PCOM - Earnings call transcript Q1 2021

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Operator

Good afternoon, everyone, and thank you for participating in today's conference call to discuss Points International's financial results for the first quarter ended March 31, 2020. Delivering today's prepared remarks are Chief Executive Officer, Rob MacLean; President, Christopher Barnard; and Chief Financial Officer, Erick Georgiou.

Following their prepared remarks, the management team will open the call up for any questions.

Before we go further, I would like to turn the call over to Cody Slach of Gateway Investor Relations, Points International's IR Advisor, as he reads the company's Safe Harbor that provides important cautions regarding forward-looking statements. Cody, please go ahead.

Cody Slach

you. Thank that to this meaning forward-looking and securities reminded contain call of remarks US refer or statements laws. the be conference on may Canadian Please within the your forward-looking in additional make also may response Management to questions. statements

Although as that securities whether management could quarter future reasonable, said, result are important Canadian turn Executive update forward-looking and in guarantees assumptions does with financial not a in predict. results risks Except forward-looking to action statements factors release regulators. not prior Points' MacLean. and be future press of and correct. materially law, or not or differ are subject well documents and Officer, are that may such Certain making difficult undertake other With performance to the as are statements of included are used to issued the actual otherwise. US to these believes required making in as prove Chief forward-looking cause as Rob information, are statements, and by Rob? our filed applied to uncertainties statements statements that assumptions to results first Important the such obligation new I call company or over any call, any revise the to will this events material

Rob MacLean

good And Cody. Thanks, everyone. afternoon,

QX. we to carried have from recovery, quarter pleased works are our towards through industry As broader our momentum last

the key quarter. EBITDA expectations last exceeded metrics, quarter we first continued deliver times improvements our results we adjusted financial Our to sequential achieving three as across generated

our through CAD March. position strong deal of have XX.X completion offering In further bond addition, we our successful in liquidity enhanced million public the

CDC flexibility. business travel TSA operate and remained in the offering recently that loyalty in has interest. risk who role nationwide In per actions and low a are steady billion the has short the well loyalty driving remained programs sources not consumer industry's people recovery at travelers our its caution vaccinated remains $XX COVID-XX throughput traffic up our consistent partners, is but to that middle for are been X at the loyalty to begun in becoming has operational elevated hospitality prepared the base. play meeting scale near AAdvantage travelers' issuance deemed since domestic and below States, continue needs. The continued and current to and Though March, checkpoints financing international of these billion an in pent operators new see an important strong, soon made backed the in our fully both for With value announced onset activity of early the day only industry industry. returning and their return million with putting program, resilience United team the nor for of the have contending us efforts. in and supporting level, prevalence quick that new programs opportunities seeing vaccinations the programs the to travel, partner travel and recovery. countries place. growing $X.X On growth these the for in we March. to travel. significant XXXX trends raised with loyalty of because are more by there across the Airlines in demonstrate American In their term, their levels. also long-term signals have of the pace key recovery, of Many our restrictions support was we leverage to around dedicated ongoing development are widespread, countries has well of platform of flexibility longer-term counts confidence case value also are Yet Several a Operators travel response like that of pandemic and the own new of demand since to programs also customers still globe policies elevated pandemic-related is The course, using to neither over role have universal. fulfilling of Our

largely Even they have non-travel as readily range over travel the rebounds they new and past loyalty spend an for on deploy of remained grounded in points active options. miles, earning year, as continued which increasing consumers can trips

Helping most For difficult earning has our own experienced. pipeline backdrop, developing points seeks work and served the travel sources industry to service liquidity respond and during continually we innovation operators, to on enhance continued their normal customers has loyalty as focus continued fueled This customers their ever our a our requires adaptability new to Against times scale into have adapt and that suite the this this critical of our to adapting the we put the on core and as execution needs. innovate flexibility. inherent growth our partners loyalty drivers. us

and have services strengthened new several we our enhanced by have relationships further XXXX our and of market. deepened also launches relationships, deploying recent newer foothold Middle in date the already Our existing in optimizing We've in some our services to net East.

products, continued discuss As partner the our several throughout core made pandemic. in all the to have call, on have we features worked retailing that progress This such generated the our gained with the strong and to Accelerate during we've expand subscription is later Chris as which currency pandemic, interests addition Anything traction will activity.

