GlobeNewswire Inc | Aug 11, 2021 04:05PM EDT

August 11, 2021

- Sustained Performance Improvements Drive Third Consecutive Quarter of Sequential Revenue, Gross Profit and Adjusted EBITDA Growth -

- Revenue Increased 152% on a Year-Over-Year and 58% Sequentially -

- Gross Profit Increased 76% from the Year-Ago Quarter and 37% Sequentially -

- Adjusted EBITDA Increased 10 X from the Year-Ago Quarter and 283% Sequentially -

- Continued Execution on Pipeline Expands Presence by Geographies and Verticals -

TORONTO, Aug. 11, 2021 (GLOBE NEWSWIRE) -- Points International Ltd. (TSX: PTS) (Nasdaq: PCOM) (Points or the Company), the global leader in powering loyalty commerce, is reporting financial results for the second quarter ended June 30, 2021.

Unless otherwise noted, all amounts are in USD. The complete second quarter Condensed Consolidated Interim Financial Statements and Managements Discussion & Analysis are available at www.sedar.com and www.sec.gov.

Our second quarter performance continued our momentum from last quarter, with strong sequential and year-over-year improvements across our key financial metrics, said Rob MacLean, CEO of Points. We generated over $100 million in revenue for the first time since the fourth quarter of 2019, with growth across gross profit and Adjusted EBITDA1 also outpacing our expectations. While we have continued to drive transactions through our promotional activity, our services more closely tied to near-term travel also began to reaccelerate as a result of vaccine-related tailwinds. These trends demonstrate the continued progress of our recovery from the lows of the pandemic last year, as well as the resilience of our platform and growth strategy.

We have delivered robust progress on our core growth drivers through deepening our existing engagements, establishing new global partnerships, and enhancing our in-market services through our growing automated marketing capabilities. In addition to further expanding our presence in the Middle East, we have signed a new long term partnership with a prominent carrier in the Asia-Pacific region. We will be launching a number of services with this partner in the coming months and look forward to updating you on the progress. We have also increased our deployments in non-travel verticals, both through further developing pre-pandemic engagements and expanding our services into new types of loyalty programs. Looking ahead, we continue to have a very healthy pipeline of business, and I expect discussions with both new and existing partners to remain positive.

Mr. MacLean concluded: Amid ongoing positive industry trends, we recognize that the pace of global recovery remains fluid. We continue to monitor changes in health protocols around the world, especially those related to the Delta variant. Within our business, we remain cautiously optimistic about our growth trajectory for the second half of 2021, and are encouraged by the strong sequential growth we have generated over the last three quarters. We look forward to leveraging our strong financial and operational foundation to further optimize the value we create for our partners, loyalty customers, and shareholders alike.

Second Quarter 2021 Financial Highlights

For the three months ended(in millions USD) June 30, 2021 March 31, 2021 June 30, 2020Total Revenue $103.0 $65.0 $40.9Gross Profit $12.3 $9.0 $7.0Total Operating Expenses $11.6 $10.2 $10.6Net Income/(Loss) $0.5 ($1.1) ($3.3)Adjusted EBITDA $3.4 $1.2 $0.3

-- Total revenue in the second quarter of 2021 increased 58% on a quarter-over-quarter basis, driven by continued improvements across both marketing activity and non-promotional or baseline activity more closely associated with near-term travel. On a year-over-year basis, total revenue increased 152%, reflecting strong sales recovery from the lows of the COVID-19-related impacts in the prior year quarter. -- Gross profit in the second quarter of 2021 improved 37% compared to the first quarter of 2021 and increased 76% compared to the prior year quarter. The sequential and year-over-year increases were driven by the Companys aforementioned marketing, promotional and baseline improvements, as well as continued recovery from pandemic-related impacts. -- Operating expenses in the second quarter of 2021 increased both sequentially and year-over-year due to an expected decrease in the amount of wage subsidy funding received under the Canada Emergency Wage Subsidy program, the gradual easing of some spending restrictions implemented at the outset of the pandemic as financial performance continues to improve, and, to a lesser extent, the impacts of foreign exchange headwinds on the Canadian dollar. The Company recognized wage subsidies of approximately $0.6 million as an offset to operating expenses in the second quarter of 2021 and does not anticipate participating in further subsidies for the remainder of the year. -- Total funds available, which is defined as the sum of cash and cash equivalents, cash held in trust and funds receivable from payment processors, at the end of the second quarter were $94.5 million compared to $79.1 million at the end of 2020. As at December 31, 2020, total funds available included $15.0 million of borrowings on the Companys senior secured credit facility, which was repaid in the first quarter of 2021. The increase primarily reflects the proceeds from the bought deal financing the Company completed in the first quarter of 2021, as well as the aforementioned strong sales activity.

