PAYS - Earnings call transcript Q3 2019

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Operator

Greetings and welcome to the PaySign, Third Quarter 2019 Earnings Conference Call. At this time all participants are in only-listen mode. A question and answers session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.

This presentation may include forward-looking statements to the extent that the information presented in this presentation discusses financial projections, information and expectations about the company's business plans, results of operations, returns on equity markets or otherwise make statements about future events. forward-looking. are statements Such can should, by estimates, may, and expects, statements words projects, use such plans as intends, proposes. be forward-looking the identified of forecast, Such anticipates, believes,

believes assumptions, there statements. from a these company Although could reflected uncertainties risks such are the to cause based reasonable are forward-looking actual number in results the on forward-looking that and statements that of expectations materially differ

consider the any the are risk cautionary and review urged You our including under to other elsewhere, statements and and made XX-K. heading carefully factors disclosures Form statements XXXX

speak and Forward-looking statements prepared any forward-looking the financial is measure GAAP. EBITDA and law. with duty they as the non-GAAP in statements in financial in contained any update except only principles, with to of alternative This generally not presentation measures as of the an are undertake prepared U.S. to nor accordance that document includes may date company require accounting not accordance also does which by accepted adjusted

addition, titled In is to not comparable standardized any other necessarily not GAAP on similarly prescribed based by presented methodology and by companies. EBITDA measures adjusted is

sir. It's Mr. Mark ahead, to of CEO PaySign my Please go introduce pleasure Newcomer. your host

Mark Newcomer

for PaySign, Thank call. a third brief morning, On you, PaySign. I'd third provide will strategic Chief of and at to the I direction. Mark everyone. quarter reinforce Kevin. our Executive you overview like of Newcomer, quarter behalf And welcome I'm of to what earnings highlights the good our XXXX will Officer some here

third quarter Attinger over Following my the take Chief to I'll us to Financial our through Mark it turn remarks, results. Officer,

field your we will questions. Following then Mark's review,

provide card at payment may of government processor We review presentation, we the to support payment about copy to most our investor want www.paysign.com. services corporate, section our solutions program and learn manager. innovative and customized a website is you recent PaySign of developed and visit a the both our integrated history To consumer investor and of more in and programs. a vertically prepaid

revenue excited share an for record and earnings. the We experienced very I'm to results outstanding quarter.

execute our premier card plasma growth new of to other and we at in continue to pharma gone in one on X strategy our programs, plasma, We card corporate our XX programs. added XX rolling have out cardholders our clients. and this live incentive two Year-to-date with

As onboarded the of expected, of number by increasing total centers XX%. scheduled all we plasma service centers at were end the September

revenues income also As and million, September summary compared were X.XX XXX%. an cardholders a of platform. million of the was an of million to X.X there was and were X on record up X increase Net million, year. XX, prior our increase EBITDA XX% XXX% record In the adjusted

million quarter to XX and XX growth Guidance card million experience to from to in EBITDA recently XX revenue of XX new see adjusted benefiting We million to excellent the remains higher continue expect programs. fourth million. onboarded and

and seek Strategically and to prepaid new continue will consistent will introduce card we to and broaden our products. with focus market diversify programs communications, for our prior our

corporate to of industry verticals. evaluating the our premier are expansion other offering We card incentive

the M&A on however, time. definitive are this share progress to front, at opportunities in evaluating is we considerable there Lastly, several making nothing

As culture profitability. innovation of I selectively pursue shared previously, acquisition that have have demonstrated candidates growth we long-standing replications, and that will corporate and

more it At like I us detail. over little the this through turn would numbers time, Mark take to to to

Mark Attinger

Thanks, Mark.

