Company Reports Record Quarterly Revenues
Remain on Pace for Record Revenues for the Year
SAN ANTONIO, Aug. 14, 2018 (GLOBE NEWSWIRE) -- Payment Data Systems (PYDS), an integrated electronic payment solutions provider, today announced financial results
for the second quarter of 2018, which ended June 30, 2018.
Second Quarter 2018 Financial Summary
- Revenues were $6.3 million for the second quarter of 2018 vs. $2.6 million for the second quarter of 2017, an increase of
146%.
- Gross profits were $1.3 million, up 90% from $.7 million in the second quarter of 2017.
- The operating loss in the second quarter of 2018 was $1.0 million compared to an operating loss of $.5 million for Q2
2017.
- Adjusted EBITDA was a loss of $.3 million for the second quarter of 2018 compared to a loss of $.1 million for the second
quarter of 2017.
- Net loss for the second quarter of 2018 was $1.0 million or ($0.09) per share versus a net loss of $.5 million or ($0.06) per
share for the second quarter of 2017. Net loss for the current quarter was based upon 12.1 million shares outstanding
whereas net loss in the year ago quarter was based upon 8.5 million shares outstanding.
- More than $821 million total dollars were processed during the second quarter of 2018 which represented 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 June 30, 2018.
Electronic check transaction volumes during the second quarter of 2018 were up 17% versus the same time-period in 2017.
Returned check transactions processed during the second quarter of 2018 were up 30% versus the same time period in 2017.
Credit card transaction volumes during the second quarter of 2018 were up 415% versus the same time period in 2017. Credit
card dollars processed during the second quarter of 2018 were up 291% versus the same time-period in 2017.
“It was a record quarter for Payment Data Systems. We reported record revenues and record volumes, reflecting continued
strong organic growth in ACH, card processing and prepaid businesses, as well as from acquisitions,” said Louis Hoch, president and
CEO of Payment Data Systems. “We expect this record pace to continue throughout the year as we heavily invest in enhancing
our capabilities and expanding our sales and marketing organization. In our card processing business, in addition to the
organic growth we experienced by our established platform, our PayFac-in-a-box solution continues to generate strong
interest, especially in the healthcare market. The ACH business has now recorded four consecutive quarters of growth as we
continue to capitalize on our NACHA certification and multiple bank sponsorships. Additionally, our prepaid business has
added several new customers and is leveraging the synergistic nature of our complementary business lines. The second half of
the year looks promising as we have strong momentum and many exciting new opportunities across our entire organization under
development.”
Financial Results for the Three Months Ending June 30, 2018
Revenues for the quarter ended June 30, 2018 increased 146% to $6.3 million primarily due to the acquisition of the business of
Singular Payments, LLC. Organic growth in the quarter was 14%.
Gross profit in the second quarter was $1.3 million, or 21% of revenues, compared to $.7 million, or 27% of revenues in the
second quarter of last year. Margins reflect the shift in product mix brought about with the Singular acquisition.
Selling, general and administrative expenses were $2.4 million for the second quarter of 2018 versus $1.2 million during the
second quarter of 2017. The increased operating expenses primarily reflect the incremental salaries and other employee
related expenses associated with the Singular Payments acquisition. Second quarter operating expenses also reflect
incremental non-cash depreciation and amortization and other non-cash expenses related to the Singular acquisition. There
were also some one-time expense and capital requirements associated with the new Tennessee office and the re-location of our
corporate headquarters.
The second quarter operating loss was $1.0 million compared to an operating loss of $.5 million in the second quarter of
2017.
Adjusted EBITDA in the second quarter of 2018 was a loss of $.3 million compared to an Adjusted EBITDA loss of $.1 million in
the second quarter of 2017.
Net loss for the second quarter of 2018 was $1.0 million or ($0.09) per share, compared to a net loss of $.5 million or ($0.06)
per share for the second quarter of 2017. Factors contributing to the increased net loss were approximately $.2 million
amortization expense related to the Singular Payments acquisition plus incremental salaries and other payroll related expenses as
we build out our sales force to drive incremental revenues.
As of June 30, 2018, the company has $2.7 million in cash and cash equivalents and no debt, compared to $4.8 million at December
31, 2017.
