Payment Data Systems Announces 2017 Third Quarter Results

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SAN ANTONIO, Nov. 14, 2017 (GLOBE NEWSWIRE) -- Payment Data Systems, Inc. (Nasdaq:PYDS), an integrated electronic payment solutions provider, today announced financial results for the third quarter that ended September 30, 2017.

Payment Data Systems is in solid financial condition, with $2.2 million in cash and cash equivalents, positive cash flows from operations for the year and no debt. With well-established ACH (Electronic Check) and credit card processing portfolios, emerging same day ACH debit and credit transactions, and consumer prepaid card businesses, the Company is positioned for future success. The Singular Payments, LLC acquisition closed during the quarter, bringing talented leadership and sales expertise to the Payment Data organization, along with an expanding credit card processing portfolio.

Credit card processing transaction volumes in the third quarter were up dramatically, reaching the highest level in the Company’s history in any quarter. Credit card dollars processed during the third quarter of 2017 were up 77% over the same time in 2016.

During the third quarter of 2017, electronic check transaction volumes were down 18% and returned check transactions processed were down 16%, both over the same time period in 2016. Electronic check transaction volumes during third quarter of 2017 were up 3% over the second quarter of 2017. Returned check transactions processed during the third quarter of 2017 were up 16% over the second quarter of 2017.

“The third quarter was a milestone for Payment Data Systems, as we announced an all-time record for transaction processing volumes,” stated President and CEO, Louis Hoch. “In addition to growing our existing businesses, we closed the Singular Payments acquisition in September, adding talented leadership, sales, and a robust credit card processing portfolio to the Payment Data team. Additionally, we are fortunate to have Vaden Landers join our management team. Mr. Landers, former CEO of Singular Payments, has assumed the role of Executive Vice President and Chief Revenue Officer. Also in the quarter, we announced the availability of same day ACH debits. This offering will facilitate a faster payment service that extends to all U.S. bank accounts, and enables businesses and consumers to send and receive payments and payment-related information on the same banking day through the ACH Network.”

“The successful execution of our revenue growth plan is now yielding results, and we are positioned for continued growth through the remainder of 2017 and throughout 2018.  As a result, we believe revenue in the fourth quarter should be the highest in the history of the Company, in excess of $5 million.” concluded Mr. Hoch.

“Bringing Singular Payments into the Payment Data Systems organization allows the Company to leverage the sales and marketing strengths and deep payments expertise of Singular Payments with the robust technology platforms, solution set and tenured leadership of Payment Data Systems,” commented Vaden Landers, Executive Vice President and Chief Revenue Officer.  “Our focus over the last twelve to eighteen months has been on building out our extensive suite of Application Programming Interfaces to allow app and software developers in key markets such as healthcare, property management, utilities, non-profits and others, to quickly and easily integrate to our feature rich platform. Further, with the launch of our new Payfac in a Box™ product, we are now able to simplify and entirely remove the friction of onboarding new clients for our strategic partners, both current and future, as we cultivate opportunities from within our ever-expanding pipeline.  We are very excited about the near and long-term growth prospects that we expect to follow the successful execution of our unique model in the payments space.”  

Revenues were $3.59 million, up 17% compared to $3.1 million for the third quarter of 2016. The revenue increase is primarily attributed to the added volume from the recent Singular Payments acquisition, which contributed one month of credit card processing volumes, and the continued growth in PINless debit processing.  For the fourth quarter of 2017, management expects continued growth in PINless debit and three full months of contribution from the Singular Payments acquisition.

Gross margin dollars were $824,617, or 23.0% of revenues, compared to $965,485, or 31.5% of revenues, in the corresponding prior-year period. The decline in gross margin dollars was due to the significant increase in credit card revenues acquired in the Singular Payments acquisition. This acquired credit card portfolio purchased is lower margin, with a longer-term relationship. The gross margin percentage declined quarter to quarter and year over year as a percentage of sales is also due to the same significant increase in credit card revenues acquired in the acquisition.

Operating losses were $892,399 compared to an operating loss of $574,897 in the third quarter of 2016, reflecting lower revenues and gross margin.  Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization adjusted for non-recurring and non-cash items) was a loss of $347,404, or (9.7%) of revenues, compared to a loss of $129,859, or (4.2%) of revenue, in the third quarter of 2016.  Net loss was $890,025, or ($0.10) per basic and diluted share, compared to a net loss of $565,957, or ($0.07) per basic and diluted share in the third quarter of 2016, reflecting higher expenses in the third quarter of 2017.

Revenues were $8.95 million, down 2.6% compared to $9.2 million for the nine months ended September 30, 2016. The revenue decrease was due to ACH processing transaction and ACH return transaction volume decreases described last quarter. Additionally, the Singular Payments acquisition only contributed one month to the period.

Gross margin dollars for the nine months ended September 30, 2017 were $2.5 million, or 27.5% of revenues, compared to $2.9 million, or 31.5% of revenues, in the corresponding prior-year period. The decline in gross margin dollars was due to an increase in cost of service expenses. 

Operating losses for the nine months ended September 30, 2017 were $1.8 million compared to an operating loss of $1.1 million for the nine months ended September 30, 2016, reflecting lower gross margins and higher sales, general and administrative expenses versus the prior period.  Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization adjusted for non-recurring and non-cash items) for the nine months ended September 30, 2017 was a loss of $336,582 or (3.8%) of revenue, compared with positive Adjusted EBITDA of $389,722, or 4.2% of revenue, in the nine months ended September 30, 2016.  Net loss for the nine months ended September 30, 2017 was $1.7 million, or ($0.20) per basic and diluted share, compared to a net loss of $953,259, or ($0.12) per basic and diluted share in the nine months ended September 30, 2016, reflecting a lower revenue base in the current year.  Operating expenses increased $450,556 for the nine months ended September 30, 2017 versus the same prior year period.

A replay of the call will be available through November 28, 2017 by dialing (877) 344-7529 (U.S.) or (412) 317-0088 (international), using the passcode 10113920.

Websites: www.paymentdata.com, www.singularpayments.com, www.payfacinabox.com, www.akimbocard.com and www.ficentive.com. Find us on Facebook®.

 

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Globe Newswire: 21:15 GMT Tuesday 14th November 2017

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