Recent Operational Highlights

New Partnerships

-- In May, signed a long term and multi service agreement with a prominent carrier in the Asia-Pacific region. These services are expected to launch in the second half of 2021. -- In April, launched a previously announced new partnership with Mashreq Bank, a leading United Arab Emirates financial institution, to allow members of Mashreqs Salaam program to exchange points into Emirates Skywards miles. -- Launched Exchange service with Bilt Rewards, the rewards program that allows renters to earn points on rent and build a path towards homeownership.

Expanded Partnerships

-- In April, announced the Rapid Rewards Subscription Plan with Southwest Airlines, allowing members to build towards a predetermined rewards balance through monthly points deposits. -- Expanded partnership with the Qatar Airways Privilege Club program during the second quarter with two additional services: (1) Hotel & Car Rewards service, enabling members to earn and redeem their miles on hotel bookings and car rentals; and (2) Launched our Accelerate Anything service for Privilege Club members. -- In July, deployed the Accelerate Anything Service with the Etihad Guest program. The Accelerate Anything service allows members to accelerate their current miles balanceregardless of how these miles were earned. Etihad is the third loyalty program partner in the growing Middle East region to take advantage of this new capability. -- In June, facilitated new integration between Frontier Airlines and meal kit delivery service Home Chef, further developing the Home Chef deployment after its pre-pandemic launch. -- Expanded exchange opportunities across the platform. In July, increased the number of exchange options with Citi Thankyou Rewards, initiating real time exchange availability with the American Airlines AAdvantage program. In August, added Air Canadas Aeroplan program as an additional exchange option with the Chase Ultimate Rewards program.

Points Announces Renewal of Share Repurchase

Points also announced today that the board of directors has approved a normal course issuer bid to repurchase up to 5% of its issued and outstanding common shares (the Repurchase), and that it intends to enter into an automatic share purchase plan with a broker in order to facilitate the Repurchase.

The Repurchase is subject to approval by the TSX, and is expected to commence in September 2021. Points previous normal course issuer bid commenced on September 9, 2020 and will terminate on September 8, 2021.

____________________________________1 Adjusted EBITDA (Earnings before income tax expense, depreciation and amortization, foreign exchange, finance costs, share-based compensation expense and other one-time costs such as impairment charges) is considered by management to be a useful supplemental measure when assessing financial performance. Management also believes that Adjusted EBITDA is an important indicator of the Companys ability to generate liquidity through operating cash flow to fund future capital expenditures and working capital needs. However, Adjusted EBITDA is not a measure of financial performance under IFRS and should not be considered a substitute for Net Income, which we believe to be the most directly comparable IFRS measure. See Non-GAAP Financial Measures section of Managements Discussion and Analysis.

Conference Call

Points will hold a conference call today at 4:30 p.m. Eastern time to discuss its second quarter 2021 results, followed by a question-and-answer session.

Date: Wednesday, August 11, 2021Time: 4:30 p.m. Eastern time (1:30 p.m. Pacific time)Toll-free dial-in number: 1-877-407-0784International dial-in number: 1-201-689-8560Conference ID: 13721291

Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Gateway Investor Relations at 1-949-574-3860.

The conference call will be broadcast live and available for replay here and via the Events section of Points Internationals IR site here.

A replay of the conference call will be available after 7:30 p.m. Eastern time on the same day through August 25, 2021.

Toll-free dial-in number: 1-844-512-2921International dial-in number: 1-412-317-6671Conference ID: 13721291

About Points International Ltd.

