Stonegate Capital Partners Updates Coverage on Payment Data Systems, Inc. (NASDAQ: PYDS)

Stonegate Capital Partners Updates Coverage on Payment Data Systems, Inc. (NASDAQ: PYDS)

DALLAS, TX / ACCESSWIRE / January 19, 2018 / Payment Data Systems, Inc. (NASDAQ: PYDS).

COMPANY DESCRIPTION

Payment Data Systems, Inc., together with its subsidiaries, provides integrated electronic payment processing services to merchants and businesses in the United States. The Company offers various types of automated clearing house (ACH) processing, and credit card, prepaid card, and debit card-based processing services. The Company also offers merchant account services for the processing of card-based transactions through the VISA, MasterCard, American Express, Discover, and JCB networks, including online terminal services accessed through a website or retail services, accessed through a physical terminal. Furthermore, the Company creates, manages, and processes prepaid card programs for corporate clients to issue prepaid cards to their customer base or employees and also issues general purpose, reloadable cards to consumers as an alternative to a traditional bank account. Payment Data Systems, Inc. was founded in 1998 and is headquartered in San Antonio, Texas.

SUMMARY

Payment Data Systems is using the cash flow from its core ACH, credit card and debit card processing business to invest in new business opportunities. With a solid balance sheet and positive cash flow, the Company is investing for the long-term and hopes to continue its growth by:

  • Operating in niche verticals where it can be a leader in ACH and credit card payment processing
  • Focusing on delivering a better customer experience compared to larger competitors by offering its customers leading technology platforms and customization. As an example, Payment Data Systems states that it was the first prepaid card integrated with Apple Pay
  • Enabling organic growth through continued use of its indirect sales model to drive revenue growth
  • Using its cash flow to fund growth initiatives such as continuously innovating its merchant processing platform
  • Expanding its ACH banking relationships
  • Increasing the brand awareness of its Akimbo platform
  • Supplementing its organic growth by targeting acquisitions of credit card processing portfolios that can provide immediate cash flow
  • An example of acquiring a company with complementary products and services is the deal just recently closed on Singular Payments as of 9/1/17; Singular Payments processed $440M in payments and 2.5M transactions in 2016. The acquisition of Singular has the potential to increase the Company’s processed payments by ~15% and its processed transactions by ~20%
  • Continuing to rely on its balance sheet that shows no debt and has a clean capital structure

We employ both comparative company analysis as well as analysis of precedent transactions using a EV/Sales framework for valuation. See the full report for details. We have factored in the recent Q317 results, and as such, have slightly adjusted our estimates. As expected, there has been a fairly seamless transition of the business from Singular; Vaden Landers, CEO of Singular Payments and now Chief Revenue Officer of the Company, and all Singular employees, have joined the PYDS team.

We note that on 12/27/17, PYDS announced the completion of a direct offering with institutional investors of 1,176,000 shares for net proceeds of $2.75M; funds are to be utilized for general corporate purposes and working capital. 

Click on the following link to access the full report:

http://www.stonegateinc.com/reports/PYDS_JAN_2018_Final_v3.pdf

Stonegate Capital Partners

Stonegate Capital Partners is a Dallas-based corporate advisory firm dedicated to serving the specialized needs of small-cap public companies. Since our inception, our mission has been to find innovative, undervalued public companies for our network of leading institutional investors who seek high-quality investment opportunities.

SOURCE: Stonegate Capital Partners 

Source: ACCESSWIRE (January 19, 2018 - 4:30 PM EST)