Third quarter revenue and net income increased
60% year over year
Please replace the release with the following corrected version
due to multiple corrections in Q3 2018 Highlights section
concerning basis points.
The corrected release reads:
3PEA REPORTS THIRD QUARTER 2018 FINANCIAL
RESULTS
Third quarter revenue and net income increased
60% year over year
3PEA International, Inc. (“3PEA” or the “Company”)
(NASDAQ:TPNL), a vertically integrated provider of innovative
prepaid card programs and processing services for corporate,
consumer and government applications, reported financial results
for the third quarter ended September 30, 2018.
Q3 2018 Highlights
- Third quarter 2018 revenue increased
60% to $6.4 million compared to $4.0 million in the same period
last year. Revenue for the nine months ended September 30, 2018
increased 56% to $16.6 million from $10.6 million for the same
period last year.
- Gross profit for the three months ended
September 30, 2018 increased 64% to $3.0 million compared to $1.85
million, in the same period last year. Gross profit for the nine
months ended September 30, 2018 increased 65% to $7.9 million from
$4.8 million for the same period last year.
- Net income for the three months ended
September 30, 2018 was $0.8 million or $.02 per share, a 60%
increase when compared to net income of $0.5 million or $.01 per
share in the same period last year. Net income for the nine months
ended September 30, 2018 was $1.9 million or $0.04 per share, a 55%
increase when compared to $1.3 million or $0.03 per share in the
same period last year.
- Adjusted EBITDA for the three months
ended September 30, 2018 was $1.5 million or Non-GAAP fully diluted
earnings per share of $0.03, a 70% increase when compared to
adjusted EBITDA of $0.9 million or Non-GAAP fully diluted earnings
per share of $0.02, in the same period last year. Adjusted EBITDA
for the nine months ended September 30, 2018 was $3.5 million or
Non-GAAP Fully diluted earnings per share of $0.07, a 48% increase
when compared to adjusted EBITDA of $2.3 million or Non-GAAP Fully
diluted earnings per share of $0.05 in the same period last year (a
reconciliation of Adjusted EBITDA to GAAP Net Income is set forth
below).
- Surpassed 2 million PaySign Cardholders
participating in 244 card programs, up from 1,750,000 cardholders
and 227 card programs for the period ended June 30, 2018.
- Our revenue conversion rate for the
three months ended September 30, 2018 was 3.732%, or 373.2 basis
points (“bps”) of gross dollar volume loaded on cards. Our revenue
conversion rate for the nine months ended September 30, 2018 was
3.68% or 368 bps of gross dollar volume loaded on cards.
- Our gross profit conversion rate for
the three months ended September 30, 2018 was 1.76% or 176 bps of
gross dollar volume loaded on cards. Our gross margin conversion
rate for the nine months ended September 30, 2018 was 1.76%, or 176
bps of gross dollar volume loaded on cards.
- Our net profit conversion rate for the
three months ended September 30, 2018 was 0.46% or 46 bps of gross
dollar volume loaded on cards. Our net profit conversion rate for
the nine months ended September 30, 2018 was 0.43%, or 43 bps of
gross dollar volume loaded on cards.
- Listed on NASDAQ under the symbol
“TPNL” as of August 10, 2018.
Management Commentary
“The third quarter of 2018 was an especially good quarter for
3PEA as we continued our growth in both revenue and net profit. We
are pleased with our sustained strong performance and solid
operational execution,” said Mark Newcomer, Chief Executive
Officer, 3PEA International. “We are particularly pleased with our
strong sales pipeline as we head into 2019. We continue to seek
acquisition candidates that will broaden our customer reach and
enhance product offerings.”
“During the third quarter we had strong results across the
board,” commented Dan Henry, Chairman, 3PEA International. “We
continue our momentum and executing on our strategic initiatives.
As we look ahead to the fourth quarter, our focus continues to be
on improving long-term profitability and sustainable
performance.”
“The increase in revenue in the third quarter and nine month
period was primarily a result of growth in our cardholder base in
newly launched and existing card programs,” said Brian Polan, Chief
Financial Officer, 3PEA International. “We expect our revenue
growth to continue at comparable rates for the foreseeable
future.”
Three Months Ended September 30, 2018
Revenues for the three months ended September 30, 2018 were
$6,421,396, an increase of $2,419,405, or 60% compared to the same
period in the prior year, when revenues were $4,001,991. The
Company expects revenues to continue to trend upwards in the long
term.
Gross profit for the three months ended September 30, 2018 was
$3,044,643, or 47% of revenue, an increase of $1,188,273 compared
to the same period in the prior year, when gross profit was
$1,856,370, or 46% of revenue.
Selling, general and administrative expenses for the three
months ended September 30, 2018 were $1,996,957, an increase of
$892,677 compared to the same period in the prior year, when
selling, general and administrative expenses were $1,104,280. The
increase in selling, general and administrative expenses is
primarily due to the expansion of our customer service and
technology departments, increased investment in our sales and
marketing teams and additional expenses related to our application
and acceptance for NASDAQ Capital Market listing.