the the recovery base. since and of around pandemic, monitoring and are have our partner various across outset paces closely we As of states the world the we

remain trends, we the of believe our and encouraged current certainly prospective the and still we by recognize We partners. in own early business of stages are that we our recovery. visibility current is While limited those within

landscape, are will gradual amidst are non-linear. the be and largely Yet factors However, that we pace demonstrable the with this within making progress control. of recovery our that

services. the partnerships of roster We benefit that our are building from

technological We capabilities already enhance and and valuable reach of partnerships to comprehensive and are grow are leveraging optimizing loyalty products our program unique our platform. and the our services we and existing

streamlined continued will our the our future a better This increases. focused pace the as have leverage serve our of platform Given us see internally opportunities and capture the better to to enable efficiencies. and recovery towards we drive to platform of partners approach operations our growth business we current capabilities realignment also ahead, greater of

also address Erick our to and highlights growth look proud our working global to to Christopher quarter and aligned it will review further on now this shortly. first additional drivers. reporting on performance the our have I for over progress constant and We forward we provide approach our will and Erick? hand will some then perspective I'm this and financial Erick activity. team's partner financial of to resilience dedication, towards our

Erick Georgiou

everyone. results, this are call all that figures are overview on and with brief otherwise, US wanted taking today's provide a presented walking quarter. dollars changes advance reporting our good accordance And Rob. In Unless through you, on afternoon, some to quarterly I IFRS. noted of effect financial our in Thank in to

breakouts platform-focused basis approach on our to have a align Rob quarter, as pandemic. some a three to and our expenses organizational legacy reporting our move grow of business. operating efficiencies be we the the mentioned, lines without and our business, starting of consolidated drive the will each of for First, to separate profit revenue, only this made To reported gross changes COVID-XX to structure a we with better internal out as

quarter. transparency starting Second, added base we in additional our our cost have to this financial statements

marketing areas, research including income general expenses on and will our and and functional classified be by operating and sales statement development, Our administrative.

the to our addition, additional In provide notes our on employment details financials costs.

peer mind, way this order closely our to and now We align align focus made report we numbers. results. financial the more how will our change have I our with with in companies on With their view tech-enabled quarterly changes in to the reporting business those internally platform

While pandemic. to Revenue of quarterly our our environment, XXXX in challenging during $XX compared the quarter. the year-ago $XX.X operate quarter we in results million the macro first continue represents performance was million very a in to best first quarter

in impacted be While of revenue generated across our year-over-year COVID-XX, year-ago which to million of quarter as quarter our $X proxy first relative XXXX. of of fourth increased we appropriate impact impacts quarter, grow due to a sequential line, down comps the for more the Gross was top by activity $XX.X the is continue the in profit, sales XX% from platform million COVID-XX. to the

profit sequentially million gross XXXX. increased from $X.X X% importantly, QX in More

had improvement expectations noted, and transactional at Rob we results our encouraging the quarter As the the in quarter saw of some set start we exceeded metrics progressed. these as the

traditionally quarter reminder, seasonally quarter us. is our a fourth a strong As for

across traditional base. of the and with improvement economics And metrics COVID-XX, was our we also a widespread baseline an marketing travel in generally transaction quarter our activity, is source throughout been So, we of generate first which campaigns, second both in encouraged were to straight of the had note, primary quarter the of partner in performance importantly, activity. improvement the in associated our Of our growth more short-term saw our XXXX. which

and quarter $XX.X Turning increase X% in to quarter. $XX.X significantly the million, a expenses the our QX million operating were in cost first XXXX compared year-ago XXXX down slight to base, of of from

quarter, Subsidy $X.X related fourth recognized quarter. in what the similar to Canada we Wage the Emergency Program, This million approximately we recorded to

to but from the cost of $X.X the the the funding the June relatively to compared significantly to flat continue At in approved up received is in quarter expect XXXX than down to participate sequential extend in second a through $XXX,XXX today, QX formulas. at subsidy this with profit of gross XXXX, less wage quarter, quarter funding increase Adjusted the we in combined on to $X.X in EBITDA first XXXX. we aforementioned for with based program due run As first significantly year-ago albeit early was million growth to came with current time, quarter, to The program proposal base. September. our the a what until in roughly million,