the to some ending and quarter third XX, I quarter. changes year-to-date This of refers unless proximally quarter the Any the or revenue Revenue and the continued So line increase million commentary. growth year and improvement through of references current the $X.XX ended to take XX.X% us of quarter stated variance was plasma to as compared XXXX. million, year the September of $X was year third provide analyst consensus XXXX top XXXX an million. and will represented XX, numbers attributable to for which our prior of business, new .XXXXXX pharma percentage otherwise increase in estimate XX% on $X.XXXXXX to quarter the third for compared in programs September revenue

were the and XXXX. to increase Gross year, XX.X% driven nine $X.X of by million expenses to compensation $X.X $XX.XXXXXX and compared $X.X in outside mix increased from $X.X compared million operating was higher for prior services. The consists basis $X.X and was salaries a $X.X XX.X% programs. professional Revenue benefits, favorable on and XXXX primarily point year-over-year from million million million increase the XX.X% million to quarter months down a to quarter in XXXX. primarily compared profit three million. $X.X revenue year incremental or and revenues stock-based million towards card in of of million improvement The increased margin XX.X% $XX.XXXXXX increase in $X.X The

XXXX $XX,XXX higher to compared interest Benefiting an was basic share, $X.XX from or ended cash the XXX.X% year. to $X.XX share quarter the third compared is balances the increase to per XX, in XXXX Net $XXX,XXX income income $X.XXXXXX of September year. prior or per for prior basic

$X.XX. versus $.XX was diluted Fully

income For increase to $X.XX per or compared per prior $X.XXXXXX months $X.XXXXXX share year. basic net $X.XX XXX.X% the was or of first nine the an basic share

$X.XXXXXX in basic was adjusted month XXX.X% $X.XX to an share, diluted was the period $X.XX the earnings or For EBITDA compared basic prior year. share per nine per GAAP $X.XX fully the year. or $X.XX $X.XXXXXX of per share increase in versus Non prior

adjusted points quarter in Furthermore, XXXX. XXXX basis EBITDA to from the up the XX.X%, third improved XX.X% margin

the $XXX volume our prior was prior year quarter compared revenue compared We $X.XXXXXX for bips the the share conversion For to quarter dollar the of share, was $XXX versus million prior the card per or cards adjusted $X.XXXXXX XXX.X% $XXX basic excuse EBITDA increase nine the $X.XX XXX or million in quarter, per in an million rate of year. month or bips loaded gross X.XX% prior to on basic to compared and year. XXX $X.XX period, in same X.XX% the to me, or loaded

in business to third to into loaded compared Worth in card, $XX were million cards. the October just noting new and QX in month reflecting average on per $XX million quarter an the the boarded loaded of

June XX, by partially due an due from but at and increased or at restricted from million, million end. higher cash $X.X increase million year compared was including at to is last consolidated liability. $XX.X $X.X year in cash X.X the billings improvement to million consolidated increased compared year-end and XX.X to XX.X% also perspective AR offset sheet September. accounts million, at XXXX XXXX million October compared cash cash $X.X up to increased consolidated Working $X.X capital to balance payable, million client month a to million comparison compared to XX.X to primarily was million in decreases The corresponding a as From increase $XX.X

from the Our by both as cash liquidity adjusting up year-end. balance measured ratio, sheet, X.X X.X in was respectively at cardholder excluding funds from restricted current

new contributed As from on signed we the we look the slightly boarded the also to mix fourth revenue, and from expect expect we to margins. recently considering gross quarter, benefit business do lower

that my I'll concludes over a And back to this at it to begin you. moderator I turn time, question-and-answer our remarks Thank believe session.

Operator

[Operator coming Instructions] today Mark from Palmer BTIG. from Our is first question

now line live. is Your

Mark Palmer

I from very commentary million is of and if after September that restricted quarter it some guess But decline on from you the second from and what Pharma much. quarter, been, indicative $XX.X the which our XX, thank had second co-pay you the help I investors business. conversations of the know are happened at should cash that? the investor not just balance look million this Yes, sequentially Question $XX.X supposed sequentially take what give on could to in at

Mark Newcomer

your voice. hear to Good question. the appreciate Mark Thanks,

cash, So from you as of good point It one number is the in that backup at is we know increased October trend and over of on month end. on a $X.X increase million things quarter. million, by I number me to an $X.X cash it time. the million did like $XX.X consolidated excuse to to restricted look by

to Typically, patients their point given the prescriptions The clients load assist about other to consumers sign as expense before and programs with space. product we particular in out-of-pocket did new program. on Pharma provides thing early the in is funds any these year talked for and that I we more. And this their would

to up go there to Once seasonality is quarter. lodes see their So And those is back first start subside. the the met you'll loads right in it. deductible then

and of seasonality. is which timing, is part new space. we seasonality, on we this, of part actually normal That's to and coming is October board Pharma this this want to the a to part month have is cash best probably clients clients way and point answer it, timing new of why So restricted the the in end

Mark Palmer

Okay.

