Planet Payment Reports Third Quarter 2012 Results Provides Update on NASDAQ Listing LONG BEACH, N.Y., Nov. 26, 2012 (GLOBE NEWSWIRE) -- Planet Payment, Inc. (LSE:PPT) (LSE:PPTR) (OTCQX:PLPM), a leading provider of international payment processing and multi-currency processing services, today announced its results for the three and nine months ended September 30, 2012. Financial Highlights for the Three Months Ended September 30, 2012 ("Q3 2012") oNet revenue for the period increased approximately 3% to $9.9m [Q3 2011: $9.7m]. oConsolidated Gross Billings increased 10% to $26.3m [Q3 2011: $23.9m]. (See Table 2 for explanation of this metric). oGross Foreign Currency Mark-up increased 12% to $22.9m [Q3 2011: $20.5m]. (See Table 2 for explanation of this metric). oNet loss increased from $(0.4)m to $(4.0)m, primarily due to expensing of deferred IPO costs of $2.6m. oAdjusted EBITDA for the period decreased to $(0.4)m [Q3:2011 $0.6m]. See Table 1 for reconciliation of net (loss) income to Adjusted EBITDA. Financial Highlights for the Nine Months Ended September 30, 2012 ("YTD" 2012) oNet revenue for the period increased approximately 7% to $31.7m [YTD 2011: $29.5m]. oConsolidated Gross Billings increased 18% to $83.9m [YTD 2011: $70.9m]. oGross Foreign Currency Mark-up increased 21% to $73.1m [YTD 2011: $60.7m]. oNet income (loss) decreased from $0.6m to $(4.3)m. oAdjusted EBITDA for the period decreased 53% to $1.5m [YTD 2011 $3.2m]. Operational Highlights for the YTD 2012 oTotal active merchant locations increased by 51% to approximately 38,000 as of September 30, 2012 [September 30, 2011: approximately 25,000]. (See Table 2 for explanation of this metric). oSettled multi-currency dollar volume processed increased 3% to $572m [Q3 2011: $555m]. YTD increase was 17% to $1.9b [YTD 2011: $1.6b]. oEntered into a number of new contracts, notably multi-currency processing agreements with Taishin Bank in Taiwan and Mashreq in UAE and a processing agreement with China Unionpay. oLaunched Pay in Your Currency^® services with Global Payments Canada, Vantiv ATMs in the United States, Mashreq UAE, Citibank Philippines and Citibank Hong Kong and our MICROS Payment Gateway solution with Banorte in Mexico. Our results reflect a 51% increase in active merchant locations over the last twelve months and growth of 10% and 12% in Consolidated Gross Billings and Gross Foreign Currency Mark-up respectively in the third quarter of 2012 compared to the same period in 2011. The growth in our financial results, however, was muted by a number of factors. The poor economic climate, which our merchants and their customers are facing, led to a decline in sales of goods and services by merchants using our services, which negatively impacted our net revenue. The net loss in the third quarter primarily resulted from expensing previously deferred IPO costs of $2.3 m associated with our registration statement on Form S-1, as well as IPO costs incurred in the third quarter for a total amount of $2.6 m. The increase in our operating costs compared to 2011 primarily reflects additions to technology and support personnel to invest in the growth of the business and future launches into new markets including Mexico and Brazil. We believe that the growth in the key operating metrics of active merchant locations, Consolidated Gross Billings and Gross Foreign Currency Mark-up are indicative of the underlying strength of our business. During the third quarter of 2012, we continued to expand our acquiring customer base, in particular announcing an agreement with Taishin Bank to provide our Pay in Your Currency^® service to the bank's portfolio of merchants in Taiwan and the launch of Pay in Your Currency^® with Mashreq Bank in the United Arab Emirates and Global Payments in Canada. We also launched services with Banorte in Mexico, initially implementing our MICROS Payment Gateway solution and plan to launch our Pay in Your Currency service shortly. Today, we announced an initiative to launch Planet Payment's Pay in Your Currencyand Shop in Your Currency^™ services with Cielo S.A. in Brazil. We believe that these new initiatives are indicative of the strong pipeline of business that we can look forward to. CURRENT TRADING The Company expects to see continuing growth in active merchant locations during the remainder of 2012, from both existing customers and those that have recently implemented and launched services with Planet Payment. However, the Company may continue to see slower growth in Consolidated Gross Billings and [net revenue from existing customers, as a result of the macro-economic downturn affecting businesses around the world. The Company intends to continue to invest in supporting new business, implementations in new markets and growing