first which And We our sheet, raised at quarter as very the summarize strengthened remaining facility across early metrics the and an full funds us $XX of we million million announced, bond Turning from deal In our improvements approximately previously well already over-allotment previous included at ended XX.X closed proceeds we our repaid to accelerate strong the To one core gross as from end ago. balance $XX US$XX.X in had a we and credit for our offering, quarter, XXXX, year borrowings our included balance of generated from total XX million, sheet, first exercise March sequential borrowings. over available or of we remain our this positioning public aggregate during the which increase growth. position to with our financial $XX million quarter of capitalized. consecutive reinforced our year quarter significant the on CAD our option. drawdown March, we million the on well second and financial we've

like would operate strengthened the first Chris? long caution during thank for in investors it And over success support climate, this In with I'll With current the meantime, has for continue Given we in the the quarter our optimism dynamic company. Christopher. confidence we to to to term. and that, near the our our their our turn period for term.

Christopher Barnard

Erick. Thanks,

Our has services as deepen on our drivers optimize help partners us enhance into continued expand our develop growth us leverage working marketing To current growing meet core net drivers around in needs. evolving launch the have new capabilities helped earlier to to market. further build adapt services XXXX. and consistent new globe, three and platform We've and focus these with reiterate automated additional Rob's our our partnerships the relationships partner's we to we our momentum remarks,

our of offer portfolio the network our As we deployed of value our opportunities grows, of on the program loyalty platform expands. services

either recently new of basis, three bonus their different quarterly with their this announced Southwest subscription of can choose we XX,XXX between launches XX-month the over of great a Rewards points members partners, XX,XXX the points Rewards As deepening subscription along a monthly XX,XXX, on the points balance example points Rapid our Once launch with plans Airlines offering, long-running with Under a plan. will automatically Rapid build a to the enabled account partnership that deposited a awarded way. period. plan, course be or choose of them members in with existing

subscription addition loyalty the And option customers deployment loyalty we Giving ability optionality travel earn launch the with members United Southwest, to points added activity service second is for with the marks overall last their quarter. portfolio. operators our alike. and monthly Airlines the to following subscription regardless provides an of of Our latest our offering expanded

and an us. the opened region. to we accelerant Middle execute our expansion partnerships growth of In existing in with we adding end strategy, addition, in Dubai, an regional office on continue East for to At XXXX, new eye expanding our important the

progress make on development see to continue are during since, pleased And this. We first the quarter. further we to

First, Emirates Accelerate we capability launched our with Skywards Anything program.

applied historically loyalty and scope through enhanced the of Anything credit form earned optimized we boosting through to travel rely allow which expands This prior members product, accelerate card doesn't to Accelerate that of of travel our to their reminder, another earnings, capability including a Accelerator any activity airline As had similar activities. miles earned activity. offers on miles now spending earning

In our East Qatar hotel earn and foothold Airways addition, car on the enhances Members year. with with can car rentals. Difficulty], for Middle partnership Airways further and our strengthened miles Qatar of now new Privilege Club bookings in the hotel last [Technical and launched rewards announcement recent which we've redeem deployment a

last partner Qatar week, third to Accelerate Just Anything became the our launch service.

in with were Mashreq are launch importantly, UAE with XX with leading of across to buy, Africa More US. our these pleased just the countries Qatar footprint a services. significant Europe, a and Airways, expansions Asia, and institution launches which the also August partnership both in a launch financial our started Bank, of recently transfer partnership gift We with of new last

Our Emirates more Elsewhere, their up the reach our their expanded Mashreq new the to to exchange the cash ability services balance, flight miles miles enabling to earn points miles. top seamlessly Salaam buy of Spirit to rewards. use Skywards Airlines, members of plus enables program members partnership we into with

we integration earn the Hilton ride facilitate to pay for points use the XXXX between expanded operators' customers rides. enabled or and shared Lyft Lyft to Hilton which every we for in helped Finally, points Hilton more Lyft, two

the to ride Honors May, in need to receive to in end Vaccine for our fight vaccine Initiative, this Lyft's Until Hilton a who enhancement for which support latest of a donated leverages will against COVID-XX. in of Our honors service someone members ride platform taking donate need. part appointment have members helps a bonus one-time to a Access helping those points

