Points International Reports Third Quarter 2009 Financial Results

    
    -   Quarterly Revenue of $20.7 Million
    -   Significant reduction in Net Loss; Swings to Positive EBITDA(1) of
        $72,000
    -   Adds New Partnership with Chase, Continues Diversification Strategy
    -   Ongoing New Technology Infrastructure Development Will Deliver
        Improved Efficiencies, Enhanced Functionality, Improved New Business
        Rollouts and Expense Reductions
    -   Targets High End of 2009 Revenue Guidance and Reiterates Positive
        Full Year EBITDA
    -   Provides 2010 Guidance Calling for Revenue Between $60 Million to $70
        Million, Net Income Profitability and 3% to 5% EBITDA Margins
    

TORONTO , Nov. 5 /CNW/ - Points International Ltd. ("Points") - (OTCBB: PTSEF, TSX: PTS) - the world's leading loyalty reward solutions provider and owner of the Points.com portal - today announced results for the third quarter ended September 30, 2009 . All financial results are in U.S. Dollars.

"Third quarter results and business metrics were on plan and we are highly encouraged by strong contributions from our newest partnerships that launched this year," said CEO Rob MacLean. "Following our recent successful European expansion we are pleased to announce a three-year contract extension of our highly productive Lufthansa partnership. Today we are also publicizing our new partnership agreement with J.P. Morgan Chase , one of the largest financial services companies in the world. Working with Chase's Ultimate Rewards program, we will be leveraging our extensive installed base of partners and providing real-time integration services for this newly launched initiative. This deal is yet another important indicator of the success of both our new business efforts and our diversification strategy. In addition, we are working closely with a number of our partners on a variety of promotional activities for the holiday season and expect to end the year on a positive note. Moreover, strong progress on partner launches and Project ePoch, our technology infrastructure initiative, continues to give us good visibility on lowered expenses and promises exciting new functionality, distribution capabilities and operational flexibility into 2010 and beyond," continued MacLean.

Third Quarter 2009 Financial Results

Total revenue was $20.7 million for the third quarter of 2009. Revenue was up from $20.4 million reported in the third quarter of 2008, and down from $21.3 million in the second quarter of 2009. Principal revenue grew to $18.9 million , up from $18.3 million in the same period last year, and down from $19.6 million in the second quarter of 2009. Commission revenue was $1.8 million , down from $1.9 million reported in the same period of last year and up from $1.7 million in the second quarter of 2009.

Points reported a net loss for the third quarter of 2009 of $265,000 , or ( $0.00 ) per share. Net loss narrowed sharply compared to $1.4 million or ( $0.01 ) per share in the same period in the previous year, and a net loss of $471,000 or ( $0.00 ) per share, in the second quarter of 2009.

Third quarter results include restructuring charges of $332,000 incurred during the quarter related to previously announced staff reductions.

Points reported positive EBITDA of $72,000 during the quarter compared to an EBITDA loss of $543,000 in the same period of 2008 and an EBITDA loss of $566,000 in the second quarter of 2009.

As of September 30, 2009 , Points' total cash, comprised of cash and cash equivalents together with security deposits, short term investments and amounts with payment processors, was $33.5 million , up from $29.4 million at the end of the second quarter of 2009. The Company carries no debt and Points believes that its strong balance sheet and proven ability to generate positive free cash flow on an ongoing basis establishes a very strong operating position going forward.

Board of Directors and Management Team Update

"We are pleased to announce that Bernay Box, a long-time major shareholder and supporter of the company, has been appointed as Chairman of our Board of Directors following the resignation of Stephen K. Bannon as Chairman. Bernay has already proven to be an important contributor to our Board and we believe he will be a valuable asset to the team as we execute on our long-term strategy to drive growth and profits for our business," added MacLean. "We also would like to thank Steve for his strong leadership and look forward to his ongoing contributions as a Board member."

"The successful launch of the ePoch technology platform in mid-November and the new consumer site in early 2010 will be the foundation that transforms the company into a high-growth high margin business. The strategy is in place; it is imperative for senior management to continue to drive this process aggressively and to articulate this to the public," stated Stephen K. Bannon.

Separately, the Company today announced that Rob Borden , Chief Marketing Officer, has resigned for personal reasons. Points has added strength and resources to its consumer marketing capabilities and has an effective team in place to continue to drive its consumer objectives. Mr. Borden will remain an advisor to the Company.

