Investor Update. September 2018 NASDAQ: PCOM TSX: PTS. Points International Ltd.

Size: px
Start display at page:

Download "Investor Update. September 2018 NASDAQ: PCOM TSX: PTS. Points International Ltd."

Transcription

1 Investor Update September 2018 Points International Ltd. NASDAQ: PCOM TSX: PTS

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 and potential for growth in revenue and gross margin. 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 forwardlooking statements. In particular, the 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 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 2 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 forward-looking statements made or incorporated in this presentation, whether as a result of new information, future events or otherwise.

3 Our Story We are the leading, global transaction platform connecting loyalty programs, 3rd party brands and consumers Recent Growth Rates For Loyalty Programs: Unique, scalable, managed services that add value to programs and drive strong economics via white label offerings by delivering new revenue streams at high margins. For Non-Loyalty Players: Managed, transaction level access to hundreds of millions of loyalty customer accounts and the ability to access valuable incentive currency that s proven to drive consumer behavior. ** Adj. EBITDA guidance range previously 20%- 40% (narrowed to 30%-40% on Aug. 8 th, 2018) Founded in 1999; ~215 employees Toronto (HQ), San Francisco, London 3

4 The Loyalty Industry GLOBAL + 000s Loyalty Programs worldwide ENGAGING 4B MEMBERSHIP In U.S. Loyalty programs PROFITABLE +60% of miles issued are BOUGHT by 3 rd parties +$50B Per year value of points/miles issued and sold by North American loyalty programs 29 Memberships/ household VALUABLE Estimated +20 trillion Outstanding miles/points in accounts worldwide 4 Sources: COLLOQUY 2011, 2015 and 2017 Loyalty Census, U.S. figures.

5 Loyalty Economics: Highly Profitable Large North American carrier estimate: Program Revenue = $2.0 - $3.0 Billion o Most miles sold to credit card companies o Then travel partners, retailers, o Average revenue / mile = +/- 1.8 cents Total Program Cost = < $1.0 Billion o Redemption costs plus OpEx o Average cost / mile = +/- 0.8 cents PROFIT = $ Billion o +/- 60% margin on every mile issued, members s/ /airlines-make-moremoney-selling-miles-than-seats Loyalty drives commerce PAYMENTS ($2.5T): Rewards credit cards = 2/3 of balances and 4/5 of all spend = Ah, so frequent flier miles are like movie theatre popcorn TRAVEL ($2.8T): 67% of travelers belong to a Hotel or Airline loyalty program RETAIL ($4.5T): 45% of consumers cite earn rewards as primary purchase driver Sources: Company estimates; COLLOQUY Loyalty Consensus Report; Bond Brand Loyalty Report North America represents U.S. and Canada. Dollar figures represent USD. 5

6 ~60 LOYALTY PROGRAM PARTNERS Transactional level access to ~1 BILLION loyalty program members ~7.4M Transactions Annually ~85Bn Miles/Points Transacted Annually ~$1.0Bn Miles/Points Value Processed Annually 1.0Bn+ Loyalty Partner (LP) s Annually 15+ Non-LP Developers Accessing the Network 6

7 OUR BUSINESS: The Loyalty Commerce Network TRANSACTION SERVICES Points Travel Loyalty Currency Retailing Platform Partnerships LOYALTY COMMERCE PLATFORM Program Integration Transaction Management Analytics & Offers Legal & Security ~60 direct integrations into Points Banks around the world 7

8 3 OPERATING SEGMENTS Points Travel Loyalty Currency Retailing Platform Partnerships Hotel and Car booking Service Earn loyalty currency bonus for cash bookings Redeem loyalty currency to pay for booking Global inventory from multiple wholesale sources GROSS PROFIT in 000,000 s $0.25 $1.3 Sell Miles/Points to Members for top-up Buy when booking Send as a gift Transfer existing to family/friend Buy status miles Highly targeted marketing GROSS PROFIT in 000,000 s $36.8 $ rd Parties Accessing LCP Exchange between programs Earn or Redeem via nonloyalty channels Add loyalty functionality to any consumer service leveraging pre-existing programs GROSS PROFIT in 000,000 s $6.3 $

9 LOYALTY CURRENCY RETAILING: Programs & Members Benefit Points currently provides Currency Retailing solutions for 36+ of the world s leading loyalty programs Very high historical retention rate BUY / GIFT Members purchase points/miles for themselves or family/friend 9 TRANSFER Members share existing points/miles with friends & family ACCELERATOR Members buy 1X/2X/3X miles earned on any flight STATUS MILES Members buy Q miles needed to get status back 9