Financial Results for the First Six Months of Fiscal 2018
Revenues for the six months ended June 30, 2018 were $12.1 million, up 126% from the same period of fiscal 2017. Organic
growth for the first half of the year was 5%. Cost of services were up 156% to $9.5 million. Gross profits in the
first six months of 2018 were up 58% to $2.6 million. Gross margins at 21% were lower this year than in 2017 driven due to
the same factors that contributed to lower second quarter gross margins. The operating loss for the first six months of 2018
was $2.1million as compared to $.9 million in the same period of 2017. Adjusted EBITDA for the first six months of 2018 was a
loss of $.5 million as compared to slightly positive, $10 thousand, for the comparable period in 2017. The net loss for
the six months ended June 30, 2018 was $2.1 million or ($0.17) per share compared to a loss of $.8 million or ($.10) per share in
the same period of 2017.
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 August 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 10123037.
About Payment Data Systems, Inc.
Payment Data Systems, Inc., 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 service 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 is headquartered in San Antonio, Texas, and has offices in New York, New
York; Long Beach, California and Nashville, Tennessee. Websites: www.paymentdata.com, www.singularpayments.com, www.payfacinabox.com, www.akimbocard.com, and www.ficentive.com. Find us on Facebook®.
About Non-GAAP Financial Measures
This 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 "Reconciliation of GAAP to Non-GAAP Financial Measures."
FORWARD-LOOKING STATEMENTS DISCLAIMER
Except 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 Relations
joeh@gregoryfca.com
610-228-2110
PAYMENT DATA SYSTEMS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
| |
June 30,
2018 |
|
December 31, 2017 |
| |
(Unaudited) |
|
|
| Assets |
|
|
|
| Current assets: |
|
|
|
| Cash and cash equivalents |
$ |
2,722,357 |
|
|
$ |
4,800,554 |
|
| Accounts receivable, net |
939,394 |
|
|
969,674 |
|
| Settlement processing assets |
40,130,936 |
|
|
38,027,984 |
|
| Prepaid expenses and other |
242,606 |
|
|
176,945 |
|
| Notes receivable, net |
77,500 |
|
|
150,000 |
|
| Current assets before merchant reserves |
44,112,793 |
|
|
44,125,157 |
|
| Merchant reserves |
14,782,305 |
|
|
14,977,468 |
|
| Total current assets |
58,895,098 |
|
|
59,102,625 |
|
| |
|
|
|
| Property and equipment, net |
2,121,062 |
|
|
2,105,186 |
|
| |
|
|
|
| Other assets: |
|
|
|
| Intangibles, net |
4,176,426 |
|
|
4,676,427 |
|
| Deferred tax asset |
1,394,000 |
|
|
1,394,000 |
|
| Other assets |
302,287 |
|
|
157,565 |
|
| Total other assets |
5,872,713 |
|
|
6,227,992 |
|
| |
|
|
|
| Total assets |
$ |
66,888,873 |
|
|
$ |
67,435,803 |
|
| |
|
|
|
| Liabilities and stockholders’ equity |
|
|
|
| Current liabilities: |
|
|
|
| Accounts payable |
$ |
237,545 |
|
|
$ |
300,736 |
|
| Accrued expenses |
901,872 |
|
|
1,006,262 |
|
| Settlement processing obligations |
40,130,936 |
|
|
38,027,984 |
|
| Deferred revenues |
50,000 |
|
|
— |
|
| Current liabilities before merchant reserve obligations |
41,320,353 |
|
|
39,334,982 |
|
| Merchant reserve obligations |
