Planet Payment Inc.
11/02/2016

Planet Payment Announces Third Quarter 2016 Results

Third Quarter Revenue increases 8%

LONG BEACH, N.Y., Nov. 02, 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 third quarter ended September 30, 2016.

Financial Highlights for the Third Quarter Ended September 30, 2016

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

Operational Highlights

Revised Revenue Outlook for Fiscal Year 2016

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

Stock Repurchase Program

From August 2, 2016 to September 30, 2016, the Company repurchased approximately 1.6 million shares of common stock for an aggregate price of $6.0 million.  As of September 30, 2016, the total amount of common stock repurchased under the program was 6.5 million shares for an aggregate price of $17.5 million.

On November 1, 2016, the Board of Directors authorized the repurchase of up to an additional $10.0 million of the Company's outstanding shares of common stock.

"This past quarter we announced several new partnership and merchant wins across multiple industries, from the Americas and EMEA to Asia-Pacific," said Carl Williams, Chairman and Chief Executive Officer of Planet Payment.  "We are continuing to expand into growing and profitable avenues, while maintaining our core existing business, creating a steady framework for success."

Conference Call

The Company will host a conference call to discuss third 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 (844) 512-2921, or for international callers (412) 317-6671, and entering the conference ID 13646668.  The replay will be available until our next earnings call on our website or via telephone until November 9, 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 nine months ended September 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 23 countries and territories across the Asia Pacific region, the Americas, the Middle East, Africa and Europe, primarily through our more than 74 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.

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 nine months ended September 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.

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 nine months ended September 30, 2016 and 2015
             
  Three Months Ended Nine Months Ended
  September 30, September 30,
  2016 2015 2016   2015 
ADJUSTED EBITDA:            
Net income $  2,225,413  $  105,971  $  5,268,441  $  3,692,925 
Interest expense    88,669     10,372     186,366     38,815 
Interest income    (428)    (392)    (1,250)    (1,183)
Provision for income taxes    289,543     92,674     675,951     308,406 
Depreciation and amortization    598,699     735,442     1,825,792     2,175,220 
Stock-based compensation expense    317,459     699,227     1,498,358     1,160,817 
Restructuring charges    229,121     283,726     354,389     283,726 
Adjusted EBITDA (non-GAAP) $  3,748,476  $  1,927,020  $  9,808,047  $  7,658,726 


Table 2.  Explanation of Key Metrics
              
  Three Months Ended Nine Months Ended 
  September 30, September 30, 
  2016 2015 2016 2015 
KEY METRICS:             
Total active merchant locations (at period end)(1) $ 196,534 $ 109,376 $ 196,534 $ 109,376 
Total settled transactions processed(2)   45,471,822   62,035,730   144,543,770   162,932,550 
Total settled dollar volume processed(3)   2,005,105,612   2,055,804,097   6,031,361,269   6,060,474,546 
Adjusted EBITDA (non-GAAP)(4)   3,748,476   1,927,020   9,808,047   7,658,726 
Capitalized expenditures   404,653   279,098   1,269,692   1,086,866 
Multi-currency processing services key metrics:             
Active merchant locations (at period end)(1)   125,598   37,495   125,598   37,495 
Settled transactions processed(5)   4,182,779   3,547,406   12,344,961   10,622,859 
Settled dollar volume processed(6) $ 652,029,363 $ 687,490,018 $ 2,040,828,647 $ 1,986,796,246 
Average net mark-up percentage on settled dollar volume processed(7)   1.25  1.11%  1.21  1.15%
Payment processing services key metrics:             
Active merchant locations (at period end)(1)   72,488   73,532   72,488   73,532 
Payment processing services revenue(8) $ 5,445,764 $ 4,826,084 $ 15,640,815 $ 13,898,759 
Settled transactions processed(9)   41,520,262   58,592,942   132,751,262   152,632,914 
Settled dollar volume processed(10) $ 1,392,081,077 $ 1,380,707,538 $ 4,089,927,472 $ 4,108,006,782 
              

(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 September 30, 2016 and 2015, there were 1,552 and 1,651 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) 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.

(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 ($8.2 million and $7.6 million for the three months ended September 30, 2016 and 2015, respectively, and $24.7 million and $22.9 million for the nine months ended September 30, 2016 and 2015, 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, 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
  September 30,  December 31,
  2016 2015
  (unaudited)   
Current assets:     
Cash and cash equivalents $  7,440,864  $  14,675,515 
Restricted cash    3,887,288     5,050,147 
Accounts receivable, net of allowances of $0.1 million as of September 30, 2016 and December 31, 2015    6,641,993     6,406,496 
Prepaid expenses and other assets    1,761,184     1,800,566 
Total current assets    19,731,329     27,932,724 
Other assets:      
Restricted cash    551,054     551,917 
Property and equipment, net    1,321,342     1,811,619 
Software development costs, net    4,177,879     3,964,454 
Intangible assets, net    981,279     1,378,264 
Goodwill    294,844     286,852 
Deferred tax asset and other long-term assets    8,270,540     8,581,082 
Total other assets    15,596,938     16,574,188 
Total assets $  35,328,267  $  44,506,912 
Liabilities and stockholders' equity      
Current liabilities:      
Accounts payable $  446,946  $  306,520 
Accrued expenses    4,459,360     6,438,600 
Due to merchants    4,068,506     5,240,427 
Current portion of capital leases    206,873     290,911 
Total current liabilities    9,181,685     12,276,458 
Long-term liabilities:      
Long-term debt    9,916,000    —
Other long-term liabilities    1,107,982     1,666,938 
Total long-term liabilities    11,023,982     1,666,938 
Total liabilities    20,205,667     13,943,396 
Commitments and contingencies       
Stockholders' equity:      
Convertible preferred stock—10,000,000 shares authorized as of September 30, 2016 and December 31, 2015, $0.01 par value: Series A—2,243,750 issued and 1,535,398 outstanding as of September 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 September 30, 2016 and December 31, 2015, respectively    15,354     22,438 
Common stock—250,000,000 shares authorized as of September 30, 2016 and December 31, 2015, $0.01 par value, and 59,230,684 issued and 48,855,330 shares outstanding as of September 30, 2016, and 56,191,389 issued and 52,585,503 shares outstanding as of December 31, 2015    592,307     561,914 
Treasury stock, at cost, 10,375,354 shares and 3,605,886 shares as of September 30, 2016 and December 31, 2015, respectively    (31,726,486)    (7,883,012)
Additional paid-in capital    109,870,586     106,741,026 
Accumulated other comprehensive loss    (529,197)    (510,445)
Accumulated deficit    (63,099,964)    (68,368,405)
Total stockholders' equity    15,122,600     30,563,516 
Total liabilities and stockholders' equity $  35,328,267  $  44,506,912 


