Q4 2021 Points.com Inc Earnings Call
[music].
Good afternoon, everyone and thank you for participating in today's conference call to discuss points financial results for the fourth quarter and full year ended December 31 2021.
Delivering today's prepared remarks are chief Executive Officer, Rob Mclean.
President Christopher Barnard and Chief Financial Officer, Eric in Georgia.
During their prepared remarks, the management team will open the call up for any questions.
Before we go further I would like to turn the call over to Cody snack of gateway points.
IR adviser as he reads the Companys safe Harbor that provides important cautions regarding forward looking statements Cody. Please go ahead.
Thank you.
Please be reminded that the remarks on this call may 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.
Factors that could cause actual results to differ materially and the assumptions used in making such statements were included in our fourth quarter and full year 2021 financial results press release.
Issued prior to this call as.
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 I'll turn the call over to points, Chief Executive Officer, Rob Maclean Rob.
Thanks, Cody and good afternoon, everyone.
We delivered strong growth across our key metrics in the fourth quarter sustaining the momentum we generated throughout 2021.
Our fourth quarter revenue reached a record and we generated not only our fifth straight quarter of sequential gross profit growth, but also our highest level of gross profit in the past eight quarters.
Despite the onset of the Omicron variant late in the fourth quarter, we continued to generate transaction growth across our platform both on a year over year and sequential basis.
Similar to what we saw with the Delta very entering the third quarter. The impact from <unk> is proving to be a temporary rather than a longer term pattern at our performance. So far in the first quarter of 2022 has also been very strong.
Even as we continue to operate in a dynamic industry environment, we believe that our partners newfound appetite for even more growth within their loyalty programs is strengthening both our current performance and the long term potential of our own business.
As broader recovery trends continue we believe that our partners visibility for their businesses and the evolving new normal for today's travelers will continue to improve.
While many of our hotel partners and some airline partners are already exceeding pretax pre pandemic performance each of our partners still have significant room to grow.
As travel restrictions continue to ease globally and more carriers gradually expand their international routes. We believe the current trends will create additional opportunities for us as we enter our next phase of growth.
Whether they have already returned to pre COVID-19 levels are still have a long road ahead towards full recovery travel and hospitality operators recognize the immense value and flexibility that loyalty programs have offered their businesses throughout these past two years.
Royalty programs, not only outperformed the broader travel and hospitality industries throughout the pandemic, but they've also served as a source of financial collateral and a vital medium for engaging customers in times, where global travel activity was at an all time low.
We've continued to see evidenced throughout depend that makes it loyalty programs remain among many operators most valuable assets.
This was most recently demonstrated by Aeromexico's announced plans to repurchase its loyalty program.
While making strategic use of their loyalty programs operators are strengthening our foundational element of their recovery efforts as well as the next phase of their growth strategies.
Accordingly, many of our loyalty program partners have continued to adopt a more aggressive posture towards enhancing their offerings and leveraging our robust platform.
As I reflect back on our performance since the onset of the pandemic I am pleased with the resiliency of our business and our ability to steadily execute on our growth drivers of launching new global partnerships identifying cross sell opportunities with current partners and enhancing our marketing and merchandising capabilities to drive maximum performance of our existing.
End market product deployments.
Our loyalty commerce platform positioned us well to take advantage of our business development pipeline that strengthened significantly throughout the pandemic with both new partners and existing partners and this continued in the fourth quarter of 2021.
From a new partnership perspective, our new relationship with either error that we launched in the fourth quarter represents our most comprehensive relationship with an APAC carrier.
This partnership helps strengthen our presence in the APAC region, which is a key growth area for us over the long term.
Importantly, we also renewed our long term partnership with air France, KLM to a multi year extension in the fourth quarter. Another partner that is looking for outsized growth as we emerge from the pandemic Christopher will provide more details on that in a few moments.
On a broader operational level, we also announced a collaboration with rocket travel booking holdings company, which will maximize the efficiency of our platform for bookings customers and allow us to strengthen our focus on our core competencies.
Booking joins a growing list of Blue Chip third party companies now leveraging our loyalty commerce platform to efficiently access the loyalty industry.
The strides were making with adding new partners complement the new deployments and enhanced services we continued.
Delivering to our existing partners.
During the fourth quarter, we launched our accelerate anything capability with two new carriers and added additional exchange options across the platform.
This strong fourth quarter, and we finished 2021 with one of our strongest business expansion periods in our history, adding three new loyalty program partnerships and launching a full 32 product and service deployments into the market.
These excellent results are both broadened the number of loyalty program partners that we've added to our loyalty Commerce network and also deepened our relationships with the worlds most successful loyalty programs by adding new products and services to grow our respective businesses.
