Pipeline Data Inc. a value-added provider of merchant payment processing services and other related software products, announced its financial results for the first quarter of 2007.
The main drivers of the Company’s financial and operating performance for first quarter 2007 include;
– Increase in Revenue: Revenue increased 59% to $11.9 million as compared to $7.4 million for the three months ended March 31, 2006. The increase in revenue was attributed to stronger marketing efforts, organic growth, the Valadata and Paynet acquisitions and other merchant portfolio acquisitions. Historically, the first quarter is the weakest quarter of the year in the payment processing industry due to cyclical consumer spending patterns
– Increase in Gross Profit: Gross profit increased 36% to $3.9 million as compared to $2.9 million for the three months ended March 31, 2006.
– Increase in EBITDA: EBITDA increased 112% to $1.1 million or 9.7% of revenue versus $542,000 or 7.2% of revenue for the three months ended March 31, 2006. Income from operations increased to $226,000 from a loss of $27,000 for the three months ended March 31, 2006.
– Increase in Operating Expenses: Operating expenses increased to $3.7 million as compared to $2.9 million for the three months ended March 31, 2006. The increase in operating expenses was primarily due to a planned increase in sales and marketing efforts that the Company expects to be reflected in future quarters. The Company received a record number of new merchant applications during the first quarter of 2007.
– Increase in Other Expenses: During the three months ended March 31, 2007, the Company had other expenses of approximately $1.6 million. The expenses, mainly characterized as interest expense, were primarily attributed to debt servicing. Interest expense included both a cash component of $0.8 million and a non-cash interest expense of $0.8 million.
– Cash provided by operating activities increased to $1.1 million for the three months ended March 31, 2007 compared to 287,000 for the three months ended March 31, 2006.
“Overall, the quarter was quite successful, considering the first quarter is historically the weakest quarter of the year and was negatively impacted by one- time annual fee refunds. Management is pleased that our wireless division, AIRCHARGE, continues to gain traction. The planned additional marketing and sales expenses have contributed to a record number of new merchant account activations, which we believe will be beneficially reflected in subsequent quarters. In addition, we have completed renegotiations with our largest vendor and anticipate substantial reductions in processing costs beginning in July. In addition to organic growth, we believe that the market remains healthy to reinvest our cash flow in select merchant portfolio acquisitions. We remain confident that our current marketing efforts and processing cost reductions will enable us to continue our current trend of strong growth, which will lead to significant improvements in operating income and EBITDA in the foreseeable future,” stated Pipeline Data’s CEO, MacAllister Smith.
