Planet Payment Inc.
05/12/2014

Planet Payment Announces First Quarter 2014 Results

Provides Annual Guidance for 2014

LONG BEACH, N.Y., May 12, 2014 (GLOBE NEWSWIRE) -- Planet Payment, Inc. (Nasdaq:PLPM) (LSE:PPT), a leading provider of international payment processing and multi-currency processing services, announced today its results for the first quarter ended March 31, 2014 and provided guidance for its annual results for 2014.

Financial Highlights for the Quarter Ended March 31, 2014

Operational Highlights for the Quarter Ended March 31, 2014

Outlook for Fiscal Year 2014

Commenting on the results, Carl Williams, CEO and President of Planet Payment, Inc., said:

"We are hard at work transforming Planet Payment into an efficient and sales-centric organization with an exciting pipeline that we believe will generate future revenue growth and profitability. With our commitment to the plan and the progress that we have made over the past few months, I am optimistic about our prospects for success as we look to the future."

Conference Call

The Company will host a conference call to discuss first quarter 2014 financial results today at 5:00 pm New York time. Carl Williams, Chief Executive Officer and President, and Robert Cox, Chief Financial Officer and Chief Operating 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) 705-6003, or for international callers (201) 493-6725. A replay will be available approximately two hours after the call concludes and can be accessed on our website or by dialing (877) 870-5176, or for international callers (858) 384-5517, and entering the conference ID 13580989. The replay will be available until our next earnings call on our website or via telephone until Monday, May 19, 2014.

Additional analysis of the Company's performance can be found in the "Management's Discussion and Analysis of Financial Condition and Results of Operations," included in the Quarterly Report on Form 10-Q to be filed at www.sec.gov.

About Planet Payment

Planet Payment (Nasdaq:PLPM) (LSE:PPT) is a leading provider of international payment and transaction processing and multi-currency processing services. Planet Payment provides services in 23 countries and territories across the Asia Pacific region, the Americas, the Middle East, Africa and Europe, primarily through our more than 60 acquiring bank and processor customers. The Company's point-of-sale and e-commerce services help merchants sell more goods and services to consumers, and together with ATM services, are integrated within the payment card transaction flow enabling acquiring customers, their merchants and consumers to shop, pay, transact and reconcile payment transactions in multiple currencies, geographies and channels.

Planet Payment is headquartered in New York and has offices in Atlanta, Beijing, Bermuda, Delaware, Dubai, Dublin, London, Hong Kong, Mexico City, Shanghai and Singapore. Visit www.planetpayment.com for more information about the Company and its services. For up-to-date information follow Planet Payment on Twitter at @PlanetPayment or join Planet Payment's Facebook page.

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 set forth in "Outlook for Fiscal Year 2014" and 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 income, Adjusted EBITDA, diluted earnings per share, estimated fully diluted common shares outstanding, tax rates, 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 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 Quarterly Report on Form 10-Q, 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 announcement. 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 (loss) adjusted to exclude: (1) interest expense, (2) interest income, (3) provision (benefit) 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 (Loss) Income to Adjusted EBITDA
   
For the three months ended March 31, 2014 and 2013
   
 Three months ended
March 31,
 20142013
ADJUSTED EBITDA:    
Net (loss) income $ (779,290) $ 371,916
Interest expense 16,170 13,146
Interest income (175) (212)
(Benefit) provision for income taxes (6,010) 593
Depreciation and amortization 746,313 735,606
Stock-based compensation expense 275,991 258,929
Restructuring charge 629,215
Adjusted EBITDA (non-GAAP) $ 882,214 $ 1,379,978
 
 
 
Table 2. Reconciliation of Prospective Net Income to Adjusted EBITDA
  
For the year ending December 31, 2014
  
 Range
ADJUSTED EBITDA:Millions
  
Net income $4.1 $6.4
Interest expense 0.1 0.1
Interest income 0.0 0.0
Provision for income taxes 0.8 0.8
Depreciation and amortization 3.0 3.0
Stock‑based expense 1.3 1.3
Restructuring charge 0.7 0.7
Adjusted EBITDA (non-GAAP) $10.0 $12.3
 
 
 
Table 3. Explanation of Key Metrics
     
   Three months ended
   March 31,
 
 20142013
     
KEY METRICS:    
Consolidated gross billings(1) $ 31,832,572 $ 32,501,926
Total settled dollar volume processed(2) $ 1,995,274,708 $ 1,700,103,417
Total active merchant locations (at period end)(3) 67,112 41,930
Total settled transactions processed (4) 23,990,910 13,178,805
     
Multi-currency processing services key metrics:    
Active merchant locations (at period end)(3) 24,504 22,503
Settled transactions processed(5) 3,171,691 3,043,970
Gross foreign currency mark-up(6) $ 28,095,890 $ 28,246,592
Settled dollar volume processed(7) $ 680,570,444 $ 697,866,524
Average net mark-up percentage on settled dollar volume processed(8) 1.09% 1.12%
     
