Planet Payment Inc.
08/03/2016

Planet Payment Announces Second Quarter 2016 Results

Reaffirms 2016 Guidance

Announces Stock Repurchase Program 

LONG BEACH, N.Y., Aug. 03, 2016 (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, 2016.

Financial Highlights for the Second Quarter Ended June 30, 2016

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

Operational Highlights

Outlook for Fiscal Year 2016

Planet Payment reaffirms its revenue, net income, Adjusted EBITDA and fully diluted earnings per share guidance for the full year 2016 as follows:

Stock Repurchase Program

On August 2, 2016, the Board of Directors reinstated the Company's share repurchase program and expanded the authorization by an incremental $4.0 million, bringing its total current authorization to $6.0 million.

Tender Offer

As a result of the completion of the tender offer, on April 12, 2016, the Company paid $14.2 million, including transaction costs, to repurchase approximately 3.9 million shares at a tender price of $3.60 per share.

"Our strategic plan and hard work have resulted in sustained profitability as we continue to lay the ground work for long-term growth and future success," said Carl Williams, Chairman and Chief Executive Officer of Planet Payment. "We have expanded into new markets, launched solutions with new and existing partners, and continue to work diligently to improve the payment experience for merchants and consumers around the globe."

Conference Call

The Company will host a conference call to discuss second quarter 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 (877) 870-5176, or for international callers (858) 384-5517, and entering the conference ID 13641381.  The replay will be available until our next earnings call on our website or via telephone until August 10, 2016.

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, 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. We provide our services in 22 countries and territories across the Asia Pacific region, the Americas, the Middle East, Africa and Europe, primarily through our more than 75 acquiring bank and processor customers. 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.

Planet Payment is headquartered in New York and has offices in Atlanta, Beijing, Bermuda, Delaware, Dubai, 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 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 Quarterly Report Form 10-Q for the three and six months ended June 30, 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. 

Enquiries:      
       
Planet Payment, Inc.     Tel: + 1 516 670 3200
Raymond D'Aponte (CFO)
     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 and six months ended June 30, 2016 and 2015
 
  Three Months Ended Six Months Ended
  June 30, June 30,
  2016 2015 2016   2015 
ADJUSTED EBITDA:            
Net income $  1,282,723  $  1,875,328  $  3,043,028  $  3,586,954 
Interest expense    83,021     13,830     97,697     28,443 
Interest income    (398)    (365)    (822)    (791)
Provision for income taxes    149,058     105,319     386,408     215,732 
Depreciation and amortization    618,103     714,605     1,227,093     1,439,778 
Stock-based compensation expense      576,931     228,128     1,180,899     461,590 
Restructuring charges    125,268         125,268     
Adjusted EBITDA (non-GAAP) $  2,834,706  $  2,936,845  $  6,059,571  $  5,731,706 
                     


  
Table 2.  Explanation of Key Metrics 
  
  Three Months Ended Six Months Ended 
  June 30, June 30, 
  2016 2015 2016 2015 
KEY METRICS:             
Consolidated gross billings(1) $ 36,791,417 $ 33,884,508 $ 76,902,616 $ 67,131,157 
Total settled dollar volume processed(2) $ 1,962,972,987 $ 1,994,928,717 $ 4,026,255,657 $ 4,004,670,449 
Total active merchant locations (at period end)(3)   178,198   103,049   178,198   103,049 
Total settled transactions processed(4)   45,680,275   57,195,139   99,071,948   100,896,820 
Multi-currency processing services key metrics:             
Active merchant locations (at period end)(3)   105,987   35,398   105,987   35,398 
Settled transactions processed(5)   3,888,083   3,587,580   8,162,182   7,075,453 
Gross foreign currency mark-up(6) $ 31,646,647 $ 29,262,838 $ 66,707,565 $ 58,058,482 
Settled dollar volume processed(7) $ 662,524,562 $ 639,029,484 $ 1,388,799,284 $ 1,299,306,228 
Average net mark-up percentage on settled dollar volume processed(8)     1.20  1.23%  1.19  1.18%
Payment processing services key metrics:             
Active merchant locations (at period end)(3)   73,728   68,763   73,728   68,763 
Payment processing services revenue(9) $ 5,144,770 $ 4,621,670 $ 10,195,051 $ 9,072,675 
Settled transactions processed(10)   41,969,598   53,717,345   91,231,000   94,039,972 
Settled dollar volume processed(11) $ 1,333,260,862 $ 1,367,839,326 $ 2,697,846,395 $ 2,727,299,244 