October? So just the at see the number the end a of restricted million to of just terms that's to confirm I what was consolidated of the wanted end cash October, number $XX.X cash in

Mark Newcomer

about don't of I is but will we to if that to restricted I end XX Before confirm to the this pull is roughly off, cash that it be but very check is see can million I'll number $XX get it. I roughly going it handy the restricted moment, have

Mark Palmer

you regard I being in traction the pace And gained there live to on wanted also queue. see of one the the on with any premier and indication program, back is to client have initial just if go will with that get

Mark Newcomer

we be reiterate that progress. we new from making up that good material customers, in early too the we but expect it's We've continued certainly XXXX do to been to and and but program, signing to have benefit are point

Operator

Thank you.

Canaccord Genuity. Austin Your next question from is from coming Moldow

live. is line Your now

Austin Moldow

Thanks taking questions. for my

pipeline sure not I missed next can those and Pharma I'm context not. follow-up the I First, Thanks. then revenue be, color some would year. quick question or your and the or Pharma what the if in of was give yielding feel campaigns and housekeeping about quarter customers that But relationships contribution to revenue terms in you

Mark Newcomer

Austin. Thanks, question. Good

have second the up up So nicely And new XX% from revenue little was continues a Pharma question, and your represented bit quarter a approximately part that on recall. to to approximately and Pharma of that us quarter for in as of to picking Mark's the yes quarter. the Austin third we grow you question, be in business signed continues for and latter strength the XX% may

third four Pharma of we I regular a is prepaid the those that programs actually new Pharma as we this are think and on the the in three mentioned other business in the see year Mark signed revenue actual program. quarter co-pay

us In to and our with partners, as who the that on several a were number channel are terms in through introduced work discussions opportunities there evaluating we know, programs. you of clients new and pipeline

Austin Moldow

networks brought, question seeing to from or my and is within a you you the -- already plasma expanding it into able that what new you just the tap know you're footprint mostly talk you of you expand you want as larger something? any are your that in batch competition, market have competitor. can something share, Great where relationships I space in And the terms last that or then was about is small

Mark Newcomer

due is XX, there's business successful is expanding from on build factors, several by space plasma was what were winning were marked to from And is we then the XX yes, Our but method. the new expansion our center in those that directly competitors. were across centers always And the primarily, customers. there

Mark Attinger

something XX client basically to been centers as that from with the September that probably on earlier existing across we an in year had brought you know. XX we secure hoping

Mark Newcomer

another But another that customer, was competitor. win from

the and our of split exactly of couple clients shared that business those we that's continue and and competitor win one things So we've example. with between our actually larger to is performance new to look and Mark's this our a of as to our that point differentiate our two us in share largest volume clients so increase to you

Austin Moldow

taking for much very Thanks it. questions. my Got

Operator

Instructions] question from is [Operator from coming Our Thalmann. Hickman Ladenburg Jon next today

live. line is now Your

Jon Hickman

my Thanks flow quarter? tell taking from the this what me cash question. was you for Could operations

Mark Newcomer

that, John, on get you with have don't I I to that will handy. have back

Jon Hickman

why it's little about talk more you I basis Okay, up, mean could so XX conversion a points? the then was bit revenue almost

Mark Newcomer

composite. conversion revenue in rate higher and results the mix that Pharma the is higher towards business typically So so Pharma higher on a

Jon Hickman

Thank quarter appreciate. you, nice

Operator

is next Eric Our Wright Investment. coming from from BW question

now Your line live. is

Eric Wright

Thanks guys.

in days quarter mix. been of to increase of first comment But versus Is The is QX large can decreased have have there premier other covered. these any been lot also then XXXX, margin. you the this the actually on launch record the off is substantially margin and that results also I congratulations product the know so increasing that? expenses margin of see I XXXX And that portion causing consistent cards, and operating and QX also attributed a the a questions new and to factor the that

Mark Newcomer

the on question Good margins.

