Points.com Inc.
Q3 2015 Earnings Call Transcript

Published: 9 Nov 2015

[Operator:]

Greetings and welcome to the Points International Third Quarter 2015 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Madeline Myers [ph], Investor Relations. Thank you. You may begin.

[Madeline Myers:]

Good afternoon everyone and thank you for joining us today to discuss Points International’s third quarter 2015 financial results. Joining me today on the call are Rob MacLean, Point’s Chief Executive Officer; and Anthony Lam, Chief Financial Officer. Before we begin, we would like to 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 guarantee 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 are included in our third quarter 2015 financial results press release as well as other documents filed with the Canadian and U.S. security regulators. Except as required by law, the Company does not undertake any obligations to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. With that said, I’ll turn the call over to Points’ Chief Executive Officer, Rob MacLean.

[Rob MacLean:]

Thanks, Madeline and thanks everyone for your participation today. Joining me today is Anthony Lam, our CFO and Christopher Barnard, our President, will also be available for the Q&A portion of today’s call. Today, we look forward to reviewing our third quarter highlights, recapping our business and product developments and discussing our outlook for the remainder of the year. Kicking things off, I am extremely pleased with our performance in the third quarter. We achieved our financial targets, grew our loyalty commerce network, and made measurable strides in advancing our open platform strategy. We ended the quarter with more than 50 loyalty program partners operating across our loyalty commerce network and since the beginning of 2014, we’ve launched or signed nearly 60 products with 13 new loyalty partners and integrated three new product partners into the loyalty commerce platform as the pace of innovation at Points continues to accelerate. Innovating against both Points branded and partner branded products will continue to be a focus of our investment and will play an important role in evolving Points platform in a way that continues to facilities the growth and innovation of the broader loyalty industry. At the same time, we have more players than ever looking to participate in the world’s largest currency market, yet a lack of resources constraining the pace of innovation. Now more so than ever before, we believe there is a need for Points product innovation and services. But the industry is evolving and we must evolve with it and today I will share our thoughts on how Points is positioning itself to facilitate the entry of new products and ideas into the marketplace through the advancement of our open platform strategy. We will also share tangible developments on this front including two upcoming digital wallet launches and our recent launch of Points Travel. With that as a backdrop, I will review our financial highlights for the third quarter. As we expected, we delivered meaningful acceleration and revenue growth both on a year-over-year and quarter-over-quarter basis. Revenues of approximately 81 million grew 32% over the prior year period reflecting a robust calendar of marketing and promotional activity among many of our larger loyalty partners. Organic growth which is calculated from partners and products that have been in market for at least one year was a very robust 18% for the third quarter, again highlighting the influence of our promotional calendar. As always, I would caution against viewing organic growth for a particular quarter in isolation as our promotional activity can add significant volatility to that number. Year-to-date organic revenue growth is just north of 10% despite euro FX headwinds which is where we expect to come in for the full year. The third quarter promotional mix and shift to larger reseller partners is reflected in our gross margin percentage which was 12.4% for the quarter in line with our expectations. Performance across our global loyalty partner base was strong with both domestic and international partners exhibiting robust revenue growth year-over-year. North America continues to outperform and though we continue to see signs of recovery in Europe, declining euro foreign exchange rates relative to the dollar continue to pressure revenue. Anthony will elaborate further in his prepared remarks. Adjusted EBITDA for the quarter was 2 million or 20% of gross margin dollars reflecting our partner and product mix as well as investment in our platform. As we previously discussed and had anticipated, the planned increase and promotional activity among our larger reseller partners during the third quarter reduced our margin percentage profile. Nevertheless, we continue to expect normalized gross margin percentages of approximately 15% on an annualized basis and we remain highly committed to investing in growth and innovation as we capture the vast opportunity ahead of us. As I mentioned, I am particularly excited to share with you some tangible developments on our open platform strategy in particular view the Points Loyalty Wallet. The Points Loyalty Wallet is the set of platform capabilities accessible via APIs that allow loyalty programs, merchants and other interested businesses to embed balanced tracking and fully managed debit or credit transaction capabilities directly into their product offerings whether they be on the web or in an app. The wallet will seamlessly integrate loyalty into everyday transactions delivering personalized, relevant value to hundreds of millions of consumers and connect loyalty programs to their members like never before. One great example of this exciting opportunity is the introduction of real loyalty functionality into mobile digital wallets. Not only will loyalty information always be accessible at the consumer’s fingertips but developers will also be able to seamlessly integrate new ways for consumers to earn or burn their favorite loyalty program