Planet Payment Announces Preliminary 2009 Annual Results

LONG BEACH, N.Y., March 24 /PRNewswire-FirstCall/ -- Planet Payment, Inc. (UK: LSE: AIM: PPT and PPTR; USA:  OTCQX: PLPM), a leading international payment and data processor, today announced its preliminary results for the year ended December 31, 2009 and quarterly results for the three month period ended December 31, 2009. During both periods, the Company delivered solid results in a challenging economic climate:

2009 Financial Highlights

• Total revenue increased 31% to $47.3m (2008: $36.2m).
• Gross Profit increased 42% to $16.3m (2008: $11.5m).
• Cash Operating expenses declined 11%, to $15.8m (2008: $17.8m).
• Adjusted EBITDA of $0.5m, a substantial improvement over the 2008 loss of $6.3m.  See Table 1 in Exhibit 1 for reconciliation of Net loss to Adjusted EBITDA.
• Net loss improved 63% to ($4.0m) (2008 loss: $11.0m).

Fourth Quarter 2009 Financial Highlights

• Total revenue increased 21% to $14.2m (Q4 2008: $11.8m).
• Gross Profit grew 26% to $4.7m (Q4 2008: $3.7m).
• Cash Operating expenses declined 3% to $4.2m (Q4 2008: $4.3m).
• Adjusted EBITDA improved 183% to $0.5m (Q4 2008 loss: $0.6m). See Table 1 in Exhibit 1 for reconciliation of net loss to Adjusted EBITDA.
• Net loss improved 59% to ($0.9m) (Q4 2008 loss: $2.1m).

2009 Operational Highlights

• Broadened  international reach:
  • India—launched multicurrency processing services.
  • Canada—commenced domestic and multi-currency processing services in support of a new multi-card acquirer.
• Active merchant locations grew 23% to over 10,000.
• Expanded relationships, entering into agreements with:
  • JCB, to provide back-end settlement and clearing processing for all merchants acquired directly by JCB in Hong Kong and multi-currency processing and acquiring services for North American merchants;
  • Agricultural Bank of China to provide our multicurrency solutions through divisions in an additional eight provinces and cities.
• Total settled transaction volume increased 38% to $2.2 billion (2008: $1.5 billion).

Current Trading Highlights – First Quarter 2010

• Total revenue projected to increase approximately 25% to over $13m (Q1 2009: $10m)
• Network International, the largest acquirer in the Middle East and North Africa, signed agreement with the Company and has begun marketing Planet Payment's Pay in Your Currency™ service to merchants in the United Arab Emirates
• Preparing to launch multi-currency services in the Philippines in Q2 2010

Commenting on the results, Philip Beck, Chairman of Planet Payment, Inc., said:

"These results reflect the strength of our business model and the continued execution of our strategic objectives. We are pleased that Planet Payment has outperformed the market during this difficult economic climate. We continue to cross sell our existing and new innovative products to our acquiring institution customers and to their customers.  We believe the Company is well positioned for further growth in 2010 as we continue to expand into new countries and are poised for the  recovery in our existing markets."

Additional analysis of the Company's performance can be found in the Management Discussion and Analysis appended to the Annual Report for 2009 filed on the OTCQX website at www.otcqx.com. Copies of the Company's Annual Report and Accounts for 2009 will be sent to shareholders in April together with the Notice of the 2010 Annual Meeting, which is to be held in June 2010 in New York.  Copies of this announcement are available on the Company's website at www.planetpayment.com.  In accordance with the rules of the OTCQX market, the Company's Annual Report for 2009 under OTCQX Disclosure Guidelines, including its Audited Consolidated Financial Statements, as of and for the year ended December 31, 2009 have been posted on the OTCQX website at www.otcqx.com and on the Company's website at www.planetpayment.com . Copies of the Annual Report and Accounts will also be available on request, through the Annual Reports service and on the Company's website upon publication.

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.  These non-GAAP key business indicators, which include Adjusted EBITDA, cash operating expense and cash compensation expense, transaction volumes, and active merchant locations and points of sale, should not be considered replacements for and should be read in conjunction with the GAAP financial measures.

About Planet Payment®  

Planet Payment's Common shares trade in the UK on AIM under the symbols PPT for unrestricted Common shares and PPTR for Reg S Common shares and in the United States on the OTCQX under the symbol PLPM.

Planet Payment is a leading international payment and data processor, providing banks and their merchants with innovative solutions to accept, process and reconcile payments, anytime, anywhere and in any currency. Our customer base of more than 40 acquiring banks and processors stretches from North America, to the Middle East, to Asia Pacific, including China, Hong Kong, Macau, Taiwan, Malaysia and India.

Planet Payment is headquartered in New York and has offices in Atlanta, Beijing, Bermuda, Delaware, London, Hong Kong, Shanghai and Singapore. Visit www.planetpayment.com for more information on the Company and its services.

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, 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; general economic risk and 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 Annual Report for 2009, 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.

