Planet Payment Announces 2011 Annual Results

LONG BEACH, N.Y., March 30, 2012 (GLOBE NEWSWIRE) -- Planet Payment, Inc. (LSE:PPT) (LSE:PPTR) (OTCQX:PLPM), a leading multi-currency payment and data processor, today announced its results for the year and the three months ended December 31, 2011. During both periods, the Company again delivered solid results, showing strong growth in revenue, net income and Adjusted EBITDA:

2011 Financial Highlights

• Net revenue increased 37% to $41.9m (2010: $30.6m)
• Multi-Currency processing services revenue increased 52% to $27.2m (2010:$18.0m)
• Net income increased to $2.4m (2010 loss: ($3.1m))
• Adjusted EBITDA of $5.9m, an increase of $4.1m or 226% over $1.8m in 2010. See Table 1 in this announcement for reconciliation of net income (loss) to Adjusted EBITDA
• Consolidated gross billings increased 58% to $102.4m (2010: $64.7m). (See Table 2 in this announcement for explanation of this key metric)
• Gross foreign currency mark-up increased 69% to $87.8m (2010: $52.1m). (See Table 2 in this announcement for explanation of this key metric)
• Diluted earnings per share increased to $0.04 from a loss of $(0.08) per share in 2010.

Fourth Quarter 2011 Financial Highlights

• Net revenue increased 29% to $12.3m (Q4 2010: $9.5m).
• Net income increased to $1.8m (Q4 2010 loss: ($0.2m))
• Adjusted EBITDA of $2.7m an increase of $0.8m or 42%, (Q4 2010: $1.9m). See Table 1 in this announcement for reconciliation of net income (loss) to Adjusted EBITDA.
• Consolidated gross billings increased 47% to $31.5m (Q4 2010: $21.4m). (See Table 2 in this announcement for explanation of this key metric)
• Gross foreign currency mark-up increased 51% to $27.2m (Q4 2010: $18.0m). (See Table 2 in this announcement for explanation of this key metric)

2011 Operational Highlights

• Total active merchant locations increased by 67% to 27,887 as of December 31, 2011 (as of December 31, 2010: 16,697).
• Settled multi-currency dollar volume processed for the year increased 70% to $2.3b (2010: $1.4b). For fourth quarter 2011 settled multi-currency dollar volume processed increased 58% to $0.7b (Q4 2010: $0.5b).
• Rolled out Pay in Your Currency service with Network International in UAE to over 3,500 merchant locations.
• Expanded our relationship with Vantiv (formerly known as Fifth Third Processing Solutions) by entering into an agreement with them to provide our Pay In Your Currency service at ATMs.
• Launched the MICROS Payment Gateway to facilitate the integration of MICROS property management systems in hotels and restaurants to our platform. The first hotels, two Hyatt Regency properties in Hong Kong, were implemented before the end of the year.
• Integrated our iPAY gateway with VendorShop's Facebook shopping cart application.

Current Trading Highlights – First Quarter 2012

• Entered into agreement with China UnionPay to provide processing support for China UnionPay's credit and debit cards in both card present and card-not-present environments directly to banks and acquirers on a worldwide basis. Signed agreement with MICROS to add support for China UnionPay cards to the MICROS Payment Gateway.
• Entered into agreements with Citibank, Hong Kong and Macau, Citibank, Philippines and Mashreq, UAE for our Pay in Your Currency service in each of those countries.

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

"We are very pleased to announce our strong year-over-year growth, capping what was an excellent year for Planet Payment. Our services continue to help acquirers open new sales channels, merchants sell more goods and services and cardholders enjoy informed choice and transparency at the point-of-sale.   We believe that Planet Payment continues to benefit from a "network effect" as we add more acquiring institutions, in more countries, using more products on our platform. We look forward to an exciting year in 2012."

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 2011, including its Audited Consolidated Financial Statements, as of December 31, 2010 and 2011 and for the three years ended December 31, 2011 have been posted on the OTCQX website at www.otcqx.com and on the Company's website at www.planetpayment.com. Additional analysis of the Company's performance can be found in the "Management's Discussion & Analysis of Financial Condition and Results of Operations." section included in such Annual Report. Copies of the Company's Annual Report for 2011 will be sent to shareholders in April together with the Notice of the 2012 Annual Meeting, which is to be held in May 2012 in New York.  Copies of the Annual Report will also be available on request, through the Annual Reports service and on the Company's website upon publication.

About Planet Payment^®

Planet Payment is a leading provider of international payment processing and multi-currency processing services. We provide our services in 16 countries and territories across the Asia Pacific region, North America, the Middle East, Africa and Europe, primarily through our more than 45 acquiring bank and processor customers. Our point-of-sale and e-commerce services help merchants sell more goods and services to consumers, and are integrated within the payment card transaction flow enabling our acquiring customers to process and reconcile payment transactions in multiple currencies, geographies and channels.