Exiting 2021, we now have a product and services footprint that is 15% larger than when we entered the pandemic and we are excited about the prospects of leveraging this to drive even more value to the loyalty industry in 2022 and beyond.
While 2021 delivered one of our strongest periods of business expansion. We're very excited to see that this success is continuing here in the early days of 2021, sorry 2022.
As you saw last week, we renewed and extended our relationship with the Marriott Bond Boy program.
Marriott is one of our largest and most successful relationships and we're thrilled to be working together during this multiyear extension.
This extension comes with a significantly expanded mandate for growth and we're seeing great early results on this enhanced partnership.
The new partnership and expanded relationships. We've built throughout 2021 have leveraged the strength of our loyalty commerce platform, while deepening our footprint in new geographies and verticals.
We have moved quickly and decisively to support our partners in today's rapidly evolving environment and I'm very pleased of the continued progress our team has made.
We will work further we will work to further execute on these opportunities throughout 2022.
The travel and hospitality industries look very different today from where they stood this time in 2020, the pandemic certainly created unprecedented turbulence in the global travel industry and as we navigated the past two years, we saw various spikes in that turbulence with the appearance of Delta and later the omicron variance throw out this peer.
And each time the travel industry faced these challenges the loyalty programs were increasingly relied on to engage travelers and to drive strong financial results.
The current violent invasion of Ukraine has presented another terrible situations and we are actively responding to this event as well.
We do not do any business with Russian airlines or hospitality companies today, and we have renewed removed those companies from our pipeline. So that we do not expect to operate in that market in the future.
And while this could present another period of turbulence for the industry. We are confident we can continue to demonstrate our increasing value proposition during another challenging time for our loyalty programs partnerships.
The journey from then to now it was difficult for all of us in the industry.
Yes.
Our strategy remains intact, and we believe it has positioned us to meet our partners' increasing mandate mandate for outsized growth as.
As we continue to develop and introduce loyalty products implement meaningful product extensions and further ramp up our marketing and merchandising efforts. We believe the long term financial growth targets, we established before the pandemic remain achievable.
With that confidence in the longer term opportunity and with a very positive start to the year, we expect to deliver strong growth in our key metrics throughout 2022.
We worked tirelessly to accelerate our execution on our core growth drivers through the throughout through the end of 2021, and we will continue ramping up efforts on these fronts and supporting the powerful role loyalty programs are playing in the new normal of travel and hospitality industries.
I will now hand, it over to Eric to review, our financial performance for the fourth quarter and full year and then Christopher will provide some additional highlights and perspective on our partner activity Eric.
Thanks, Rob and thanks for joining everyone as always all figures on today's call are in U S dollars.
I'll start by providing some color on our fourth quarter financial results and then provide some early thoughts on 2022.
Fourth quarter results demonstrate the strengthening momentum we generated in our business throughout 2021, and we're in line with our preliminary ranges provided in January .
Total revenue in the fourth quarter of 2021 increased significantly to a quarterly record of $115 1 million, a 104% increase over the year ago quarter, and a 33% increase over the third quarter.
Revenue was underscored by increased transaction volumes across our platform.
<unk> strong performance from our marketing activity and aided by the benefits of recovery tailwind, which benefited transactional activity that is more closely tied to near term redemption activity.
And despite the omicron wave, which started late in the fourth quarter, we did not see our performance metrics meaningfully affected as the impact seems to be less severe and they have a shorter duration than previous ways.
Gross profit in the fourth quarter of 2021 was $17 1 million.
38% increase over the third quarter and up more than doubled from $8 5 million in the year ago quarter.
We were pleased to see strong organic growth from the majority of our partners in the fourth quarter with several ending the year above their 2019 performance levels.
Geographically the U S market has remained our strongest market, particularly with our hospitality and domestic airlines in this region.
They've made to strengthening transaction volumes, we generated across our existing partner base. In Q4. We also benefited from the impact of new partners and services, we have brought to market over the last two years as these new additions have continued to ramp through the pandemic and become a more meaningful portion of our quarterly performance.
In addition, gross profit in the fourth quarter also benefited from our tier status product, which was reintroduced during the fourth quarter on a limited basis.
As a reminder, this product which is seasonal in nature and generally offered during the fourth quarter was not end market in the year ago quarter as airlines extended status to members free of charge due to the impact of COVID-19, given.
Given the excellent results, we saw with the limited reintroduction, we'd expect to see more of these services moved into market later in 2022.
Operating expenses in the fourth quarter of 2021 were $15 2 million, an increase from $9 9 million in the year ago quarter.
The increases were a result of the gradual easing of spending restrictions implemented at the onset of the pandemic higher stock based compensation and the impact of wage subsidies reported in the prior year period.
