Company Reports Record Quarterly
Revenues
Payment Data Systems (PYDS), an integrated electronic payment
solutions provider, today announced financial results for the third
quarter of 2018, which ended September 30, 2018.
Louis Hoch, President and CEO of Payment Data Systems, said,
“With the third quarter’s record revenues and volumes, and the
strong momentum across our ACH, prepaid and card processing
businesses, we are on pace for a banner year. In
addition, we continue to make significant progress with our plans
to grow revenues, which we expect to improve even further in the
fourth quarter. Most exciting, organic revenue growth was 18%
this quarter compared to our 14% organic growth in Q2 2018,
primarily due to our fifth consecutive quarter of growth in our ACH
business. We also ended the quarter in a strong financial
condition, which together with the anticipated continued
improvement in cash flow generation, is providing sufficient
resources to fund the exciting growth initiatives that are gaining
traction in our Prepaid and PayFac operations. The outlook has
never been brighter, and we are committed to capitalizing on the
significant opportunities we see in order to leverage our
proprietary technology and to build value for our
shareholders.”
Third Quarter 2018 Financial Summary
Revenues were $6.5 million for the third quarter of 2018, up 80%
compared to $3.6 million in the same period last year. The
primary drivers of the revenue growth included organic growth of
18% for the quarter, excluding Singular Payments in both periods,
plus three months of Singular Payments results in 2018 compared to
one month in 2017. Organic growth in the second quarter
of 2018 was 14%.
Gross profits were $1.5 million, up 77% from $0.8 million in the
same period last year. Gross margins improved to 22.5% in the
third quarter of 2018 compared to 23.0% in the same period last
year. The primary driver for the improved gross margin
came from strong revenue growth and improved profits in the ACH
business line.
Operating loss was $0.8 million in the third quarter of 2018
compared to $0.9 million in the same period last year and $1.0
million in the second quarter of 2018.
Adjusted EBITDA was a loss of $60,653 for the third quarter of
2018, improving from an adjusted EBITDA loss of $0.3 million in the
third quarter of 2017.
Net loss for the third quarter of 2018 was $0.8 million or
($0.07) per share compared to a net loss of $0.9 million or ($0.10)
per share for the same period last year. The earnings per share
loss for the current quarter was based upon 12.1 million shares
outstanding whereas the earnings per share loss in the same period
last year was based upon 8.9 million shares outstanding.
Net loss improved $0.2 million to a loss of $0.8 million
compared to a net loss of $1.0 million in the second quarter of
2018.
More than $885 million total dollars were processed during the
third quarter of 2018, which is the Company’s highest volume in the
last three years.
Payment Data Systems continues to be in solid financial
condition with $2.7 million in cash and cash equivalents and no
debt at September 30, 2018.
Electronic check transaction volumes during the third quarter of
2018 were up 28% versus the same time period last year.
Returned check transactions processed during the third
quarter of 2018 were up 34% versus the same period last year.
Credit card transaction volumes during the third quarter of 2018
were up 109% compared to the same period last year. Credit
card dollars processed during the third quarter of 2018 were up
112% compared to the same period last year.
Financial Results for the Nine Months of Fiscal
2018Revenues for the nine months ended September 30, 2018
were $18.6 million, up 108% from the same period last year.
Gross profit in the nine months ended September 30, 2018 was
$4.0 million, up 64% from the same period last year.
Gross margins were 21.8% for the nine months ended September 30,
2018 compared to 27.5% in the same period last year.
Operating loss for the nine months ended September 30, 2018 was
$2.9 million compared to $1.8 million for the same period last year
due to continued investments in the Prepaid and PayFac growth
initiatives.
Adjusted EBITDA for the nine months ended September 30, 2018 was
a loss of $0.6 million compared to a loss of $0.3 million for the
same period in the prior year.
Net loss for the nine months ended September 30, 2018 was $2.9
million or ($0.24) per share compared to a loss of $1.7 million or
($0.20) per share in the same period last year.
Conference Call and Webcast
Payment Data Systems, Inc.’s management will host a conference
call with a live webcast today at 5:30 p.m. Eastern Time
to provide a business update. To listen to the conference
call, interested parties within the U.S. should call
1-844-883-3890. International callers should call +1-412-317-9246.
