Points International Reports First Quarter 2010 Financial Results

    
    -   Record Revenue of $23.5 Million

    -   Significant Year-over-Year Improvements in Net Income and EBITDA(1)

    -   Strong Transaction Activity from Existing Partners

    -   Robust New Business Opportunities Globally; Added Virgin America
    

TORONTO, May 13 /CNW/ - Points International Ltd. (TSX: PTS; OTCBB: PTSEF), the owner and operator of Points.com, the world's leading reward program management web site, today announced results for the first quarter ended March 31, 2010. All financial results are in US Dollars.

"Points delivered record revenue during the first quarter as our ongoing marketing and promotional efforts, in conjunction with our loyalty partners, led to an increase in transaction activity of 33 percent over the same period last year, with particular strength across our largest North American partners," said CEO Rob MacLean. "We are particularly pleased to have posted significant year-over-year gains in EBITDA and net income, as we benefitted from the rapid growth of many existing products as well as the launch of new partnerships and products throughout the past year, all while aggressively managing our operating expenditures. Our strong first quarter results are a reflection of the health of our business model, strong execution by the Points team and ongoing momentum in establishing new programs and partnerships, as evidenced by the recent addition of our newest partner, Virgin America."

"We are already seeing substantial benefits from the initial rollout of our ePoch technology platform in terms of enhanced functionality and efficiency. The first phase of ePoch is now live in the market, and both recent launches and the current backlog of new installations will be deployed directly onto this new platform. In addition, we are actively engaged in upgrading our existing partners onto this enhanced technology, and expect to complete that effort through the remainder of 2010," continued MacLean.

First Quarter 2010 Financial Results

Total revenue was $23.5 million for the first quarter of 2010. Revenue was up 11% over $21.1 million reported in the first quarter of 2009, and up 42% over $16.6 million reported in the fourth quarter of 2009. Principal revenue totaled $21.8 million, an increase of 12% over $19.4 million in the same period last year, and an increase of 69% over $12.9 million in the fourth quarter of 2009. Other partner revenue was $1.7 million, down from $1.8 million reported in the same period of last year and down from $3.7 million in the fourth quarter of 2009.

Points reported net income for the first quarter of 2010 of $460,000. This compares to a net loss in the first quarter of 2009 of $1.1 million, and to net income in the fourth quarter of 2009 of $1.9 million.

During the first quarter of 2010, Points reported positive EBITDA of $246,000 compared to an EBITDA loss of $580,000 in the same period of 2009 and positive EBITDA of $1.7 million in the fourth quarter of 2009.

New Board Member

"We are delighted to welcome Michael Beckerman to our Board of Directors. Michael's extensive experience in consumer marketing and e-commerce with companies including NIKE, MVP.com and BMO will enhance the breadth of our Board. We are confident that he will be integral to driving long-term profitability and delivering value to our shareholders," said Bernay Box, the Company's Chairman.

    
    First Quarter 2010 Business Metrics

                                                     Q1/10              Q1/10
                                                      vs.                vs.
                                Q1/10       Q4/09    Q4/09     Q1/09    Q1/09
    -------------------------------------------------------------------------
    TOTAL ALL CHANNELS(1)
      Points/Miles
       Transacted (in 000s)   2,770,973   3,146,513   -12%   2,090,808    33%
      No. of Points/Miles
       Transactions             285,191     277,261     3%     226,920    26%

    LOYALTY CURRENCY
     SERVICES(1)
      Points/Miles
       Transacted (in 000s)   2,485,539   2,733,109    -9%   1,820,057    37%
      No. of Points/Miles
       Transactions             266,992     252,418     6%     204,631    30%

    POINTS.COM CHANNELS
      Points/Miles Transacted
       (in 000s)                285,434     413,405   -31%     270,751     5%
      No. of Points/Miles
       Transactions              18,199      24,843   -27%      22,289   -18%
      Cumulative Registered
       Users                  2,467,663   2,404,108     3%   2,189,814    13%


    NOTE: (1) For comparative purposes, Buy, Gift & Transfer activity for
              Delta has been excluded from the metrics presented.
    

Business Outlook

MacLean continued, "Our record first quarter results and the fact that we have already raised our revenue guidance twice in 2010 speaks to the strength of our business. The most recent 2010 revenue guidance was increased to a range of $85 million to $95 million, up from $75 million to $85 million, based on increasing transactional activity as well as recent and upcoming product and partnership launches. These include the launch of our first Transfer functionality for a major European partner with British Airways; new functionality enabling the sale of Delta SkyMiles on our Points.com consumer site; two new integrations under our Chase Ultimate Rewards partnership; new magazine subscriptions with Alaska Airlines and AirTran Airways; and most recently, the addition of Virgin America's Elevate frequent flyer program to the Points Partner Network."

