Points Provides Business and Financial Update
Points (TSX:PTS) (Nasdaq:PCOM), the global leader in loyalty currency management, announced today that it has updated its business outlook as well as provided additional details regarding the acquisition of assets of Crew Marketing International, Inc.
"Points' core business remains strong, we continue to execute against our global pipeline, and our outlook remains optimistic," said Rob MacLean, Chief Executive Officer of Points. "Given recent announcements, since the start of 2014, we have announced or launched over 40 products and added 9 new partners to our Loyalty Commerce Platform."
"Further, we remain in discussions with several potential new partners, and a number of those discussions are presently in advanced stages. While we cannot give assurances on the fruition of these discussions, based on our experience and assessment, these potential new partners could be material contributors to our financial performance in 2015."
"Overall, we are very pleased with our Partner developments in 2014. Nevertheless, we do anticipate market consolidation in 2015 to change the mix of products and partners that drive our economics. The previously announced consolidation of the US Airways Dividend Miles and American Airlines' AAdvantage programs, in particular, will likely lead to these programs representing a smaller portion of our future business. While discussions are ongoing, we anticipate restructuring elements of the relationship through 2015. We do expect, however, that Points will maintain a robust relationship with AAdvantage, and that we will continue to leverage our Loyalty Commerce Platform to provide future innovation for the program."
Acquisition of Crew Marketing
In addition, and in conjunction with today's announcement earlier today regarding Points' agreement with United Airlines MileagePlus, Points has provided further details on its acquisition of substantially all of the assets of Crew Marketing, a long-time United Airlines MileagePlus technology vendor.
Pursuant to the purchase agreement for the acquisition, Points paid $14.75 million in cash and issued 238,393 common shares in consideration for the purchased assets. The common shares, which represent approximately 1.6% of Points' issued and outstanding common shares, were issued into escrow and will be released to Crew Marketing in 18 months' time, subject to typical indemnities to the benefit of Points. The transaction closed on December 22, 2014.
"The acquisition of Crew Marketing represents a positive development in Points' growth strategy," said MacLean. "We look forward to leveraging Crew's unique technologies and commercial applications to power additional loyalty commerce solutions for the MileagePlus program."
Updated 2014 Guidance and Outlook
"Points has had a strong year, and we continue to anticipate solid growth for full year 2014. However, revenue and transactional activity during the fourth quarter has been adversely impacted by continued softness in Europe as well as reduced promotional activity among certain partners as they align consumer activity with the associated industry consolidation. As a result, we currently expect 2014 revenues and Adjusted EBITDA1 to be at the lower end of our guidance range for the year," added MacLean.
With the partnerships and products added throughout 2014, and the anticipated change in mix of certain partner contributions, management currently expects that it will continue to see growth in revenue, gross margin2 and Adjusted EBITDA in 2015. The Company will provide final results for the fourth quarter and full year 2014, as well as provide formal guidance for the full year 2015, in its fourth quarter 2014 earnings release in early March.
Mr. MacLean concluded, "With today's business update, we continue to believe that our addressable market is $2.5 - $3.5 billion, providing significant opportunity for Points to grow well into the future. Continuing to add new partners, enhancing relationships with existing partners, and driving further innovation and engagement throughout the broader loyalty industry are expected to provide solid revenue upside and be core drivers of our future growth."
Points, publicly traded as Points International Ltd. (TSX:PTS)(Nasdaq:PCOM), provides loyalty eCommerce and technology solutions to the world's top brands to power innovative services that drive increased loyalty program revenue and member engagement. With a growing network of over 50 global loyalty programs integrated into its unique Loyalty Commerce Platform, Points offers three core private or co-branded services: its Buy Gift and Transfer service retails loyalty points and miles directly to consumers; its Points Loyalty Wallet service offers any developer transactional access to dozens of loyalty programs and their hundreds of millions of members via a package of APIs; and its Points Travel service helps loyalty programs increase program revenue from hotel bookings, and provides more opportunities for members to earn and redeem loyalty rewards more quickly. Points is headquartered in Toronto with offices in San Francisco and London.
Caution Regarding Forward-Looking Statements
This press release contains or incorporates forward-looking statements within the meaning of United States securities legislation, and forward-looking information within the meaning of Canadian securities legislation (collectively "forward-looking statements"). These forward-looking statements include, among other things, our guidance for 2014 with respect to revenue growth and Adjusted EBITDA expectations and our expectations for growth in revenue, gross margin and Adjusted EBITDA in 2015. These statements are not historical facts but instead represent only Points' expectations, estimates and projections regarding future events.
Although Points believes the expectations reflected in such forward-looking statements are reasonable, such statements are not guarantees of future performance and are subject to important risks and uncertainties that are difficult to predict. Certain material assumptions or estimates are applied in making forward-looking statements, and actual results may differ materially from those expressed or implied in such statements. Undue reliance should not be placed on such statements. In particular, the financial outlooks herein assume Points will be able to maintain its existing contractual relationships and products, that such products continue to perform in a manner consistent with Points' past experience, that Points will be able to generate new business from our pipeline at expected margins, our in-market and newly launched products and services will perform in a manner consistent with the Company's past experience and we will be able to contain costs. Our ability to convert our pipeline of prospective partners and product launches is subject to significant risk and there can be no assurance that we will launch new partners or new products with existing partners as expected or planned nor can there be any assurance that Points will be successful in maintaining its existing contractual relationships or maintaining existing products with existing partners. Other important risk factors that could cause actual results to differ materially include the risk factors discussed in Points' annual information form, Form-40-F, annual and interim management's discussion and analysis, and annual and interim financial statements and the notes thereto. These documents are available at www.sedar.com and www.sec.gov.
The forward-looking statements contained in this press release are made as at the date of this release and, accordingly, are subject to change after such date. Except as required by law, Points does not undertake any obligation to update or revise any forward-looking statements made or incorporated in this press release, whether as a result of new information, future events or otherwise.