All callers should ask for the Payment Data Systems conference
call. The conference call will also be available through a live
webcast, which can be accessed via the company’s website
at www.paymentdata.com/invest. A replay of the call will be
available approximately one hour after the end of the call
through November 28, 2018. The replay can be accessed via the
Company’s website or by dialing 1-877-344-7529 (U.S.) or
+1-412-317-0088 (international). The replay conference playback
code is 10125759.
Payment Data Systems, Inc. (Nasdaq: PYDS), a leading integrated
payment solutions provider, offers a wide range of payment
solutions to merchants, billers, banks, service bureaus, and card
issuers. The Company operates credit, debit/prepaid, and ACH
payment processing platforms to deliver convenient, world-class
payment solutions and services to their clients. The strength of
the Company lies in its ability to provide tailored solutions for
card issuance, payment acceptance, and bill payments as well as its
unique technology in the prepaid sector. Payment Data Systems
is headquartered in San Antonio, Texas, and has offices in
Franklin, Tennessee, just outside of Nashville.
Websites: www.paymentdata.com, www.singularpayments.com, www.payfacinabox.com,
www.akimbocard.com, and www.ficentive.com. Find us on
Facebook® and Twitter.
About Non-GAAP Financial MeasuresThis press
release includes non-GAAP financial measures, EBITDA and adjusted
EBITDA, as defined in Regulation G of the Securities and Exchange
Act of 1934, as amended. The Company reports its financial results
in compliance with GAAP, but believes that also discussing non-GAAP
measures provides investors with financial measures it uses in the
management of its business. The Company defines EBITDA as operating
income (loss), before interest, taxes, depreciation and
amortization of intangibles. The Company defines adjusted EBITDA as
EBITDA, as defined above, plus non-cash stock option costs and
certain non-recurring items, such as acquisitions. These measures
may not be comparable to similarly titled measures reported by
other companies. Management uses EBITDA and adjusted EBITDA as
indicators of the Company's operating performance and ability to
fund acquisitions, capital expenditures and other investments and,
in the absence of refinancing options, to repay debt
obligations.
Management believes EBITDA and adjusted EBITDA are helpful to
investors in evaluating the Company's operating performance because
non-cash costs and other items that management believes are not
indicative of its results of operations are excluded. EBITDA and
adjusted EBITDA are supplemental non-GAAP measures, which have
limitations as an analytical tool. Non-GAAP financial measures
should not be considered as a substitute for, or superior to,
measures of financial performance prepared in accordance with GAAP.
Non-GAAP financial measures do not reflect a comprehensive system
of accounting, may differ from GAAP measures with the same names,
and may differ from non-GAAP financial measures with the same or
similar names that are used by other companies. For a description
of our use of EBITDA and adjusted EBITDA, and a reconciliation of
EBITDA and adjusted EBITDA to operating income (loss), see the
section of this press release titled "Non-GAAP Reconciliation."
FORWARD-LOOKING STATEMENTS DISCLAIMERExcept for
the historical information contained herein, the matters discussed
in this release include forward-looking statements which are
covered by safe harbors. Those statements include, but may not be
limited to, all statements regarding management's intent, belief
and expectations, such as statements concerning our future and our
operating and growth strategy. These forward-looking statements are
identified by the use of words such as "believe," "intend," "look
forward," "anticipate," "schedule", and "expect" among others.
Forward-looking statements in this press release are subject to
certain risks and uncertainties inherent in the Company's business
that could cause actual results to vary, including such risks
related to the realization of the anticipated opportunities from
the Singular acquisition, the management of the Company's growth,
the loss of key resellers, the relationships with the Automated
Clearinghouse network, bank sponsors, third-party card processing
providers and merchants, the security of our software, hardware and
information, the volatility of our stock price, the need to obtain
additional financing, risks associated with new tax legislation,
and compliance with complex federal, state and local laws and
regulations, and other risks detailed from time to time in the
Company's filings with the Securities and Exchange Commission
including its annual report on Form 10-K for the fiscal year ended
December 31, 2017. One or more of these factors have affected, and
in the future, could affect the Company’s businesses and financial
results in the future and could cause actual results to differ
materially from plans and projections. The Company believes that
the assumptions underlying the forward-looking statements included
in this release will prove to be accurate. In light of the
significant uncertainties inherent in the forward-looking
statements included herein, the inclusion of such information
should not be regarded as a representation by us or any other
person that the objectives and plans will be achieved. All
forward-looking statements made in this release are based on
information presently available to management. The Company assumes
no obligation to update any forward-looking statements, except as
required by law.