Points, (TSX: PTS) (Nasdaq: PCOM) is a trusted partner to the worlds leading loyalty programs, leveraging its unique Loyalty Commerce Platform to build, power, and grow a network of ways members can get and use their favourite loyalty currency. Our platform combines insights, technology, and resources to make the movement of loyalty currency simpler and more intelligent for nearly 60 reward programs worldwide. Founded in 2000, Points is headquartered in Toronto with teams operating around the globe.

For more information, visitPoints.com.

Caution Regarding Forward-Looking Statements

This press release contains or incorporates forward-looking statements within the meaning of United States securities legislation, and forward-looking information within the meaning of Canadian securities legislation (collectively, "forward-looking statements"). These forward-looking statements include or relate to but are not limited to, among other things, plans we have implemented in response to the COVID-19 pandemic and its expected impact on us (including with respect to: cost saving measures that have been implemented and our capitalization), our financial performance, our growth strategies, our business pipeline and ability to sign and launch new loyalty program partnerships, and our beliefs on the long-term sustainability of the loyalty industry, the role of the loyalty industry in the recovery of the travel industry, the competitive environment in which we operate, the recovery of the broader travel and hospitality industries, the Repurchase (including the expected timing of commencement), other objectives, strategic plans and business development goals, and may also include other statements that are predictive in nature, or that depend upon or refer to future events or conditions, and can generally be identified by words such as "may," "will," "expects," "anticipates," "continue," "intends," "plans," "believes," "estimates" or similar expressions. In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances are forward-looking statements.

Although Points believes the expectations reflected in such forward-looking statements are reasonable, such statements are not guarantees of future performance and are subject to important risks and uncertainties that are difficult to predict. Certain material assumptions or estimates are applied in making forward-looking statements, and actual results may differ materially from those expressed or implied in such statements. Undue reliance should not be placed on such statements. In particular, uncertainty around the duration and scope of the COVID-19 pandemic and the impact of the pandemic and actions taken in response on global and regional economies, economic activity, and all elements of the travel and hospitality industry may have a significant and materially adverse impact on our business. In addition, the risks, uncertainties and other factors that may impact the results expressed or implied in such forward-looking statements include, but are not limited to: (i) airline or travel industry disruptions, such as an airline insolvency and continued airline consolidation; (ii) our dependence on a limited number of large partners for a significant portion of our total revenue; (iii) our reliance on contractual relationships with loyalty program partners that are subject to termination and renegotiation; (iv) our exposure to significant liquidity risk if we fail to meet contractual performance commitments; (v) our ability to convert our pipeline of prospective partners or launch new products with new or existing partners as expected or planned; (vi) our dependence on various third-parties that provide certain solutions that we market to loyalty program partners; (vii) the fact that our operations are conducted in multiple jurisdictions and in multiple currencies and as such dramatic fluctuations in exchange rates of the foreign currencies can have a dramatic effect on our financial results and (viii) the risk of an event of default under our senior secured credit facility. These and other important risk factors that could cause actual results to differ materially are discussed in Points' annual information form, Form 40-F, annual and interim management's discussion and analysis (MD&A), and annual and interim financial statements and the notes thereto. These documents are available at www.sedar.com and www.sec.gov. The forward-looking statements contained in this press release are made as at the date of this release and, accordingly, are subject to change after such date. Except as required by law, Points does not undertake any obligation to update or revise any forward-looking statements made or incorporated in this press release, whether as a result of new information, future events or otherwise.

Non-GAAP Financial Measures The Companys financial statements are prepared in accordance with International Financial Reporting Standards ("IFRS"). Management uses certain non-GAAP measures, which are defined in the appropriate sections of this press release, to better assess the Companys underlying performance. These measures are reviewed regularly by management and the Company's Board of Directors in assessing the Companys performance and in making decisions about ongoing operations. In addition, we use certain non-GAAP measures to determine the components of management compensation. We believe that these measures are also used by investors as an indicator of the Companys operating performance. Readers are cautioned that these terms are not recognized GAAP measures and do not have a standardized GAAP meaning under IFRS and should not be construed as alternatives to IFRS terms, such as net income. Refer to Non-GAAP Financial Measures section of the Companys Q2 2021 MD&A for reconciliation to, and description of the Companys non-GAAP financial measures.