currency. For our participating loyalty partners this will also mean greater distribution and more opportunities for engaging their members. Last week, we participated in the largest financial technology conference Money 20/20 where we announced that RBC will be leveraging the Points Loyalty Wallet in their new mobile digital wallet offering. This exciting news was followed up by yesterday’s announcement that short app, a mobile digital wallet supported by a consortium of the three main Canadian telecom companies will also be embedding our royalty functionality into the next version of their leading payment app. Through both of these offerings expected to launch this year, more than 15 million consumers will be able to interact with their favorite loyalty programs by either linking their current Points.com user account or by creating a new one for them to then track all of their programs inside each app. From there, they will immediately be able to exchange loyalty currency between participating programs and each app develops more and more functionality, merchant funded offers, earning or burning of miles and Points based on a march merchant offer will become additional activity drivers. The redesigned Points.com that we launched over the summer will act as a central hub for these and future consumers to manage their loyalty program participation across the entire network of wallet partners. What we find exciting about this multi currency capability is that it really speaks to the increasing desire among players in a wide variety of industries both offline and online, to find new ways to interact and engage with their consumers. With the efficient, secure and sanctioned functionality of the Points Loyalty Wallet companies from diverse industries such as financial services, travel, retail and gaming seeking to tap into existing loyalty programs and offer their consumers the ability to transact in the currency of their choice. Every deployment of this functionality in a new distribution channel offers our loyalty program partners a new opportunity to communicate with their members and deliver relevant, timely and location based offers. In fact, we already have contracts in front of potential loyalty wallet partners representing an addressable audience of over 150 million consumers. Progress with our loyalty wallet speaks to the evaluation of our loyalty commerce platform and our increased focus on our open platform strategy. Over the past 12 to 18 months, we’ve increased our focus on opening up our platform in a way that allows us to interact with outside innovators who can bring their products and ideas to our platform. We now have close to ten third party partners using our loyalty commerce platform to offer unique products to the world’s largest and most successful loyalty programs. While the loyalty wallet is focused on multi currency activity outside our loyalty partner’s channels, we are also very focused on adding value to each individual currency via their own branded channels. To that end, I am also pleased to highlight Monday’s announcement that we have launched our first partner with Points Travel, our private label hotel booking platform. We launched this innovative new product with Lufthansa’s Miles & More program the largest frequent flyer program in Europe with over 25 million members. With our Points Travel product, Miles & More members can accelerate their earning by receiving rich amounts of valuable Miles & More miles for booking hotel stays through the Miles & More branded hotel booking website. We are able to achieve these very rich mileage offers by working jointly with Miles & More to efficiently and uniquely connect the millions of members in their program to the significant hotel commissions we have access to via the Points Travel product. The result is a fantastic value proposition for Miles & More members and excellent economics for both the program and Points. This launch reflects the first stage of the product for Miles & More with development efforts now focused on additional functionality. We are thrilled with this launch and are also in the final stages of securing a number of additional partners in the airline and hospitality verticals that are expected to launch with this product in early 2016. Additional active discussions remain underway. As is evident the scope and reach of our loyalty currency network is more diverse than ever. Since the beginning of 2014, we have added 14 new loyalty partners within hospitality, travel, financial services and fuel retail as well as coalition programs. We are also expanding our network globally, adding partners in the Middle East, Asia and South America. Speaking to this diversity, in September, we announced that Farmax, the leading pharmacy chain in the Dominican Republic would joint Points Loyalty Commerce Network. In partnership with JetBlue, Farmax customers will be able to earn JetBlue’s True Blue Frequent Flyer points through their daily purchases at Farmax Pharmacies. One of our goals is to continue to represent our partners in new markets and merchant verticals. This is a great example of how we can easily and efficiently connect our loyalty program partners to new merchants and enable those merchant partners to reward their customers with a loyalty currency they already know and love. We also remain on track to launch our previously announced partnership with Shangri-La Hotels premier hotel network that operates 92 hotels across North America, Asia Pacific, Europe, Australia, China and the Middle East by the end of the year. Through our partnership with Shangri-La’s Golden Circle loyalty program members are now able to buy and gift their points for the first time in the program’s history. In summary, the second half of 2015 is off to a strong start and we remain on track to deliver against our financial targets for 2015. I will be back with you in a moment to discuss our outlook in greater detail but first, I will hand the call over to Anthony to walk through our third quarter financial performance. Anthony?