We recognized $1 $2 million in subsidies from the Canada emergency wage subsidy program in Q4, 2020 and cease participation in this program during the second quarter of 2021.
Adjusted EBITDA for the fourth quarter of 'twenty, one came in at $5 5 million up significantly from roughly 400000 in the year ago quarter and $2 million in Q3 2021.
Sequential and year over year increases were primarily driven by the high levels of gross profit I mentioned earlier.
Turning to our balance sheet, our liquidity position remains strong and positions us well to deliver on our growth drivers.
Total funds available of approximately $109 million at the end of Q4.
Represented a significant increase from approximately $79 million at the end of 2020.
To summarize 2021, we generated strong improvements across our key financial metrics, which were bolstered by strong marketing activity the impact of new partnerships and products and aided by a recovery related tailwind.
As we look ahead to 2022, we are encouraged by a very positive start to the first quarter with activity across our platform looking very strong.
Remain optimistic about 2022, but continue to operate in a volatile macro environment.
The impacts of COVID-19, still remain in certain markets and while we are seeing positive signs of recovery over the last several months the <unk>.
<unk> of recovery various globally and is evolving.
And as Rob mentioned, we are continuing to monitor the developing situation in eastern Europe , which could cause further disruption for trial.
While our economic exposure to this region is low and we have not seen any impact so far the situation is obviously quite fluid.
While we are not yet initiating annual guidance for 2022 I'll provide some color on early thoughts on the year ahead.
Overall, we are optimistic about our ability to grow in 2022.
Based on current trends, we are seeing we expect travel to continue to recover through the year and we'll work with our partners to capture the outsized for alternatives. Accordingly, our expectation is to drive meaningful year over year growth in revenue and gross profit in 2022.
From an expense standpoint.
We're taking a long view on where we invest.
As we think about the significant opportunity in front of us and the growth mandates from our partners. We plan to make investments in marketing data analytics and engineering resources in 2022.
These additional resources will be focused on supporting our partners aggressive growth mandates as well as adding scale to our platform to more efficiently facilitate this growth.
Notwithstanding our plans for ongoing investments in our business our expectation for strong top line growth is expected to deliver material growth to our bottom line in 2022, and improve our effective margin or operating leverage and to grow that metric even more in 2023.
To be clear the global environment presents risks that will be difficult to predict at this stage and our expectations for 2022 are being made assuming no substantial disruptions.
As always we will provide updates some incremental color on our progress throughout the year as we gain further visibility and continue to monitor trends in our industry.
And with that I'll turn it over to Christopher.
Thanks, Eric.
Our progress on our growth drivers throughout 2021 highlights the resilience of our strategy and our dedication to providing flexible high quality loyalty commerce services to our current and prospective partners around the world.
With many of our loyalty program partners pursuing more aggressive long term growth mandates coming out of the pandemic, our loyalty commerce platform suite of services and broad partner base makes us well positioned to continue delivering on these objectives.
To review the progress we made in Q4, we expanded the reach of Marriott Bond boys existing by service in October by adding top up capability directly hitting their booking flow.
We now carry it powered marriott's by activity directly into redemption flow, having moved as existing channel onto our loyalty commerce platform.
This product represents a substantial channel expansion for us and the partnership and will enable us to deliver significantly more revenue to Marriott over the long term.
In addition, the new top up solution enables marriott to enhance its personalized loyalty marketing campaigns with a variety of promotional constructs providing marriott <unk> members with a wider range of new offers we place a strong priority on proving the depth and breadth of our deployments for our long term partners.
During our loyalty solution represents an efficient tailored experience to our program partners and their customers.
While subsequently subsequent to yearend, we also like to hire a highlight last week's announcement of a multi year extension to our partnership with Marriott.
In 2006, our relationship with Marriott is now well into its second decade.
After its merger with a very popular SPG program and successful relaunch of the combined bond void program.
It's been a proud to play our part in continuing to steadily grow our performance and successfully increased member engagement, while driving significant economics and the partnership with this leading hospitality brand.
You've seen this sector become an increasingly important one for us as it is being fastest to recover from the pandemic loans.
We're very encouraged by the prospects of our newly expanded in booking pass service and look forward to continuing our focus on data driven personalized growth initiatives with Marriott.
In the fourth quarter. We're also pleased to renew our long term partnership with one of Europe's largest frequent flyer programs air France, Klm's flying blue to a multiyear extension.
Enduring support of our long standing travel hospitality partners is a testament to the strong results and high quality of service that our team has worked to preserve.
Across our partner base.
Building upon the support we provide the flying Blue program throughout our partnership we added or accelerate anything capability to their existing service suite in the fourth quarter.