Contact: Joe Hassett, Investor
Relationsjoeh@gregoryfca.com610-228-2110
PAYMENT DATA SYSTEMS,
INC.CONDENSED CONSOLIDATED BALANCE
SHEETS
|
September 30, 2018 |
|
December 31, 2017 |
|
(Unaudited) |
|
|
Assets |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
2,716,316 |
|
|
$ |
4,800,554 |
|
Accounts receivable, net |
1,147,482 |
|
|
969,674 |
|
Settlement processing assets |
34,767,837 |
|
|
38,027,984 |
|
Prepaid expenses and other |
179,330 |
|
|
176,945 |
|
Notes receivable, net |
72,500 |
|
|
150,000 |
|
Current assets before merchant reserves |
38,883,465 |
|
|
44,125,157 |
|
Merchant reserves |
13,602,562 |
|
|
14,977,468 |
|
Total current assets |
52,486,027 |
|
|
59,102,625 |
|
|
|
|
|
Property and equipment, net |
2,050,221 |
|
|
2,105,186 |
|
|
|
|
|
Other assets: |
|
|
|
Intangibles, net |
3,926,426 |
|
|
4,676,427 |
|
Deferred tax asset |
1,394,000 |
|
|
1,394,000 |
|
Other assets |
303,759 |
|
|
157,565 |
|
Total other assets |
5,624,185 |
|
|
6,227,992 |
|
|
|
|
|
Total assets |
$ |
60,160,433 |
|
|
$ |
67,435,803 |
|
|
|
|
|
Liabilities and stockholders’
equity |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ |
251,906 |
|
|
$ |
300,736 |
|
Accrued expenses |
1,217,307 |
|
|
1,006,262 |
|
Settlement processing obligations |
34,767,837 |
|
|
38,027,984 |
|
Deferred revenues |
35,000 |
|
|
— |
|
Current liabilities before merchant reserve
obligations |
36,272,050 |
|
|
39,334,982 |
|
Merchant reserve obligations |
13,602,562 |
|
|
14,977,468 |
|
Total current liabilities |
49,874,612 |
|
|
54,312,450 |
|
|
|
|
|
Non-current liabilities: |
|
|
|
Deferred rent |
58,457 |
|
|
— |
|
Total liabilities |
49,933,069 |
|
|
54,312,450 |
|
|
|
|
|
Stockholders’ equity: |
|
|
|
Preferred stock, $0.01 par value, 10,000,000
shares authorized; -0- shares outstanding at September 30, 2018
(unaudited) and December 31, 2017, respectively |
— |
|
|
— |
|
Common stock, $0.001 par value, 200,000,000
shares authorized; 17,020,180 and 16,874,235 issued, and 15,943,624
and 16,201,634 outstanding at September 30, 2018 (unaudited) and
December 31, 2017, respectively |
185,447 |
|
|
186,299 |
|
Additional paid-in capital |
74,371,930 |
|
|
74,041,083 |
|
Treasury stock, at cost; 1,076,556 and
672,601 shares at September 30, 2018 (unaudited) and December 31,
2017, respectively |
(1,797,442 |
) |
|
(831,059 |
) |
Deferred compensation |
(6,372,735 |
) |
|
(7,012,544 |
) |
Accumulated deficit |
(56,159,836 |
) |
|
(53,260,426 |
) |
Total stockholders’ equity |
10,227,364 |
|
|
13,123,353 |
|
|
|
|
|
Total liabilities and stockholders’ equity |
$ |
60,160,433 |
|
|
$ |
67,435,803 |
|
PAYMENT DATA SYSTEMS,
INC.CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS(UNAUDITED)
|
|
Three Months Ended September
30, |
|