    
    Third Quarter 2009 Business Metrics

                                                  Q3/09                Q3/09
                                                   vs.                  vs.
                         Q3/09          Q2/09     Q2/09      Q3/08     Q3/08
    TOTAL ALL CHANNELS

    Points/Miles
     Transacted      2,977,544,288   2,830,429,997  5%   3,051,397,755   -2%
    No. of
     Points/Miles
     Transactions          325,053         302,419  7%         335,742   -3%
    Cumulative
     Points/Miles
     Transacted     54,344,042,972  51,366,498,684  6%  42,750,548,917   27%

    PRIVATE BRANDED CHANNELS

    Points/Miles
     Transacted      2,695,440,443   2,542,915,477  6%   2,752,100,503   -2%
    No. of
     Points/Miles
     Transactions          301,041         279,311  8%         310,608   -3%
    Cumulative
     Points/Miles
     Transacted     48,842,866,291  46,147,425,848  6%  38,503,143,113   27%

    POINTS.COM CHANNELS

    Points/Miles
     Transacted        282,103,845     287,514,520 -2%     299,297,252   -6%
    No. of
     Points/Miles
     Transactions           24,012          23,108  4%          25,134   -4%
    Cumulative
     Points/Miles
     Transacted      5,501,176,681   5,219,072,836  5%   4,247,405,804   30%
    Cumulative
     Registered
     Users               2,324,611       2,252,404  3%       2,066,919   12%
    

Business Outlook

"We expect to deliver fourth quarter revenues that will result in the company reaching the high-end of our 2009 revenue range of $70 to $80 million and we are reiterating our outlook for positive annual EBITDA for the third consecutive year," said CFO Anthony Lam . "Looking ahead to 2010 our goal is to replace lower margin business with more attractive and diversified revenues. We plan to accomplish this via a combination of solid growth from our current partners, an improved mix of transactions, strong contributions from new partners and operational efficiencies driven by project ePoch. Our 2010 guidance calls for revenues of $60 million to $70 million and we expect to report net income profitability for the year based on EBITDA margins of approximately three to five percent. Our model calls for continued margin expansion through the rest of 2009 and into 2010 that will drive profitability for our company."

    
    Points has an aggressive 2010 plan that includes the following
    objectives:

    -   Development and deployment of Project ePoch. This upgraded technology
        platform is designed to improve efficiencies and support scale for
        both Points' private-branded e-commerce solutions and the Points.com
        consumer portal. The e-commerce deployment is on track for launch in
        the fourth quarter of 2009, followed by a redesigned Points.com
        consumer destination. ePoch will facilitate the Company's aggressive
        growth plans and enable Points to develop and launch new innovations,
        including mobile and social networking applications, for the loyalty
        industry, while delivering efficiencies that are expected to result
        in lower operating and maintenance costs.

    -   Continued progress on the Points.com consumer proposition
        redevelopment. Building on recent new functionality such as Facebook
        Connect integration, Points.com will see tremendous change over the
        course of 2010. In coordination with Project ePoch, new branding,
        user interface, expanded social media integration as well as improved
        product functionality will be rolled out over the first half of the
        year and continue throughout 2010 toward a goal of attracting 15
        million registered users over the next several years.

    -   Expand and diversify the customer base. Points currently partners
        with approximately 50 leading companies in the loyalty sector. During
        2010 the Company intends to expand the number of total partners as
        well as the number of services it offers and deploys to its current
        partners. Points also plans to continue its diversification efforts
        geographically and across multiple sectors and is establishing a
        staff presence in Europe in support of this growth.

    -   Drive higher margin revenue and focus on profitability. Points is
        driving a shift in its revenue mix toward higher margin business that
        is expected to lead to sustained profitability for the Company. Many
        of the recent partnership agreements signed by Points have been under
        the principal model, and the additional consumer services that will
        be launched on the Points.com portal are expected to be accretive to
        the Company's current margin profile.
    

"2010 will be a very exciting year for Points. We are fully engaged with our blue-chip loyalty partners in leveraging our services to help drive revenue and margin for their businesses. We are very pleased that our revenues other than the Delta/NWA business continue to be very robust, growing almost 35% year over year and carrying significantly improved gross margins. Through the year we will be growing our most successful partnerships while benefitting from an ability to leverage the operating efficiencies and expansion capabilities inherent to the deployment of project ePoch. Our new business pipeline is healthy and will contribute to our ability to deliver strong results and improving profitability for our shareholders," concluded MacLean.

