Points.com Inc.
Q2 2017 Earnings Call Transcript

Published: 10 Aug 2017

[Operator:]

Greetings and welcome to the Points International Second Quarter 2017 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Garo Toomajanian. Please go ahead sir.

[Garo Toomajanian:]

Good afternoon and thank you for joining us today to discuss Points International's financial results for the second quarter of 2017. Joining me on the call are Rob MacLean, Chief Executive Officer; Christopher Barnard, President; and Michael D'Amico, Chief Financial Officer. Before we begin, let me remind you that the remarks on this conference call contain or refer to forward-looking statements within the meaning of Canadian and U.S. securities laws. Management may also make additional forward-looking statements in response to your questions. Although management believes these forward-looking statements are reasonable, such statements are not guarantees of future performance or action, and are subject to important risks and uncertainties that are difficult to predict. Certain material assumptions are applied in making forward-looking statements and may not prove to be correct. Important factors that could cause actual results to differ materially and the assumptions used in making such statements were included in our second quarter 2017 financial results press release issued prior to this call, as well as other documents filed with the Canadian and U.S. securities regulators, except as required by law, the Company does not undertake any obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise. With that said, I'll now turn the call over to Points' Chief Executive Officer, Rob MacLean for his prepared remarks. Rob?

[Robert MacLean:]

Thanks Garo. We continued business momentum. We are tracking solidly towards our full year targets as we execute on our strategy of building on our successful curtailing currency retailing business while further developing our Points, Travel and Platform Partners initiatives. In addition to confidence in our full year expectations, our performance in the second quarter makes us increasingly optimistic about the ability of all of our business segments to contribute to our growth and profitability over the longer term. And looking at our performance by segment, we stable improvements from our core loyalty currency retailing business with revenue up sequentially and year-over-year and gross profit and adjusted EBITDA that both grew from the first quarter. This business line represented 82% of our consolidated gross profit in the second quarter. This segment is a significant contributor to our profitability which we remain confident would generate approximately $20 million of adjusted EBITDA in 2017. So far this year, we’ve launched or announced new partnerships with Copa Airlines, Eithad, WestJet, Air Canada and most recently Air Europa. Importantly, we’ve also expanded current partnerships with Jet [Indiscernible] and IHG in their mobile channels as well as launching new initiatives with United Airlines. We have shown clear and continued progress across multiple geographies and we are confident in the meaningful number of opportunities we are pursuing, both with current partners as we extend our relationships as well as with net new partners around the world. As such we remain confident that the loyalty currency retailing segment will remain an important contributor to profitability as our other segments scale. Our newer growth initiatives are still in early stages but are gaining traction as demonstrated by increasing gross profit. In Points Travel, we are adjusting a large segment of the hotel booking market where we can offer unique value for travel industry players looking to capture a larger portion of global hotel booking margin. Industry experts that focus right estimate that over $67 billion worth of hotel accommodation is booked by leisure and unmanaged business travellers in the U.S. alone. By 2020 they project this to grow to $83.5 billion and be close to double that amount worldwide. This represents one of the largest e-commerce categories globally. Into this category, Points Travel injects our expertise in loyalty and aims to be the best place for loyalty program members to book their hotels stays. Through de-collaboration with loyalty partners and using a portion of the margin generated by hotel booking to fund an attractive points to miles offer, we efficiently target these travellers who are already booking hotels online with the aim of driving higher than typical future repeat purchases. Importantly, we avoid costly and competitive customer acquisition activity through advanced beta science and contracted access to perspective purchasers within the loyalty partner’s ecosystem. The result is a highly qualified audience, a great member offer and a new points for miles revenue source for the loyalty partner, all the while establishing an emerging sustainable segment within the enormous and growing online travel category. In keeping with these objectives, we’ve seen a good pickup with our recently launched program with ANA and expect to see even more growth in the second half of the year. We’ve made progress in our new partnership with Expedia, and we will also shortly be adding Collinson hotels to the list of loyalty programs taking advantage of our service. So following our continued execution in the first half of the year, we expect Points Travel to benefit from both new launches later in the year as well as continued traction from previously launched programs. As such we are optimistic that the current trends of significant quarterly percentage increases in gross profit will continue. With this continued progress, we continue to anticipate that Points Travel to reach breakeven by the end of 2018 and then be a meaningful contributor to our overall profitability. Turning to our platform partner segment, we are leveraging our Points loyalty commerce platform to enable our partners to leverage dozens of leading loyalty programs around the globe representing almost 1 billion memberships in total. Our Platform partnership strategy is focussed on leveraging our unique access to and relationships with the loyalty industry by finding businesses, products or services that will benefit from tapping into the world’s most powerful loyalty programs. We currently have over 15 companies access in the loyalty industry via our loyalty commerce platform. In the second quarter, this business segment represented over 15% of our consolidated gross profit. Further, with an improving EBITDA we continue to be optimistic that this segment can approach breakeven on a quarterly basis by the end of this year. Based on our current momentum, we are confident that our strategy of scaling these two segments to become meaningful, economic and strategic contributors represents an important opportunity for the company. Our second quarter results demonstrate that our progress towards this goal is on track and we believe that this performance also puts us on track to achieve our full year expectations for adjusted EBITDA growth of upto 10% with loyalty currency retailing driving that profitability with increasing traction of both our Points Travel and Platform Partner segments. I’ll now turn the call over to Christopher to give you more insight regarding our recent performance.

