• 2Q06 total revenue increased $2.7 million year-over-year, a 7% increase and a 15% increase excluding the foreign exchange impact
• Points Solutions revenue increased 12% year-over-year, and 21% excluding foreign exchange impact
• Points.com adds Microsoft® Points during the second quarter of 2006
• American Express® Membership Rewards® launched on Points.com in July
TORONTO, August 9, 2006 – Points International Ltd. (TSX: PTS; OTC: PTSEF; "Points" or the "Company"), the owner and operator of Points.com, the world`s leading reward program management portal, announced today results for the three and six months ended June 30, 2006.
Total revenues in the second quarter of 2006 were $2.7 million, an increase of 6.7% versus the $2.6 million reported in the second quarter of 2005, and a 4.0% sequential decline from the first quarter of 2006. Adjusted for the impact of the weakened U.S. dollar during the second quarter, Points’ second quarter revenue growth would have included a further $216,000, resulting in 15.2% versus the second quarter of 2005 and a further $86,000, resulting in a 1.0% decline versus the first quarter of 2006. The Company reported a net loss for the second quarter of 2006 of $3.2 million, or $0.03 per share, based on 98.0 million weighted-average shares outstanding, versus a net loss of $2.0 million, or $0.03 per share, on 76.8 million weighted average shares, in the second quarter of 2005, and versus a net loss of $2.3 million, or $0.02 per share on 93.7 million weighted-average shares outstanding in the first quarter of 2006.
Second quarter revenues from Points Solutions (defined as revenues excluding interest income), which represented 98% of the total, increased 12.3% year-over-year, and declined 3.9% versus the first quarter of 2006. Adjusted for the impact of the weaker U.S. dollar, Points` second quarter would have included an additional $216,000 in revenue, resulting in 21.4% growth versus the second quarter of 2005, and an additional $86,000, resulting in a 0.8% decline versus the first quarter of 2006. The sequential decline was primarily due to the seasonal strength of a product that is only available during the first four months of the calendar year, and lower revenues as eBay wound down its loyalty program.
“During the second quarter, we continued to invest in marketing, business and partner development, as well as new product initiatives,” said Rob MacLean, Chief Executive Officer of Points. “We are pleased with our efforts, particularly the addition of Points.com partner Microsoft Points, which brought the total number of partners to 50. And, subsequent to the quarter-end, American Express Membership Rewards, one of the largest rewards programs in the financial services sector, launched on Points.com. Additionally, we launched TrAAvel Perks, American Airlines’ travel club, further deepening our partnership with American Airlines. Both events are milestones for the Company as we continue to grow the business.”
Mr. MacLean continued, “On the surface, our Points Solutions revenue growth of 12% in the second quarter does not accurately reflect the strength of our business due to the negative impact of the strong Canadian dollar. Adjusting for the foreign exchange effect, Points’ Solutions second quarter revenue grew 21% versus a year ago, demonstrating the healthy progress we have made.”
“During the second quarter, we broadened our marketing initiatives to include off-line advertising which increased our overall marketing expense significantly. It was clear that this channel is much less efficient in driving activity to our site, and as a result, at the end of the quarter, we concentrated our efforts on partner channels which we know is a more cost effective means for marketing Points.com. During the second half of 2006, we will continue to focus our marketing spend on partner marketing.”
Mr. MacLean concluded, “We continue to develop new products to introduce to our growing number of partners. We have a strong business development pipeline, and are optimistic about the second half of the year. We believe we are taking the right strategic steps as we strive to reach EBITDA profitability in the fourth quarter. In this regard, we will be diligent about controlling our marketing and other costs as we grow our revenues through the end of the year.”
Business Highlights in the Second Quarter and to the Date Hereof
• Launched the TrAAvel Perks program with American Airlines, a fully outsourced travel and entertainment discount program managed by Points.com
• Launched Microsoft Points and OVS CruisePoints launched on Points.com during the quarter
• Launched American Express Membership Rewards on Points.com in July
• Partnered with Truition to launch the Priority Club® Rewards online auction site for InterContinental Hotel Group
• Added Continental Airlines as the sixth major airline in the AirIncentives program
• Launched a new Buy Miles relationship with Virgin Atlantic
• Extended Lufthansa relationship agreement into 2009
• Deepened Alaska Airlines relationship with the installation of the Transfer product
Business Metrics in the Second Quarter
• Points.com added approximately 150,000 new registered users in the quarter, a 41% year-over-year increase
• Total cumulative registered users on Points.com increased 73% year-over-year to 1.3 million, and the number of Points.com transactions increased 287%. On a sequential basis, total cumulative registered users on Points.com increased 13% in the quarter, and the number of Points.com transactions increased 14%.
• Unique visits to Points.com surged 58% to more than 1 million, compared to 637,329 unique visits registered in the first quarter of 2006
• The average number of miles or points Swapped per transaction was stable at 14,019 versus 14,022 in the first quarter of 2006
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