10 SELLING MILES/POINTS: The Proposition Member has 90,00 miles, but needs 100,000 for a free flight Buys 10,000 miles from Points online/mobile for $300 Points deposits miles real-time via LCP Points pays program $255 for Miles Points earns $45 Gross Profit Frequent Flyers Will Pay Anything to Fly For FREE Example only, economics vary between partners LOYALTY COMMERCE PLATFORM 10 Loyalty Program Gets: Revenue Guarantee Full capabilities of Loyalty Commerce Platform Ongoing product development Industry leading fraud/gaming protection Points Gets: Wholesale price Extensive marketing access at no additional cost Aggregated data access Long term contract

11 POINTS TRAVEL: We are the pioneer of this space First OTA to offer choice of mileage bonus as booking incentive (Acquired in 2014) 11 Now Private Label deployments With 11+ Loyalty Programs around the world

12 POINTS TRAVEL: Travel Bookings <-> Loyalty BEST IN MARKET OFFERS SAMPLE EARN TRANSACTION* Consumer Pays Retail Room Rate $800 Points Wholesale Room Cost - $550 Margin to Fund Loyalty Offer = $250 Points Revenue $50 Loyalty Program Revenue (Mileage Sale) $200 Earn and burn offering for hotel and car bookings through access to multiple supplier industry sources Strong marketing coordination with Loyalty Programs to drive acquisition and repeat bookings Extensive wholesale supply from industry leaders 12 Significant profit margin ~2 /mile) Membership engagement tool Incentive Miles: Retail room rate competitive with OTA s *Example/pricing for illustrative purposes only

13 PLATFORM PARTNERSHIPS: Leveraging Platform Investments to Broaden Distribution Points Loyalty Commerce Platform offers seamless fully managed transactional (credit/debit) access to dozens of loyalty programs and millions of loyalty members around the globe API-driven service for loyalty programs and 3rd party developers, distributable across multiple digital channels ONE INTEGRATION DELIVERS THE ENTIRE INDUSTRY EFFORTLESS PROGRAM/PARTNERSHIP EXPANSION ENHANCED: UX SECURITY AUDIT & REPORTING 13

14 PLATFORM PARTNERS: Distributing More Currency SAMPLE EARN TRANSACTION* Consumer Buys Daily Deal $100 Commission to Fund Loyalty Offer = $12 Points Revenue $2 Loyalty Program Revenue (Mileage Sale) $10 Significant profit margin ~2 /mile) Membership engagement tool No investment required Incentive Miles: 5X better bonus vs. typical offer Groupon accesses all participating Points Loyalty Partners via APIs Contracts on both sides flow through Points Marketing driven by Distribution Channel *Example/pricing for illustrative purposes only 14

15 RECENT DEVELOPMENTS Points Travel 12 Deployments Loyalty Currency Retailing +36 Global Loyalty Partners Platform Partnerships +15 Developers LAUNCHED/ANNOUNCED IN 2018 LAUNCHED / ANNOUNCED IN 2018 LAUNCHED / ANNOUNCED IN 2018 US LCC IN MARKET - END OF 2017 LAUNCHED / EXPANDED IN 2017 LAUNCHED / EXPANDED IN 2017 Earn Earn/Burn Burn 15

16 SUSTAINED GROWTH: Our Formula (+ Acquisitions) 1) New Partnerships Strong historic track record Healthy pipeline 2) Up-sell current partnerships Strong historic track record Points Travel & Platform Partnerships accelerate potential 3) Organic growth of existing implementations Leveraging Platform investments 4) Geographic Expansion Platform investments drive efficiencies 5) Develop new verticals Either directly or via Platform Partnerships Retail Financial Services 2 successful acquisitions in last 5 years High cash balance + no debt + public currency Opportunistic acquisitions would be focused on: Capabilities expansion Geographic expansion New vertical entry 16

17 KEY STATS 36% 27% 29% 28% 28% 31% 1 Based on Nasdaq listing (PCOM). 2 Cash includes cash and cash equivalents, restricted cash, and amounts with payment processors 3 Prior periods restated for IFRS15 17

18 Delivering For All Stakeholders 5 YR CAGR: Revenue 20% Gross Profit Dollars 10% ADJ EBITDA 13% Book Value 9% 18 #9 Software #6 SAAS

19 Thank You 19