[Christopher Barnard:]

Thank you. As Rob discussed, during the second quarter, we made progress on all three of our business segment and continue to be confident in our full year financial targets. In our loyalty currency retailing business we continue to execute against our new business pipeline in 2017. Year-to-date we have launched four new relationships with Copa Airlines, WestJet, Eithad and Air Canada. In addition, since the end of the quarter, we signed a new partnership with Air Europa, a Spanish carrier that will leverage our core Buy Gift and Transfer services starting next week. With respect to our growth businesses, we are pleased with our continued progress in the second quarter. In Points Travel, we are seeing growth as the sixth loyalty program partners on the Point Travel service benefit from our unique offering. As Rob mentioned, we’ll be adding Collinson hotels to our participating program list shortly and our relationship with Expedia generating new opportunities and adding to our confidence in the business. In fact, Points Travel saw an almost doubling of gross profit from first quarter to second quarter and we believe we are on track to see this type of significant growth continue through this year and as we said in the past, lead to a positive adjusted EBITDA contribution in 2018. In our Platform Partner segment, we saw gross profit increase year-over-year fuelled by strong transactional growth across multiple products enabled by our loyalty commerce platform. For example, in partnership with Collinson Latitude we are excited to announce a recent win with both Melia Hotel and one of our large airline partners and the upcoming launch of multi country online earn and [Indiscernible]. Further, we recently announced that Scotia Bank, one of North America leading financial institutions deployed new versions of their mobile banking app that leveraged our loyalty walled APIs to offer increased value to their millions of customers. This addition of another leading name to our list of financial services partners is certainly an encouraging development and continues to see more opportunity in this industry vertical. Retail is another industry vertical that we are very focused on and are seeing great traction with our offering. We are in the later stages of launching services with the number of retail players leveraging our LCP [ph] capabilities and taking advantage of our loyalty wallet APIs. For example, in the coming days, we will be launching a new initiative with Intercontinental hotels, enabling their members to earn bonus points on purchases made at the Apple Store online. Similarly, one of our largest airline partners will soon be allowing members to earn miles at the pump for the major gas retailer via our loyalty commerce platform at the end of year. Finally, we are pleased to have other agreement that leverage our wallet APIs that are in the later stages of completion, including the major online via marketplace, the financial services app, an online travel provider, details of these will be announced upon launch. In summary, given our healthy growth coupled with positive trends across all our business segments we remain confident in our full year guidance. Just as important, we are optimistic that early tracking with our newer products will contribute to overall growth and profitability in 2018 and beyond. I’ll now turn the call over to Michael, so he can walk you through the financial results in a bit more detail.