Planet Payment is headquartered in New York and has offices in Atlanta, Beijing, Bermuda, Delaware, Dubai, London, Hong Kong, Mexico City, Shanghai and Singapore. Visit www.planetpayment.com for more information on the Company and its services. For up-to-date information follow Planet Payment on Twitter at @PlanetPayment or join Planet Payment's page on Facebook.

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, including information related to the first quarter 2012 activities and performance, 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 2011, 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, 2011. Planet Payment's strong performance during the year reflects the continued adoption of our services and solutions by existing and new customers. The improvement in our financial results demonstrates the operating leverage inherent in our payment platform and business model.

We achieved net revenue of $41.9 million for the full year, reflecting an increase of 37% over 2010. Our strong revenue growth reflects the increase in transaction processing volumes primarily driven by the addition of active merchant locations as well as the general improving of global economic conditions.  Adjusted EBITDA for the year increased to $5.9 million, a year over year increase of 226%. Adjusted EBITDA growth far outpaced revenue growth for the year, highlighting the operating leverage in our business and our ability to maintain level operating expenses, while investing in future growth. As a result, we generated net income for the year of $2.4 million, a significant improvement from a net loss of $3.1 million in 2010.

Our point-of-sale ("POS") and e-commerce services help merchants sell more goods and services to consumers and enable our acquiring customers to process and reconcile payment transactions in multiple currencies, geographies and channels. Our services help banks, processors and merchants enhance revenue, broaden their product set and open new sales channels and cardholders enjoy informed choice and transparency at the point-of-sale. The Company's customer base includes more than 45 acquiring banks and processors spanning more than 16 countries and territories across the Asia Pacific region, North America, the Middle East, Africa and Europe, including our established markets of China, Hong Kong, Macau, Taiwan and Malaysia.

In 2011 we continued to collaborate with our existing acquiring bank and processor customers in order to increase participation by merchants in the various services that we offer. Since the beginning of 2011, the Company has rolled out our multi-currency processing services in the United Arab Emirates, the Philippines and other Asia Pacific countries launched in 2010 and delivered both domestic and multi-currency services to additional acquirers in Canada. Network International announced in July that over 3,500 merchant locations in the UAE had signed agreements to offer the Company's Pay in Your Currency service. By the end of 2011, our base of active merchant locations grew more than 67% or by over 11,000 to nearly 28,000 active locations. Approximately 26% of the multicurrency settled dollar volume processed in December 2011 was attributed to new merchants activated in 2011.

We continue to cross sell our innovative services to our acquiring banks and processors, and merchants. While merchants in industry verticals such as hospitality, retail and restaurants have been enjoying the benefits of our Pay in Your Currency service for several years, we are now able to offer similar services to ATM operators. In March 2011 we entered into a new contract with one of our long-standing customers, Vantiv (formerly known as Fifth Third Processing Solutions) to power its ATM Network in the United States with our Pay in Your Currency service.  Cardholders withdrawing cash from over 11,000 ATMs powered by Vantiv across the United States will have the option to see the final amount of a cash withdrawal in their home currency at the time of the transaction.  We anticipate launching the service with Vantiv in the second quarter of 2012. We consider this to be a significant new channel to market and expansion of our existing multicurrency product set, complementing our e-commerce and point of sale capabilities.

We have continued to use our technology resources to develop enhanced platform capabilities in order to enhance our market position and enable our customers to retain and attract new business, as well as respond to changes in the marketplace. For example, in certain markets in which we operate, there is a shift from merchants' use of stand-alone terminals to integrated payment solutions. In 2011, we launched the MICROS Payment Gateway to facilitate integrated payment support solutions for merchants using MICROS point of sale and property management systems in the hospitality and restaurant industries. In December 2011, we announced our first implementation of the MICROS Payment Gateway at two Hyatt Regency hotels in Hong Kong.

As the payment industry continues to evolve, we aim to be at the forefront by developing new services and solutions that leverage both our platform and core competencies. We believe that the development of new services and solutions are essential, in order to enable us to continue to differentiate our platform and capabilities and provide solutions to meet the challenges faced by acquiring banks and processors, as well as merchants. For example, in 2011 we integrated our iPAY gateway with VendorShop's Facebook shopping cart application. This innovative social commerce solution empowers merchants to sell to a global market of over 800 million Facebook monthly active users, enabling retailers to convert their "static" Facebook presence into a new sales channel for their business.  With this solution, Facebook merchants will be able to accept credit cards through any participating acquirer integrated into Planet Payment's international transaction platform.   