14,782,305 |
|
|
14,977,468 |
|
| Total current liabilities |
56,102,658 |
|
|
54,312,450 |
|
| |
|
|
|
| Non-current liabilities: |
|
|
|
| Deferred rent |
27,416 |
|
|
— |
|
| Total liabilities |
56,130,074 |
|
|
54,312,450 |
|
| |
|
|
|
| Stockholders’ equity: |
|
|
|
| Preferred stock, $0.01 par value, 10,000,000 shares authorized; -0-
shares outstanding at June 30, 2018 (unaudited) and December 31, 2017, respectively |
— |
|
|
— |
|
| Common stock, $0.001 par value, 200,000,000 shares authorized;
17,069,680 and 16,874,235 issued, and 15,997,361 and 16,201,634 outstanding at June 30, 2018 (unaudited) and December 31, 2017,
respectively |
185,501 |
|
|
186,299 |
|
| Additional paid-in capital |
74,434,439 |
|
|
74,041,083 |
|
| Treasury stock, at cost; 1,072,319 and 672,601 shares at June 30,
2018 (unaudited) and December 31, 2017, respectively |
(1,790,135 |
) |
|
(831,059 |
) |
| Deferred compensation |
(6,724,336 |
) |
|
(7,012,544 |
) |
| Accumulated deficit |
(55,346,670 |
) |
|
(53,260,426 |
) |
| Total stockholders’ equity |
10,758,799 |
|
|
13,123,353 |
|
| Total liabilities and stockholders’ equity |
$ |
66,888,873 |
|
|
$ |
67,435,803 |
|
PAYMENT DATA SYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
| |
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
| |
|
|
2018 |
|
2017 |
|
2018 |
|
2017 |
| |
|
|
|
|
|
|
|
|
|
| Revenues |
|
|
$ |
6,283,875 |
|
|
$ |
2,550,441 |
|
|
$ |
12,127,540 |
|
|
$ |
5,361,185 |
|
| Cost of services |
|
|
4,964,260 |
|
|
1,854,406 |
|
|
9,537,018 |
|
|
3,722,351 |
|
| Gross profit |
|
|
1,319,615 |
|
|
696,035 |
|
|
2,590,522 |
|
|
1,638,834 |
|
| |
|
|
|
|
|
|
|
|
|
| Selling, general and administrative: |
|
|
|
|
|
|
|
|
|
| Stock-based compensation |
|
|
298,477 |
|
|
217,759 |
|
|
672,855 |
|
|
425,679 |
|
| Other expenses |
|
|
1,595,276 |
|
|
799,740 |
|
|
3,093,927 |
|
|
1,628,012 |
|
| Depreciation and amortization |
|
|
457,276 |
|
|
227,273 |
|
|
915,939 |
|
|
455,818 |
|
| Total selling, general and administrative expenses |
|
|
2,351,029 |
|
|
1,244,772 |
|
|
4,682,721 |
|
|
2,509,509 |
|
| |
|
|
|
|
|
|
|
|
|
| Operating (loss) |
|
|
(1,031,414 |
) |
|
(548,737 |
) |
|
(2,092,199 |
) |
|
(870,675 |
) |
| |
|
|
|
|
|
|
|
|
|
| Other income and (expense): |
|
|
|
|
|
|
|
|
|
| Interest income |
|
|
15,396 |
|
|
38,730 |
|
|
26,917 |
|
|
72,546 |
|
| Other income (expense) |
|
|
(420 |
) |
|
(2,653 |
) |
|
(1,962 |
) |
|
(1,114 |
) |
| Other income and (expense), net |
|
|
14,976 |
|
|
36,077 |
|
|
24,955 |
|
|
71,432 |
|
| |
|
|
|
|
|
|
|
|
|
| (Loss) before income taxes |
|
|
(1,016,438 |
) |
|
(512,660 |
) |
|
(2,067,244 |
) |
|
(799,243 |
) |
| Income taxes |
|
|
19,000 |
|
|
21,677 |
|
|
19,000 |
|
|
21,677 |
|
| |
|
|
|
|
|
|
|
|
|
| Net (loss) |
|
|
$ |
(1,035,438 |
) |
|
$ |
(534,337 |
) |
|
$ |
(2,086,244 |
) |
|
$ |
(820,920 |
) |
| |
|
|
|
|
|
|
|
|
|
| Basic (loss) per common share: |
|
|
$ |
(0.09 |
) |
|
$ |
(0.06 |
) |
|
$ |
(0.17 |
) |
|
$ |
(0.10 |
) |
| Diluted (loss) per common share: |
|
|
$ |
(0.09 |
) |
|
$ |
(0.06 |
) |
|
$ |
(0.17 |
) |
|
$ |
(0.10 |
) |
| Weighted average common shares outstanding |
|
|
|
|
|
|
|
|
|
| Basic |
|
|
12,075,580 |
|
|
8,471,494 |
|
|
12,124,538 |
|
|
8,478,339 |
|
| Diluted |
|
|
12,075,580 |
|
|
8,471,494 |