Investor Relations Contact

Cody Slach and Jackie KeshnerGateway Investor Relations1-949-574-3860IR@points.com



Points International Ltd.Key Financial Measures and Schedule of Non-GAAP Reconciliations

Reconciliation of Net Income to Adjusted EBITDA ^[1]

Expressed in thousands of United States dollars For the three months ended June 30, 2021 June 30, 2020 Net income (loss) $ 452 $ (3,325 ) Income tax expense (recovery) 145 (420 ) Finance costs 81 280 Depreciation and amortization 1,037 1,259 Foreign exchange loss (gain) 84 (80 ) Share-based compensation expense 1,589 787 Impairment charges - 1,798 Adjusted EBITDA ^[1] $ 3,388 $ 299 ^[1] Adjusted EBITDA is a non-GAAP financial measure, which is defined asearnings before income tax expense, finance costs, depreciation andamortization, share-based compensation expense, foreign exchange and otherone-time costs or benefits such as impairment charges. Management believesthat adjusted EBITDA is an important indicator of the Company?s ability togenerate liquidity through operating cash flow to fund future capitalexpenditures and working capital needs. However, adjusted EBITDA is not ameasure of financial performance under IFRS and should not be considered asubstitute for Net Income, which we believe to be the most directlycomparable IFRS measure.

Points International Ltd. Condensed Consolidated Interim Statements of Financial Position Expressed in thousands of United States dollars (Unaudited) As at June 30, December 31, 2021 2020 ASSETS Current assets Cash and cash equivalents $ 85,855 $ 73,070 Cash held in trust 1,973 280 Funds receivable from payment processors 6,719 5,795 Accounts receivable 5,950 3,559 Prepaid taxes 668 1,760 Prepaid expenses and other assets 4,046 3,075 Total current assets $ 105,211 $ 87,539 Non-current assets Property and equipment 1,186 1,529 Right-of-use assets 1,460 1,862 Intangible assets 11,513 12,130 Goodwill 5,681 5,681 Deferred tax assets 3,655 3,087 Other assets 202 202 Total non-current assets $ 23,697 $ 24,491 Total assets $ 128,908 $ 112,030 LIABILITIES Current liabilities Accounts payable and accrued liabilities $ 5,010 $ 5,766 Income taxes payable 668 489 Payable to loyalty program partners 61,860 50,629 Current portion of lease liabilities 1,188 1,156 Current portion of other liabilities 940 847 Current portion of long term debt - 3,500 Total current liabilities $ 69,666 $ 62,387 Non-current liabilities Long term debt - 11,500 Lease liabilities 605 1,136 Other liabilities 43 57 Deferred tax liabilities 951 1,731 Total non-current liabilities $ 1,599 $ 14,424 Total liabilities $ 71,265 $ 76,811 SHAREHOLDERS? EQUITY Share capital 73,168 49,251 Contributed surplus 1,090 1,795 Accumulated other comprehensive income 475 623 Accumulated deficit (17,090) (16,450) Total shareholders? equity $ 57,643 $ 35,219 Total liabilities and shareholders? equity $ 128,908 $ 112,030