We believe that Planet Payment continues to benefit from a "network effect" as we add more countries and more acquiring institutions using more products on our platform. The addition of new regions, acquirers and products creates more choices for our customers and their merchants. We recently entered into a contract with China UnionPay to provide processing support for China UnionPay's credit and debit cards in both card present and card-not-present environments directly to banks and acquirers on a worldwide basis. In addition, we will be enhancing iPAY to include support for China UnionPay's new UnionPay Online Payment (UPOP) service, which we expect to launch in the second quarter of 2012. UPOP provides merchants with the facility to authenticate and process UnionPay debit cards online, providing merchants with better access to the Chinese e-commerce space. We also recently announced an agreement with MICROS to add support for China UnionPay to the MICROS Payment Gateway.

In response to market demand, we have accelerated the expansion of our business development and relationship sales teams ahead of our original operating plan, thereby increasing certain operating expenses. Notably, during the third quarter, we established a Mexican subsidiary, with offices in Mexico City as our headquarters for the Latin America Caribbean region and hired a Managing Director for Latin America.

Planet Payment continues to benefit from a robust new business pipeline and is currently working to implement additional acquiring bank, processor and merchant solutions and thereby 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. By adding incremental volume to our single, scalable, currency neutral platform we can increase our operational leverage.

ENHANCEMENTS TO OUR PROCESSING PLATFORM AND CAPABILITIES

During 2011, 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 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 a more comprehensive solution and is intended to increase returns on investment for our acquiring customers by including a broader pool of potential customers.  

We have continued to ensure our processing platform remains robust, reliable, scalable and secure. The provision of secure processing solutions to our acquiring customers, their merchants and cardholders continues to be a key priority for the Company. We therefore deployed several new service offerings during 2011. Given the unified architecture of our single platform, once new enhancements and solutions have been implemented, they are available to all of our customers around the world.

Specifically, in 2011:

• we developed multi-currency processing support for ATMs hosted by acquiring banks, certified through the Cirrus (MasterCard) network, which we anticipate launching in the second quarter of 2012;
• we certified hosted processes for Verified by Visa and MasterCard Securecode authorization for e-commerce merchants; 
• we integrated with and launched our hosted MICROS Payment Gateway; and
• we added additional language support, including Canadian French, building on our existing support in Canada, as well as and Spanish and Portuguese to support our expansion initiatives in Latin America.

During 2011 the Company again successfully completed its annual independent examination under Statement on Standards for Attestation Engagements No. 16 (Formerly known as "SAS70 Type II") and obtained re-certification of compliance with the PCI-DSS security requirements.

During the first half of 2011, we were granted additional patent claims under our "Time of Transaction Foreign Currency Conversion" in Singapore. These are in addition to the patents previously granted in the United States and other countries. We view the Company's growing catalogue of patents as a validation of the Company's innovative approach to multicurrency payments.

CORPORATE FINANCE

In April 2011, the Company announced that investors led by Camden Partners had converted their entire outstanding principal amount of $9.0m of convertible notes into an aggregate of 4,049,776 shares of common stock. In addition, the Company issued 425,000 shares of common stock in lieu of cash payments for accrued interest and a prepayment fee negotiated at the time of conversion. This transaction strengthened the Company's balance sheet and eliminated related interest expense going forward. The Company ended 2011 with total liabilities reduced by 55% to $6.1m (2010: $13.5m) and stockholders' equity of $18.7m an increase of 230% over 2010 (2010: $5.7m).

In 2011, the Company started the process of becoming a reporting company under U.S. Securities laws and continues to work with its advisors on that process. 

CURRENT TRADING AND OUTLOOK

The year has started with our signing agreements with three new acquiring banks, one of which is already operating a pilot and we look forward to implementing other acquiring banks over the coming months and to boarding their merchants on to our platform. In 2012 we also expect to continue to cross sell our innovative services to our acquiring institution customers and to their merchants. We believe that based on entering new regions, implementing new acquiring customers and activating new merchants on our platform, the Company is well positioned for further growth in 2012.

We look forward to an exciting 2012.

Philip Beck
Chairman and Chief Executive Officer

Management's Discussion & Analysis of Financial Condition and Results of Operations.

RESULTS OF OPERATIONS

Year and Three Months Ended December 31, 2011 Compared to the Year and Three Months Ended December 31, 2010

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 income (loss) 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 income (loss) , the most directly comparable financial measure calculated and presented in accordance with GAAP.

Table 1. Reconciliation of Net Income (Loss) to Adjusted EBITDA (non-GAAP)

For the three months and year ended December 31, 2011 and 2010

Table 2.  Explanation of Key Metrics