Investor Conference Call

Points' quarterly conference call with Rob MacLean, CEO, Christopher Barnard , President and Anthony Lam , CFO, will be held today at 5:00 p.m. Eastern Time . To participate in the conference call, investors from the US and Canada should dial 877-941-1429 ten minutes prior to the scheduled start time. International callers should dial 480-629-9666. 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.

Consumer Website: www.points.com

Corporate Website: www.pointsinternational.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 statements relating to our guidance for 2009 and 2010 with respect to revenue, EBITDA and net income profitability, our ability to improve our margins, our anticipated expense reductions, and our objectives, strategic plans and business development goals, including our registered user goal and the timing and efficacy of the upgrade to our technology platform. Such forward-looking statements can generally be identified by words such as "will," "may," "expects," "guidance," "anticipates," "intends," "plans," "believes," "estimates" or similar expressions. These statements represent only Points' expectations, estimates and projections regarding future events and actual results may vary from the forward-looking statements made in this press release.

Although Points believes the expectations reflected in such forward-looking statements are reasonable, the forward-looking statements are not guarantees of future performance and are subject to important risks and uncertainties that are difficult to predict. In addition, certain material assumptions and estimates are applied in making forward-looking statements, and these may not prove to be correct. In particular, our revenue, EBITDA and net income profitability guidance, and our expectation of improved margins, assume that we will be able to generate new business from our pipeline at expected margins, Points' in-market products and services will continue to perform along historical growth curves, transaction rates for newly launched products and services will grow in a manner consistent with the Company's experience with its products in the market, and we will be able to contain costs and realize operational efficiencies from the upgraded technology platform. Important risk and uncertainties that could cause actual results to differ materially include those detailed in Points' other filings with applicable securities regulators, including Points' Annual Information Form, Form 20-F, Annual 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.

(tables to follow)

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


                          POINTS INTERNATIONAL LTD.
                UNAUDITED INTERIM CONSOLIDATED BALANCE SHEETS
                     (Expressed in United States dollars)

                                                  September 30,  December 31,
    AS AT                                                 2009          2008
    -------------------------------------------------------------------------

                                   ASSETS
                                   ------
    CURRENT
      Cash and cash equivalents                   $ 27,144,314  $ 22,854,494
      Funds receivable from payment processors       3,075,540     5,065,722
      Short-term investments                           878,335       791,880
      Security deposits                              2,417,676     2,249,582
      Accounts receivable                            1,364,502     2,447,525
      Future income tax assets                         479,000       600,815
      Current portion of deferred costs                249,653       246,772
      Prepaid and sundry assets                        678,189     1,548,329
                                                  ------------- -------------
                                                    36,287,209    35,805,119
                                                  ------------- -------------

    PROPERTY AND EQUIPMENT                             764,476       808,648
    INTANGIBLE ASSETS                                1,335,774       997,716
    GOODWILL                                         4,204,755     4,204,755
    DEFERRED COSTS                                      84,673       146,391
    OTHER ASSETS                                     1,076,912       751,843
                                                  ------------- -------------
                                                     7,466,590     6,909,353
                                                  ------------- -------------
                                                  $ 43,753,799  $ 42,714,472
                                                  ------------- -------------
                                                  ------------- -------------

                                 LIABILITIES
                                 -----------
    CURRENT
      Accounts payable and accrued liabilities    $  2,467,596  $  3,217,409
      Current portion of deferred revenue              817,202     1,087,059
      Payable to loyalty program partners           29,351,228    25,966,589
                                                  ------------- -------------
                                                    32,636,026    30,271,057

    DEFERRED REVENUE                                   268,872       259,220
                                                  ------------- -------------
                                                    32,904,898    30,530,277
                                                  ------------- -------------

                             SHAREHOLDERS' EQUITY
                             --------------------

    ACCUMULATED OTHER COMPREHENSIVE LOSS            (2,566,230)   (2,566,230)
    ACCUMULATED DEFICIT                            (51,362,458)  (49,527,082)
                                                  ------------- -------------
                                                   (53,928,688)  (52,093,312)

    CAPITAL STOCK                                   56,662,421    56,662,421
    CONTRIBUTED SURPLUS                              8,115,168     7,615,086
                                                  ------------- -------------
                                                    10,848,901    12,184,195
                                                  ------------- -------------
                                                  $ 43,753,799  $ 42,714,472
                                                  ------------- -------------
                                                  ------------- -------------