[Anthony Lam:]

Thanks Rob. As I review our results for the third quarter of 2015, please be remained that all other numbers mentioned on our call today are in U.S. dollars and all the figures are presented in accordance with International Financial Reporting Standards. Revenues for the third quarter totaled 81.1 million up 32% compared to 61.4 million in the prior year quarter. Principal revenues totaled 78.8 million, or a growth of 34% as compared to 58.8 million in the prior year period. Increased marketing and awareness campaign activity with many of our larger low margin loyalty partners drove the meaningful acceleration in revenue growth in the quarter. Gross margin dollars totaled 10.1 million in the third quarter 2015 and this is in line with the prior year period. As a percentage of total revenue, gross margin dollars were 12.4% in the quarter and 15.1% on a year-to-date basis. To-date gross margins are at anticipated levels at both the quarter and year-to-date. It is important to remember that we will always have some quarter-over-quarter variability in our gross margin percentage. The success of our promotional and awareness campaigns in the third quarter with some of our larger reseller partners resulted in the anticipated higher revenue but with the resulting lower gross margin profile. This resulted in overall gross margin percentage which was in line with our expectations but lower than our full year gross margin percentage level. Gross margin dollars continue to be an important measure of our financial performance as it represents the amount of revenue retained and available to fund ongoing operating activity and strategic investments in the company. Year-to-date gross margin dollars totaled 32.7 million or 15.1% of revenue. As Rob mentioned, we continue to expect normalized gross margins of approximately 15% on an annualized basis. I will now move on to discuss some of our key operating expenses for the quarter. Total ongoing operating expenses which consist of employment expenses, marketing, technology and other operating expenses were approximately 8.1 million compared to 7.6 million in the prior year period. The year-over-year change was primarily a result of increased spend against loyalty commerce platform including development of our Loyalty Wallet Points Travel products. These expenditures were partially offset by weakening of the Canadian dollar versus the U.S. dollar. We remain very disciplined in our management of the ongoing cost structure. Employment cost in the quarter totaled 5.7 million up slightly compared to the prior year quarter excluding part time and contract staff as of September 30, 2015 we have 187 full time staff at Points up from 171 in the prior year period. The primary areas of growth has been in our Toronto based marketing team and both our Toronto and San Francisco based technology groups. If current foreign exchange rates are maintained for the remainder of the year, we expect our full year employment cost to increase approximately 5% over 2014 levels. As we look at the fourth quarter, we anticipate employment cost to remain in line with the third quarter levels. Marketing expenses for the quarter were 499,000 in line with the prior year period. Looking at the fourth quarter, as we market both our existing core business and support Loyalty Wallet, Points Travel launches we expect marketing expenses to range between 600 and 700,000. Technology expenses which cover the cost of protecting our production environment, maintaining on line redundancy capabilities, PCI compliance, user application licenses, as well as general technology upkeep and enhancements was 357,000. We continue to expect this line item to grow to approximately 1.4 million on a full year basis. Other operating expenses comprise rent, insurance, professional, legal and accounting fees as well public [ph] company cost. For the third quarter, this line item was 1.5 million compared to 1.2 million in the prior year period. For the full year, we are on track to be in the $5.8 million to $6 million for this line item. Now, turning to our profitability metrics. As a reminder, in determining adjusted EBITDA, we start with net income and add back the following items, income tax expense, interest, depreciation and amortization and foreign exchange loss. This measure is an important measure for us as we consider this key measure of our success in delivering ongoing profitability. Adjusted EBITDA for the quarter came in at anticipated $2 million level compared to $2.6 million in the prior year period. The year-over-year decrease reelects marginally higher operating expenses in the quarter. On a year-to-date basis adjusted EBITDA improved 39%. Amortization expense in the third quarter was 891,000 compared to 481,000 in the year ago period. The year-over-year increase can be primarily attributed to the amortization of products acquired through acquisition and launch during 2015. We continue to expect amortization expense to be in the $3.5 million to $4 million on an annualized basis for 2015. Finally, as anticipated the company reported third quarter net income of approximately 768,000 or $0.05 per diluted share compared to 1.6 million or $0.10 per diluted share in the comparable 2014 period. As of September 30, 2015 total funds available comprise of cash equivalents together with security deposits, distributed cash and amount with our payment processors totaled approximately 45.7 million. We ended the quarter debt free. As a reminder, on July 2, we entered into a bank credit facility agreement with the Royal Bank of Canada in which two credit facilities were made available. The first is a revolving operating term facility in the amount of 6 million and is available until July 2, 2016. The second facility is a multi draw term loan facility to be used for financing the cash component of a business acquisition until July 2, 2016 of up to 7.5 million or to fund the corporations’ current normal course issuer bid share repurchase program until March 8, 2016 of up to 7 million. This gives us a total potential facility of between 13 million to 13.5 million and to-date we have not drawn on any of these facilities and only do so as the need arises. Net operating cash which we define as total funds available thus amounts payable to loyalty program partners was 10 million at the end of the third quarter. We are very pleased to generate sufficient cash to fund our current working capital requirements, anticipated capital expenditures and share buyback activity. During the third quarter, we repurchased 163, 695 shares of our common stock for a total of 1.7 million at an average price of $10.40 per share. On a year-to-date basis, we repurchased 345,710 shares of our common stock for a total of 3.7 million at an average price of $10.60. The three months ended September 30, 2015 we have weighted average shares outstanding of 15,528,928 shares and 15,567,440 shares on a fully diluted basis. Thank you all for you attention. With that, I will hand the call back over to Rob.