Our net income for the three months ended September 30, 2018 was
$800,862, or $0.02 per fully diluted share, an increase of
$300,694, or 60% compared to the same period in the prior year,
when we recorded net income of $500,168, or $0.01 per fully diluted
share. The increase in our net income is attributable to the
aforementioned factors.
Nine Months Ended September 30, 2018
Revenues for the nine months ended September 30, 2018 were
$16,558,438, an increase of $5,937,383, or 56% compared to the same
period in the prior year, when revenues were $10,621,055. The
increase in revenue is primarily due to the expansion of our
cardholder base throughout our card programs.
Gross profit for the nine months ended September 30, 2018 was
$7,907,599 or 48% of revenue, an increase of $3,121,253 compared to
the same period in the prior year, when gross profit was
$4,786,346, or 45% of revenue.
Selling, general and administrative expenses for the nine months
ended September 30, 2018 were $5,244,684, an increase of $2,396,729
compared to the same period in the prior year, when selling,
general and administrative expenses were $2,847,955.
Net income for the nine months ended September 30, 2018 was
$1,945,425 or $0.04 per fully diluted share, an increase of
$691,421 or 55% compared to the same period in the prior year, when
we recorded net income of $1,254,004 or $0.03 per fully diluted
share. The increase in our net income is attributable to the
aforementioned factors.
Shareholder Update
The Company’s revenue continues to grow at an accelerated rate
when compared to 2017. The Company expects growth to continue at
comparable rates for the foreseeable future. Currently, the Company
has over 2 million PaySign Cardholders participating in 244 card
programs. Going forward, the Company expects to launch a general
spend reloadable prepaid card as well as increasing market share in
our current market verticals.
Financial Guidance
Based on the Company’s current estimates, The Company continues
to expect revenue of $22.75 million to $23.75 million in 2018 as
compared to revenue of $15.2 million in 2017. This represents an
annual increase of 50% to 56% when compared to 2017 revenue. The
Company is raising its Adjusted EBITDA forecast from $4.5 to $5.0
million to $4.8 million to $5.3 million. When compared to $3.0
million in 2017, this represents an annual increase of 60% to 77%
when compared to 2017 Adjusted EBITDA.
About 3PEA International
3PEA International (NASDAQ:TPNL) is an experienced and trusted
prepaid debit card payment solutions provider as well as an
integrated payment processor that has millions of prepaid debit
cards in its portfolio. Through its PaySign brand, 3PEA designs and
develops payment solutions, prepaid card programs, and customized
payment services. 3PEA’s corporate incentive prepaid cards are
changing the way corporations reward, motivate, and engage their
current and potential customers, employees, and agents. 3PEA’s
customizable prepaid solutions offer significant cost savings while
improving brand recognition and customer loyalty. 3PEA’s customers
include healthcare companies, major pharmaceutical companies, large
multinationals, prestigious universities, and social media
companies. PaySign is a registered trademark of 3PEA Technologies,
Inc., in the United States and other countries. For more
information visit us at www.3pea.com or follow us on LinkedIn,
Twitter and Facebook.
Forward- Looking Statements
Certain statements in this news release may contain
forward-looking information within the meaning of Rule 175 under
the Securities Act of 1933 and Rule 3b6 under the Securities
Exchange Act of 1934, and are subject to the safe harbor created by
those rules. All statements, other than statements of fact,
included in this release, including, without limitation, statements
regarding potential future plans and objectives of the companies,
are forward-looking statements that involve risks and
uncertainties. There is no assurance that such statements will
prove to be accurate, and actual results and future events could
differ materially. 3PEA undertakes no obligation to publicly update
or revise any statements in this release, whether as a result of
new information, future events, or otherwise.
3PEA INTERNATIONAL, INC. CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE AND NINE MONTHS ENDED
SEPTEMBER 30, 2018 AND 2017
(UNAUDITED)
For the three months endedSeptember
30,
For the nine months endedSeptember 30,
2018 2017 2018 2017 Revenues $
6,421,396 $ 4,001,991 $ 16,558,438 $ 10,621,055 Cost of
revenues 3,376,753 2,145,621 8,650,839
5,834,709 Gross profit 3,044,643
1,856,370 7,907,599 4,786,346 Operating
expenses Depreciation and amortization 284,124 276,533 779,797
725,401 Selling, general and administrative 1,996,957
1,104,280 5,244,684 2,847,955 Total
operating expenses 2,281,081 1,380,813
6,024,481 3,573,356 Income from operations
763,562 475,557 1,883,118 1,212,990
Other income Interest Income 36,683 14,398 62,298
40,395 Interest expense - (31,623 )
Total other income 36,683 14,398 62,298
8,772 Income before provision for income taxes and
noncontrolling interest 800,245 489,955 1,945,416 1,221,762
Provision for income taxes - 3,000 3,125
9,000 Net income before noncontrolling
interest 800,245 486,955 1,942,291 1,212,762 Net loss
attributable to the noncontrolling interest 617
13,213 3,134 41,242
Net income attributable to 3PEA
International, Inc.