Points International Ltd.Condensed Consolidated Interim Statements of Comprehensive Income (Loss) Expressed in thousands of United States dollars, except per share amounts(Unaudited) For the three For the six months months ended ended June 30, June 30, June 30, June 30, 2021 2020^[2] 2021 2020^[2] REVENUE Principal $ 96,946 $ 35,801 $ 157,188 $ 111,671 Other partner revenue 6,063 5,106 10,846 11,909 Total Revenue $ 103,009 $ 40,907 $ 168,034 $ 123,580 Direct cost of revenue 90,700 33,919 146,725 102,765 Gross Profit $ 12,309 $ 6,988 $ 21,309 $ 20,815 OPERATING EXPENSES Sales and marketing 4,270 2,810 7,830 7,331 Research and development 2,932 2,334 5,462 5,962 General and administrative 3,373 2,389 6,074 5,530 Depreciation and amortization 1,037 1,259 2,454 2,508 Impairment charges - 1,798 - 1,798 Total Operating Expenses $ 11,612 $ 10,590 $ 21,820 $ 23,129 Foreign exchange loss (gain) 84 (80) 311 (118) Finance and other income (65) (57) (119) (246) Finance costs 81 280 207 368 INCOME (LOSS) BEFORE INCOME TAXES $ 597 $ (3,745) $ (910) $ (2,318) Income tax expense (recovery) 145 (420) (270) (111) NET INCOME (LOSS) $ 452 $ (3,325) $ (640) $ (2,207) OTHER COMPREHENSIVE (LOSS) INCOME Items that will subsequently be reclassified to profit or loss: Unrealized gain (loss) on foreign exchange derivatives 265 519 518 (966) designated as cash flow hedges Income tax effect (70) (137) (137) 256 Reclassification to net income of (gain) loss on foreign exchange (412) 260 (726) 359 derivatives designated as cash flow hedges Income tax effect 109 (69) 192 (95) Foreign currency translation 3 (12) 5 5 adjustment Other comprehensive (loss) incomefor the period, net of $ (105) $ 561 $ (148) $ (441) income taxTOTAL COMPREHENSIVE INCOME (LOSS) $ 347 $ (2,764) $ (788) $ (2,648) EARNINGS (LOSS) PER SHARE Basic earnings (loss) per share $ 0.03 $ (0.25) $ (0.05) $ (0.17) Diluted earnings (loss) per share $ 0.03 $ (0.25) $ (0.05) $ (0.17) ^[2] Prior period comparatives had been reclassified to conform with currentyear presentation.

Points International Ltd. Condensed Consolidated Interim Statements of Changes in Shareholders? Equity Attributable to equity holders of the Company Expressed inthousands of Accumulated TotalUnited States Share Capital Contributed other Accumulated shareholders? dollars except Surplus comprehensive deficit equitynumber of shares income (loss)(Unaudited) Number of Amount Shares Balance at 13,227,407 $ 49,251 $ 1,795 $ 623 $ (16,450) $ 35,219 December 31, 2020Net loss - - - - (640) (640) Othercomprehensive - - - (148) - (148) loss, net of taxTotalcomprehensive - - - (148) (640) (788) lossEffect ofshare-based - - 2,519 - - 2,519 compensationexpenseShare issuances ? 24,925 244 (72) - - 172 options exercisedSettlement of - 851 (3,152) - - (2,301) RSUsShares purchased - (453) - - - (453) and held in trustShares issued,net of issuance 1,687,510 23,275 - - - 23,275 costsBalance at June 14,939,842 $ 73,168 $ 1,090 $ 475 $ (17,090) $ 57,643 30, 2021 Balance at 13,241,516 $ 45,799 $ - $ 184 $ (6,791) $ 39,192 December 31, 2019Net loss - - - - (2,207) (2,207) Othercomprehensive - - - (441) - (441) loss, net of taxTotalcomprehensive - - - (441) (2,207) (2,648) lossEffect ofshare-based - - 1,666 - - 1,666 compensationexpenseShare issuances ? 50,299 457 (390) - - 67 options exercisedSettlement of - 2,920 (4,100) - - (1,180) RSUsSharesrepurchased and (67,483) (238) (804) - - (1,042) cancelledReclassification - - 4,302 - (4,302) - within equity^[3]Balance at June 13,224,332 $ 48,938 $ 674 $ (257) $ (13,300) $ 36,055 30, 2020 ^[3] The Corporation has adopted a policy that when contributed surplus is indebit balance, the amount is reclassified to accumulated deficit for financial statement presentation purposes.