[Rob MacLean:]

Thanks Anthony. Before we open up the call for questions, I want to take a moment and update you on our outlook for the year. Overall, we are very pleased with our performance in the year-to-date period which is in line with our expectations. As anticipated, we experienced a meaningful sequential ramp in revenue during the third quarter led by a robust promotional calendar among our large principal partners. We expect to maintain a similar promotional cadence in the fourth quarter and once again expect a greater contribution from our larger principal partners. As a result, we are on track to deliver against full year guidance as follows. Revenue growth in the range of 15% to 20% over 2014 and adjusted EBITDA growth in the range of 15% to 25% over 2014. We expect our gross margin percentage to follow in line with our full year expectations of approximately 15%. On the profitability side, we will continue to show discipline in both our investments and operating expenses to deliver continued positive cash flow and improved operating leverage going forward. We are appropriately resourced to make these investments in our platform and will continue to focus our allocation of capital on activities designed to drive shareholder return. With that, I will hand the call back over to the operator to take your questions, operator?

[Operator:]

Thank you. At this time we will be conducting a question-and-answer session. [Operator Instructions] Our first question is coming from the line of Andrew D’Silva with Merriman Capital. Please proceed with your question.

[Andrew DSilva:]

Hey good afternoon, guys, just a couple of quick questions for everyone. Starting off just thinking about guidance range ending the year out, promotional activity should we still expect the fourth quarter at least for this year to be the seasonally highest quarter and then if that is true, have you already started to increase promotional activity due the holiday seasons coming up or is that something you are yet to do and should that also result in compressed margins, kind of like what we saw in the third quarter?

[Rob MacLean:]

It’s Rob, yes I think as we’ve indicated, we are very pleased with third quarter and how that played out, if you remember coming out of Q2, we were signaling to the market that we have a lot more promotional activity happening in the third quarter than we saw in the second quarter, so as a result we are going to see a different cadence with regards to revenues and gross margins and really as we look into Q4, one Q3 has happened very much as we would have expected and so as we look into Q4, you are going to see a similar approach to the marketplace, lots of activity out there. Obviously, we are sitting here early in November, so we’ve had a lot of that activity really across our partner mix. Here is just the beginning of the fourth quarter, so you know we see it really more like what Q3 delivered on a go forward basis.

[Andrew DSilva:]

Okay and on a margin relative basis, should we, would it be fair to expect margin really should not dip much lower than what they were in the third quarter because it was so heavily weighted towards larger principal partners or can it dip even further as that variable skews more towards larger partners?

[Rob MacLean:]

I wouldn’t expect it to move much differently than what you saw in Q3 again good opportunity for us to get a broader reach with our products in the promotional activity to really get those first time buyers and those customers to engage with these products and services. Early on we got a great kind of track record and lots of data that suggest that we can get that consumer in and do an initial transaction, the repeat business, the buy number two, the transaction number three all comes in at a very interesting set of economics for us and the industry, so you will see us very active again here in the third quarter on or on the forth quarter on driving kind of that first buyer activities and lots of promotional and those types of campaigns but expect that to be kind of in the neighborhood of where we were in 3Q.