During this time, we also launched accelerate anything with Copa Airlines, a prominent Latin American carrier.
After retooling, our traditional travel dependent accelerator products into this more flexible option during the pandemic, we have swiftly expanded its reach in less than two years after introducing it.
Loyalty partners and customers alike have benefited from this product's optionality, whether customers use it to accumulate loyalty currency for future travel use or leverage additional earning options to support near term travel needs.
We launched this new service in the spring of 2020 and now with these two launches have seven total deployments in market.
Continued expand deployments and integrations of some of our legacy products offerings throughout the fourth quarter. In particular, we continue to make strong progress with our exchange service as we added both the Wyndham rewards program and choice privilege program as exchange options for Citi Thankyou rewards.
In addition, we enabled air Canada's Aeroplan, Virgin Red and Turkish Airlines miles and smiles ex exchange options with built rewards and newly launched rent rewards program having.
Having just launched our partnership with built in Q2 2021, we're pleased to be rapidly advancing our progress with this new type of loyalty program partner and to be doing so in a way that is mutually beneficial to many of our existing carrier in hospitality partners.
Subsidy subsequent to year end, we continued our exchange services momentum by enabling Turkish Airlines miles and smiles as an additional citibank thankyou points transfer option as well as linking Qatar Airways program to our air miles Middle East exchange offering.
Now turning to our progress with some of our newer partners launched during Q4.
Several we launched several contracted solutions for APAC carrier EPA are we.
We launched <unk> purchase miles offering with at the inception of the partnership in November , allowing Eda's Infinity mileage land customers to get their rewards sooner by buying additional miles at preferential rates.
<unk> also leveraging our industry, leading loyalty marketing expertise and data driven insights to develop personalized campaigns for their infinity and mileage lands membership base, which is expected to drive additional growth for the program.
We track towards launching a series of additional solutions expected to follow later this year, we have created a strong foundation for both this comprehensive partnership and our continued efforts to expand our APAC footprint.
Lastly, we announced the collaborate collaboration with rocket trial, the industry, leading provider of bespoke white label travel booking platforms that aims to enhance the overall booking experience offered to our loyalty program partners.
Under the collaboration agreement rocket travels White label loyalty Hotel and car booking service will replace the services previously provided by the points travel solution.
This process will still leverage the capabilities of our loyalty commerce platform as we will continue to manage the loyalty program relationships and process the miles and points portion of each transaction.
In addition, <unk> town Dotcom became a rocket miles channel provider, which will facilitate accelerated rewards and streamlined user journey for our loyalty customer loyalty customers across an even greater selection of global loyalty partners.
This new initiative allows us to continue building on our deep and long standing loyalty program relationships as well as deepen our focus on our core competencies and unique transaction capabilities of our loyalty commerce platform.
In fact, the collaboration is already off to a strong start as we expect one of those are forthcoming service launches for <unk> are to include the first deployment of travel booking service under this rocket travel partnership.
Together with rocket travel, we will continue to seek additional opportunities to enhance our loyalty partners and customers experience and further complement each other's offerings.
As you've heard US express throughout 2021, our commitment to our core growth drivers did not waiver during the low as the pandemic and this resiliency enabled us to drive increasingly strong financial and operational results as we progress through the year.
Our Q4 performance reflects the high quality of service and support we have continuously delivered to our partners as well as our execution on our pipeline of new partnership opportunities.
We've moved into 2022 with a renewed confidence in our long term growth prospects and while we do not have perfect visibility on how the broader recovery will play out over the coming quarters, we have proven our ability to move swiftly and aggressively in support of our loyalty industries ramping growth expectations.
As we progress further into 2022, we will work to continue creating new partnerships with global loyalty programs deepening our current partnerships through launching net new service deployments and enhancing the services. We currently have in market.
With our robust foundation and business development pipeline.
We are well positioned to continue advancing our growth initiatives and supporting a substantial the essential role that loyalty programs are now playing in the traveling hospital hospitality industry recovery.
Operator, we can now open the call up for questions.
Thank you Sir and at this time, we will be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad.
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One moment, please while we poll for questions.
And our first question comes from the line of drew Mcreynolds with RBC.
Please proceed with your question.
Yeah, Thanks, very much and good afternoon.
A couple for me just starting on the long term target so great to see.
Those being achievable within the next three years.
Just just to confirm.
That's the the $90 million in gross profit or gross margin at $40 million in EBITDA.
And when.
When you look at your kind of playbook for growth I know, there's there's obviously the three key pillars.
Of growth.
To get there is there one or two that stands out as a.
The bigger delta in the growth equation. Thank you.
Hey, drew it's Chris Thanks.