                          POINTS INTERNATIONAL LTD.
     UNAUDITED INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT
                     (Expressed in United States dollars)

    FOR THE PERIODS ENDED
    SEPTEMBER 30,             Three Month Period          Nine Month Period
    -------------------------------------------------------------------------
                              2009          2008          2009          2008
    -------------------------------------------------------------------------
    REVENUE
      Principal       $ 18,886,179  $ 18,304,129  $ 57,885,436  $ 45,770,758
      Commission         1,840,994     1,871,845     5,267,048     7,419,888
      Interest               4,925       208,376        49,943       704,280
                      ------------- ------------- ------------- -------------
                        20,732,098    20,384,350    63,202,427    53,894,926
                      ------------- ------------- ------------- -------------

    GENERAL AND
     ADMINISTRATION
     EXPENSES
      Direct cost of
       principal
       revenue          16,393,009    15,957,294    50,749,186    38,858,455
      Employment costs   2,537,551     2,880,473     7,993,566     8,280,872
      Processing fees
       and related
       charges             582,103       716,476     1,776,938     2,313,657
      Marketing and
       communications      327,724       395,892     1,058,722       961,202
      Technology
       services            253,129       243,556       694,880       683,906
      Amortization of
       property and
       equipment            92,800       175,032       267,259       404,833
      Amortization of
       intangible
       assets              107,618       171,889       282,016       441,842
      Amortization of
       deferred costs            -        82,333         1,629       323,053
      Foreign exchange
       (gain) loss         (69,773)      390,932      (238,474)     (684,592)
      Operating
       expenses            566,477       733,321     2,002,572     2,281,932
      Restructuring
       charges             331,997             -       331,997             -
                      ------------- ------------- ------------- -------------
                        21,122,635    21,747,198    64,920,291    53,865,160
                      ------------- ------------- ------------- -------------
    OPERATING (LOSS)
      INCOME - before
      undernoted          (390,537)   (1,362,848)   (1,717,864)       29,766
                      ------------- ------------- ------------- -------------
    OTHER (INCOME)
     EXPENSES
      Interest on
       preferred
       shares                    -             -             -       516,577
      Interest and
       other (income)
       charges             (28,340)       10,139        (4,303)       40,932
                      ------------- ------------- ------------- -------------
                           (28,340)       10,139        (4,303)      557,509
                      ------------- ------------- ------------- -------------
    LOSS BEFORE INCOME
     TAXES                (362,197)   (1,372,987)   (1,713,561)     (527,743)

    (Recovery)
     provision for
     future income
     taxes                 (97,000)            -       121,815             -
                      ------------- ------------- ------------- -------------
    NET LOSS          $   (265,197) $ (1,372,987) $ (1,835,376) $   (527,743)
                      ------------- ------------- ------------- -------------
                      ------------- ------------- ------------- -------------

    LOSS PER SHARE
      Basic                 ($0.00)       ($0.01)       ($0.01)       ($0.00)
      Diluted               ($0.00)       ($0.01)       ($0.01)       ($0.00)

    DEFICIT -
     Beginning of
     period           $(51,097,261) $(45,126,800) $(49,527,082) $(45,972,044)
      Net loss for the
       period             (265,197)   (1,372,987)   (1,835,376)     (527,743)
                      ------------- ------------- ------------- -------------
    DEFICIT - End of
     period           $(51,362,458) $(46,499,787) $(51,362,458) $(46,499,787)
                      ------------- ------------- ------------- -------------
                      ------------- ------------- ------------- -------------


                          POINTS INTERNATIONAL LTD.
       UNAUDITED INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
                   AND ACCUMULATED OTHER COMPREHENSIVE LOSS
                     (Expressed in United States dollars)

    FOR THE PERIODS ENDED
    SEPTEMBER 30,             Three Month Period          Nine Month Period
    -------------------------------------------------------------------------
                              2009          2008          2009          2008
    -------------------------------------------------------------------------
    COMPREHENSIVE LOSS
      Net loss for the
       period         $   (265,197) $ (1,372,987) $ (1,835,376) $   (527,743)
                      ------------- ------------- ------------- -------------
    Comprehensive
     loss             $   (265,197) $ (1,372,987) $ (1,835,376) $   (527,743)
                      ------------- ------------- ------------- -------------
                      ------------- ------------- ------------- -------------