[Andrew DSilva:]

Fair enough, I got to ask a pipeline question. I am kind of personally categorizing now in two different aspects maybe more consumer facing, mobile wallet OTA pipeline and then you know your legacy top up pipeline, can we maybe dive into the top up aspect, you’ve obviously closed on several opportunities in recent quarters, can you give us a sense of what that pipeline looks like today and maybe little color on what region, industries are making up the largest component of the pipeline?

[Rob MacLean:]

Sure. Yes, it continues to be very robust. We are, I think as we have been saying for a number of quarters, we think that core business is a multi billion dollar market opportunity and so as a result you would expect us to continue to have a pretty deep and robust pipeline that very much is where we sit, the team that is working that pipeline thank you for referencing. We had pretty good success over the last sort of while. What I would say is it is interesting. We are in different markets, I would say there is more international opportunity there than there probably has been for sometime which is great, we see some really decent opportunities in Asia and you will continue to see announcements out of there, we would expect the Middle East and Europe continues to have opportunities and in categories like financial services and others still some really good opportunities here in the Americas, so we are pretty active in most of these geographies, we are seeing good opportunities in the travel space both hotels and airlines and when I say airlines, we are really very focused on the frequent flier programs those big profitable growing entities inside the airline sector that really become the partner of Points in what we are trying to achieve, so we quite like where the pipeline is and I’d say we’re working our tails off to kind of get a few of those guys across the line.

[Andrew DSilva:]

Last question, just related to Master Card, and your relationship with them, you mentioned the financial services industry, you know I think in the last call you said in not too distant future, we can expect some partnerships to emerge from that, has that changed or has anything fallen through that you were expecting, what I am personally trying to do is get a sense of the landscape for your loyalty solutions in the financial services industry has changed at all with everything is going on with mobile and social today?

[Rob MacLean:]

Reasonably complex question. I think nothing new to report on Master Card per say, other than I think some of the things that you are seeing us do and now be able to put names against on our wallet products, I think is you will start to see the connection between how we see our role in connecting loyalty and payments and we think obviously Master Card is a fantastic brand with a tremendous amount of presence in the financial sector and you know from a tax [ph] standpoint, they are right in the middle of everything, so we see some of the progress that Christopher and team have had on the wallets that we’ve announced here recently putting us in a pretty good position to interact with companies like Master Card as we go forward and that’s a little bit different than just the core top-up as you called it or the buy gift and transfer type activity, so I think we’ve got in a way, I would describe it as we got a few more options and products that are relevant to big partners and potential partners like Master Card.