Thanks for the question, yes, those numbers are correct and I would say not necessarily evenly balanced obviously that growth would rely on all three I think we have such a large installed base of partners now that we see increasing opportunities and hence our ongoing investment over the last number of years in the operational capacity.
<unk> an automated marketing.
Capabilities that we've been developing too.
Expand the current services and market.
A little bit more aggressively so we're excited about that element but.
With a larger portfolio of partners also comes more cross selling opportunities as well.
And there's a long list of new partners that were still going after so it'll be a balanced approach to that growth profile.
Okay Super.
And just.
Just keeping on I guess the outlook.
Thanks, Eric for all that color very very helpful and great to see.
The momentum of the business just in terms of.
You know maybe a quarterly pacing if you will for 2022, I know probably almost impossible to get much precision, but is there anything that kind of stands out from your perspective is correct.
You know outside of the typical seasonality is there anything else, we should kind of factor in to our forecast.
Yeah, Andrew it's Eric here I think from a quarterly standpoint, I mean, we're going to steer away a little bit here in terms of providing any kind of quarterly guidance, there, but I think as.
As we indicated on our call Q1 is coming in very very strongly for us.
We would expect to see in line with how we describe the full year, we expect our year over year growth on a quarterly basis to be quite significant as well and certainly over.
Historical.
Factories, we had in the previous year, So I think.
I think what we've seen over the last few quarters is going to continue in terms of year on year growth, but that's about as much as I want to come back there sure.
Okay, well, that's that's perfectly fine.
Terms of.
The launch of the VA or Eva.
Relationship in November .
I would assume in Q4.
It clearly didn't capture.
You know the the full kind of run rate of that given that you've got a lot incrementally planned.
In terms of that agreement in 2022 is there.
Any kind of quantum you can put around it in terms of what the EBITDA contribution was in Q4.
I'm, assuming you can't do that but anything can it would be helpful any context.
Yeah sure it was quite small that was launched.
The exact date in front of me, but probably mid quarter, we have a number of products slated to launch with them. So I believe we only started with our traditional by service out of the gate.
And so we probably only had about six weeks of that activity and that's that's continuing to ramp up our expectation is is to launch.
More products with them through 2022. So it was it was certainly quite small during the fourth quarter.
Okay Super while I've got you Eric on the CIB I don't think there's been any change certainly in the MDA and DNA doesn't point to it where you're just going to.
Be limited to kind of tactical use only here.
Here in the near term I'm wondering you know what are the kind of trigger points to.
Get back to being a little bit more active on the buyback.
Yeah. Thanks drew.
The Mci P is on pause for now.
In line with our guidance conversation, we're certainly still looking at eastern Europe and wanted to see a bit more recovery in other regions as well, but I would expect us to you know for Chris Rob and I and our board to have that on our board agenda in the next three to six months in terms of.
Firming up our capital allocation strategy going forward.
Okay Super one last one for me.
For the list here.
I don't know who wants to take this one but obviously a lot of.
Activity out there from from all of your partners and.
I don't know anybody who's not travelling here in March so all of that's very good.
Got you.
<unk> talked about at the last kind of six to eight quarters, where coming out of this.
Loyalty programs and partners are.
Using these programs much more effectively than they are perhaps where in the past trying to get a sense of.
To what extent, there's a pent up level of activity here, that's going to flow through in.
2022, and do you see.
At some point hitting kind of a tougher comp on.
Some of that pent up activity like getting through the pipeline or are we just you know.
Wining back up to a higher level.
That that can more or less be sustained going forward.
Yeah, Joe it's Rob Yeah.
Yeah look I think your commentary around pent up demand just generally we're seeing.
You know, we're well into the recovery.
We've had a number of quarters, where we've continued to see improving transactional performance financial performance.
See the demand and kind of feedback from our partners globally that that is continuing I think very ambitious views on 2022.
In terms of overall travel growth.
I think like you.
Just anecdotally we're all.
Happy to be talking about travel and more excited about being back on aircraft and staying in hotels, we definitely saw the hotel performance pick up earlier than air.
Aviation travel a recovery that's been really leading the way for us we see that continuing here in 2022 and.
Into 2023 for sure I think generally most travel prognosticators are not expecting business travel really to be back into late next year, So still a tremendous amount of lift coming.
Coming from a travel recovery in our view.
I think the second question, if I understand that.
You know pent up Oh, sorry in terms of bringing on new partners and backlog I think as I understood that.
Ben.
I mentioned in my prepared remarks.
Very pleased with the business development efforts and the demand for our products and services from the loyalty industry. That's continued here in 2022.
You should expect to continue to see us deploying more and more products with new partners and existing partners.
Don't see that I don't see that shifting as Chris spoke about a.