Payment processing services key metrics:    
Active merchant locations (at period end)(3) 42,631 19,447
Payment processing services revenue(9) $ 3,736,682 $ 4,255,334
Settled transactions processed(10) 20,819,219 10,134,835
Settled dollar volume processed(11) $ 1,314,704,264 $ 1,002,236,893
     
(1)  Represents gross foreign currency mark-up (see footnote 6) plus payment processing services revenue (see footnote 9).
(2)  Represents total settled dollar volume processed through both our multi-currency and payment processing services.
(3)  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, 2014 and 2013, there were 23 and 20 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.
(4)  Represents total settled transactions (excluding other transaction types such as authorizations and rate look-ups).
(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 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. Management believes this metric is relevant because it provides the reader an indication of the gross mark-up derived from multi-currency transactions processed through our platform during a given period. 
(7)  Represents the total settled dollar volume processed using our multi-currency processing services.
(8)  Represents the average net 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 the reported total multi-currency processing services net revenue ($7.4 million and $7.8 million for the three months ended March 31, 2014 and 2013, respectively) and dividing by settled dollar volume processed (See footnote 7).
(9)  Represents revenue earned and reported on payment processing services.
(10)  Represents settled transactions processed using our payment processing services (excluding other transaction types such as authorizations and rate look-ups).
(11)  Represents the total settled dollar volume processed using our payment processing services.
     
     
     
Planet Payment, Inc.  
   
Condensed Consolidated Balance Sheets  
   
 As of March 31,As of December 31,
 20142013
 (unaudited) 
Current assets:    
Cash and cash equivalents $ 5,709,245 $ 6,572,468
Restricted cash 1,974,117 3,471,023
Accounts receivable, net of allowances of $0.2 million as of March 31, 2014 and December 31, 2013 5,486,137 6,016,296
Prepaid expenses and other assets 1,638,277 1,457,660
Total current assets 14,807,776 17,517,447
Other assets:    
Restricted cash 676,138 446,044
Property and equipment, net 2,225,457 2,198,640
Software development costs, net 4,938,911 4,904,415
Intangible assets, net 2,704,027 2,820,909
Goodwill 361,695 362,063
Security deposits and other assets 2,248,669 2,141,620
Total other assets 13,154,897 12,873,691
Total assets $ 27,962,673 $ 30,391,138
Liabilities and stockholders' equity    
Current liabilities:    
Accounts payable $ 748,282 $ 585,604
Accrued expenses 3,887,287 5,032,620
Due to merchants 1,494,676 3,018,900
Current portion of capital leases 492,911 466,010
Total current liabilities 6,623,156 9,103,134
Long-term liabilities:    
Long-term portion of capital leases and deferred revenue 1,352,181 1,432,513
Total long-term liabilities 1,352,181 1,432,513
Total liabilities 7,975,337 10,535,647
Commitments and contingencies (Note 8)    
Stockholders' equity:    
Convertible preferred stock— 10,000,000 shares authorized as of March 31, 2014 and December 31, 2013, $0.01 par value: Series A— 2,243,750 issued and outstanding as of March 31, 2014 and December 31, 2013; $8,975,000 aggregate liquidation preference 22,438 22,438
Common stock—250,000,000 shares authorized as of March 31, 2014 and December 31, 2013, $0.01 par value, and 54,845,113 and 55,037,488 issued and outstanding as of March 31, 2014 and December 31, 2013, respectively 548,451 550,375
Additional paid-in capital 101,964,657 101,038,685
Accumulated other comprehensive income 122,318 135,231
Accumulated deficit (82,670,528) (81,891,238)
Total stockholders' equity 19,987,336 19,855,491
Total liabilities and stockholders' equity $ 27,962,673 $ 30,391,138
     
The accompanying notes are an integral part of these financial statements
     
     
     
Planet Payment, Inc.  
Condensed Consolidated Statements of Operations (unaudited)  
   
 Three months ended
March 31,
 20142013
Revenue:  
Net revenue   $ 11,175,117 $ 12,086,063
Operating expenses:  
Cost of revenue:    
Payment processing services fees 2,518,821 2,802,289
Processing and service costs 3,714,593 3,175,647
Total cost of revenue 6,233,414 5,977,936
Selling, general and administrative expenses 5,081,793 5,722,684
Restructuring charge 629,215 --
Total operating expenses 11,944,422 11,700,620
(Loss) income from operations (769,305) 385,443
Other (expense) income:  
Interest expense (16,170) (13,146)
Interest income 175 212
Total other expense, net (15,995) (12,934)
(Loss) income before provision for income taxes (785,300) 372,509
Benefit (provision) for income taxes 6,010 (593)
Net (loss) income $ (779,290) $ 371,916
Basic net (loss) income per share applicable to common stockholders $ (0.01) $ 0.01
Diluted net (loss) income per share applicable to common stockholders $ (0.01) $ 0.01
Weighted average common stock outstanding (basic) 53,437,184 52,779,130
Weighted average common stock outstanding (diluted) 53,437,184 54,806,026
     
The accompanying notes are an integral part of these financial statements
     
     
     
Planet Payment, Inc.  
   