CHAIRMAN & CEO REPORT

I am pleased to announce our results for the year ended December 31, 2009.  Once again the Company delivered strong results, despite a challenging business climate that persisted throughout the year.  The 31% increase in revenue to $47.3 million, and 42% increase in gross profit to $16.3 million demonstrate that Planet Payment has continued to execute upon its business plan. Our 2009 performance has resulted in our first year of positive Adjusted EBITDA. Our results over the period from 2006 to 2009 represent a compound annual revenue growth rate of 115%.

The Company's customer base of more than 40 supported acquiring banks and processors now spans North America, the Middle East and Asia-Pacific, including China, Hong Kong, Macau, Taiwan and Malaysia, with India and Canada newly activated in 2009.  Our revenue in Greater China as a whole grew approximately 49% during the year, which supports the view that the Company is well positioned for the recovery by virtue of its exposure to one of the fastest growing economies in the world.  

By the end of 2009, our base of active merchants grew more than 25% to over 10,000 active locations.  Approximately 40% of the multi-currency processing transaction volume processed in December 2009 was attributed to new merchants activated in 2009, with 11% of the December 2009 volume attributable to merchants activated in the fourth quarter 2009.  Although the Company's same store sales volume experienced significant declines in the first half of the year as compared to the same period in 2008, during the second half of 2009 this trend began to reverse so that same store sales volume approached 2008 levels again.

Planet Payment's stable operating expenses, strong revenue growth and scalable platform provide significant operating leverage, as evidenced in 2009 when our operating costs as a percentage of revenue decreased to 40% from 60%.  In 2010, as we increase our processing volumes, the Company should see an increasing proportion of its revenue and gross profits falling to the bottom line.

During 2009 we continued to make a substantial investment in our systems to support new markets and products.  Our innovative services help merchants sell more goods and services by allowing them to simplify the shopping experience by allowing customers to pay in their own currencies. Using our analytic products, merchants can also better understand their customer spending habits. Our solutions can deliver more operational efficiencies at the point of sale through the use of a common point of sale technology connected to our platform, no matter the acquiring bank, region or currency in which the merchant wishes to conduct business.

GLOBAL EXPANSION – REVIEW OF 2009 ACTIVITIES

During 2009, the Company further extended its international reach with the launch of multicurrency processing services in India and Canada. In Canada, the Company additionally launched domestic processing services, in support of one of the first Canadian multi-card acquirers.

In mainland China we signed new agreements with Agricultural Bank of China  to provide our multicurrency solutions through ABC divisions in an additional eight provinces and cities including support for integrated systems and local terminal solutions.

The Company signed agreements with JCB, the leading Japanese card issuer, to provide back-end settlement and clearing processing for all Hong Kong merchants acquired directly by JCB and multi-currency processing and acquiring services for North American merchants.    Our multi-currency services were launched in Guam, a prime Japanese tourist destination, through First Hawaiian Bank, a TSYS Acquiring Solutions customer, which also offers the service in Hawaii.  We also signed agreements with American Express, to provide front end, authorization processing for merchants in Hong Kong and in the United States.  

Across Asia-Pacific, our customers continued to attract new merchants to their portfolios, activating over 2,800 new multi-currency and processing merchant locations, thereby increasing the revenue contribution from the region by more than 50% over 2008.

We also benefit from the fact that in many of the countries in which we operate, our revenue is earned in US dollars, or currencies that track closely to the US dollar. Although currency fluctuations do impact our margins on multi-currency processing, our overall financial results are less sensitive to major fluctuations in the US Dollar exchange rate, as compared to other companies with significant foreign earnings.

In 2010 we expect to continue to add processors, acquiring banks and active merchants to our platform. With each new customer win, we can increase our transaction volume and our revenue. In all cases, we are adding transaction volume to our single, scalable, currency neutral platform resulting in increased operational leverage.

GLOBAL INNOVATION – ENHANCEMENTS TO OUR PROCESSING PLATFORM AND CAPABILITIES

During 2009, we continued to enhance our proprietary systems in order to offer our acquiring partners and their merchants increased opportunities to capture additional revenue with new products and services.  The Company invested over 45% of total cash operating costs in developing new technology infrastructure and services. In addition, approximately 65% of our personnel are involved daily in maintaining and improving our platform and managing our processing operations.

To support our Canadian solution, we added several capabilities for both in-store and online merchants, including local interchange clearing as well as certification with Visa Debit and Interac Debit—the dominant transaction type in that market. The iPAY e-commerce gateway, was launched in Canada to enable e-commerce merchants to price in currencies other than Canadian dollars.  The Company also supported further rollout in Canada and Asia-Pacific markets of EMV "chip and pin" point of sale terminals, which offer enhanced security to merchants and cardholders.

The Company also expanded its processing to over 45 authorization currencies to support our existing customers and is testing additional currencies to support the delivery of new services to new markets. This expansion allows us to offer our acquiring customers and their merchants access to additional revenue streams.  

We have continued to ensure our processing platform remains robust, reliable, scalable and secure.  To that end, the Company upgraded components of our authorization systems which resulted in increased reliability, cost improvements and greater efficiencies. We also invested in state-of-the-art hardware upgrades to our merchant accounting system, which offer enhanced performance and increased scalability for our expanding customer portfolio.