recovery. Our of programs network outside our loyalty support helped both work to increased preparation our in expand longer-term of and for member overall engagement, partner services travel has its

operators against broader with new facilitate of deployments rewards. will provide members' activity. also resilient benefit more near-term to we market earn travel As future transitional more the ways core customers period, Having alike, to these fluctuations burn and propensity this within we earn service offerings platform the the and regardless they operate into put and an travel we spend and makes our patterns, individual as in as

of the We enhances continued our their our cross drivers new This continue by growing maximizing loyalty the in-market comprehensive that travel selling of hospitality commitment growth signing crucial services enabled our partners, underscores believe and programs performance network flexible services and to our to verticals and remain to recovery and platform industry's that from and execution across the to on existing geographies. new partnerships value.

development pipeline and to doing new on work to partners adapting offerings, add over through focus coming launch we ability services new roster. bolster the existing strong the business our Further, and of platform, our accelerated to and remains should both our reflective our innovating quarters. trajectory are as Our performance new we core steepen services growth

significant company. to as date. I'm challenges most some the even operations emerging of we've industrywide and we to an say And that proud through are stronger resilient strategy Our remain faced

are work on always, the and we of As we make now up we our year. Operator, questions? hard drivers of continued for this team our our support shareholders will the growth grateful open progress for as

Operator

[Operator Instructions].

Our proceed first your RBC with the Please Drew with question. line question from Capital of McReynolds comes Markets.

Drew McReynolds

couple me. A for

level, certainly and on kind as understand Erick. back we here? the all subsidies we profile, coming How of the do before, be into be at really agreements think how of I've I here with line the of segment? should the here to trend keeping then level, year obviously, changes got there that quarterly QX, when come there year, a at When what about went there this, Is reopen this And do of high this further anything that business margin but that at part these And top should of in as at into how that and half see as we of your you, look work look change was then adding think in OpEx of and, secondly, contracted, improves? with maybe any into of next that it we LCM you starting OpEx? comment housekeepings of begin COVID high a to respect out structural gross that what the a were after. out we you are to would business years we couple aware

Erick Georgiou

On the roughly first the side, quarter. of million in we expense had wage subsidies $X.X

come in that mentioned the significantly I think expect I in to remarks, pretty we'd second so, And prepared quarter. down our

So, ramp up that. just I'd expect from certainly some

subsidies been mentioned I have September. well, extend think until I at out proposed, least the as

still question eligibility a the that criteria is think on little of a I mark. bit

So, something modest monitoring strengthened we're or banking dollar. that would last I'd headwinds thing say but at is the QX It's on some at this we're so looking looking from time, we're seen on that's to it. year. other it X% not what Canadian to have certainly QX the we like about

certainly, So, those in two areas. headwinds some

our and touch the it but contracted lot Maybe want we've we've in to contracts. And net add of if deals haven't certainly, to on Most of very a what upfront changes are some pricing. pass off it historically. our new LCR characteristic you structural that. to we seen think on side, I'll any context quickly that's I launched Rob, on the Rob, seen of

Rob MacLean

of part that more the operators into and even just think our really saw last them. structure, of importance loyalty of the through months, terms nice and felt when for airlines out significant XX, these us business that hotels own its I loyalty XX What optimists pandemic probably monetization the the over as value of than LCR had in I a the general, come We on of potential much probably the going of what's the of program pandemic. kind think the XXXX. been think the I in trajectory of I is like programs,

a programs So, help actually greater be monetized. on I parent do these amount the companies spent can see attention being how economics and significantly of generate

So, that's really, generating an revenue having really positive us profit I as potential. that's think really recognized industry substantial for generating and getting inside

So, that'd I thing. think be first the

I big think what is of are part that of comes businesses now. these out

businesses. I billion. debt to huge $X like remarks, and through it's programs seeing and my generate American leveraging loyalty their you then or Airlines That's to because solid mentioned That's Delta aggressive I $XX for companies cetera. years leading five I'd teams in They're sophisticated probably et managed say, than a whether six stance ago. much big, also capital management bonds, strong, raises, more think these or are by programs. also United these prepared to billion loyalty more,

to post I think going the accelerate that's only pandemic.

they've recently. just with of good and it. as they'll new what push launch 'hey, seeing Anything And here now can. do channels. products possibly on Accelerate think strong a the partners, think taste with I this a programs is we subscription with are our distribution of just saying, Those talked can expand as on build it our really examples Christopher Southwest gotten let's our these I and hard we're launches about business,

the ideation a be business'. little we a this That's of little can kinds love how going all a maybe terms braver that. Let's to Right? let's translates little growth And innovation of bit and in we interesting really the more that bit forward. courageous, be grow

structural positive very that our know, forward change So, all of I think and going elements are see from I we'll feel those don't stance.