As our footprint continues to increase and we're 15% plus larger than as we entered into the pandemic is that continues to increase with new logos, we get that many more new cross sell opportunities and that's proving to be.
A very strong kind of channel of growth for us as our partners are looking to leverage their their programs more and provide more utility for their around their membership so I don't see them.
A waning in terms of that growth.
Described maybe tougher quarter over quarter metrics I don't see that in the foreseeable future I think it's we're just gonna want pretty hard to try to capture and keep building the momentum on this.
Okay fantastic. Thank you very much.
And our next question comes from the line of Gavin Fairweather with core Mark. Please proceed with your question.
Oh, Hey, good afternoon, and congrats on the strong results.
To start out just on a long term target that you are.
Kind of put a pin in and the timing of that in terms of.
Three years now I guess my my question relates to <unk>.
What assumptions, we've made for kind of travel volume underpinning your confidence in putting the time to get three years apart.
Yeah, Hey, Gavin it's Erick here.
So certainly a lot of estimates out there in terms of when we see travel more broadly.
Come back to pre pandemic levels I think based on the you know the.
External research, we've done and what we're seeing with our partners most start pointing to.
At 2023 timeline sometime in there so.
We're trying to be very conservative with how we apply a recovery curve in our forecast.
What does bring us some comfort as we have seen loyalty.
Be at that kind of that lead so far with respect to travel certainly.
How we've performed has.
Being quite strong we think loyalty is going to be a leader over the travel recovery and so 2023 would kind of be our estimate right now probably later in that year.
I would say Kevin it's Rob.
To reiterate chris's comments around the growth drivers the overall recovery of travel certainly contributes to our optimism and confidence in the long term performance, but we're really seeing such strong performance on kind of new partner engagement and launches that we have.
Put in place the cross selling opportunities the 30, plus deployments that we put into the marketplace. In 2021 is a good example, you see that continuing and then going deeper into these databases and optimizing the existing footprint. Those those three kind of core drivers of our business alone give us a high degree of confidence on.
You know, how we forecast that out over the long term frankly more difficult to forecast that kind of stuff in the short term.
But a high degree of confidence on our kind of normal course business how that evolves in 2020.
'twenty two 'twenty three 'twenty four so we're pretty confident on those long term objectives and I think you know.
As the recovery continues to evolve where you not only strengthens the the growth curve.
That's great that's super helpful and I did wanted to ask about just kind of the sales success that you've had neck obviously.
These three new program 32 expansion.
2021 lots.
Lots of progress there it doesn't sound like that's really going to slow down here in the near term.
I guess I'm curious are you you know replenishing the pipeline at the top of the pile is there any kind of thoughts about whether there's going to be a bit of a slowdown from the third is just kind of curious for any kind of trends that you're tracking in the pipeline. There just given how hot the market for being here.
Yeah, no. It's a good it's.
Good question I think the short answer is we're not seeing a slowdown we have had we felt very good really through 2020 and 2021 in terms of our business development teams succeed.
Success in migrating them.
Partners through the pipeline and into close and into launch.
We're very cognizant of the filling the top of the pipeline as well as part of your question I think where we're pretty comfortable with how thats evolved loyalty broadly is gaining momentum. So we're seeing more and more companies move into that sweet spot for us.
Larger currency based programs with a profit motive so as more of those kind of organizations move under under that umbrella that kind of gives us an opportunity to keep building the top of the funnel. So I generally feel very good about it and as.
Chris said earlier, when we think of the pipeline and the funnel. It is a good mix of new logos coming into the pipeline, but then also new products and services that are certainly that side of things as well.
We're kind of filling up the funnel on that pretty much every day.
That's great and then just lastly for me just kind of given what's going on over in Europe can you just refresh us on maybe the growth profit sensitivity of your business or how much it would be kind of tied to either the trans Atlantic traveler or continental Europe travel can you help us out on that front.
Yeah, Hey, Gavin it's Eric here again.
Very small exposure right now.
You know it would be less than 1% far less than 1% very very small number in terms of any sort of activity coming out of Russia or Ukraine.
We don't really have any.
Our partnerships in that region right now.
So we don't think there's much exposure there we haven't really seen any any major impact so far.
In Q1, it is something we're looking at and in terms of whether it impacts routes that are.
Our current partner base, but so far so good.
Great our pipeline thanks, so much.
Thanks, Kevin.
Our next question comes from the line of.
Gary <unk> with Barrington Research. Please proceed with your question.
Hi, guys Hey.
I just wanted to make sure I'm right on these long term targets. So is that a four year event from here. So we're looking at 'twenty two 'twenty three 'twenty four exiting 'twenty four exiting 'twenty five.
Exiting 'twenty four.
Okay.
Alright.
