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Wednesday, 14 August 2013
Planet Payment sees positive trends in the second quarter
The second quarter saw strong increased revenue growth and profitability at payments processing specialist Planet Payment (LON:PPT, NASDAQ:PLPM).
Net revenue rose 16% to US$11.8mln in the second quarter of 2013 from US$10.1mln in the corresponding quarter of 2012.
Consolidated gross billings increased 11% to US$30.4mln compared to US$27.4mln the year before. Consolidated gross billings is regarded by management as one of the key performance indicators for the group, along with the total number of active merchant locations and the total settled dollar volume processed, both of which also improved sharply year-on-year.
Total active merchant locations increased by 30% to around 44,000, while total settled dollar volume processed increased 20% to US$1.7 billion. Meanwhile, total settled transactions processed increased 34% to 14.9mln.
Adjusted underlying earnings (EBITDA) stormed higher, rising to US$1.35mln from $115,518 in the second quarter of 2012. Profit before tax was US$372,665, versus a loss of US$1.02mln the year before.
Philip Beck, chairman and chief executive officer of Planet Payment, said the company was pleased with the results.
"Although we have seen some weakness in certain areas, we have seen positive trends this quarter in particular in the increase in payment processing revenue, which we believe will continue to grow in the second half of 2013 and beyond,” Beck added.
The weakness in multi-currency revenues was particularly noticeable in the Asia-Pacific (APAC) region, where the continued change in international travel trends is having an effect, as is softness in some of Planet Payment’s customers' portfolios.
At the same time, some of the company’s customers, especially in the Americas, have been slower than anticipated in completing technical implementations or roll-outs to their customer portfolios.
As a result of these trends, the company has taken the prudent course of adjusting full-year guidance. Net revenue is now estimated to be in the range of US$48.0 million to US$50.0 million, versus US43.6mln in 2012, while profit after tax is estimated to be in the range of US$1.0 million to US$2.9 million, versus a 2012 loss of US$4.5mln.
Adjusted EBITDA is seen landing in the range of US$5.4 million to US$7.4 million, versus US$2.4mln in 2012, while fully diluted earnings per share are expected to be in the range of 2 to 5 cents, versus a loss per share of 4 cents in 2012.
“Based on the planned multi-currency implementations during the second half of 2013 and the expected growth in our processing services, we are anticipating revenue growth in excess of 20% for 2014. We expect this revenue growth will result in increasing profitability, as we continue to demonstrate the leverage in our model,” the company said.
Beck added: “We are focused on growing our revenue from existing products and customers. In addition, we continue to work with our customers on multi-currency processing implementations in new markets such as Indonesia, Mexico, and Brazil, and we expect to be able to report further developments in those markets as the year progresses."
Broker Canaccord Genuity reiterated its ‘buy’ recommendation on Planet Payment and its 250p target price. It believes the company remains well-positioned for growth and that its high-potential business model remains intact.
“The company has not seen a change in commercial terms or competition and it has not lost any customers. Average net mark up on dollar volume processed at 1.1% was in line with our forecasts and active merchant locations (23,509) is broadly on track,” noted Canaccord’s Planet Payment watchers, Bob Liao and Jonathan Imiah.
“Planet is diversifying revenues. North American revenues were up 50% and SEMEA was up 20%. Moreover, large rollouts are planned in Latin America. In addition, processing revenues are expanding rapidly (+32% yoy) driven by both the new Visarelationship and North America,” the broker said.