Drew McReynolds

here. tidy-ups Two

You've the raise. obviously done

don't facility. do on balance the paid can think of You've a QX. you end until the the buyback I down

a priorities breach beginning that update good provide assuming back on we of the if cash you maybe I'm you, normal technical free half an largely as can in And get flow to time, just here just in well? comment But here as there's administrative for XXXX. a Erick, to So, any -issue. maybe timing that's or that covenant on QX of or back

Erick Georgiou

think, sure on we're part, from the not I covenant last a there. standpoint, we're

now. very I the borrowings a with it's no point think on books moot

investing provided of and there. concerned pause, us, relationships deal we has overly bond certainly in of spending, have bunch us on a think start had flexibility, the priority areas for terms put I our great some of we with pre has not standpoint, lenders in From those So, COVID. done what a

So, and roadmap advancing product our automation marketing capabilities.

So, areas to the start half of probably second I in see those think in focus us you'll XXXX.

Operator

line question next of with Prestopino Gary Research. from Our comes Barrington the

Gary Prestopino

going modeling on quarterly us to a to for you bit so be easier just basis compare or us offer are it's for to throughout Erick, to a year-over-year a of able expenses XXXX prepare changes? purposes, little recast the

Erick Georgiou

really Let our me we public. should think it with the quarterly numbers on one that out issue as to That one. come

I can So, something basis. one-off not do we a on think it's

and certainly that. and It back So, can But we to you I on so. in let me that that wasn't try guide on think can take our internally, help plans one. do

Gary Prestopino

cadence it And April can your visibility Could you to about on can a January, you of maybe, how obviously, Did March? the the you sequentially quarter? to of growth if you February about then, how would, from up, talk throughout and to pick us February? May compared bit March sales – talk give little maybe the maybe

Erick Georgiou

trending in And the touch certainly to can along the chime on and Chris want Rob, the first way. I quarter.

QX, pretty in ended a so marketing environment. activity. been we heavier strong quarter, considered, QX strongest traditionally So, our COVID things all has

quarter, a marketing calendar bit the expectations of just from little lighter And a also so, the our we lower seasonality basis when and enter set on we've first a standpoint.

trending overlaid a So, marketing lighter metrics kind QX calendar. the a of QX we've factored baseline standpoint, from with of

– us to but But the that's say in levels I our really area. in back it that And started pre-COVID say we means. say, so, activity. quarter indication would March, improvement any non-promotional out much saw baseline smaller the I in we say that it metrics. would also QX. in say, I acceleration by some some generally relying would And that with, we what pandemic, very that we of steep marketing in call was saw that I'd It we've activity entered so a been metrics, to When that meaningful the yet across our we expecting was was quarter twofold. What numbers was way. that I than we hit on first so wouldn't

Rob MacLean

the on to me. like the cetera, feel think, indicated, That that's And will we a The saw progression we times really recovery in. XX, particularly you CFO travel, really of forward-looking of number May of previously you period. positive into be through do stuff the in the our And I'll we've Erick side surprising. not up are we picked off about the jump here et When days. terms wants metric April every the kind quarter. think look early that of continued XX, good really curve. hand as last you said I has hotel, business, to US, every and in the occupancy, those at, see XX metric airline in signs that have a

see to expect would with track I that. So, us

of I launches going the be of we all progress – had then with advance leads in And given capture QX, made of that going of to growth. kind this in us XXXX recovery. And bigger we I have we're continued all that. to to through actually acceleration ultimately and of that new believe a footprint to is more our the to think a we're helping continued

and we good So, now. the first about feel pretty quarter we we're seeing saw what what