[Michael D'Amico:]

Thank you, Christopher. As I'll review our results for the second quarter of 2017, please note that all of the numbers mentioned in our call today are in U.S. Dollars and unless otherwise noted, all amounts are presented in accordance with International Financial Reporting Standards. Revenue in the second quarter was $85.8 million, a record level for the company and an increase of 2% from a year ago. Principal revenues were $81.9 million up 2% from the second quarter of 2016. Other partner revenue was $3.8 million, an increase of 17% from last year, largely due to growth from our Platform Partners and Points Travel segments. Gross profit which is an important metric for us was $11.4 million in the second quarter, up slightly on both the sequential and the year-over-year basis. Relative to the prior year period, we saw growth in both our Platform Partners and Points Travel segments. Platform Partners generated gross profit of $1.7 million in the second quarter, up 12% from a year ago and representing 15% of our total quarterly gross profit. Points Travel produced gross profit of $0.4 million increasing almost 90% on a sequential basis, a good result at this early stage of the business albeit of a small base. Total adjusted operating expenses which consist of employment expenses excluding stock based compensation, marketing, technology and other operating expenses were $8.3 million in the second quarter, up 5% over the prior year. As anticipated, the majority of this increase was due to increased rent expense resulting from our new head office lease, and incremental operating expenses related to our Points Travel product. Adjusted EBITDA is an important metric in evaluating our ongoing profitability. As a reminder, we calculated adjusted EBITDA by taking net income and adding back the following items. Income tax expense, interest expense, depreciation and amortization, foreign exchange gains and losses, impairment charges, and share-based compensation expenses. On that basis, adjusted EBITDA in the second quarter was $3.1 million compared to $3.2 million during the prior year period. By business segment on a fully allocated basis, in other words by allocating 100% of our adjusted operating expenses across our operating segments, adjusted EBITDA from loyalty currency retailing was $5 million, consistent with the prior year. As expected, Points Travel generated an adjusted EBITDA loss of $1.5 million compared to a loss of $1.2 million a year ago. Adjusted EBITDA loss from Platform Partners was $0.4 million compared to a loss of $0.6 million a year ago, an improvement of $0.2 million. Total net income for the second quarter was $0.7 million compared to $0.9 million in the prior year. Overall resourcing levels were relatively stable with prior periods. Excluding part-time and contract roles, we ended the second quarter with 188 full-time equivalent employees slightly down from the 191 at the end of the second quarter of 2016 and 190 at the end of Q1 as we continue to focus on cost containment where possible. As a reminder, while we generate the majority of our revenues in U.S. dollars, the majority of our operating expenses are denominated in Canadian dollars and we are therefore subject to currency exchange rate volatility. To minimize this volatility, we engage in foreign exchange hedging to provide greater certainty around future costs and are typically hedged out 12 months for approximately 50% of our total Canadian dollar based expenses Our financial strength is clearly reflected in our balance sheet, total funds available which is comprised of cash and cash equivalents together with short-term cash investments, restricted cash, and amounts with our payment processors totaled $62.2 million at the end of the second quarter. Of primary importance to us is our net operating cash, which we define as total funds available, less amounts payable to loyalty program partners. As of June 30, net operating cash was $13.7 million up $1.4 million or 11% compared to the end of the first quarter. Keep in mind that changes in total funds available and net operating cash reflects the quarterly variations in revenue and the timing of certain cyclical expenditures including outlays for capital and intangible asset additions, and the timing of partner and operating expense payments. Our loyalty currency retailing business continues to be a strong cash flow generator for us, enabling us to fund current operating and capital expenditures as well as share buyback activity through working capital. Finally, our board has authorised an observation to our historical normal course issuer bid to include a new automatic share purchase plan. This plan will now enable us to repurchase and cancel shares automatically, including through blackout periods. With this new plan in place, it is our intention to execute to on the full extent of our 5% purchase capability. It is important to note that this will represent significantly more capital spent on our share buyback program than in the past few years. Our automatic share purchase plan will be set up to accelerate the purchase of almost 750,000 shares to the greatest extent possible within the NCIB parameters. This plan will commence as soon as is practicable and we anticipate it will last until the first quarter of next year. As part of our considered capital allocation strategy, we believe that not only is this return of capital a strong show or our commitment to shareholder value, but also believe that there will be incremental benefit down the road, given our confidence in mid and long-term growth prospects. I will now pass the call back to Christopher to review our 2017 guidance and to close out our prepared remarks.

