The travel industry has spawned more interesting B2B platforms and networks than any other industry.  Examples include:

• The three major Global Distribution Systems (GDSs)–Travelport, Amadeus, Sabre.  See here.
• Online Travel Agencies (OTAs)–Expedia, Orbitz, and Priceline.  See here.
• Cvent in meetings registrations and strategic meetings management
• Eved in Event Commerce (full disclosure: I am on the board of Eved)
• Concur in Travel and Expense reports (has some platform elements)

I’ve recently discovered another public and profitable travel platform:  Points International (NASDAQ: PCOM).

Points International

Points International is a Toronto-based company which describes itself as follows:

Points, publicly traded as Points International Ltd. (TSX:PTS) (Nasdaq:PCOM), is the global leader in loyalty currency management. Via a state-of-the-art loyalty commerce platform, Points provides loyalty eCommerce and technology solutions to the world’s top brands to enhance their consumer offerings and streamline their back-end operations.

Points’ solutions enhance the management and monetization of loyalty currencies ranging from frequent flyer miles and hotel points to retailer and credit card rewards, for more than 50 partners worldwide. Points also manages Points.com, where more than 4 million consumers use the only industry sanctioned loyalty wallet to not only track all of their loyalty programs but also trade, exchange and redeem their miles and points. In addition to these services, Points’ unique SaaS products allow merchants and businesses to reward their customers with points and miles from the world’s largest loyalty brands.

In 2014, Points acquired PointsHound, a hotel booking engine and loyalty currency aggregator built specifically for frequent travelers. PointsHound enables loyalty program members to earn loyalty points for staying in their favorite hotels and also to earn bonus rewards in the form of airline miles. Members of the free-to-use site have access to over 150,000 hotels worldwide, including boutique and non-chain properties.

B2B and

As I interpret this, Points International has a B2B offering to help travel (and other) providers offer rewards programs and allow those rewards programs to interoperate.   (For gifting, transferring or buying between rewards between programs).  While I’m not into this rewards stuff any more, I have plenty of friends who are “PointsHounds”!  What fascinates me about Points International is the quality of the programs Points has managed to get on its platforms.

A recent press release claimed Points International had all top ten airlines and nine of the top 15 hotel chain loyalty programs on their platform.  Here’s a graphic of their partners from Points International 2014 annual report:

That is not shabby company to keep.

B2C

Points International also has a B2C side of their business from  its website, Points.com.  The consumer-facing website allows travelers  to consolidate   their loyalty programs into one place.  I tried it and it worked as expected, though its not completely clear to me that it adds a lot of value for someone like me.  It’s a little like Yodlee for your travel programs, instead of your financial accounts.  Again, for business travel warriors who obsess about this stuff it would be a nice thing to have.

Positives

There are several things I like about Points International, based on my exhaustive one hour of deep research: 😉

• Points seems to have built a platform with some market dominance (admittedly I have not tried to figure out if there is much competition)
• Points makes real money (not just the non-GAAP kind).
• The stock price is at the low-end of historical ranges and sells for less than 10x EV/EBITDA.
• There is no debt on the balance sheet and some cash.
• Maybe, like Yodlee, some day Points can make some money with the data it is are collecting.  After all, Points International’s customer base is, by definition, affluent.
• With Points.com, an investor gets an option on a B2C play with an underlying B2B play.

Outstanding Questions

• The Points International website has financials, but no investor presentations.   I never like to invest without seeing one of those presentations which tells me how well the company can pitch themselves.  (I’m too lazy and cheap to go to investor conferences and probably would not get in anyways.)
• The website has only one non-financial metric:  points and miles transacted.  This metric and their quarterly financials show quite a bit of variation, which does not bother or surprise me, but I’d like to understand it better.  During the first half of 2015 organic growth was 5%.  Points International is expecting full year growth of about 10%, so the company expects a big second half of the year.  Being new to the company myself, I’m not sure what to believe!
• Loyalty is a big deal to the providers on their platforms, so the B2B side of the business strikes me as potentially important and sustainable.  I’m less sure of the size and investment and promise of the consumer side.  When I was young, poor, and traveling alot for business, these kinds of rewards were central to my life.  Now I only really track one airline.  I need to dig a little more to get the TAM-type numbers on the consumer side and understand the costs and revenues associated with this segment.

Summary

Lots of work yet to do on this one, but it is always fun to find a profitable, public B2B platform that I can learn about and just maybe profit from!