the pipeline, although the benefit of these investments may only be realized in subsequent periods. Based on these and other factors referenced above, the Company estimates full year net revenue to be in the range of $43.0m to $43.5m, net loss for 2012 to be in the range of ($4.2)m to ($4.7)m and Adjusted EBITDA to be in the range of $2.3m to $2.8m (See Table 3 for reconciliation of estimated net loss to estimated Adjusted EBITDA). NASDAQ LISTING The Company plans to file an amendment to its Form 10 in the next few weeks with a view to completing the process of becoming a NASDAQ listed company by the end of 2012. Commenting on the results, Philip Beck, Chairman and CEO of Planet Payment said: "Our third quarter financial results reflect the continued impact of the global economic environment during the year. We are pleased that we continue to build a strong pipeline for the future and are excited by the new opportunities that lie ahead of us, especially in the Latin American region. We are delighted to have been selected by Cielo in Brazil to deliver our innovative products to its customers.In pushing ahead with our NASDAQ listing, we believe this will mark another important milestone in the Company's development and be of significant benefit to the Company's shareholders, customers and employees." Additional breakdown on the Company's performance can be found in the Management's Discussion and Analysis of Financial Condition and Results of Operations included in the Company's Third Quarter Report. In accordance with the rules of the OTCQX market, the Company's Third Quarter Report, including its Consolidated Condensed Financial Statements (unaudited), as of and for the nine and three month periods ended September 30, 2012, have been posted on the OTCQX website at www.otcqx.com and on the Company's website at www.planetpayment.com. 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, estimated net revenue, net loss and Adjusted EBITDA, plans to effect a NASDAQ listing, an intended definitive agreement and future service launches with Cielo, and other 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. Actual results may vary materially from the results anticipated by these forward-looking statements as a result of a variety of risk factors, including, regulatory changes and changes in card association regulations and practices; changes in domestic and global economic conditions and changes in volume of international travel and commerce, the impact of the BPS acquisition, delays in customer implementations and others. See the Company's Quarterly Report for the period, 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. NON-GAAP MEASURES 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. In addition, management utilizes these measures in monitoring performance. 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 (loss) income adjusted to exclude (1) interest expense, (2) interest income, (3) provision (benefit) for income taxes, (4) depreciation and amortization, (5) stock‑based expense from options and warrants 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 (loss) income, the most directly comparable financial measure calculated and presented in accordance with GAAP. Table 1. Reconciliation of Net (Loss) Income to Adjusted EBITDA (non-GAAP) For the three and nine months ended September 30, 2012 and 2011 The following table sets forth the reconciliation of Adjusted EBITDA to net (loss) income, our most directly comparable financial measure in accordance with GAAP: Three months ended Nine months ended September 30, September 30, 2012 2011 2012 2011 ADJUSTED EBITDA: Net (loss) income $(3,961,815) $(375,414) $(4,333,290) $600,311 Interest expense 14,163 19,378 42,738 307,796 Interest income (513) (156) (926) (804) (Benefit) provision for income (17,076) 106,260 213,622 106,260 taxes Depreciation and amortization 744,602 656,726 2,052,063 1,837,147 Expensing of deferred IPO 2,578,770 -- 2,578,770 -- costs(1) Stock‑based expense 284,071 208,663 824,468 435,154 Acquisition deal costs 323 -- 122,078 -- Convertible debt prepayment -- -- -- 601,318 fee(2) Derecognition of note -- (40,000) -- (700,000) payable(3) Adjusted EBITDA (non-GAAP) $(357,475) $575,457 $1,499,523 $3,187,182 (1) In connection with the preparation of the financial statements as of and for the periods ended September 30, 2012 we determined that it is likely that our IPO will be postponed for a period in excess of 90 days and as a result deemed it to be an aborted offering in accordance with the guidance set forth in ASC 340-10-S99-1. For the three months ending September 30, 2012, we expensed previously deferred IPO costs of $2.3 million associated with our registration statement on Form S-1 as well as any IPO costs incurred