(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 June 30, 2016 and 2015, there were 1,517 and 1,112 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 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 ($8.0 million and $7.9 million for the three months ended June 30, 2016 and 2015, respectively, and $16.6 million and $15.3 million for the six months ended June 30, 2016 and 2015, respectively) and dividing by settled dollar volume processed (see footnote 7 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.

(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. 

 
Table 3. Reconciliation of Prospective Net Income to Adjusted EBITDA
 
For the year ending December 31, 2016
 
  Range
  Millions
ADJUSTED EBITDA:  Low  High
Net income $ 8.6 $ 9.6
Interest expense, net   0.2   0.2
Provision for income taxes   0.9   0.9
Depreciation and amortization   2.6   2.6
Stock-based compensation expense   1.8   1.8
Adjusted EBITDA (non-GAAP) $ 14.1 $ 15.1
       


 
Planet Payment, Inc.
Condensed Consolidated Balance Sheets
 
  As of As of
  June 30,  December 31,
  2016 2015
  (unaudited)   
Current assets:     
Cash and cash equivalents $  10,486,645  $  14,675,515 
Restricted cash    4,561,278     5,050,147 
Accounts receivable, net of allowances of $0.1 million as of June 30, 2016 and December 31, 2015    5,762,559     6,406,496 
Prepaid expenses and other assets    2,026,928     1,800,566 
Total current assets    22,837,410     27,932,724 
Other assets:      
Restricted cash    551,862     551,917 
Property and equipment, net    1,602,882     1,811,619 
Software development costs, net    4,104,959     3,964,454 
Intangible assets, net    1,117,235     1,378,264 
Goodwill    292,041     286,852 
Deferred tax asset and other long-term assets    8,293,159     8,581,082 
Total other assets    15,962,138     16,574,188 
Total assets $  38,799,548  $  44,506,912 
Liabilities and stockholders' equity      
Current liabilities:      
Accounts payable $  317,308  $  306,520 
Accrued expenses    3,824,694     6,438,600 
Due to merchants    4,812,012     5,240,427 
Current portion of capital leases    244,223     290,911 
Total current liabilities    9,198,237     12,276,458 
Long-term liabilities:      
Long-term debt    9,916,000     
Other long-term liabilities    1,424,243     1,666,938 
Total long-term liabilities    11,340,243     1,666,938 
Total liabilities    20,538,480     13,943,396 
Commitments and contingencies       
Stockholders' equity:      
Convertible preferred stock—10,000,000 shares authorized as of June 30, 2016 and December 31, 2015, $0.01 par value: Series A—2,243,750 issued and 1,535,398 outstanding as of June 30, 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 June 30, 2016 and December 31, 2015, respectively    15,354     22,438 
Common stock—250,000,000 shares authorized as of June 30, 2016 and December 31, 2015, $0.01 par value, and 59,087,147 issued and 50,330,051 shares outstanding as of June 30, 2016, and 56,191,389 issued and 52,585,503 shares outstanding as of December 31, 2015    590,871     561,914 
Treasury stock, at cost, 8,757,096 shares and 3,605,886 shares as of June 30, 2016 and December 31, 2015, respectively    (25,726,459)    (7,883,012)
Additional paid-in capital    109,224,346     106,741,026 
Accumulated other comprehensive loss    (517,667)    (510,445)
Accumulated deficit    (65,325,377)    (68,368,405)
Total stockholders' equity    18,261,068     30,563,516 
Total liabilities and stockholders' equity $  38,799,548  $  44,506,912 
           




 
Planet Payment, Inc.
Condensed Consolidated Statements of Operations (unaudited)
 