$ 800,862 $ 500,168 $ 1,945,425 $ 1,254,004 Net
income per common share - basic 0.02 0.01 0.04
0.03 Net income per common share - fully diluted
0.02 0.01 0.04 0.03
Weighted average common shares outstanding - basic
46,467,826 43,474,895 46,370,177 43,308,750
Weighted average common shares outstanding - fully diluted
46,668,798 44,544,895 46,571,149
44,378,750 3PEA INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS SEPTEMBER 30, 2018 AND DECEMBER 31,
2017 (UNAUDITED)
September 30, December 31, 2018 2017
ASSETS Current assets Cash $ 4,299,570 $ 2,748,313
Restricted Cash 20,436,369 14,416,444 Accounts receivable 390,959
165,523 Prepaid Expenses and other current assets 1,103,407
572,789 Total current assets 26,230,305
17,903,069 Fixed assets, net 907,034 854,402
Intangible and other assets Deposits 4,551 5,551 Intangible assets,
net 1,985,763 1,639,557 Total
assets $ 29,127,653 $ 20,402,579 LIABILITIES
AND STOCKHOLDERS' EQUITY Current liabilities Accounts
payable and accrued liabilities $ 1,052,438 $ 1,145,083 Customer
card funding 20,436,369 14,416,444
Total current liabilities 21,488,807
15,561,527 Total liabilities 21,488,807
15,561,527 Stockholders' equity
Common stock: $0.001 par value;
150,000,000 shares authorized, 44,100,765 and 43,670,765 issued and
outstanding at September 30, 2018 and December 31, 2017,
respectively
44,101 43,671 Additional paid-in capital 8,011,043 7,155,970
Treasury stock at cost, 303,450 and 303,450 shares, September 30,
2018 and December 31, 2017 (150,000 ) (150,000 ) Accumulated
deficit (63,047 ) (2,008,472 )
Total 3PEA International, Inc.'s
stockholders' equity
7,842,097 5,041,169 Noncontrolling interest (203,251 )
(200,117 ) Total stockholders' equity 7,638,846
4,841,052 Total liabilities and
stockholders' equity $ 29,127,653 $ 20,402,579
3PEA International, Inc. Non-GAAP Measures
To supplement 3PEA's financial results presented on a GAAP
basis, we use non-GAAP measures of net income that excludes the
following cash and non-cash items - interest, taxes, stock-based
compensation, amortization and depreciation. We believe these
non-GAAP measures help investors better evaluate our past financial
performance and potential future results. Non-GAAP measures should
not be considered in isolation or as a substitute for comparable
GAAP accounting and investors should read them in conjunction with
the Company's financial statements prepared in accordance with
GAAP. The non-GAAP measures of net income we use may be different
from, and not directly comparable to, similarly titled measures
used by other companies.
"EBITDA" defined as earnings before interest, taxes,
depreciation and amortization expense. "Adjusted EBITDA" reflects
the adjustment to EBITDA to exclude stock-based compensation
charges.
Adjusted EBITDA is not intended to represent cash flows from
operations, operating income (loss) or net income (loss) as defined
by U.S. GAAP as indicators of operating performances. Management
cautions that amounts presented in accordance with 3PEA's
definition of Adjusted EBITDA may not be comparable to similar
measures disclosed by other companies because not all companies
calculate Adjusted EBITDA in the same manner.
Three months ended September 30, 2018
2017
Reconciliation of adjusted EBITDA to net income:
Net income attributable to 3PEA
International, Inc.
$ 800,862 $ 500,168 Income tax expense - 3,000 Interest expense -
31,623 Depreciation and amortization 284,124 276,533
EBITDA 1,084,986 811,324 Stock-based compensation
405,921 135,132
Adjusted EBITDA $ 1,490,907 $ 946,456
Fully diluted weighted average shares outstanding
46,668,798 44,544,895
Non-GAAP EPS - fully
diluted $ 0.03 $ 0.02 Nine months ended September 30,
2018 2017
Reconciliation of adjusted EBITDA to net
income:
Net income attributable to 3PEA
International, Inc.
$ 1,945,425 $ 1,254,004 Income tax expense 3,125 9,000 Interest
expense - 31,623 Depreciation and amortization 779,797
725,401
EBITDA 2,728,347 2,020,028 Stock-based
compensation 755,503 238,040
Adjusted EBITDA $
3,483,850 2,258,068
Fully diluted weighted average
shares outstanding 46,571,149 44,378,750
Non-GAAP EPS - fully diluted $ 0.07 $ 0.05
View source
version on businesswire.com: https://www.businesswire.com/news/home/20181113005372/en/
3PEA International, Inc.Brian Polan, 1-702-749-7234Chief
Financial Officerbpolan@3pea.comwww.3pea.comorS&C Public
Relations, Inc.Suzanne Dawson,
1-646-941-9140sdawson@scprgroup.com
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