TORONTO, Aug. 14, 2015 /CNW/ - Posera-HDX Ltd. (TSX: HDX) (the "Company" or "Posera-HDX") announced today its financial results for the three-months ended June 30th, 2015. Posera-HDX is listed on the TSX under the symbol "HDX".
Paul Howell, Chief Executive Officer, reports:
The Company's consolidated recurring revenues for the three-months ended June 30, 2015 was $2,143,315, which represents an increase of $265,023 (14.1%) and $191,751 (9.8%) from $1,878,292 and $1,951,564 for the three-months ended June 30, 2014 and March 31, 2015 respectively. The Company continues to build on its recurring revenue model of stable, predictable recurring revenue streams. Recurring revenue will continue to benefit the business as we focus on enhancing and growing these revenue streams.
Recurring revenue also continues to be an increasing component of total revenue. During the three-months ended June 30, 2015, recurring revenue represented 40.6% to total revenue for the Company, whereas during the three-months ended June 30, 2014, recurring revenue represented only 35.6% of total revenue. This has resulted in an increase of recurring revenue as a percentage of total revenue by 14.0%, which displays a higher quality of earning being generated by the Company as a proportion of total revenue.
The Company's merchant portfolio processed $366,246,342 in transactions for the three-months ended June 30, 2015 an increase of $86,772,526 (50.4%) and an increase of $72,975,172 (39.2%) compared to the three-months ended June 30, 2014 and March 31, 2015 respectively. The Company and its sales agent's continue to target higher volume customers during the three-months ended June 30, 2015 when compared to the three-months ended June 30, 2014, which has resulted in the processing volumes increasing, and processing revenue per merchant increasing.
The processing revenue per merchant for the three-months ended June 30, 2015 was $178.91 compared to $127.13 and $151.96 for the three-months ended June 30, 2014 and March 31, 2015 respectively, representing an increase of $51.78 (40.7%) and $26.95 (17.7%) per merchant during the comparable periods. Aside from the increase in fees paid to sales agents, the increase in processing revenue per merchant will result in increased margins for the Company, as the costs associated with servicing each merchant are relatively fixed.
The Company has identified a number of potential cost reductions due to recognized synergies, which upon execution will improve the operating efficiencies for the Company. These identified cost reductions will likely be achieved during the third and fourth quarters of 2015 and management believes that the cost reductions should result in positive cash flows from operations upon completion.
The Company continues to focus on integrating business units, building and acquiring technologies to round out the Company's product and service offering, identifying and negotiating to acquire organizations complimentary to the Company's growth strategy. Gross payment processing fees represents the total payment processing fees that are earned by the Company's third party processors, of which the Company receives a percentage of these fees.(1)
The Company has stated an objective to recognize the gross payment processing fees as payments processing revenue through future acquisitions. Had the Company recorded the gross payment processing fees as payment processing revenue the Company would have achieved adjusted total revenue of $10,242,532 for the three-months-ended June 30, 2015, an increase of $1,392,010 (15.7%) compared to $8,850,522 for the three-months ended June 30, 2014.(1)
On December 31st 2014 the Company completed the acquisition of Terminal Management Services Ltd. ("TMC"). TMC provides wireless EMV Chip and PIN "pay-at-the-table" ("PATT") credit and debit card processing software and hardware solutions to Canadian merchants nationwide. Based in Markham, Ontario, TMC has deployed its payment software solutions through direct sales and strategic partnerships with the world's largest payment terminal manufacturers. TMC's solutions and services integrate directly with most of the leading restaurant POS applications world-wide. Because TMC's middle-ware product is POS solution agnostic, payment processing relationships can be achieved regardless of the POS solution employed by a particular restaurant.
TMC's solutions will be marketed and deployed in the United States where the requirement for pay-at-the-table solutions is becoming a necessary part of restaurant operations due to the introduction of EMV Chip and PIN requirements. The credit card / merchant liability shift due to take place in October of 2015 will result in merchants needing to upgrade their current payment terminals that are currently purely magnetic stripe readers. There are over 900,000 restaurants in the United States and very few offer pay-at-the-table today.
TMC's product offering will be marketed through Posera-HDX Ltd.'s direct sales team, through the Company's approximately 85 software reseller partners, and through Zomaron's approximately 175 sales agents. The Company continues to negotiate licence agreements for TMC pay-at-the-table products with American payment processors that currently do not have a PATT solution to offer to their merchant base.
On October 1st 2014 the Company announced that it had signed a letter of intent to acquire Premier Payments Systems Inc. ("Premier") of Oak Brook, Illinois, USA. Founded in 2010, Premier Payment Systems Inc. provides payment processing solutions for debit and credit transactions to clients throughout the United States. Based in the Western Suburbs of Chicago, Illinois Premier is superbly situated to fuel HDX's growth strategy in the United States. The combined company will ramp quickly to offer merchants best-in-breed payment and point-of-sale solutions in time for the upcoming Liability Shift for EMV Chip and PIN slated for October 2015. HDX has developed and deployed EMV Chip and PIN enabled solutions at thousands of merchant locations throughout Europe and Canada over many years and is well prepared to scale the combined organization for the coming opportunity in the USA. Premier has established its own BIN ("Bank Identification Number"), maintains multiple front-end authorization network agreements, performs its own ongoing risk monitoring and underwriting and has the ability to transfer its merchant processing base from one back-end settlement network and Sponsor Bank to another if necessary.
The Company continues to pursue acquisitions within the point of sale and payments industries although none are specifically named at this time.