|
|
12,124,538 |
|
|
8,478,339 |
|
PAYMENT DATA SYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
| |
Six Months Ended June 30, |
| |
2018 |
|
2017 |
| Operating activities: |
|
|
|
| Net (loss) |
$ |
(2,086,244 |
) |
|
$ |
(820,920 |
) |
| Adjustments to reconcile net (loss) to net cash (used) by operating
activities: |
|
|
|
| Depreciation |
415,939 |
|
|
374,249 |
|
| Amortization |
500,001 |
|
|
81,569 |
|
| Provision for loss on note receivable |
72,500 |
|
|
— |
|
| Stock based compensation |
672,855 |
|
|
425,679 |
|
| Issuance of stock to consultant for services |
7,911 |
|
|
15,400 |
|
| Changes in current assets and current liabilities: |
|
|
|
| Accounts receivable |
30,280 |
|
|
25,647 |
|
| Prepaid expenses and other |
(65,661 |
) |
|
(86,710 |
) |
| Other assets |
(144,722 |
) |
|
(22,567 |
) |
| Accounts payable and accrued expenses |
(167,581 |
) |
|
20,731 |
|
| Merchant reserves |
(195,163 |
) |
|
(851,121 |
) |
| Deferred revenue |
50,000 |
|
|
— |
|
| Deferred rent |
27,416 |
|
|
— |
|
| Net cash (used) by operating activities |
(882,469 |
) |
|
(838,043 |
) |
| |
|
|
|
| Investing activities: |
|
|
|
| Purchases of property and equipment |
(431,815 |
) |
|
(298,426 |
) |
| Notes receivable |
— |
|
|
(500,000 |
) |
| Net cash (used) by investing activities |
(431,815 |
) |
|
(798,426 |
) |
| |
|
|
|
| Financing activities: |
|
|
|
| Purchases of treasury stock |
(959,076 |
) |
|
(108,939 |
) |
| Net cash (used) by financing activities |
(959,076 |
) |
|
(108,939 |
) |
| |
|
|
|
| Change in cash, cash equivalents and merchant reserves |
(2,273,360 |
) |
|
(1,745,408 |
) |
| Cash, cash equivalents and merchant reserves, beginning of
period |
19,778,022 |
|
|
19,924,379 |
|
| |
|
|
|
| Cash, cash equivalents and merchant reserves, end of period |
$ |
17,504,662 |
|
|
$ |
18,178,971 |
|
| |
|
|
|
| |
|
|
|
| Supplemental disclosure of cash flow
information: |
|
|
|
| Cash paid during the period for: |
|
|
|
| Interest |
— |
|
|
— |
|
| Income taxes |
49,000 |
|
|
21,677 |
|
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES |
| (UNAUDITED) |
| |
|
|
|
|
|
|
|
|
| |
|
Three Months Ended |
|
Six Months Ended |
| |
|
June 30, |
|
June 30, |
|
June 30, |
|
June 30, |
| |
2018 |
|
|
2017 |
|
|
|
2018 |
|
|
2017 |
|
| |
|
|
|
|
|
|
|
|
| Reconciliation from Operating (Loss) to Adjusted EBITDA: |
|
|
|
|
|
|
|
|
| Operating (Loss) |
|
$ |
(1,031,414 |
) |
|
$ |
(548,737 |
) |
|
$ |
(2,092,199 |
) |
|
$ |
(870,675 |
) |
| Depreciation and amortization |
|
|
457,276 |
|
|
|
227,273 |
|
|
|
915,939 |
|
|
|
455,818 |
|
| EBITDA |
|
|
(574,138 |
) |
|
|
(321,464 |
) |
|
|
(1,176,260 |
) |
|
|
(414,857 |
) |
| Non-cash stock-based compensation expense, net |
|
|
298,477 |
|
|
|
217,759 |
|
|
|
672,855 |
|
|
|
425,679 |
|
| Adjusted EBITDA |
|
$ |
(275,661 |
) |
|
$ |
(103,705 |
) |
|
$ |
(503,405 |
) |
|
$ |
10,822 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
| Calculation of Adjusted EBITDA margins: |
|
|
|
|
|
|
|
|
| Revenues |
|
$ |
6,283,875 |
|
|
$ |
2,550,441 |
|
|
$ |
12,127,540 |
|
|
$ |
5,361,185 |
|
| Adjusted EBITDA |
|
|
(275,661 |
) |
|
|
(103,705 |
) |
|
|
(503,405 |
) |
|
|
10,822 |
|
| Adjusted EBITDA margins |
|
|
-4.39 |
% |
|
|
-4.07 |
% |
|
|
-4.15 |
% |
|
|
0.20 |
% |
