17 th B. Riley & Co. Investor Conference. May 2016 Hollywood

Transcription

1 17 th B. Riley & Co. Investor Conference May 2016 Hollywood Christopher Barnard President & Co-Founder NASDAQ: PCOM, TSX: PTS 1

2 SAFE HARBOR This presentation contains or incorporates forward-looking statements within the meaning of the United States securities legislation and forward-looking information within the meaning of Canadian securities legislation (collectively forward-looking statements"). These forward-looking statements include opportunities for new products and partners, potential for growth in revenue and gross margin and our financial outlook and guidance for 2016 with respect to revenue and Adjusted EBITDA. These statements are not historical facts but instead represent only Points expectations, estimates and growth 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. Undue reliance should not be placed on such statements. Certain material assumptions or estimates are applied in making forward-looking statements and actual results may differ materially from those expressed or implied in the forward-looking statements. In particular, the financial outlooks herein assume we will be able to maintain our existing contractual relationships and products, that such products continue to perform in a manner consistent with our past experience, that we will be able to generate new business from our pipeline at expected margins, in-market and newly launched products and services will perform in a manner consistent with past experience and we will be able to contain our costs. Our ability to convert our pipeline of prospective partners and product launches is subject to significant risk and there can be no assurance that we will launch new partners or new products with existing partners as expected or planned, nor can there be any assurance that we will be successful in maintaining our existing contractual relationships or maintaining existing products with existing partners. Other important assumptions, factors, risks and uncertainties that could cause actual results to differ materially are discussed in this presentation in the footnotes on Page 23 "2016 Guidance Financial Metrics and in our annual information form, Form-40-F, annual and interim management s discussion and analysis, and annual and interim financial statements and the notes thereto. These documents are available at and The forward-looking statements contained in this presentation are made as at the date of this presentation 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 forwardlooking statements made or incorporated in this presentation, whether as a result of new information, future eventsor otherwise. 2

3 Our Story The leading global transaction platform linking Loyalty Programs, Consumers and 3rd party brands. For Loyalty Programs: Unique, scalable, managed products that add value to their programs and drive strong economics. For Non-Loyalty Players: Managed transaction level access to hundreds of millions of accounts with incentive currency proven to drive behavior. Founded in 1999; ~200 employees HQ in Toronto, London, San Francisco 3

4 Investment Highlights Proven Track Record Consistent growth; Compelling Financial Model with Increasing Profitability Large, Underpenetrated Global Market Loyalty Programs looking to add new value to their hundreds of millions of members Multiple Growth Drivers Open Platform drives increasing innovation 4

5 Our Track Record: Delivering for All Stakeholders 5 YR CAGR: 2015 REVENUE 25% GROSS PROFIT DOLLARS ADJ EBITDA 27% 17% #8 SOFTWARE EPS 25% BOOK VALUE 24% #3 SAS 5

6 The Loyalty Industry GLOBAL + 000s Loyalty Programs worldwide VALUABLE $48B Per year value of points/miles issued and sold by North American loyalty programs That s 4X The revenue of US box office (2015) 1 ENGAGING 3.3B MEMBERS In U.S. Loyalty programs Memberships/ 29 household PROFITABLE +60% of miles issued today are bought Sources: COLLOQUY 2011 and 2015 Loyalty Census, U.S. figures, 1http:// 6

7 Loyalty: Common Thread Linking Major Global Industries TRAVEL $2.8T TRAVEL: 67% of travelers belong to a Hotel or Airline loyalty program FINTECH: Rewards credit cards = 2/3 of balances and 4/5 of all spend (2014) FINTECH $2.5T LOYALTY RETAIL $4.5T RETAIL: 45% of consumers cite earn rewards as primary purchase driver Sources: Travel Statista, Phocuswright; FnTech PayPal, Consumer Financial Protection Bureau; Retail Mariitz 7

8 Points Partner Network: Integrated Into Programs Globally Online banking level access to over 700M loyalty members globally 8

9 The Loyalty Commerce Network BUY PROGRAM INTEGRATION TRANSACTION MANAGEMENT MARKETING & MERCHANDISING PREDICTIVE ANALTYICS & OFFERS MALLS HOTEL SINGLE- CURRENCY PRODUCTS LOYALTY COMMERCE PLATFORM MULTI- CURRENCY PRODUCTS CONNECT 9

10 The Loyalty Commerce Network BUY PROGRAM INTEGRATION TRANSACTION MANAGEMENT MARKETING & MERCHANDISING PREDICTIVE ANALTYICS & OFFERS MALLS HOTEL LOYALTY COMMERCE PLATFORM SINGLE- CURRENCY PRODUCTS MULTI- CURRENCY PRODUCTS CONNECT 10

11 Selling Miles: +/- 95% of Current Revenue Points currently provides Currency Retailing solutions for 30+ of the world s leading loyalty programs BUY Members purchase points/miles for themselves GIFT Purchase points/miles for someone else TRANSFER Members share existing points/miles with friends & family 11