The provision of best-in-class secure processing solutions to our acquiring customers, their merchants and cardholders continues to be a key priority for the Company.  To that end, we deployed several new service offerings.  We enriched our e-commerce processing services by developing iPAY Tokens™, which was launched in 2010.  This service protects sensitive customer payment account data by encrypting and assigning a unique token that is stored securely in Planet Payment's Payment Card Industry Data Security Standard (PCI) compliant data vault.  Merchants have the ability to process payments by passing the token, rather than handling and storing sensitive customer data, facilitating a merchant's PCI compliance and reducing exposure related to the storage of sensitive customer account data.

The Company also implemented a new portfolio risk and fraud monitoring system which allows both Planet Payment and its acquirers to better identify potential transactional anomalies and more effectively minimize potential losses within their merchant portfolios. Our processing platform was also certified to support the Verified by Visa and MasterCard SecureCode programs, which offer increased e-commerce transaction processing security through cardholder validation.

During the year the Company again successfully completed its annual examination under Statement of Auditing Standards No. 70, Service Organizations ("SAS70") Type II and obtained re-certification of compliance with the PCI security requirements.

In March, 2010 Planet Payment was awarded a patent from the United States Patent and Trademark Office that protects, among other innovations, our methods to obtain the cardholder's currency selection, including our Cardholder Choice receipt model which has been extensively deployed in the market.  Furthermore, we obtained patents in Singapore, New Zealand and the Philippines covering certain of the unique methodology and processes comprising our Pay in Your Currency service.

Additional patent applications are also pending in the US and in a number of other jurisdictions for technological innovations developed by Planet Payment.  We view the Company's growing catalogue of patents as a validation of the Company's innovative approach to multi-currency payments and believe these patents should serve to strengthen the Company's market position in several key jurisdictions.

In 2010, we are continuing to use our technology resources to develop enhanced platform capabilities and solutions including multi-currency processing for ATMs, debit card processing, enhanced merchant fraud screening tools for e-commerce customers, as well as additional opportunities to further internationalize the iPAY gateway. These enhancements will when delivered, enable us to offer our customers additional value-added solutions that allow them and their merchants to grow their businesses.

CORPORATE FINANCE

The Company completed private placings of new common shares in March and November raising $6.7 million, net of expenses. The Company also issued $0.4 million in convertible debt during 2009, which were converted to common stock at December 31, 2009. The net proceeds of the private placings and the convertible debt were used to fund 2009 operations and support ongoing working capital requirements.

The Company ended 2009 with $3.8 million in cash and cash equivalents (2008: $0.2 million). Accounts receivable increased only marginally to $1.9 million (2008: $1.8 million), notwithstanding the substantial overall growth in the business. Current assets increased to $9.7 million (2008: $5.2 million).  Current liabilities totalled $7.4 million at December 31, 2009, an increase of $3.1 million over 2008 due to the fact that $4 million in long term debt has become current as of the fourth quarter 2009. Excluding the $4 million note, current liabilities declined by $0.9 million as of December 31, 2009. There was a corresponding reduction in long term debt of $4 million to $9 million.  

The Company ended 2009 with $15.8 million total assets, a 48% improvement (2008: $10.8 million) and $0.5 million in Stockholders' Deficit as compared to a deficit of $6.6 million at the end of 2008.

CURRENT TRADING AND OUTLOOK

For the first quarter 2010, total revenue is projected to increase approximately 25% to approximately $13m (Q1 2009: $10m). First quarter is historically the slowest quarter of the year due primarily to reduced international business travel in Greater China during January and February around the Chinese New Year, while fourth quarter is the most active. Accordingly, as with prior years, first quarter revenue is expected to be approximately 9% lower than fourth quarter 2009 (Q1 2009 was down 14% from Q4 2008).  Multi-currency transaction volume is expected to rebound in March, as it typically has in the past, back up towards levels achieved in Q4 2009.

In 2010 we expect to launch our services in new markets in the United Arab Emirates and the Philippines and to continue to cross sell our existing and new innovative products to our acquiring institution customers and to their customers.  The Company is well positioned for further growth in 2010 based on our own activities, as well as the potential for recovery in various regions around the world.

We look forward to an exciting 2010.

Philip Beck

Chairman and Chief Executive Officer

    
    
                                       EXHIBIT 1.
    
    Table 1. Reconciliation of Net Loss to Adjusted EBITDA
    For the three and twelve month periods ended December 31, 2009 and 2008
    
    
                            Three Months Ended     Year Ended
                              December 31          December 31
                             2009       2008     2009        2008
                             ----       ----     ----        ----
    
    Net loss                $(0.9)     $(2.1)   $(4.0)     $(11.0)
    Interest expense, net     0.3        0.4      1.2         1.0
    Depreciation and
     amortization             0.4        0.3      1.5         1.2
    Stock compensation
     expense                  0.2        0.4      1.2         1.5
    Income taxes              0.0        0.0      0.0         0.0
    Other expenses            0.5        0.4      0.6         1.0
                              ---        ---      ---         ---
    
    Adjusted EBITDA          $0.5      $(0.6)    $0.5       $(6.3)

SOURCE Planet Payment, Inc.