Gary Prestopino

In was between marketing are pre-COVID, what you of your us you give kind mix of baseline environment the a right normal and business where now? and could

Rob MacLean

question. Good

take to it learnings of terms our have and team of remarkably our hundreds concert last smart about One we this and the of that is responsive marketing up we've how to several the around these we loyalty data millions segment built merchandising, with in obviously, love just and smarter over of target years and get just partners. and business, things analytics we'd and program to, smarter access our in members the

putting good front were results, that our saw actually the great great first being our some and the pre-COVID, done work and conversion of driving of flywheel performance buyer so, is through people seeing that that Part on XXXX. in get was great and time And to strategy about, cycle. into really offers obviously, we in you

then want these was good that of travel good engaged. get of millions baseline opportunity them that effective and they that hundreds the being growth consumers but would get you these seeing offers as on aware were because And really to and we done them being activity so, the there of say good trip people work – during doing, I to promotional just purchase the get I and were of somebody when on with in keep obvious to supplement we back getting towards is really them we miles in some want, a up. – and reasons. weren't I'm not by the to the what that offer take to purchase, on programs in that make but a more purchasing engagement mean Obviously, awareness terms to traveling, for being miles with COVID, front COVID, of incent skew response

to there in more as it's continue now jumping it staying I on improve. think not to expect yet, It's I and to the would reverting members airplanes we're seeing hotels, but back some of more levels. traditional

non-campaign nicely as the place. recovery baseline are takes seeing non-promotional or improving travel or here We transactions

we're direction. think back I right heading So, in the

Gary Prestopino

skewing traditional margins overall? improve towards more your non-promotional business, that Would does

Rob MacLean

Absolutely.

Operator

Instructions]. [Operator

Ascendiant comes Capital. line question of Our the from next Woo with Ed

Edward Woo

North Asian versus between Congratulations. your versus with East? your Do you notice versus any carriers European Middle other your geographies American significant differences

Rob MacLean

robust about the US, sure. country. the there's seeing we're lots the there, recovery I been for Again, domestic volumes within market US, Certainly, in Americans in the most traveling the picking of think coverage up

So, of be the good seeing would Europe. We're certainly, that signals strongest. out

confidence rollout, in active is the in have earlier although more perhaps vaccine to East those I particular stages regions, be UK depths think of other helping even airlines is been going the the than vaccine in Middle the of pandemic. recovery, there.

So which reported. travel, that is again, mirrors And the we in transactional I way would contextually, on broadly it largely activity. based a what see think, be we're our partners out rolling seeing

Edward Woo

in or green you just Going the this back more of it back services programs pipeline year plans to office terms more or guys going of work focusing terms you your next to partnerships more with to for in shoots the year? people and back people into of seeing on in travel, for back half all improvements these, of of I have guess, partners seen and

Rob MacLean

had We fantastic I a a Yeah, and of think partnerships new pieces that. new terms to in couple of deployments. XXXX

solid the of been I reported launches lots think on market, Really into last that lots over great. delivery, XX months. which has of we pipeline, the

is think I that our continues. expectation

very program has really in I more as strong. our mentioned pipeline managing. Drew's I be question, to Our continued have operators powerful that asset they – they're a Again, there's sense in more answering loyalty that confidence

ways asset, try opportunities to programs. find up so, that moved priority for to monetize And the those to it's

So, going to be think I continue that's very positive. to

on think we've I been and it's partnerships the think more really I new you'll the products that new happy continue it. to launch that, of not the profiles see only with,

we to just push revenue harder of Importantly, in programs bit generate and the possible. these profitability a where see to to think and services want all me, we're really these moving of terms and be how provide. from want I helping have be. as quickly We profitability these kind as of see revenue That's going partners we potential products generating to to that much much and little programs

Operator

closing Thank at to turn further for like Rob you. gentlemen, I back to Ladies no MacLean there and comments. would this questions. time, it are

Rob MacLean

our Thank to you in just I when to you. would call. second today's on all everyone speaking listening you. we Thank with thank results. report I like quarter for look forward

Operator

gentlemen, this and Thank you. teleconference. concludes Ladies today's

lines this at disconnect your participation. for Thank your time. you may You

Points.com (PCOM) 13 May 212021 Q1 Earnings call transcript