Slightly off, Planet Payment comes back to Earth

Higher orbit: Despite some bumps in the road, Planet Payment is still firing on all thrusters, according to Chairman and CEO Carl Williams.

Planet Payment’s first quarter fell just short of analyst expectations – but the company is still on course for what would be a record-setting year.

Reporting Tuesday on the results of the first quarter of its 2017 fiscal year, which ended March 31, the Long Beach-based provider of international payment, transaction-processing and currency-processing services (Nasdaq: PLPM) noted not-insignificant year-over-year drops in quarterly revenues and income.

Despite the setback, company officials reaffirmed that full-year revenues are estimated to reach as high as $61.5 million, easily besting the $54.3 million collected in FY2016.

Total revenues for 1Q FY2017 were $12.7 million, down from the $13.7 million reported for the same quarter last year. Net quarterly income was recorded as $1.4 million, down from $1.8 million in 1Q FY2016.

In addition to disappointing analysts (three observers surveyed by Zacks Investment Research had predicted $13.6 million in quarterly revenues), the declines dented the Long Beach company’s earnings before interest, taxes, depreciation, and amortization – reported at $3 million for the first quarter, down 6.25 percent from the $3.2 million recorded in the same quarter last year.

They did not, however, contribute to the company’s revised estimate of its total FY2017 net income, which was lowered but for entirely unrelated reasons, according to company officials.

Planet Payment on Tuesday announced it was lowering its income guidance to a range of $9.1 million to $10.1 million, down from prior guidance of $11.8 million to $12.8 million – but said the new prediction is “due only to the change in our expected book tax expense,” citing an effective tax rate of somewhere around 32 percent, up from prior estimates of roughly 10 percent.

Carl Williams: Saw that coming.

The dips in quarterly income and revenues certainly didn’t lower the company’s full-year revenue predictions. Planet Payment is still anticipating that record-setting $61 million-plus haul.

And the declines were, in fact, “anticipated,” according to Chairman and CEO Carl Williams, who noted several contributing factors during a call Tuesday with Planet Payment investors.

Among them: Various renegotiated contract renewals that take a fiscal bite in the short term but provide new long-term opportunities – some of which may be realized later this fiscal year – and an expected decline in transactions involving Nigerian currency.

“Despite the decline in revenue for this period, gross margins continued to expand and income from operations and EBITDA were comparable to a year ago,” Williams said.

The chairman also noted various operational highlights of Planet Payment’s first quarter, including rollout of the firm’s Pay In Your Currency platform with India’s HDFC Bank; a multiyear contract extension with Network International, the leading payment-solutions provider in the Middle East and Africa; a new UnionPay Card Acceptance program with United Airlines; and a nascent partnership with UK-based payment-processing company Worldpay involving the placement of Planet Payment Dynamic Currency Conversion technology in some 70,000 U.S. automatic teller machines.

Coming off a string of successful and progressive quarterly reports, Williams framed the slightly off first quarter as a predictable bump in the road – and said investors would be wise to remain in Planet Payment’s orbit.

Those 1Q operational developments represent “new initiatives in multiple key regions demonstrating our dedication to building a stable foundation for the company’s future growth,” the chairman noted.

“Our multicurrency revenues in both the U.S. and Asia Pacific were up and we achieved several business wins that we believe will lay a strong foundation for the remainder of 2017,” Williams added.

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