in the third quarter to selling, general and administrative expenses. The total amount of the third quarter expense was $2.6 million. (2) In April 2011, the convertible debt holders converted the outstanding principal amount of $9.0 million under convertible notes issued in 2007 and 2008 into an aggregate of 4,049,776 shares of common stock. In addition, we issued 127,318 shares of common stock valued at $0.3 million in lieu of cash payments for accrued interest and 297,682 shares of common stock valued at $0.6 million as a prepayment fee negotiated at the time of conversion. The shares issued for the accrued interest and the prepayment fee were valued at the average closing price of our common stock on AIM under the symbol "PPTR" during the 10 trading day period ending two days prior to the conversion. (3) In 2003, we entered into an agreement with FHMS and FTB and recorded a liability. Due to a breach of the contractual terms by FHMS and FTB, we did not believe we were liable to repay these amounts. As of March 31, 2011, the statute of limitations had expired on $0.66 million of the $0.7 million balance and as of September 30, 2011, the statute of limitations had expired on the remaining $40,000. For the three months ended March 31, 2011, we recorded other income due to the derecognition of the note payable in the amount of $0.7 million. Table 2. Explanation of Key Metrics Consolidated Gross Represents Gross Foreign Currency Mark-up plus payment Billings processing services revenue. Represents the Gross Foreign Currency Mark-up amount on settled dollar volume processed using our Gross Foreign Currency multi‑currency processing services. Gross Foreign Mark-up 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. The Company considers a merchant location to be active as of a date if the merchant completed at least one Active merchant revenue‑generating transaction at the location during locations 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. Table 3. Reconciliation of Forward-Looking Net Loss to Forward-Looking Adjusted EBITDA (Non-GAAP) (US Dollars in Millions) For the Year ending December 31, 2012 Year ending December 31, 2012 Estimated Range Net loss $(4.7) $(4.2) Interest expense 0.1 0.1 Interest income (0.0) (0.0) Provision for income taxes 0.3 0.3 Depreciation and amortization 2.8 2.8 Expensing of deferred IPO costs 2.6 2.6 Stock‑based expense 1.1 1.1 Acquisition deal costs 0.1 0.1 Adjusted EBITDA (non-GAAP) $2.3 $2.8 Planet Payment,Inc. condensed consolidated balance sheets (unaudited) As of September 30, As of December 31, 2012 2011 Current assets: Cash and cash equivalents $5,319,950 $7,671,963 Restricted cash 2,299,942 1,941,909 Accounts receivable, net of allowances of $1.4 million as of September30, 3,826,280 4,768,040 2012 and December 31, 2011 Prepaid expenses and other assets 1,582,208 947,043 Total current assets 13,028,380 15,328,955 Other assets: Restricted cash 649,974 659,958 Property and equipment, net 1,548,640 1,223,562 Software development costs, net 4,828,587 4,978,002 Intangible assets, net 3,359,320 799,648 Goodwill 630,756 -- Security deposits and other assets 311,587 213,230 Deferred IPO costs -- 1,650,789 Total other assets 11,328,864 9,525,189 Total assets $24,357,244 $24,854,144 Liabilities and stockholders' equity Current liabilities: Accounts payable $329,944 $993,872 Accrued expenses 3,870,527 2,482,255 Due to merchants 2,382,111 2,137,064 Current portion of capital leases 341,536 247,257 liability Total current liabilities 6,924,118 5,860,448 Long-term liabilities: Long-term portion of capital leases 518,480 248,730 liability Total long-term liabilities 518,480 248,730 Total liabilities 7,442,598 6,109,178 Commitments and contingencies Stockholders' equity: Convertible preferred stock— 4,000,000 shares authorized, $0.01 par value: Series A— 2,243,750 issued and 22,438 22,438 outstanding as of September 30, 2012 and December 31, 2011; $8,975,000 aggregate liquidation preference Common stock—80,000,000 shares authorized as of September 30, 2012 and December 31, 2011, $0.01 par value, and 523,776 517,644 52,377,603, and 51,764,405issued and outstanding as of September 30, 2012 and December 31, 2011, respectively Additional paid-in capital 96,571,663 94,083,901 Warrants 1,622,651 1,622,651 Accumulated other comprehensive loss (31,653) (40,729) Accumulated deficit (81,794,229) (77,460,939) Total stockholders' equity 16,914,646 18,744,966 Total liabilities and stockholders' $24,357,244 $24,854,144 equity The accompanying notes are an integral part of these financial statements Planet Payment, Inc. condensed consolidated statements of operations (unaudited) Three months ended Nine months ended September 30, September 30, 2012 2011 2012 2011 Revenue: Net revenue $9,925,137 $9,660,128 $31,723,111 $29,527,135 Operating expenses: Cost of revenue: Payment processing services 2,724,030 2,630,448 7,941,869 8,273,579 fees Processing and service costs 2,936,471 2,370,388 8,309,890 6,758,294 Total cost of revenue 5,660,501 5,000,836 16,251,759 15,031,873 Selling, general and 8,229,877 4,949,224 19,549,208 13,580,381 administrative expenses Total operating expenses 13,890,378 9,950,060 35,800,967 28,612,254 (Loss) income from operations (3,965,241) (289,932) (4,077,856) 914,881 Other (expense) income: Interest expense (14,163) (19,378) (42,738) (307,796) Interest income 513 156 926 804 Other income, net -- 40,000 -- 98,682 Total other expense, net (13,650) 20,778 (41,812) (208,310) (Loss) income before benefit (3,978,891) (269,154) (4,119,668) 706,571 (provision) for income taxes Benefit (provision) for 17,076 (106,260) (213,622) (106,260) income taxes Net (loss) income $(3,961,815) $(375,414) $(4,333,290) $600,311 Basic net (loss) income per share applicable to common $(0.08) $(0.01) $(0.08) $0.01 stockholders Diluted net (loss) income per share applicable to common $(0.08) $(0.01) $(0.08) $0.01 stockholders Weighted average common stock 52,366,739 50,794,219 52,062,429 48,834,130 outstanding (basic) Weighted average common stock 52,366,739 50,794,219 52,062,429 51,593,111 outstanding (diluted) The accompanying notes are an integral part of these financial statements Planet Payment, Inc. condensed consolidated statements of comprehensive (loss) income (unaudited) Three months ended Nine months ended September 30, September 30, 2012 2011 2012 2011 Net (loss) income $(3,961,815) $(375,414) $(4,333,290) $600,311 Foreign currency translation 74,765 (18,385) 9,076 (16,655) adjustment Total comprehensive (loss) $(3,887,050) $(393,799) $(4,324,214) $583,656 income The accompanying notes are an integral part of these financial statements Planet Payment, Inc. Condensed Consolidated Statements of Cash Flows (unaudited) Nine months ended September 30, 2012 2011 Cash flows from operating activities: Net (loss) income $(4,333,290) $600,311 Adjustments to reconcile net (loss) income to net cash provided by operating activities: Stock option expense 824,468 420,226 Depreciation and amortization expense 2,052,063 1,837,147 Provision for doubtful accounts 85,052 75,384 Expensing deferred IPO costs 2,346,210 -- Deferred income taxes (66,009) -- Non‑cash interest expense on convertible debt -- 254,636 Warrant expense -- 14,928 Common stock issued for payment of account payable -- 20,000 Derecognition of note payable -- (700,000) Non-cash prepayment fee on conversion of convertible -- 601,318 debt Changes in operating assets and liabilities, net of effects of acquisitions (Increase) decrease in settlement assets (358,033) 151,706 Decrease (increase) in accounts receivables, prepaid 544,110 (1,455,920) expenses and other current assets (Increase) decrease in security deposits and other (8,066) 34,474 assets (Decrease) increasein accounts payable and accrued (250,142) 1,411,866 expenses Increase (decrease) in due to merchants 245,047 (159,855) Other (17,226) (3,742) Net cash provided by operating activities 1,064,184 3,102,479 Cash flows from investing activities: Decrease in restricted cash 9,984 127,234 Purchase of property and equipment (189,685) (80,935) Capitalized software development (1,037,742) (1,431,347) Purchase of intangible assets (75,490) (61,490) Cash paid for business combination, net of cash (1,577,829) -- acquired Net cash used in investing activities (2,870,762) (1,446,538) Cash flows from financing activities: Proceeds from issuance of common stock 67,680 247,764 Principal payments on capital lease obligations (258,584) (214,629) Payment of IPO costs (354,531) (859,077) Net cash (used in) provided by financing activities (545,435) (825,942) Effect of exchange rate changes on cash and cash -- -- equivalents(*) Net (decrease) increase in cash and cash equivalents (2,352,013) 829,999 Beginning of period 7,671,963 5,182,499 End of period $5,319,950 $6,012,498 Supplemental disclosure: Cash paid for: Interest $41,804 $53,160 Income taxes 304,989 106,260 Non cash investing and financing activities: Convertible debt converted to common stock $-- $8,979,926 Common stock issued for BPS acquisition 1,596,862 -- Common stock issued for stock options and warrants 685 -- exercised Assets acquired under capital leases 550,878 283,103 Derecognition of note payable -- 700,000 Prepayment fee on conversion of convertible debt -- 601,318 Accrued IPO Costs -- 477,639 (*) For the nine months ended September 30, 2012 and 2011, the effect of exchange rate changes on cash and cash equivalents was inconsequential. The accompanying notes are an integral part of these financial statements Planet