[Christopher Barnard:]

Thanks, Michael. We are pleased with our continued progress at the midpoint of 2017 and are tracking towards our annual targets. Therefore, we are confident in achieving our 2017 guidance which calls for both total gross profit and total adjusted EBITDA for the full year to increase upto 10% over 2016. In addition, we expect to see more meaningful gains in gross profit and adjusted EBITDA in the second half of the year, consistent with prior indications, particularly as some of the new initiatives discussed today and for the market place. That concludes our prepared remarks, thanks very much for your time. Operator, can you please open the call up for questions.

[Operator:]

[Operator Instructions] Our first question comes from Andrew D'Silva with B. Riley & Company. Please go ahead.

[Andrew D'Silva:]

Hey good afternoon everybody. Thanks for taking my call and good quarter. I just had a few questions for you. As far as your guidance goes, I know that first half or second half of the year on a comparative basis for I mean first half of the year versus first half of 2016 on comparative basis is relatively flat, but you are trending well above where we were projecting and I think the street was projecting from an adjusted EBITDA standpoint. Do you guys feel at this point that the back half of the year growth that we were initially expecting should still continue with that rate or do you think that you kind of had a larger concentration of sales in the second quarter due to promotional activity that will then subsequently be taken out of the third quarter and the fourth quarter.

[Robert MacLean:]

Hey Andy, its’ Rob. Yeah, I think the concise answer to that is that your first half of the year basically called tracking right where we would have expected, so we feel really good about that. And as a result kind of as Christopher reiterated our guidance for the full year we are comfortable that we are tracking towards that. So I think no surprises for us, we are kind of right where we would have expected to be at this stage.

[Andrew D'Silva:]

Okay. And then Mike, just as far as stock based compensation goes, obviously a meaningful uptick is there any reason for that and should we expect that to continue?

[Michael D'Amico:]

Thanks, Andy. Yes we had a more significant increase in stock based comps, because we’ve converted some of the internal bonuses to stock-based compensation rather than cash bonuses and that’s to increase the number of shares that we delivered to the hands of the internal people, but its in the form of their bonuses rather than on a cash basis, which is a change we’ve made at the beginning of this year.

[Andrew D'Silva:]

Okay. But -- so that should be a reoccurring item that we expect to tick up over time, but the cash expense go down?

[Michael D'Amico:]

Absolutely correct.

[Andrew D'Silva:]

Okay, great. And can you maybe just touch a little bit about some of the macro dynamics that are going on right now in Canada. I noted that Air Canada Aeroplan deals set to expire in the next couple years. Am I right understand that has a very nominal impact on your business or is there is something else there that I'm not aware of?

[Robert MacLean:]

No, I think that’s the correct assessment. We do give a little business with both Aeroplan and Air Canada, two separate entities, but pretty nominal impact from our perspective, it is several years down the road and we’re not seeing that have any impact on the business.

[Andrew D'Silva:]

Okay. Okay. And then I may be a little bit of a discussion on Expedia, you mentioned that the relationship is moving forward in a way that you guys like, maybe provide little more color on what you're seeing? Are they bringing you into conversations that you weren’t in before or where they adding the most value in your opinion?