[Andrew DSilva:]

Got it, alright, great guys, thanks good luck going forward.

[Rob MacLean:]

Great thank you.

[Operator:]

[Operator Instructions] Our next question is coming from the line of Ed Woo with Ascendiant Capital. Please proceed with your question.

[Ed Woo:]

Yes, thank you, I know you mentioned gross margin should be 15% but you said out in Q3, you guys had a lot of promotion and you had some other things in Q4, is there a chance that you may have a new normal and gross margin possibly dipping down so you could get higher revenue growth?

[Rob MacLean:]

Sorry, Ed, could you repeat that?

[Ed Woo:]

Sure, you mentioned that promotions drove some of your gross margin below 15% in the third quarter and you say that it may be the same in the fourth quarter but you guided for 15% for the year, do you think that going forward, you may have lower gross margin?

[Rob MacLean:]

In Q4?

[Ed Woo:]

No, no just in general instead of trade off to get higher revenue growth but have a new normal long term growth margin rate?

[Rob MacLean:]

Yes, I know, I mean we are looking at this Q3 and kind of the activity that we have in market in Q4 to be within the context of what we are trying to achieve here in 2015 and we’ve indicated to the market that we expect our full year margins to be in an around 15%, so I think that’s the way we think about it, I think as we talked about last quarter, we will work with our partners less around the calendar quarters and more around what the objectives are and potential is of our various relationships on a product-by-product basis, so that really heads us down the path where we will pull the various levers whether it’s driving incremental revenue or incremental margin to us and our partners that will vary over time certainly quarter-by-quarter but generally speaking, we look at the overall margin profile to be in and around that 15% range. One other things to keep in mind as we continue to transition and see more and more activity across the platform rather than a product-by-product basis is that kind of activity will change the mix of revenues and margins of the company over time and typically we would expect to see that kind of activity at a slightly higher margin profile than our principal relationships, so that will be a reasonably big driver over time on how the margin evolves.

[Ed Woo:]

Great and I just have one additional question, congratulation Ponza [ph] building on the pipeline, do you think your growth going forward will continue to be more outside of the U.S.?

[Rob MacLean:]

Well I flagged that there is some significant international opportunities, a bit of that is that we have a very good footprint and had great success here in the North American marketplace. Miles & More as an example is a very, very large loyalty program, the largest in fact in Europe, we think there is great opportunities with some of our existing partners for products like Points Travel in Europe as well as in North America, so we would expect to see growth in all of these markets. We just see kind of net new partnerships pretty – not low hanging fruits, not the right word but right term but lots of opportunities on the international front where there are programs that haven’t yet engaged with Points, whereas you see in the North America marketplace, it’s a bit more of, we got a good relationship and have established some product relationships with the North American programs and now its really an opportunity to grow them with incremental products whether its some of the wallet activity that we are going on or Points Travel et cetera so we do view each of these markets as having great opportunities in front of us, the international piece is really about net new currencies if that make sense.

[Ed Woo:]

Great well, thank you and good luck.

[Rob MacLean:]

Great thank you.

[Operator:]

[Operator Instructions] Thank you, our next question is coming from the line of Sameet Sinha with B. Riley. Please proceed with your question.

[Sameet Sinha:]

Yes thank you very much. I had a question regarding your digital wallet initiative. Earlier in the year you had indicated a couple of deals in the pipeline that will be announced between RBC and Shortapp deals that were announced earlier. You do these two constitute the ones you had indicated earlier or are there others which you consider to be in the pipeline and or even just close to being announced?