Condensed Consolidated Statements of Cash Flows (unaudited)  
   
 Three months ended
March 31,
 20142013
Cash flows from operating activities:    
Net (loss) income $ (779,290) $ 371,916
Adjustments to reconcile net (loss) income to net cash used in operating activities:    
Stock-based compensation expense 311,124 258,929
Depreciation and amortization expense 746,313 735,606
Provision for doubtful accounts 3,268 160,893
Disposal of property and equipment 3,157 2,950
Changes in operating assets and liabilities:    
Decrease in settlement assets 1,496,906 780,213
Decrease in accounts receivables, prepaid expenses and other current assets 346,274 143,279
Increase in security deposits and other assets (107,049) (90,102)
Decrease in accounts payable and accrued expenses (1,112,427) (1,590,373)
Decrease in due to merchants (1,524,224) (830,321)
Other (10,979) (19,876)
Net cash used in operating activities (626,927) (76,886)
Cash flows from investing activities:    
Insurance proceeds 100,000
Increase in restricted cash (230,094)
Purchase of property and equipment (19,756) (405,739)
Capitalized software development (397,401) (375,066)
Purchase of intangible assets (53,695) (22,701)
Net cash used in investing activities (700,946) (703,506)
Cash flows from financing activities:    
Proceeds from the issuance of common stock 602,572 106,250
Principal payments on capital lease obligations (137,922) (91,175)
Net cash provided by financing activities 464,650 15,075
Effect of exchange rate changes on cash and cash equivalents(*)
Net decrease in cash and cash equivalents (863,223) (765,317)
Beginning of period 6,572,468 6,002,457
End of period $ 5,709,245 $ 5,237,140
Supplemental disclosure:    
Cash paid for:    
Interest $ 18,272 $ 14,454
Income taxes 180,835 103,227
Non-cash investing and financing activities:    
Assets acquired under capital leases $ 163,861 $ 115,032
Accrued capitalized hardware, software and fixed assets 50,401 197,445
Capitalized stock-based compensation 10,352 13,624
                                                                  
(*)          For the three months ended March 31, 2014 and 2013, the effect of exchange rate changes on cash and cash equivalents was inconsequential.
     
The accompanying notes are an integral part of these financial statements
 
 
 

Notes to Condensed Consolidated Financial Statements (unaudited)

1. Business description and basis of presentation

Business description

Planet Payment, Inc. together with its wholly owned subsidiaries ("Planet Payment," the "Company," "we," or "our") is a provider of international payment and transaction processing and multi-currency processing services. The Company provides its services to approximately 67,000 active merchant locations in 23 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. The Company provides banks and their merchants with innovative services to accept, process and reconcile electronic payments. The Company's point-of-sale and e-commerce services are integrated within the payment card transaction process enabling its acquiring customers to process and reconcile payment transactions in multiple currencies, geographies and channels. The Company's ATM services provide its domestic and international acquirers with additional processing capabilities to help them increase revenue and improve customer satisfaction. The Company also offers non-financial transaction processing services that allow merchants to offer a range of commercial services including pre-paid mobile phone top-up, bill payments and insurance premium payments, using the same point-of-sale devices deployed to accept payment cards. The Company is a registered third party processor with the major card associations and operates in accordance with industry standards, including the Payment Card Industry, or PCI, Security Council's Data Security Standards.

Basis of presentation

The condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP").

The accompanying condensed consolidated financial statements include the accounts of Planet Payment, Inc. and its wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated.

Unaudited consolidated interim financial information

The accompanying unaudited condensed consolidated interim financial statements as of March 31, 2014 and for the periods ended March 31, 2014 and 2013 have been prepared on the same basis as the annual consolidated financial statements. In the opinion of management, the unaudited financial information for the interim periods presented reflects all adjustments, which are normal and recurring, necessary for a fair presentation of the statement of operations, financial position and cash flows. The accompanying unaudited condensed consolidated interim financial statements should be read in conjunction with the audited consolidated financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2013. Operating results for the interim period ended March 31, 2014 are not necessarily indicative of the results that may be expected for the year ending December 31, 2014. The December 31, 2013 balance sheet information has been derived from the audited financial statements at that date. Certain information and disclosures normally included in annual consolidated financial statements have been omitted pursuant to the rules and regulation of the Securities and Exchange Commission, or SEC.

CONTACT: Enquiries:

         

         Planet Payment, Inc.

         Robert Cox CFO and COO

         Tel: + 1 516 670 3200

         www.planetpayment.com

         

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

         Simon Bridges / Cameron Duncan

         Tel: +44 20 7523 8000