"While some near-term inputs are impacting our margin and EBITDA results, we believe there may be further EBITDA upside in 2010 should European currencies rebound from recent lows versus the US Dollar, and we see potential positive mix shifts in our business. We are mining our current installed base, driving strong transactional activity, and are having great success establishing new partnerships. Our consumer efforts are on track and will be contributing to growth this year. We are focused on aggressively expanding our revenue footprint while improving the bottom-line results of our business, and this is setting the stage for exciting growth for our company for the balance of 2010 and beyond," concluded MacLean.

Investor Conference Call

Points' quarterly conference call with investors will be held today at 8:00 AM Eastern Time. To participate in the conference call, investors from the US and Canada should dial 877-941-2069 ten minutes prior to the scheduled start time. International callers should dial 480-629-9713. Points International will also offer a live and archived webcast, accessible from the "Investor Relations" section of the company's Web site at www.pointsinternational.com.

About Points International Ltd

Points International Ltd. is the owner and operator of Points.com, the world's leading reward program management web site which was recently named one of the 28 Best Travel Sites by Kiplinger's. At Points.com consumers can Swap, Earn, Buy, Gift, Share and Redeem miles and points from more than 25 of the world's leading reward programs. Participating programs include American Airlines AAdvantage(R) program, Aeroplan(R), AsiaMiles(TM), British Airways Executive Club, Wyndham Rewards(R), Delta SkyMiles(R) and InterContinental Hotels Group's Priority Club(R) Rewards. Redemption partners include Amazon.com(R) and Starbucks. For more information, visit http://www.points.com.

Caution Regarding Forward-Looking Statements

This press release contains or incorporates forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995, as amended, and forward-looking information within the meaning of Canadian securities legislation (collectively "forward-looking statements"). These forward-looking statements include our guidance for 2010 with respect to revenue, net income and EBITDA. 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 may not prove to be correct. In particular, the financial outlooks herein assume we 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 and realize operational efficiencies from our upgraded technology platform. Other important risk factors that could cause actual results to differ materially include the risk factors discussed in Points' annual information form, Form-20-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.

    
    ----------------------------------
    (1) EBITDA (Earnings (loss) before interest, taxes, amortization, foreign
        exchange, impairment and restructuring) is considered by management
        to be a useful measure of performance. EBITDA is not a recognized
        measure under generally accepted accounting principles.



    CONSOLIDATED BALANCE SHEETS
    (Expressed in thousands of United States dollars)
    (Unaudited)

                                                           March    December
                                                              31,         31,
    AS AT                                                   2010        2009
    -------------------------------------------------------------------------
    ASSETS
    Current Assets
      Cash and cash equivalents                         $ 27,857    $ 26,414
      Restricted cash                                      2,223         802
      Funds receivable from payment processors             5,340       5,855
      Security deposits                                    2,616       2,463
      Accounts receivable                                  1,481       1,907
      Future income tax assets                             1,193         945
      Current portion of deferred costs                      151         139
      Prepaid and sundry assets                            1,220         759
    -------------------------------------------------------------------------
                                                          42,081      39,284
    -------------------------------------------------------------------------
    Property and equipment                                   587         607
    Intangible assets                                      2,461       2,014
    Goodwill                                               4,205       4,205
    Deferred costs                                            81          82
    Other assets                                             924         951
    -------------------------------------------------------------------------
                                                           8,258       7,859
    -------------------------------------------------------------------------
                                                        $ 50,339    $ 47,143
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    LIABILITIES
    Current Liabilities
      Accounts payable and accrued liabilities          $  2,059    $  3,087
      Current portion of deferred revenue                    813         609
      Payable to loyalty program partners                 33,344      30,215
    -------------------------------------------------------------------------
                                                          36,216      33,911
    Deferred revenue                                         377         301
    -------------------------------------------------------------------------
                                                          36,593      34,212
    -------------------------------------------------------------------------

    SHAREHOLDERS' EQUITY
    Accumulated other comprehensive loss                  (2,356)     (2,566)
    Accumulated deficit                                  (49,003)    (49,463)
    -------------------------------------------------------------------------
                                                         (51,359)    (52,029)
    Capital stock                                         56,662      56,662
    Contributed surplus                                    8,443       8,298
    -------------------------------------------------------------------------
                                                          13,746      12,931
    -------------------------------------------------------------------------
                                                        $ 50,339    $ 47,143
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
    (Expressed in thousands of United States dollars,
     except per share amounts)
    (Unaudited)

    FOR THE THREE MONTHS ENDED MARCH 31,                    2010        2009
    -------------------------------------------------------------------------