plasma most was things in much that of bit business, the board year timing too a little outside you move getting on expense saw we mind. on a the margin the second operating services We audits the will for keep have that gross see as not of we that the down see of that new standpoint, quarter third in From the-- taper quarter little bit expense so basis it on to margin care gross expenses those and at of our centers getting plasma last a on and that come expenses, the our a hit that'll run rate fourth consolidated to we on recognizing getting quarter. that XXX(k) the for in didn't taken professional that in were that some bring through

would quarter. I up closer the in a operating were a our be for bit, to the back expect they So little fourth quarter little to second bit come expenses what

Eric Wright

trajectory and to need growth expense doing operating you to Okay, do we're line.? variable that's that great that that and terms guys you on of if execute is leverage, have somehow to capabilities this the guys gage guys are you continue in trying operating

Mark Newcomer

question one we on talk calls seeing and we It's with thing in continue of to all improvements leverage. you, and great is a are analysts that these about operating

about If mid-XX you last at year-to-date percent was a year's range year were this basis. in growth the in year about OpEx to on XX% year on look

growing. to And at have we not same revenues the that rate grow expect so we that our do

So we should get better and margins. better

Eric Wright

That's you great, much. very Okay. thank

Operator

today [Operator coming with Jeff Feinberg next Investments. question is Instructions] Our Feinberg from

now is line Your live.

Jeff Feinberg

Thank much. you Nice guys. very job

consensus did to Just look want me sure, beat make like to you the revenue.

you I delivered call. that was coming prepared the I mentioned in, know we think in [indiscernible]? What

Mark Newcomer

that sites composite a the us. of on was it X.XX else four a of to Looks as cover we couple took what saw like million

Jeff Feinberg

are particular regard That's where With I great. was XX%, next higher $X.XX year? about, sign for the margin provide the pay Can premier was I how to quarter the about the people business incremental asked towards the overtime think what's XX%. dollar mix there got the profile we with maybe results to more nine months for opportunities, can perspective okay, EBITDA through couple every and shifting you like its margin incremental and dropped margin margins

Mark Newcomer

over and question a at at glance the take good that's Yeah, let kind it. look just me a quick models

read were margin going things seeing card I gross the on in that probably a some we we're that number on XX% think affect on card see how premier range better that on to on We get learning's and conversion that basis. got settle the that. premier get margin will of exactly there's gross a the in well factors products to

new We see programs those Pharma have number of just that we live went that a want how to perform.

plasma corporate we We were other have a really also some good well read obviously factor at programs that then to will and as as. incentives on need looking in

number forward plasma a So XXXX there as the margin on, kind into the at think dynamics and Pharma but gross here, of on comes go twiner least of card I basis, gross is margin. probably between premier

this where I fourth don't a in you will it see think around believe see again, I was don't I be the will XX.X% that quarter. level XX%. quarter it think you'll and

Jeff Feinberg

margins I'm of this maybe so. for to for completely it quarter between I the through $X.XX that revenue the on the EBITDA but about and way its every year, somewhere EBITDA, referring sound will nine think months $X.XX, be incremental to understand flow probably to dollar the should gross incremental or XX% next margin like the particular the EBITDA

revenue. incremental would that in XX it. Is right, about we So to analyst are way grow the up flow through. $XX million million from revenue would that that so think hypothetically XX the million the

Mark Newcomer

in fourth adjusted a quarter at to you closer at year the year that's XX% that we I at see EBITDA We're finished least full that's did a through we're margins the year, EBITDA think full looking at probably quarter our will taper XX% third if and fair, look on basis. looking this right. full on year

year when next like So reasonably you a look still good at year full composite look that's a on basis.

Jeff Feinberg

excited, math, the in really if do appreciate time. just and the you. Pretty I Thank I EBITDA midXX

Mark Newcomer

bet. You

Operator

back for floor to Thank management comments. you. question-and-answer I'd We any to further our turn like session. reach end of closing the over

Mark Newcomer

very in and our listening focus your and Again, pleased quarter we and on payments an We participating overall. this appreciate outstanding for And world-class a ourselves company. with with continue week. building update this progress to we're

Operator

does conclude wonderful may your a your and line today's you. teleconference time day. participation Thank today. you have disconnect for We thank It this you at

PaySign (PAYS) 5 Nov 192019 Q3 Earnings call transcript