Planet Payment, Inc.
Condensed Consolidated Statements of Operations (unaudited)
             
  Three Months Ended Nine Months Ended
  September 30, September 30,
  2016 2015 2016 2015
Revenue:            
Net revenue $ 13,621,239  $ 12,618,413  $ 40,409,128  $ 37,434,542 
Operating expenses:            
Cost of revenue:            
Payment processing service fees   2,781,289    2,692,090    8,207,202    7,871,179 
Processing and service costs   2,878,088    3,776,232    9,902,879    10,399,830 
Total cost of revenue   5,659,377    6,468,322    18,110,081    18,271,009 
Selling, general and administrative expenses   5,222,560    5,657,740    15,908,166    14,840,844 
Restructuring charges    229,121     283,726     354,389     283,726 
Total operating expenses   11,111,058    12,409,788    34,372,636    33,395,579 
Income from operations   2,510,181    208,625    6,036,492    4,038,963 
Other income (expense):            
Interest expense   (88,669)   (10,372)   (186,366)   (38,815)
Interest income   428    392    1,250    1,183 
Other income    93,016     —     93,016     — 
Total other income (expense), net   4,775    (9,980)   (92,100)   (37,632)
Income from operations before provision for income taxes   2,514,956    198,645    5,944,392    4,001,331 
Provision for income taxes   (289,543)   (92,674)   (675,951)   (308,406)
Net income $ 2,225,413  $ 105,971  $ 5,268,441  $ 3,692,925 
Basic net income per share applicable to common stockholders $ 0.04  $ 0.00  $ 0.10  $ 0.06 
Diluted net income per share applicable to common stockholders $ 0.04  $ 0.00  $ 0.09  $ 0.06 
Weighted average common stock outstanding (basic)   49,179,596    51,360,758    49,848,634    52,985,106 
Weighted average common stock outstanding (diluted)   51,254,223    52,384,391    52,002,249    53,611,968 


Planet Payment, Inc.
Condensed Consolidated Statements of Cash Flows (unaudited)
       
  Nine Months Ended
  September 30,
  2016 2015
Cash flows from operating activities:      
Net income $  5,268,441  $  3,692,925 
Adjustments to reconcile net income to net cash provided by operating activities:      
Stock-based compensation expense    1,498,358     1,197,741 
Depreciation and amortization expense    2,083,655     2,175,220 
Provision for doubtful accounts    62,675     7,403 
Disposal of property and equipment    500     — 
Gain on insurance settlement    —     (517,930)
Changes in operating assets and liabilities:          
Decrease (increase) in settlement assets    1,160,869     (322,982)
(Increase) decrease in accounts receivables, prepaid expenses and other current assets    (258,790)    1,184,851 
Decrease (increase) in other long-term assets    310,542     (131,588)
(Decrease) increase in accounts payable and accrued expenses    (3,062,995)    559,792 
(Decrease) increase in due to merchants    (1,169,931)    323,105 
Other    (44,740)    (133,242)
Net cash provided by operating activities    5,848,584     8,035,295 
Cash flows from investing activities:          
Decrease (increase) in restricted cash    2,853     (27,651)
Decrease in merchant reserves    (1,990)    (92,169)
Purchase of property and equipment    (156,165)    (175,570)
Capitalized software development    (999,733)    (828,393)
Purchase of intangible assets    (16,299)    (16,500)
Net cash used for investing activities    (1,171,334)    (1,140,283)
Cash flows from financing activities:          
Proceeds from issuance of common stock    2,287,990     1,203,750 
Principal payments on capital lease obligations    (272,417)    (404,884)
Borrowings under credit facility    13,916,000     — 
Repayments under credit facility    (4,000,000)    — 
Purchase of treasury stock    (23,843,474)    (4,567,501)
Net cash used for financing activities    (11,911,901)    (3,768,635)
Effect of exchange rate changes on cash and cash equivalents(*)    —     — 
Net (decrease) increase in cash and cash equivalents    (7,234,651)    3,126,377 
Cash and cash equivalents at beginning of period    14,675,515     9,837,791 
Cash and cash equivalents at end of period $  7,440,864  $  12,964,168 
Supplemental disclosure:          
Cash paid for:          
Interest $  165,252  $  36,585 
Income taxes    744,911     539,520 
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     156,129 
Accrued capitalized hardware, software and fixed assets    75,870     39,158 
Capitalized stock-based compensation    21,625     27,245 

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

 

Enquiries:

Planet Payment, Inc.
Raymond D'Aponte (CFO)
Tel: + 1 516 670 3200
www.planetpayment.com