    REVENUE
      Principal                                         $ 21,837    $ 19,360
      Other partner revenue                                1,664       1,751
      Interest                                                 1          35
    -------------------------------------------------------------------------
                                                          23,502      21,146
    -------------------------------------------------------------------------

    GENERAL AND ADMINISTRATION EXPENSES
      Direct cost of principal revenue                    18,704      16,941
      Processing fees and related charges                    583         586
      Employment costs                                     2,664       2,771
      Marketing & communications                             262         466
      Technology services                                    211         207
      Amortization                                           135         173
      Foreign exchange (gain) loss                           (22)        192
      Operating expenses                                     832         755
    -------------------------------------------------------------------------
                                                          23,369      22,091
    -------------------------------------------------------------------------
    OPERATING INCOME (LOSS) - before undernoted              133        (945)
      Interest and other charges                              15          13
    -------------------------------------------------------------------------
    INCOME (LOSS) BEFORE INCOME TAXES                        118        (958)
      Future income taxes (recovery) expense                (342)        141
    -------------------------------------------------------------------------
    NET INCOME (LOSS)                                   $    460    $ (1,099)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    OTHER COMPREHENSIVE INCOME:
      Gain on foreign exchange derivatives designated
       as cash flow hedges, net of income taxes
       expense of $102                                       228           -
      Reclassification to net income of gain on
       foreign exchange derivatives designated as
       cash flow hedges, net of income taxes
       expense of $8                                         (18)          -
    -------------------------------------------------------------------------
    OTHER COMPREHENSIVE INCOME                               210           -
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    COMPREHENSIVE INCOME (LOSS)                         $    670    $ (1,099)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Basic and diluted earnings (loss) per share         $   0.00    $  (0.01)
    -------------------------------------------------------------------------



    CONSOLIDATED STATEMENTS OF ACCUMULATED DEFICIT AND ACCUMULATED OTHER
    COMPREHENSIVE LOSS
    (Expressed in thousands of United States dollars)
    (Unaudited)

    FOR THE THREE MONTHS ENDED MARCH 31,                    2010        2009
    -------------------------------------------------------------------------
    ACCUMULATED DEFICIT - Beginning of period           $(49,463)   $(49,527)
      NET INCOME (LOSS)                                      460      (1,099)
    -------------------------------------------------------------------------
    ACCUMULATED DEFICIT - End of period                 $(49,003)   $(50,626)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    ACCUMULATED OTHER COMPREHENSIVE LOSS -
     Beginning of period                                $ (2,566)   $ (2,566)
      Other comprehensive income                             210           -
    -------------------------------------------------------------------------
    ACCUMULATED OTHER COMPREHENSIVE LOSS -
     End of period                                      $ (2,356)   $ (2,566)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    CONSOLIDATED STATEMENTS OF CASH FLOWS
    (Expressed in thousands of United States dollars)
    (Unaudited)

    FOR THE THREE MONTHS ENDED MARCH 31,                    2010        2009
    -------------------------------------------------------------------------

    Net income (loss)                                   $    460    $ (1,099)
    Items not affecting cash
      Amortization of property and equipment                  65          82
      Amortization of deferred costs                           -           2
      Amortization of intangible assets                       70          89
      Future income taxes (recovery) expense                (342)        141
      Unrealized foreign exchange loss                       253         317
      Employee stock option expense                          145         157
    Changes in non-cash balances related to
     operations                                            3,028       3,082
    -------------------------------------------------------------------------
    CASH FLOWS PROVIDED BY OPERATING ACTIVITIES            3,679       2,771
    -------------------------------------------------------------------------

      Additions to property and equipment                    (45)       (122)
      Additions to intangible assets                        (517)        (10)
      Changes in restricted cash, purchase of
       investments                                        (1,421)          -
    -------------------------------------------------------------------------
    CASH FLOWS USED IN INVESTING ACTIVITIES               (1,983)       (132)
    -------------------------------------------------------------------------
    EFFECT OF EXCHANGE RATE CHANGES ON CASH HELD
     IN FOREIGN CURRENCY                                    (253)       (302)
    -------------------------------------------------------------------------
    INCREASE IN CASH AND CASH EQUIVALENTS                  1,443       2,337
    CASH AND CASH EQUIVALENTS - Beginning of period       26,414      22,854
    -------------------------------------------------------------------------
    CASH AND CASH EQUIVALENTS - End of period           $ 27,857    $ 25,191
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

SOURCE POINTS INTERNATIONAL LTD.

For further information: For further information: Rob MacLean, Chief Executive Officer, (416) 596-6390, rob.macLean@points.com

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POINTS INTERNATIONAL LTD.

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