And then could you maybe talk about you know 32 product launches service deployments and all that was there any.
Products or services that really drove it.
A real strong level of incremental revenue.
That is really experienced a tremendous uptake from your partners and that you would expect this to continue into 2022.
Yeah, I'll take I'll jump on that to start and then maybe Eric can kind of add some some color.
It's pretty broad.
When we think of the products that we're deploying the accelerate anything product that we launched.
The pandemic has been very well received by the market I think we've got.
Well I think but approaching 10 deployments of that are in the marketplace in pretty short order we've.
We've had a significant amount of exchange activity as more and more.
But companies are engaging with the loyalty industry I think are the built relationship where we've added a number of exchange partners with built which is kind.
A an innovative and very interesting.
Loyalty program, that's emerged here in the last year, and a bit and leveraging our platform to be able to move quickly and efficiently and to launch their business and then as we bring on new partners and launched new buy gift and transfer kind of core products. We've seen and will continue to see are we believe very strong growth on the perm.
<unk> of those those products and services so.
It's a pretty broad mix and in terms of deployments and different kinds of products that we have into the marketplace. I think we see that accelerating going forward as the footprint continues to build our products and services. We've been always been highly confident that if it can accelerate anything type of product is relevant for.
One partner, it's likely going to be very highly relevant for the rest of our 30 or 40 or 50 partners. So we have a team of people that are spending a lot of time.
Demonstrating results and demonstrating the success of our products and that's really helping us deploy it more and more products into our existing footprint. So.
Lots of good stuff that we were really pleased on 2020 as well as 2021 .
And that's you know that approach is continuing here in 2022.
Okay and then.
Would it be applicable I mean, your 15% bigger than when you exited more than when you started the pandemic. So if we look at 2019 and where you were in total in terms of total revenue.
Adjusted EBITDA versus where you are at year end here.
It would seem that you would certainly be exceeding the $401 million of revenue that you generated in 2019, but there's there's a big differential in the adjusted EBITDA generation.
It looked like it was about 33% on net revenue in 2019 about 24% in 'twenty 'twenty. One is there anything thats really structurally changed or.
Or is that just a reflection of more marketing activity that as you know.
Impacting your gross profit line.
Guess, what I'm trying to get at I know youre, not giving guidance, but it would seem that you are.
Bigger versus pre pandemic.
That $21 million adjusted EBITDA number should at least be achievable that you did in 2019.
Yeah, Hey, Gary it's Eric here.
So well I'll kind of steer away from providing any guidance.
Clearly right.
Maybe just touching on your 2021 comment a little bit so.
So.
In the year at just under $51 million of GP, you know what.
And comparing that to how we exited 2019, which was just under $60 million. So really the way we think about it is exiting 2019.
With $60 million roughly we've layered on a bunch of new products and services for 2020 and 21.
And so that is certainly contributing to our economic profile.
In 2021, and we'll continue to do so in 2022, I think what's underlying all of that and what's impacting the EBITDA line isn't that existing business from 2019, most of our partners are simply not at pre pandemic levels yet.
If I were to kind of estimate how many partners have kind of hit that number it's probably nine or 10 Theres a lot more partners that have a lot of growth.
A lot of room to grow.
And in 2022 so.
With respect to 2021, certainly the operating leverage wasn't as strong as 2019 simply because most partners havent come back yet.
As we think about it long term I think what I would lean on there is our long term outlook and the implied leverage in that outlook.
You get to the mid forty's, or so or roughly 40% and so.
We kind of look to that outlook in terms of what our long term targets are.
Not necessarily going to be a straight line, but we do we do expect to see operating leverage improvements in 2022 over 2021 for sure.
And then could you.
Maybe just give us numerically what.
What you ended up in terms of loyalty partners at the end of 2021 versus where you were in 2019.
Okay.
Yeah, I don't I don't have that number off hand area. We can certainly take that one offline I mean, the way we report on it and certainly the way we think of it I mean, we've got roughly 60 loyalty program partners with either commercial contracts or that are integrated into our platform.
That ebbs and flows over time, we've had a couple of partners merge I think we've had a couple but that's.
That's generally that has grown generally over the last three years or so.
Okay. Thank you.
Okay.
Our next question comes from the line of Greg Greg Gibas with Northland Securities. Please proceed with your question.
Hey, thanks for taking the questions guys.
You touched on this in your prepared comments, but wondering if you could comment a little bit further on the impact that you.
Seeing in Q1 or have seen in Q1 as a result of the omicron surge and then also if you could comment on where promotional activity levels are in Q1 versus Q4.
Yeah, Greg it's Rob.
I think in the prepared remarks, we commented on the crime, we were watching pretty carefully obviously in the fourth quarter and then into the first quarter. It has proven to be pretty nominal impact.