[Robert MacLean:]

Yes. I think again very much like the earlier comment. It’s Rob, progressing there as we would've expected, as I mentioned after the first quarter, establishing that relationship. We very pleased with the potential of on that. Really focus on right now on the joint marketing and selling activity. To your specific question about are they bringing us into new opportunities and vice versa? The answer is yes. So again continue to feel very, very positive. As we said in our prepared remarks around the pipeline on all of our businesses and in reference to Points Travel I think being in market in a combined way is demonstrating some results at this stage.

[Andrew D'Silva:]

Okay. And just my last question, as far as point Points Travel goes, I just want to make sure that I got this correct. For 2018 you guys believe right now that you’re trending to be EBITDA positive?

[Robert MacLean:]

Correct.

[Andrew D'Silva:]

Okay, great. Thank you very much. Best of luck going forward.

[Robert MacLean:]

Great, thanks Andy.

[Operator:]

Thank you. Our next question comes from Drew McReynolds with RBC Capital Markets. Please proceed.

[Drew McReynolds:]

Thanks very much. Good afternoon. Michael on the cost structure you’ve take some bodies out of the cost structure and lot of moving parts underneath the hood surely. Just can you comment what’s required kind of incrementally as we look into 2018?

[Michael D'Amico:]

I'm not sure I understand exactly what you're looking for there, Drew. As far as bodies or as a general cost you talking about…

[Drew McReynolds:]

Yes, sorry Michael to cut off. Just general costs if you look at kind of your cost base for 2017 and look into 2018, are there any kind of deltas that we should be aware of in terms of the incremental investment or changes?

[Michael D'Amico:]

We’ve made the – the major changes going in the 2017 the principal thing with the new lease, and frankly it was mostly for our head office, but we had new leases for all three of our locations. And that’s the new baseline going into 2018. We don’t see a significant increase there. And then a good majority of our cost, of course our headcount and as we discuss in the script and generally we’re trying to keep a good lead on our head count numbers in order to manage some of those expenses on a go forward basis.

[Robert MacLean:]

Yes. I’ll jump in, Drew, is that a little color as Michael said, we had some items that were up this year but by and large we’re minting [ph] pretty aggressively in terms of cost containment. We’ll from a headcount standpoint we’re largely flat this year in headcount cost. I would expect as we see opportunities to really drive revenue growth they will be opportunities to add a very moderate amount of expense from headcount, but will be all pretty oriented towards revenue growth roles and nothing significant.

[Drew McReynolds:]

Okay. That's great color. Thank you for that. Just in terms of the back half of 2017, I mean pretty much a clean Q2, everything kind of reiterated from my perspective. Can you just comment maybe little bit of Q3 versus Q4 in terms of that kind of pacing one versus the other?

[Robert MacLean:]

Yes. You know, it’s Rob, again. We typically try to stay away from quarter by quarter guidance. We have indicated at a high level that we see accelerated growth in the second half of the year, that’s kind of pretty consistent with our business model. Some of that comes from new business that we’ve been successfully knocking down. I probably prefer to say that this stage at an annual guidance level, I think lot of your modeling, the market modeling as you guys get down at a quarter level, but fundamentally we still feel pretty good about our guidance and that when you back it at the map makes our pretty good second half.

[Drew McReynolds:]

Yes. That’s great. Lastly from me, I guess for you all, just high level, just in terms of the pipeline, any changes by any of the three segments sequentially. It sounds like you’re clearly continue to be optimistic and certainly with respect to Points Travel building, can you just kind of comment that high level. And Carlson Hotels that's incremental to the sixth partners on Points Travel, just want to confirm that?