Points International Ltd. Condensed Consolidated Interim Statements of Cash FlowsExpressed in thousands ofUnited States dollars (Unaudited) For the three months ended For the six months ended June 30, June 30, 2020 June 30, 2021 June 30, 2021 2020 Cash flows from operating activitiesNet income (loss) for the $ 452 $ (3,325 ) $ (640 ) $ (2,207 )periodAdjustments for: Depreciation of 284 337 799 676 property and equipment Depreciation of 240 298 485 597 right-of-use assets Amortization of 513 624 1,170 1,235 intangible assets Unrealized foreign 96 221 45 (866 ) exchange loss (gain) Share-based 1,589 787 2,519 1,666 compensation expense Finance costs 81 280 207 368 Deferred income tax (760 ) (294 ) (1,293 ) (124 ) recovery Impairment charges - 1,798 - 1,798 Derivative contracts designated as cash (147 ) 779 (208 ) (607 ) flow hedgesChanges in cash held in (1,374 ) 658 (1,693 ) 2,038 trustChanges in non-cashbalances related to 3,318 (1,829 ) 7,576 (7,111 )operationsInterest paid (81 ) (275 ) (244 ) (318 )Net cash provided by(used in) operating $ 4,211 $ 59 $ 8,723 $ (2,855 )activities Cash flows from investing activitiesAcquisition of property (204 ) (25 ) (456 ) (328 )and equipmentAdditions to intangible (349 ) (512 ) (553 ) (1,116 )assetsNet cash used in $ (553 ) $ (537 ) $ (1,009 ) $ (1,444 )investing activities Cash flows from financing activitiesNet proceeds from - - 23,275 - issuance of share capitalProceeds from long term - - - 40,000 debtRepayment of long term - (5,000 ) (15,000 ) (5,000 )debtPayment of lease (301 ) (311 ) (635 ) (637 )liabilitiesProceeds from exercise of 172 - 172 67 share optionsShares repurchased and - - - (1,042 )cancelledPurchase of share capital (453 ) - (453 ) - held in trustTaxes paid on net (1,844 ) (1 ) (2,301 ) (1,180 )settlement of RSUsNet cash (used in)provided by financing $ (2,426 ) $ (5,312 ) $ 5,058 $ 32,208 activities Effect of exchange rate (59 ) (136 ) 13 717 fluctuations on cash held Net increase (decrease)in cash and cash $ 1,173 $ (5,926 ) $ 12,785 $ 28,626 equivalentsCash and cash equivalentsat beginning of the $ 84,682 $ 104,517 $ 73,070 $ 69,965 periodCash and cash equivalents $ 85,855 $ 98,591 $ 85,855 $ 98,591 at end of the period Interest Received $ 28 $ 87 $ 52 $ 300 Taxes received $ - $ - $ 355 $ - Taxes Paid $ (79 ) $ - $ (79 ) $ (1,842 ) Amounts received for interest and amounts received for/paid in taxes werereflected as operating cash flows in the condensed consolidated interimstatements of cash flows.

Points International Ltd.Income Statement Presentation Changes - FY 2020 by Quarter Previous presentation: Expressed in thousands of For the three months ended FY 2020 United States dollars Mar 31, June 30, Sept Dec 31, Dec 31,(Unaudited) 2020 2020 30, 2020 2020 2020Operating Expenses Employment costs $ 7,708 $ 4,924 $ 5,447 $ 6,580 $ 24,659 Marketing and 422 245 255 298 1,220 communications Technology services 752 732 656 627 2,767 Depreciation and 1,249 1,259 1,173 1,178 4,859 amortization Foreign exchange gain (38) (80) (178) (375) (671) Other operating expenses 2,408 1,632 1,485 1,199 6,724 Impairment charges - 1,798 - - 1,798 Total Operating Expenses $ 12,501 $ 10,510 $ 8,838 $ 9,507 $ 41,356 Current presentation: Expressed in thousands of For the three months ended FY 2020 United States dollars Mar 31, June 30, Sept Dec 31, Dec 31,(Unaudited) 2020 2020 30, 2020 2020 2020Operating Expenses Sales and marketing $ 4,521 $ 2,810 $ 2,969 $ 3,599 $ 13,899 Research and development 3,628 2,334 2,255 2,508 10,725 General and administrative 3,141 2,389 2,619 2,597 10,746 Depreciation and 1,249 1,259 1,173 1,178 4,859 amortization Impairment charges - 1,798 - - 1,798 Total Operating Expenses $ 12,539 $ 10,590 $ 9,016 $ 9,882 $ 42,027 Foreign exchange gain (38) (80) (178) (375) (671) $ 12,501 $ 10,510 $ 8,838 $ 9,507 $ 41,356