Quarterly Highlights and Summary
- Recurring revenue for the three-months ended June 30, 2015 was $2,143,315, an increase of $265,023 (14.1%) from recurring revenue of $1,878,292 for the three-months ended June 30, 2014, and an increase of $191,751 (9.8%) from recurring revenue of $1,951,564 for the three-months ended March 31, 2015;
- Total revenue was $5,284,556 for the three-months ended June 30, 2015, down $50,034 (0.9%) from $5,334,590 for the three-months ended June 30, 2014 and up $538,495 (11.3%) from $4,746,061 for the three-months ended March 31, 2015;
- Total point-of-sale ("POS") revenue was $4,697,150 for the three-months ended June 30, 2015, down $236,365 (4.8%) from $4,933,515 for the three-months ended June 30, 2014 and up $419,272 (9.8%) from $4,277,878 for the three-months ended March 31, 2015;
- Total adjusted payment processing revenue was $587,406 for the three-months ended June 30, 2015, up $238,541 (68.4%) from $348,865 for the three-months ended June 30, 2014 and up $119,223 (25.5%) from $468,183 for the three-months ended March 31, 2015;
- Net loss for the three-months ended June 30, 2015 was a loss of $645,911, an increase of $18,342 (2.9%) from a loss of $627,569 for the three-months ended June 30, 2014, and a decrease of $472,967 (42.3%) from a loss of $1,118,878 for the three-months ended March 31, 2015;
- EBITDA loss for the three-months ended June 30, 2015, was $173,033, a decrease of $4,053 (2.9%) from a loss of $177,086 for the three-months ended June 30, 2014, and a decrease of $474,987 (73.3%) from a loss of $648,020 for the three-months ended March 31, 2015;
- Normalized EBITDA profit / (loss) for the three-months ended June 30, 2015 was ($125,043), a decrease of $518,289 (131.8%) from $393,246 for the three-months ended June 30, 2014, and an improvement of $438,178 (77.8%) from ($563,221) for the three-months ended March 31, 2015;
- Gross profit was $2,209,753 for the three-months ended June 30, 2015, down $84,586 (3.7%) from $2,294,339 for the three-months ended June 30, 2014, and up $446,227 (25.3%) from $1,763,526 for the three-months ended March 31, 2015; and
- Included in cost of sales and operating expenses for the three-months ended June 30, 2015, June 30, 2014 and March 31, 2015 were certain one-time non-recurring expenditures, non-cash amortization of intangible assets and property plant and equipment and non-cash stock-based compensation expense totaling $402,781, $636,342 and $427,455 respectively.
(1) The Company's ability to recognize the gross payment processing fees as payment process revenue for the calculation of adjusted total revenue, would have resulted in a similar increase in the Company's costs of sales resulting in a minimal impact to earnings for the comparative periods.
Non-GAAP Reporting Measures:
Management reports on certain non-GAAP measures to evaluate performance of the Company. EBITDA is a measure commonly reported and widely used by investors as an indicator of a company's operating performance and ability to incur and service debt, and as a valuation metric. While EBITDA has been disclosed herein to permit a more complete comparative analysis of the Company's operating performance and debt servicing ability relative to other companies, investors are cautioned that EBITDA as reported by Posera-HDX may not be comparable in all instances to EBITDA as reported by other companies. For definitions of other Non-GAAP measures, refer to the Company's annual management discussion and analysis for the three and twelve-months ended December 31, 2014 and management discussion and analysis for the three-months ended March 31, 2015 and June 30, 2015.
Additional information on HDX's first quarter 2015 financial results will be available in the financial reports filed by the Company with Sedar at www.sedar.com
About the Company
HDX is in the business of managing merchant transactions with consumers and facilitating payment. The Company develops and deploys touch screen POS system software and associated enterprise management tools and has developed and deployed numerous POS applications. HDX also provides system hardware integration services, merchant staff training, system installation services, and post-sale software and hardware support services.
HDX leading edge technology also includes prepaid stored value payments solutions, customer self-serve kiosks and "line buster" mobile POS terminals. These products have been designed to dramatically enhance customer throughput and drastically reduce customer queues. These technologies are especially effective in high foot traffic environments that have limited cash register counter space, limited retail square footage, and the absence of a drive through.
HDX develops, deploys, and supports a restaurant POS software known as "Maître 'D" which has been deployed in over 20,000 locations worldwide in eight different languages. The Company sells and services its clients directly, as well as through a network of approximately 85 value added reseller partners in 25 countries with approximately 550 reseller representatives selling, supporting & installing its software.
This discussion includes certain forward-looking statements that are based upon current expectations, which involve risks and uncertainties associated with our business and the environment in which the business operates. Any statements contained herein that are not statements of historical facts may be deemed to be forward-looking, including those identified by the expressions "anticipate", "believe", "plan", "estimate", "expect", "intend", and similar expressions to the extent they relate to the Company or its management. The forward-looking statements are not historical facts, but reflect HDX's current expectations regarding future results or events. These forward-looking statements are subject to a number of risks and uncertainties that could cause actual results or events to differ materially from current expectations, including the matters discussed under "Risks and Uncertainties" in the Annual Information Form to be filed on March 31st 2015 with the regulatory authorities. HDX assumes no obligation to update the forward-looking statements, or to update the reasons why actual results could differ from those reflected in the forward-looking statements.
For further information: Paul K. Howell, Chief Executive Officer, Posera-HDX Ltd. (HDX), 350 Bay Street, Suite 700, Toronto, Ontario M5H 2S6, (800) 465-2400 ext. 2263