And I would say based on what we've seen.
Largely through it so it was a bit like Delta in September October proved to be a fairly temporary blip and it was it was a pretty minor one in the first place. So I'd say that'd be kind of the short and sweet response on omicron.
I think around them.
Promotional and campaign activity.
We have been speaking at some for some length now about what we viewed as a kind of a quite a change in the overall posture of the loyalty industry and our loyalty program partners in particular.
Where they are taking a much more I think.
Sophisticated an expansive view on what the potential.
Contribution of their loyalty programs are to their overall corporate revenues and profitability and engagement metrics.
That's translated through 2021 and into our 2022 plan.
Very directly just a much more ambitious approach to it when we think about our marketing and merchandising and campaign activity with the vast majority of our partners. We would have full year marketing and merchandising plans in place and approved and kind of in motion now.
We've seen really really positive uptake from.
Program memberships here in the first quarter.
On the kind of the different offer sets and campaigns that we're running I think our marketing and merchandising teams. Our analytics teams have been just getting better and better every day on getting access to more data being able to better utilize that data and leverage it to the to the advantage of our partners and in our business.
And I think we're going to continue to see that that happen generally speaking these long term.
Annual plans, we're constantly refining that and adding reach there as we demonstrate success on campaign, one versus campaign to and so I'm going to expect to see that continue in 2022.
I think one of the comments Eric has spoken about this over the last year and a bit.
With the benefit of our data and analytics work.
Like we're getting more efficient in terms of how we're putting campaigns in the market.
Finding ways to be a bit more profitable for our partners in terms of how we target and what kind of offers we put in place I think that's great news for our partners. It's great news for us and so it allows us to continue to be very active but being active in a way that.
It is very fiscally responsible so I think you'll continue to see that happening during the course of 'twenty two.
Got it very helpful and if I could.
A high level question, just wondering if you could touch on maybe how far out your visibility is on new partner launches or new services with existing partners.
You talk about the pipeline being very strong I'm just trying to gauge is your visibility six months out until year end kind of multi year, how should we think about them.
Yeah, I think there's you know from a pure launch standpoint.
You know pretty good visibility through 2022 in terms of.
New partners and new products that are in the development cycle and in the delivery channel.
Channel that's a that's one of our busiest groups in the company right now we're happy to say.
I think as you get out into 'twenty, three and even in the last quarter of 'twenty, two but certainly out into 'twenty three we've got lots of kind of slots identified us as being.
Partner XR product why that we would we would expect to be in those slots, but that will evolve a little bit as we get closer to kind of end the year and into 2023, but pretty good visibility for sure through the rest of 'twenty two.
Okay, great. Thank you.
And as a reminder, if anyone has any questions you May press star one on your telephone keypad in doing so make sure your spot in the question and answer queue.
Our next question comes from the line of Sandeep.
Indeed capital. Please proceed with your question.
Yes, congratulations on the quarter, you seem to be doing very well in travel and hotels all verticals, what about non travel and hospitality industries are you guys looking at expanding the pipeline to bring in new partners in those areas.
Yeah, Hey, it's great. Thanks, a lot.
Some vertical expansion is.
A key element of our plan and we are seeing the exchange activity as I talked about I think Rob mentioned, it a little bit as well we've been regularly adding new programs to our exchange platform and just a reminder, we run the exchange activity for the Chase Bank Ultimate rewards majority of the Citibank. Thank you.
Program.
A couple of middle Eastern.
Deployments on the banking side and that new loyalty program Rod mentioned called built rewards which is.
Our rental people pay their rent and earn rewards.
And one of the key redemptions were built is transferring into a number of our loyalty program partners. So that's a key portion while half of an exchange is still in the travel and hospitality space.
The funding of that is not it's in the financial services, usually and now more in the sort of retail with the built activity. So we're seeing that.
The defense growing and also adding kind of non travel options into our.
Onto our platform to allow programs to redeem for a non travel as until the redemption I think we've talked about the lift.
A relationship that we power for Hilton and we see some expansion opportunities there as an example of that ability to take your travel data points and redeem them for some non travel activities.
Great well. Thank you for answering my questions and I wish you guys continued good luck. Thank you.
Yes.
At this time. This concludes our question and answer session I would now like to turn the call back over to Mr. Maclean for closing remarks.
Hey, Thanks, operator, I would like to thank everyone for listening to today's call and look forward to speaking with you. When we report our first quarter results are in the not too distant future. Thanks again for joining us.
And ladies and gentlemen, this does conclude today's teleconference. You may disconnect. Your lines at this time. Thank you for your participation.
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Andrew.
Yes.
Yes.
Okay.
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Sure.