    ACCUMULATED OTHER
     COMPREHENSIVE LOSS
      Balance -
       Beginning of
       period         $ (2,566,230) $ (2,566,230) $ (2,566,230) $ (2,566,230)
                      ------------- ------------- ------------- -------------
      Balance - End of
       period         $ (2,566,230) $ (2,566,230) $ (2,566,230) $ (2,566,230)
                      ------------- ------------- ------------- -------------
                      ------------- ------------- ------------- -------------


                          POINTS INTERNATIONAL LTD.
           UNAUDITED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
                     (Expressed in United States dollars)

    FOR THE PERIODS ENDED
    SEPTEMBER 30,             Three Month Period          Nine Month Period
    -------------------------------------------------------------------------
                              2009          2008          2009          2008
    -------------------------------------------------------------------------
    CASH FLOWS FROM OPERATING
     ACTIVITIES

    Net loss          $   (265,197) $ (1,372,987) $ (1,835,376) $   (527,743)

    Items not
     affecting cash
      Amortization of
       property and
       equipment            92,800       175,032       267,259       404,833
      Amortization of
       intangible
       assets              107,618       171,889       282,016       441,842
      Amortization of
       deferred costs            -        82,333         1,629       323,053
      Future income
       taxes (recovery)    (97,000)            -       121,815             -
      Unrealized
       foreign exchange
       (gain) loss         (81,178)      154,252      (493,488)     (808,094)
      Employee stock
       option expense      176,349       166,692       500,082       494,055
      Interest on
       Series Two and
       Four Preferred
       Shares                    -             -             -       516,577
    Changes in non-cash
     balances related
     to operations       3,939,367    (4,222,713)    5,882,011     1,708,917
                      ------------- ------------- ------------- -------------
    CASH FLOWS
     PROVIDED (USED IN)
     BY OPERATING
     ACTIVITIES          3,872,759    (4,845,502)    4,725,948     2,553,440
                      ------------- ------------- ------------- -------------
    CASH FLOWS FROM
     INVESTING
     ACTIVITIES
      Additions to
       property and
       equipment           (13,610)     (291,856)     (223,087)     (439,496)
      Additions to
       intangible
       assets             (442,815)      (61,168)     (620,074)     (279,109)
      Sale of
       short-term
       investments               -     3,932,702             -    11,470,605
      Purchase of
       short-term
       investments               -             -             -    (4,975,494)
                      ------------- ------------- ------------- -------------
    CASH FLOWS (USED
     IN) PROVIDED BY
     INVESTING
     ACTIVITIES           (456,425)    3,579,678      (843,161)    5,776,506
                      ------------- ------------- ------------- -------------
    CASH FLOWS FROM
     FINANCING
     ACTIVITIES
      Loan repayments            -             -             -        (5,927)
      Share issuance
       on capital
       transaction               -      (106,980)            -     1,692,061
      Issuance of
       capital stock
       on exercise of
       stock options
       and warrants              -         7,662             -       269,673
                      ------------- ------------- ------------- -------------
    CASH FLOWS (USED
     IN) PROVIDED BY
     FINANCING
     ACTIVITIES                  -       (99,318)            -     1,955,807
                      ------------- ------------- ------------- -------------
    EFFECT OF EXCHANGE
     RATE CHANGES ON
     CASH HELD IN
     FOREIGN CURRENCY       34,418      (138,672)      407,033       (28,807)
                      ------------- ------------- ------------- -------------
    INCREASE
     (DECREASE) IN
     CASH AND CASH
     EQUIVALENTS         3,450,752    (1,503,814)    4,289,820    10,256,946
    CASH AND CASH
     EQUIVALENTS -
     Beginning of the
     period             23,693,562    33,296,738    22,854,494    21,535,978
                      ------------- ------------- ------------- -------------
    CASH AND CASH
     EQUIVALENTS - End
     of the period    $ 27,144,314  $ 31,792,924  $ 27,144,314  $ 31,792,924
                      ------------- ------------- ------------- -------------
                      ------------- ------------- ------------- -------------

    Supplemental Information
    ------------------------

      Interest
       received       $      7,350  $    258,126  $     64,520  $    702,031
      Interest paid   $      4,763  $        378  $      8,325  $      1,542
    

For further information: Anthony Lam, Chief Financial Officer, Points International Ltd., [phone], [email protected]; Alex Wellins or Brinlea Johnson, The Blueshirt Group, [phone], [email protected], or [email protected]