(By Mani) Points
International Ltd. (NASDAQ: PCOM) (TSE: PTS) announced the addition
of Southwest Airlines (NYSE:LUV) as a principal partner under a
multi-year agreement. The program is expected to launch in mid-2013.
International will power and manage programs designed to enhance
Southwest Rapid Rewards Members' abilities to collect and share their
Points has brought on seven new partners including Wyndham, Melia Hotels,
Speedway and SVM. These new partners along with new products from
existing partners are expected to generate
$50 million in incremental annualized revenue beginning in 2013, with
Southwest accounting for the bulk of the revenue.
there is no change to our $13.00 price target (due to rounding
effects), the addition of Southwest is NAV accretive," RBC Capital
Markets analyst Drew McReynolds wrote in a note to clients.
the business has a healthy pipeline of potential new business, the
reiteration of 2012 organic revenue growth guidance of 10-15 percent
despite the macro uncertainty, with expectations to achieve the
top-end of the range and for acceleration in organic revenue growth
the company indicated that approximately 47 percent of the revenue
growth has been generated by the international footprint. While 2013
guidance will be provided either in late December or early January,
the company sees revenue growth would accelerate in 2013, boosted by
growth among existing partners as well as the likely addition of new
EV/EBITDA multiple of 12.0x, which we believe is an attractive entry
point within the context of an expected 28 percent EBITDA CAGR through
2015E, the absence of cash taxes, a debt-free balance sheet with a
growing cash balance ($12MM at Q3/12), and option value with
Points.com," McReynolds wrote.
International is the owner and operator of Points.com, which provides
reward currency management providing multiple eCommerce and
technology solutions to the world's top loyalty brands. Points.com
also manages the largest consumer rewards management platform,
allowing more than 3.5 million users to trade, track, exchange, and
redeem their loyalty points, miles, and rewards.