  Three Months Ended Six Months Ended
  June 30, June 30,
  2016 2015 2016 2015
Revenue:            
Net revenue $ 13,103,376  $ 12,683,359  $ 26,787,889  $ 24,816,129 
Operating expenses:            
Cost of revenue:            
Payment processing service fees   2,734,689    2,590,885    5,425,913    5,179,089 
Processing and service costs   3,524,123    3,385,658    7,024,791    6,623,598 
  Total cost of revenue   6,258,812    5,976,543    12,450,704    11,802,687 
Selling, general and administrative expenses   5,204,892    4,712,704    10,685,606    9,183,104 
Restructuring charges    125,268         125,268     
  Total operating expenses   11,588,972    10,689,247    23,261,578    20,985,791 
Income from operations   1,514,404    1,994,112    3,526,311    3,830,338 
Other (expense) income:            
Interest expense   (83,021)   (13,830)   (97,697)   (28,443)
Interest income   398    365    822    791 
Total other expense, net   (82,623)   (13,465)   (96,875)   (27,652)
Income from operations before provision for income taxes   1,431,781    1,980,647    3,429,436    3,802,686 
Provision for income taxes   (149,058)   (105,319)   (386,408)   (215,732)
Net income $ 1,282,723  $ 1,875,328  $ 3,043,028  $ 3,586,954 
Basic net income per share applicable to common stockholders $ 0.02  $ 0.03  $ 0.06  $ 0.06 
Diluted net income per share applicable to common stockholders   $ 0.02  $ 0.03  $ 0.05  $ 0.06 
Weighted average common stock outstanding (basic)   49,602,206    53,082,296    50,186,828    53,439,467 
Weighted average common stock outstanding (diluted)   51,987,695    53,830,534    52,401,790    54,090,469 
                     


 
Planet Payment, Inc.
Condensed Consolidated Statements of Cash Flows (unaudited)
 
  Six Months Ended
  June 30,
  2016 2015
Cash flows from operating activities:      
Net income $  3,043,028  $  3,586,954 
Adjustments to reconcile net income to net cash provided by operating activities:        
Stock-based compensation expense    1,180,899     461,590 
Depreciation and amortization expense    1,330,238     1,439,778 
Provision (recovery) for doubtful accounts    58,595     (193)
Disposal of property and equipment    500     
Gain on insurance settlement        (517,930)
Changes in operating assets and liabilities:      
Decrease (increase) in settlement assets    498,553     (244,451)
Decrease in accounts receivables, prepaid expenses and other current assets    358,980     1,529,933 
Decrease (increase) in other long-term assets    287,923     (181,213)
(Decrease) increase in accounts payable and accrued expenses    (3,540,524)    239,331 
(Decrease) increase in due to merchants    (438,099)    240,034 
Other    (26,219)    (53,259)
  Net cash provided by operating activities    2,753,874     6,500,574 
Cash flows from investing activities:      
(Increase) decrease in restricted cash    (9,629)    11,506 
Increase (decrease) in merchant reserves    9,684     (131,599)
Purchase of property and equipment    (109,555)    (168,282)
Capitalized software development    (677,822)    (593,946)
Purchase of intangible assets    (353)    (13,454)
  Net cash used for investing activities    (787,675)    (895,775)
Cash flows from financing activities:      
Proceeds from issuance of common stock    1,965,380     22,949 
Principal payments on capital lease obligations    (193,002)    (287,168)
Borrowings under credit facility    13,916,000     
Repayments under credit facility    (4,000,000)    
Purchase of treasury stock    (17,843,447)    (1,647,211)
  Net cash used for financing activities    (6,155,069)    (1,911,430)
Effect of exchange rate changes on cash and cash equivalents(*)        
Net (decrease) increase in cash and cash equivalents    (4,188,870)    3,693,369 
Cash and cash equivalents at beginning of period    14,675,515     9,837,791 
Cash and cash equivalents at end of period $  10,486,645  $  13,531,160 
Supplemental disclosure:      
Cash paid for:      
Interest $  14,718  $  30,785 
Income taxes    504,398     395,294 
Non-cash investing and financing activities:      
Common stock issued for preferred stock conversion    21,629     
Common stock issued for stock options exercised    98     
Assets acquired under capital leases    122,630     79,291 
Accrued capitalized hardware, software and fixed assets    63,291     12,071 
Capitalized stock-based compensation    14,018     20,015 

(*) For the six months ended June 30, 2016 and 2015, the effect of exchange rate changes on cash and cash equivalents was immaterial.