Nine Months Ended September 30, |
|
|
2018 |
|
2017 |
|
2018 |
|
2017 |
|
|
|
|
|
|
|
|
|
Revenues |
|
$ |
6,473,743 |
|
|
$ |
3,588,853 |
|
|
$ |
18,601,283 |
|
|
$ |
8,950,038 |
|
Cost of services |
|
5,014,603 |
|
|
2,764,236 |
|
|
14,551,621 |
|
|
6,486,587 |
|
Gross profit |
|
1,459,140 |
|
|
824,617 |
|
|
4,049,662 |
|
|
2,463,451 |
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative: |
|
|
|
|
|
|
|
|
Stock-based compensation |
|
289,038 |
|
|
230,206 |
|
|
961,893 |
|
|
655,885 |
|
Other expenses |
|
1,519,793 |
|
|
1,172,021 |
|
|
4,613,720 |
|
|
2,800,033 |
|
Depreciation and amortization |
|
473,225 |
|
|
314,789 |
|
|
1,389,164 |
|
|
770,607 |
|
Total selling, general and administrative
expenses |
|
2,282,056 |
|
|
1,717,016 |
|
|
6,964,777 |
|
|
4,226,525 |
|
|
|
|
|
|
|
|
|
|
Operating (loss) |
|
(822,916 |
) |
|
(892,399 |
) |
|
(2,915,115 |
) |
|
(1,763,074 |
) |
|
|
|
|
|
|
|
|
|
Other income and (expense): |
|
|
|
|
|
|
|
|
Interest income |
|
23,327 |
|
|
16,381 |
|
|
50,244 |
|
|
88,927 |
|
Other income (expense) |
|
1,423 |
|
|
993 |
|
|
(539 |
) |
|
(121 |
) |
Other
income and (expense), net |
|
24,750 |
|
|
17,374 |
|
|
49,705 |
|
|
88,806 |
|
|
|
|
|
|
|
|
|
|
(Loss) before income taxes |
|
(798,166 |
) |
|
(875,025 |
) |
|
(2,865,410 |
) |
|
(1,674,268 |
) |
Income taxes |
|
15,000 |
|
|
15,000 |
|
|
34,000 |
|
|
36,677 |
|
|
|
|
|
|
|
|
|
|
Net (loss) |
|
$ |
(813,166 |
) |
|
$ |
(890,025 |
) |
|
$ |
(2,899,410 |
) |
|
$ |
(1,710,945 |
) |
|
|
|
|
|
|
|
|
|
Basic (loss) per common share: |
|
$ |
(0.07 |
) |
|
$ |
(0.10 |
) |
|
$ |
(0.24 |
) |
|
$ |
(0.20 |
) |
Diluted (loss) per common share: |
|
$ |
(0.07 |
) |
|
$ |
(0.10 |
) |
|
$ |
(0.24 |
) |
|
$ |
(0.20 |
) |
Weighted average common shares outstanding |
|
|
|
|
|
|
|
|
Basic |
|
12,145,323 |
|
|
8,954,831 |
|
|
12,098,828 |
|
|
8,637,169 |
|
Diluted |
|
12,145,323 |
|
|
8,954,831 |
|
|
12,098,828 |
|
|
8,637,169 |
|
PAYMENT DATA SYSTEMS,
INC.CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS(UNAUDITED)
|
Nine Months Ended September
30, |
|
2018 |
|
2017 |
Operating activities: |
|
|
|
Net (loss) |
$ |
(2,899,410 |
) |
|
$ |
(1,710,945 |
) |
Adjustments to reconcile net (loss) to net cash
(used) by operating activities: |
|
|
|
Depreciation |
639,164 |
|
|
564,920 |
|
Amortization |
750,000 |
|
|
205,687 |
|
Provision for loss on note receivable |
72,500 |
|
|
— |
|
Bad debt expense |
— |
|
|
71,667 |
|
Stock based compensation |
961,893 |
|
|
655,885 |
|
Issuance of stock to consultant for
services |
7,911 |
|
|
15,400 |
|
Changes in current assets and current
liabilities: |
|
|
|
Accounts receivable |
(177,808 |
) |
|
30,733 |
|
Prepaid expenses and other |
(2,385 |
) |
|
(84,783 |
) |
Other assets |
(146,194 |
) |
|
64,440 |