Payment, Inc. Condensed Consolidated Statements of Changes in Convertible Preferred Stock and Stockholders' Equity (unaudited) Convertible preferred stock Common stock $0.01 par value— $0.01 par value— 4,000,000 shares 80,000,000 shares authorized SeriesA Shares Shares Additional Accumulated Total Shares par Shares par paid-In Warrants other Accumulated stockholders' issued value issued value capital comprehensive deficit equity loss Balance—December 2,243,750 $22,438 51,764,405 $517,644 $94,083,901 $1,622,651 $(40,729) $(77,460,939) $18,744,966 31, 2011 Options exercised — — 124,861 1,248 66,432 — — — 67,680 Issuance of common shares – — — 488,337 4,884 1,596,862 — — — 1,601,746 Acquisition of BPS Stock-based — — — — 824,468 — — — 824,468 expense Cumulative translation — — — — — — 9,076 — 9,076 adjustment Net loss — — — — — — — (4,333,290) (4,333,290) Balance—September 2,243,750 $22,438 52,377,603 $523,776 $96,571,663 $1,622,651 $(31,653) $(81,794,229) $16,914,646 30, 2012 The accompanying notes are an integral part of these financial statements Planet Payment,Inc. 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 processing and multi‑currency processing services. The Company provides its services to approximately 38,000 active merchant locations in 18 countries and territories across the Asia Pacific region, North America, 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's point-of-sale and e-commerce services are integrated within the payment card transaction flow and enable its acquiring customers to process and reconcile payment transactions in multiple currencies, geographies and channels. 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. Company structure Planet Payment was incorporated in the State of Delaware on October12, 1999 as Planet GroupInc. and changed its name to Planet Payment,Inc. on June18, 2007. Since March20, 2006, shares of the Company's common stock have traded on the Alternative Investment Market of the London Stock Exchange, or AIM, under the symbols "PPT" and "PPTR." Since November19, 2008, shares of the Company's common stock have traded on the OTCQX market tier operated by OTC Markets Group,Inc., or the OTCQX, in the United States under the symbol "PLPM." 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 ("USGAAP"). 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. The Company evaluated subsequent events through November 26, 2012, the date on which the September 30, 2012 financial statements were available to be issued. There were no events or transactions during this subsequent reporting period that require recognition or disclosure in the financial statements, except as noted below. In October 2012, the east coast of the United States was hit by Hurricane Sandy, including the city of Long Beach, where the Company's corporate offices are located.The aftermath of this event caused temporary disruption to certain functions undertaken at that office and caused us to incur additional costs for repairs, temporary office space and other requirements to maintain or re-establish these functions. While the Company insures against such property damage and business interruption risks, such insurance may not adequately compensate the Company for losses incurred. Based on the information available to us today the Company estimates that the impact of such losses to be approximately $0.1 million.At no time were any of our transaction processing functions or systems affected by the storm and accordingly none of our customers suffered any loss of transactions. Unaudited consolidated interim financial information The accompanying unaudited condensed consolidated interim financial statements as of September 30, 2012 and for the periods ended September 30, 2012 and 2011 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. Operating results for the interim periods ended September 30, 2012 are not necessarily indicative of the results that may be expected for the year ending December 31, 2012.The December31, 2011 balance sheet information has been derived from the audited financial statements at that date but does not include all disclosures required by GAAP. CONTACT: Enquiries: Planet Payment, Inc. Robert Cox (CFO) Tel: + 1 516 670 3200 www.planetpayment.com Redleaf Polhill (UK PR for Planet Payment) Emma Kane / Henry Columbine / David Ison Tel: +44 20 7566 6720 email@example.com ICR (US PR for Planet Payment) Don Duffy / Dara Dierks Tel: +1 646-277-1212 Canaccord Genuity Ltd (UK) (Nomad for Planet Payment) Simon Bridges / Andrew Chubb Tel: +44 20 7523 8000 Canaccord Genuity, Inc. (US) (DAD for Planet Payment) Andy Viles Tel: +1 617-371-3900
Planet Payment Reports Third Quarter 2012 Results Provides Update on NASDAQ Listing
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