[Robert MacLean:]

So, working backward, yes, on Carlson, absolutely, look, I think generally on pipeline I would say I'm feeling better about the pipeline today than I have been quite some time and we always had – we felt pretty optimistic about the pipeline. I think as I assess it and work with the business development teams and the account teams, really looked at three areas and really looking to see additions into the pipeline, so starting to get in discussion or identifying new partners that might be interested or really interesting opportunities for us. We’re seeing significant improvements in that. I think we -- the trend of loyalty stepping into more and more verticals, the trend of loyalty becoming more important, and the monetization side the royalty becoming more important is really positive for us. So we’re just seeing more and more opportunity show up in our pipeline which is great. The second kind of keeping that I look to is are we as an organization progressing that pipeline. So we’re moving from discovery and those initial interactions to advancing towards closing deals. And we like every organization we’re on a pretty aggressive pipeline management process where we’re really evaluating how we moving towards close on these relationships. And again my sense here in the last six months is, the teams done a very nice job in advancing the discussions with a number of peer of airlines, hotels, financial services and some of the areas that we’ve seen make announcement, and in multiple geographies. So multiple verticals, multiple geographies and different size and scale of the relationship as well, so we had some big guys that are advancing, we got some smaller but interesting guys that are advancing. And so progress in the pipeline is in is another area that I think, I feel very good about. And then ultimately closing is what you all should be measured on, and today when I sit here in midyear we had a pretty good track record against the pipeline in the last several months. Closing deals with Air Europa, Coppola, Etihad, WestJet, Air Canada, we enhance some relationship with JetBlue [Indiscernible] and United. We’ve seen that same kind of dynamic on the core business really I could replicate that same conversation on both Points Travel and our platform business where we’re advancing, we’re adding to the pipeline, we’re advancing the pipeline and we’re knocking down deals. So that's lot of moving pieces as you articulated, but I feel pretty good about where we are on all three of those measures.

[Drew McReynolds:]

Okay. That’s helpful. Last one from me, maybe – just I don’t know who but I guess a couple of quarters ago you alluded to some Hilton headwinds kind of cycling through. From my perspective didn’t really see a lot of impact on the first half of the year. Presumably that's kind of behind you now as we look forward?

[Robert MacLean:]

It’s a great kind of reference and referring back. It is one of things we watch very carefully. We’re making good progress on a number of the pipeline activities and kind of growth on our -- generally on our partners. Reality is we did face some headwinds on Hilton, as we anticipated and as we indicated to the market. Your comment about not necessarily seeing a show up in the results is encouraging. I think it is an indication of the general growth in the business is really addressing that and then some. So look, at the end of the day there’s still Hilton as you reference headwinds because they introduced some new products, but we’re pretty optimistic based on our guidance and progress to-date that we grow on the business through that and continue to expect to see it.

[Drew McReynolds:]

Okay. Thanks Rob.

[Operator:]

Thank you. Our next question comes from Ed Woo with Ascendiant Capital. Please proceed.

[Ed Woo:]

Yes. I had a question in terms of what’s competitive macroenvironment look like. Has it changed at all as you guys getting more traction or is it seems to be getting a little bit easier as you guys are getting little bit more scale?

[Robert MacLean:]

Yes. It’s Rob again. I answered in a couple of ways and I’ll pass it over to Chris on some of the platform activity. On our core business the competitive dynamics really hasn't changed very much over time, Ed, and you and I have talked about this in the past. It really continues to be a buy versus build, internal versus working without decision-making process. I think we are feeling very good about our ability to win those discussions as we enhance our data science and our marketing and merchandising and are driving some really good results for the partner. So on that side, continue to see it as a big opportunity ahead of us and frankly the big game in town. We think about Points Travel as we’ve indicated previously, that’s a reasonably competitive marketplace, big companies as we talked about in the first quarter like Priceline our big competitors in there. We feel very good about how our product and our business approach and our business model is competing in the Points Travel space. We have seen enhancements with knocking down deals as we’ve described, but also enhancements to a Points Travel branded hotel booking platform. Our new launch there with United just recently that very encouraging for us. And so we have a nice kind of mix of product offerings for the travel industry on this hotel booking. So I think we’re competing nicely on that. And let Chris comment little bit on progress that we’re making on the platform, because it is, you’ve seen some of that here in this quarter. It’s a good, kind of solid business for us and we do have a very unique position in that marketplace. Chris, you could comment.