12 How Our Core Business Works: Long Term Contracts to Sell Miles/Points to Members Loyalty Program Gets Revenue Guarantee Full capabilities of Loyalty Commerce Platform Ongoing product development Points Gets: Wholesale price Extensive marketing access at no additional cost Long term contract Member has 42,000 miles, but needs 50,000 for a free flight Buys 8,000 miles from Points online/mobile for $200* Points deposits miles real-time via LCP Points pays program $160* for Miles Points earns $40 Gross Profit LOYALTY COMMERCE PLATFORM Frequent Flyers Will Pay Anything to Fly For Free * Representative pricing only 12

13 Selling Miles: Dependable Financial Foundation + Large Pipeline REVENUE GROSS PROFIT New Partner Adds ~$300M 2015 ± 10% Historic Organic Growth 75% of 2015 Revenue in Long Term Contracts +/- $43M PIPELINE GROSS PROFIT +/- $43M 2015 GROSS PROFIT 13

14 The Loyalty Commerce Network BUY PROGRAM INTEGRATION TRANSACTION MANAGEMENT MARKETING & MERCHANDISING PREDICTIVE ANALTYICS & OFFERS MALLS HOTEL LOYALTY COMMERCE PLATFORM SINGLE- CURRENCY PRODUCTS MULTI- CURRENCY PRODUCTS CONNECT 14

15 Points Travel: Connecting Travel Bookings with Loyalty Retail Hotel Price to Consumer $400 Points Wholesale Cost $300 Hotel Commission to Fund Loyalty Offer $100 Points Revenue $25 Loyalty Program $0.02 / mile $75 3,750 Miles to the Consumer BEST-IN-MARKET EARN OFFERS *Example/pricing for illustrative purposes 15

16 Points Travel: Market Proof - Now Focused on Scale Profitably Leveraging our OTA and Loyalty Assets Connecting OTA assets acquired in our 2014 PointsHound acquisition to the Loyalty Commerce Platform Customer acquisition costs eliminated via exclusive distribution channel for partner currencies Commercialization Announced / Launched: +/- $40M PIPELINE GROSS PROFIT 16

17 The Loyalty Commerce Network BUY PROGRAM INTEGRATION TRANSACTION MANAGEMENT MARKETING & MERCHANDISING PREDICTIVE ANALTYICS & OFFERS MALLS HOTEL LOYALTY COMMERCE PLATFORM SINGLE- CURRENCY PRODUCTS MULTI- CURRENCY PRODUCTS CONNECT 17

18 Points Loyalty Wallet: Engagement Tool to Increase Member Activity API-driven service for loyalty programs and 3 rd party developers that is distributable across multiple digital channels Broad distribution of loyalty currencies Engage members in the channels they are using Flexible and secure transactions in any channel 18

19 Balances / Card Art / Bar Codes Exchange Between Programs Earn / Burn Offers in Any Channel 19

20 Managed Access to Multiple Loyalty Programs for Any Channel DIGITAL WALLETS FINTECH Broad distribution of loyalty currencies & transactions through multi-channel distribution RETAIL ONLINE TRAVEL LOYALTY PROGRAM SITES 20

21 Points Loyalty Wallet Rollout Status Immediate Focus: Current Loyalty Partners Aim is to become de facto integration standard for the global loyalty industry Matrix of current partner requests represents almost 80 loyalty programs around the world +/- $40M PIPELINE GROSS PROFIT Non-Loyalty Partners/Channels Three signed deals announced with well established partners: Robust pipeline of opportunities with brands from travel, retail, fin tech/financial services 21

22 GROWTH DRIVERS: Strong Foundation Funds New Opportunities GROSS PROFIT DOLLARS CURRENT BASE BUSINESS: Platform capabilities offer line of site to significant growth PROVEN TRACK RECORD: +75% of historic Revenues under Long Term contracts +/- $43M 2015 MULTI-CURRECNY DISTRIBUTION: Unique Loyalty Wallet service with proof of Market Fit NEW SINGLE CURRENCY SERVICE: Unique Travel Offering with proof of Market Fit +/- $43M PIPELINE +/- $40M PIPELINE +/- $40M PIPELINE LOW INCREMENTAL COST TO DELIVER ON ANY PIPELINE SUCCESS. 22

23 2016 Guidance Financial Metrics REVENUE 25% 5 YR CAGR (2015) ADJUSTED EBITDA 27% 5 YR CAGR (2015) $350 $300 $250 $200 $150 $100 $50 $123 $140 $202 $255 $ %* $15 $13 $10 $8 $5 $3 $6.3 $7.2 $8.7 $10.9 $12.6 >10%* $ $ CASH, DEBT, SHARES OUTSTANDING**: 15.3M CASH**: $52.8M DEBT**: $0 ($13M AVAIL.) ENTERPRISE VALUE: $88.3M SHARE PRICE (5/24/16) $9.25 IMPLIED TTM EBITDA MULTIPLE 7.9x STOCK BUYBACK: 2016 NCIB PROGRAM ANNOUNCED TO BUY BACK UP TO 5% S/O **AS OF MARCH 31, 2016 *This data represents forward-looking information per our 2016 guidance provided in our news release dated March 2, Guidance reflects the Company's expectations as it relates to Adjusted EBITDA growth and the revenue growth from partners and products that were in market and deals that have been announced or are in very late stages of development as at March 2, Users are cautioned that actual results may vary due to material risk factors such as a downturn in the demand for air travel, the termination or renegotiation of contractual relationships with existing loyalty program partners, and delays in new deals with new loyalty program partners. 23

24 More Together. 24