|
Accounts payable and accrued expenses |
162,215 |
|
|
220,100 |
|
Merchant reserves |
(1,374,906 |
) |
|
(894,741 |
) |
Deferred revenue |
35,000 |
|
|
— |
|
Deferred rent |
58,457 |
|
|
— |
|
Net cash (used) by operating activities |
(1,913,563 |
) |
|
(861,637 |
) |
|
|
|
|
Investing activities: |
|
|
|
Purchases of property and equipment |
(584,198 |
) |
|
(344,611 |
) |
Purchase of Singular Payments, LLC |
— |
|
|
(900,000 |
) |
Notes receivable |
5,000 |
|
|
(600,000 |
) |
Net cash (used) by investing
activities |
(579,198 |
) |
|
(1,844,611 |
) |
|
|
|
|
Financing activities: |
|
|
|
Purchases of treasury stock |
(966,383 |
) |
|
(109,382 |
) |
Net cash (used) by financing
activities |
(966,383 |
) |
|
(109,382 |
) |
|
|
|
|
Change in cash, cash equivalents and
merchant reserves |
(3,459,144 |
) |
|
(2,815,630 |
) |
Cash, cash equivalents and merchant
reserves, beginning of period |
19,778,022 |
|
|
19,924,379 |
|
|
|
|
|
Cash, cash equivalents and merchant
reserves, end of period |
$ |
16,318,878 |
|
|
$ |
17,108,749 |
|
|
|
|
|
Supplemental disclosure of
cash flow information: |
|
|
|
Cash paid during the period for: |
|
|
|
Interest |
— |
|
|
— |
|
Income taxes |
$ |
49,000 |
|
|
$ |
21,677 |
|
Non-cash transactions: |
|
|
|
Issuance of common stock in exchange for
purchase of Singular Payments, LLC |
— |
|
|
3,500,000 |
|
Forgiveness of note receivable in
exchange for purchase of Singular Payments, LLC |
— |
|
|
600,000 |
|
Issuance of deferred compensation to Vaden
Landers |
— |
|
|
630,000 |
|
|
|
|
|
|
|
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL
MEASURES |
(UNAUDITED) |
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
September 30, |
|
September 30, |
|
September 30, |
|
September 30, |
2018 |
2017 |
|
2018 |
2017 |
|
|
|
|
|
|
|
|
Reconciliation from
Operating (Loss) to Adjusted EBITDA: |
|
|
|
|
|
|
|
Operating
(Loss) |
$ |
(822,916 |
) |
|
$ |
(892,399 |
) |
|
$ |
(2,915,115 |
) |
|
$ |
(1,763,074 |
) |
Depreciation and amortization |
473,225 |
|
|
314,789 |
|
|
1,389,164 |
|
|
770,607 |
|
EBITDA |
(349,691 |
) |
|
(577,610 |
) |
|
(1,525,951 |
) |
|
(992,467 |
) |
Non-cash stock-based
compensation expense, net |
289,038 |
|
|
230,206 |
|
|
961,893 |
|
|
655,885 |
|
Adjusted
EBITDA |
$ |
(60,653 |
) |
|
$ |
(347,404 |
) |
|
$ |
(564,058 |
) |
|
$ |
(336,582 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Calculation of Adjusted
EBITDA margins: |
|
|
|
|
|
|
|
Revenues |
$ |
6,473,743 |
|
|
$ |
3,588,853 |
|
|
$ |
18,601,283 |
|
|
$ |
8,950,038 |
|
Adjusted EBITDA |
(60,653 |
) |
|
(347,404 |
) |
|
(564,058 |
) |
|
(336,582 |
) |
Adjusted EBITDA
margins |
-0.9 |
% |
|
-9.7 |
% |
|
-3 |
% |
|
-3.8 |
% |
|
|
|
|
|
|
|
|
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