[Rob MacLean:]

Yes those are the two we referenced in terms of what we had signed previously. But what I would say is the pipeline is actually pretty deep here as you might imagine getting that developed and established and being able to announce it and now speak to other prospective partners about the product has gone very, very well as I mentioned in the prepared remarks. We were at Money 20/20 last week and Christopher and RBC spoke to that. Not surprisingly that led to a fairly robust set of discussions even host that session because we’re really for the first time bringing a loyalty solution into a digital wallet environment. So while we’ve been talking about the things we’ve been working on, really in the last week to ten days it’s been the first time we’ve been able to demonstrate who those brands are, what it looks like in real time, and be able to really show the market what it looks like and how they might be able to apply it to their plans near-term and mid-term. So, good success there, good feeling on where that pipeline is, there’s obviously some big guys, there’s some small guys. The application for our loyalty wallet isn’t limited to digital wallets. We use that as a great way to demonstrate the utility of the Points Loyalty Wallet and they’ve been in an area where we’ve focused here in the near-term but practically speaking, we see all kinds of applications for that Points Loyalty Wallet to be distributed out into a number of other channels. So, pretty pleased with where we are at this point.

[Sameet Sinha:]

Thank you. So just, in terms of organic growth obviously massive acceleration this quarter, is this something that we can use to kind of figure out 2016 estimates and I’m just assuming that in that businesses your customers which you had a year ago, United is not included in that. Are there any specific trends that you’d want to point out that probably not replicated next year or will benefit next year?

[Rob MacLean:]

Yes, you’re right in terms of United not included in those numbers that wouldn’t be in the organic growth. But obviously we’re very pleased with what we saw in the third quarter. As I did mention though, we’ve indicated all along that we would expect to see organic growth in and around 10% for the year and do we get the volatility quarter-over-quarter based on the promotional activity that we have in the marketplace. So, I think we can expect to see that number for now we haven’t provided any initial guidance into 2016, so for your modeling purposes I’d think that’s the best information you have.

[Sameet Sinha:]

Okay, great. Thank you.

[Operator:]

Thank you. Our next question is coming from the line of Rick Teller with Templeton Research. Please proceed with your question.

[Rick Teller:]

Yes, hi Rob.

[Rob MacLean:]

Hi Rick.

[Rick Teller:]

You mentioned that there were about 10 outside apps that are now available on your platform from third parties. I was just wondering if you could tell us, give us examples of some these things, especially if any of them seem to be attracting a lot of interest amongst your partners?

[Rob MacLean:]

Sure so examples of third parties that are using our access and our platform and our access to the industry really would be things like auctions. So we don’t spend a lot of time talking with external investors about all of the various products we have. Obviously, the story has its moments of being complex and in the way we do describe it but we have companies like Vigor8 that produce auctions that are a number of our partners have tapped into, which really allows them to use the existing plumbing and existing platform functionality that Points has to offer a whole bunch of kind of innovative bids and auction-type products that really add some engagement and spice to their overall business. We’ve got gift certificates. We’ve got redemption opportunities, so companies like Synapse that have created a really kind of innovative redemption opportunities for the loyalty industry that they viewed accessing our platform and therefore through our platform accessing tens of loyalty programs is really on-strategy for them. NSX is a newspaper redemption company that has a very similar approach where they’re offering the industry some very efficient burn and utility for the currency but most effective way for them to deploy that product is into Points.com and our platform, which then delivers a number of our partners into their product. So, those will be some that we’ve operating with over some time. I recently announced a partnership with Collins & Latitude here in 2015 and that’s really just building on some success we’ve had with a mall product which is effectively giving consumers and members of our partner’s loyalty programs the opportunity to go in, shop on-line, and earn currencies in programs like Virgin Atlantic, JetBlue and others. So they would be a third party company that we found to be a really good partner on bringing new products to market and they build on our platform and we deliver that out to our loyalty programs.

[Rick Teller:]

Okay. Thank you.

[Rob MacLean:]

Great, thanks Rick.

[Operator:]

Thank you. It appears there are no further questions at this time. Ladies and gentlemen, this does conclude today’s teleconference. We thank you for your participation and you may disconnect your lines at this time.