that it is likely that our IPO will be postponed for a period in excess of 90 days and as a result deemed it to be an aborted offering in accordance with the guidance set forth in ASC 340-10-S99-1. For the three months ending September 30, 2012, we expensed previously deferred IPO costs of $2.3 million associated with our registration statement on Form S-1 as well as any IPO costs incurred in the third quarter to selling, general and administrative expenses.  The total amount of the third quarter expense was $2.6 million.

 

(2)In April 2011, the convertible debt holders converted the outstanding principal amount of $9.0 million under convertible notes issued in 2007 and 2008 into an aggregate of 4,049,776 shares of common stock. In addition, we issued 127,318 shares of common stock valued at $0.3 million in lieu of cash payments for accrued interest and 297,682 shares of common stock valued at $0.6 million as a prepayment fee negotiated at the time of conversion. The shares issued for the accrued interest and the prepayment fee were valued at the average closing price of our common stock on AIM under the symbol “PPTR” during the 10 trading day period ending two days prior to the conversion.

 

(3)   In 2003, we entered into an agreement with FHMS and FTB and recorded a liability. Due to a breach of the contractual terms by FHMS and FTB, we did not believe we were liable to repay these amounts. As of March 31, 2011, the statute of limitations had expired on $0.66 million of the $0.7 million balance and as of September 30, 2011, the statute of limitations had expired on the remaining $40,000. For the three months ended March 31, 2011, we recorded other income due to the derecognition of the note payable in the amount of $0.7 million.

 

 

 

 

 

Table 2.  Explanation of Key Metrics

 

Consolidated Gross Billings

Represents Gross Foreign Currency Mark-up plus payment processing services revenue.

Gross Foreign Currency Mark-up

Represents the Gross Foreign Currency Mark-up amount on settled dollar volume processed using our multi‑currency processing services. Gross Foreign Currency Mark-up represents multi‑currency processing services net revenue plus amounts paid to acquiring banks and their merchants associated with such multi‑currency processing transactions.

Active merchant locations

The Company considers 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.

 

Table 3.  Reconciliation of Forward-Looking Net Loss to Forward-Looking Adjusted EBITDA (Non-GAAP) (US Dollars in Millions)

 

For the Year ending December 31, 2012

 

 

 

Year ending December 31, 2012

 

Estimated Range

 

 

 

Net loss..................................................................................................................

$(4.7)  

$(4.2)  

Interest expense.....................................................................................................

0.1

0.1

Interest income.......................................................................................................

(0.0)

(0.0)

Provision for income taxes.....................................................................................

0.3

0.3

Depreciation and amortization...............................................................................

2.8

2.8

Expensing of deferred IPO costs............................................................................

2.6

2.6

Stock‑based expense..............................................................................................

1.1

1.1

Acquisition deal costs............................................................................................

0.1

0.1

Adjusted EBITDA (non-GAAP).............................................................................

$2.3

$2.8