[Christopher Barnard:]

Yes. Hey, Ed. From a platform partnership space, again we’ve spend quite a bit of afford and thinking on opening up and architecting a platform to open up for third-party organization to get access to loyalty programs around the world. And we’re starting to see some of that come in fruition now. And we mentioned a little bit that we’ll launching tomorrow relationship between IT [ph] and Apple through the platform where IT members will bonus points by shopping online at the Apple store. And bonuses but they won’t be otherwise able to access. So that’s an exciting [Indiscernible] show some the size and scale of the companies that are interested in accessing a loyalty program universe through us. As we mentioned, as I mentioned on the call there we are in the later stages that some larger deals as well with larger brands. We’re trying to stay away from the mono [ph] type shops and we get lots of inbound activity and questions how we could help somebody else’s propositions, but we’ve been focusing our efforts to an business development size to larger brand rolling out proposition across as many of our loyalty program partners as possible that we start to scale traction. So, there the ease that which we made it for them to add a bonus program, so shop coming done the pike, buy some gas and earn some miles and a number of other opportunities like that. We’ve made it very easy for big company to roll that kind of proposition to our platform and we’re starting have some good uptake on that. We believe and as we had indicated second half of the year we would expect to be announcing some of those deals that launch into the marketplace. And from a standpoint I think we also had a strong belief that the mold around this business and asset of the technology that’s integrated into 50 to 60 different loyalty programs around the world is a really interesting asset for our shareholders where we’re really from a competitive standpoint, far and away more connected into the billion customers and our loyalty program members than anybody else and other alternative out there. So the pricier question on a competitive advantage we think we have a real strong one on that platform business.

[Ed Woo:]

Great. If I had a follow-up question in terms of you talk a lot about the pipeline previously, in terms of what should we expect going forward. Do you think we’re going see I guess new partners across all three of your product lines relatively evenly?

[Robert MacLean:]

Evenly and timing is always tricky, but what I can say on equivalently is as I mentioned earlier, we’re adding -- I’m very pleased with the depth and how we’re adding to the pipeline on all three categories, all three segments of the business. Very pleased with how we’re advancing those opportunities in terms of getting too close and continue expect to see us close deals on every one of the business segments. There is no – none of these business segments were in, do we think that were anywhere near finished closing the deal and growing the business.

[Michael D'Amico:]

And that -- again some previous commentary on other calls as well, we kind of see similar types of opportunities in terms of size across all three as well, so that’s why we’re taking the longer term view and trying to get at multiple opportunities by leveraging our investment in the platform technology that we put in place over the last few years.

[Ed Woo:]

Great. Well, thank you and good luck.

[Operator:]

We have a follow-up question from Andrew D'Silva with B. Riley. Please go ahead.

[Andrew D'Silva:]

Hey, sorry, just two quick follow-ups. First one is you might have said this in your prepared remarks, but what percent of revenues currently locked up in multiyear contract, restate and if you didn't do say could you let us know?

[Michael D'Amico:]

Yes. Roughly around 60% we were in the last quarter, yes.

[Andrew D'Silva:]

Okay, great. And then with the Expedia relationship that you have, could you refresh my memory, are they have a hotel inventory platform that you use to purchase inventory from. Are you guys now getting that at a better pricing than before or those two separate entities within Expedia?

[Robert MacLean:]

Yes. I probably wouldn't disclose the specific terms on that. I would say we get access to more inventory as we grow that business and we work pretty closely with Expedia and particular [Indiscernible] Expedia Affiliate Network is really were a lot of this is oriented towards, where working together gives us access to better inventory, that’s probably the best way I could describe it.

[Andrew D'Silva:]

Okay, great. Thank you very much.

[Robert MacLean:]

All right.

[Operator:]

This concludes today's teleconference. I would like to turn the floor back over to Rob McLean for closing comments.

[Robert MacLean:]

Thank you for joining our call today. As you sense we’re pleased with our results so far this year and look forward to further updating you on our progress on our next call. Thank you and good bye.

[Operator:]

This concludes today’s teleconference. Thank your for your participation. You may disconnect your line at this time.