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LML Payment Systems Inc. Reports Operating Results (10-Q)

November 14, 2011 | About:
10qk

10qk

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LML Payment Systems Inc. (LMLP) filed Quarterly Report for the period ended 2011-09-30.

Lml Payment Systems Inc. has a market cap of $61.55 million; its shares were traded at around $2.18 with a P/E ratio of 4.45 and P/S ratio of 1.31.

Highlight of Business Operations:

Revenue pertaining to our TPP segment consists of transaction fees, one-time set-up fees and monthly gateway fees. TPP segment revenue for the three months ended September 30, 2011 was approximately $3,791,000, an increase of approximately $905,000 or approximately 31.4% from TPP segment revenue of approximately $2,886,000 for the three months ended September 30, 2010. Transaction fees for the three months ended September 30, 2011 were approximately $2,964,000 compared to approximately $2,333,000 for the three months ended September 30, 2010, an increase of approximately $631,000 or approximately 27%; the amortized portion of one-time set-up fees recognized was approximately $57,000 for the three months ended September 30, 2011 compared to approximately $46,000 for the three months ended September 30, 2010, an increase of approximately $11,000 or approximately 23.9%; and monthly gateway fees for the three months ended September 30, 2011 were approximately $524,000 compared to approximately $377,000 for the three months ended September 30, 2010, an increase of approximately $147,000 or approximately 39%. The increase in transaction fees, one-time set-up fees and monthly gateway fees was primarily attributable to a 26.6% increase in our merchant base as at September 30, 2011 as compared to September 30, 2010. Software customization fees for the three months ended September 30, 2011 were approximately $92,000 compared to approximately $25,000 for the three months ended September 30, 2010, an increase of approximately $67,000 or approximately 268%.

Cost of revenue increased from approximately $3,167,000 for the three months ended September 30, 2010, to approximately $5,611,000 for the three months ended September 30, 2011, an increase of approximately $2,444,000 or approximately 77.2%. The increase was primarily attributable to an increase in our IPL segment cost of revenue of approximately $2,014,000 from approximately $925,000 for the three months ended September 30, 2010 to approximately $2,939,000 for the three months ended September 30, 2011 and partially attributable to an increase in TPP segment cost of revenue of approximately $549,000 or approximately 31.4% from approximately $1,746,000 for the three months ended September 30, 2010 to approximately $2,295,000 for the three months ended September 30, 2011. The increase in IPL segment cost of revenue was primarily attributable to the costs incurred in entering into the License Agreements with three of the defendants in the Patent Litigation during the three months ended September 30, 2011. The increase in TPP segment cost of revenue was primarily attributable to an increase in transaction costs which include interchange, assessments and other transaction fees of approximately 23.5% consistent with the increase in transaction fee revenue and partially attributable to an increase in customer service representation costs of approximately $98,000 or approximately 62% due to an increase in staffing within the customer service department.

Revenue pertaining to our TPP segment consists of transaction fees, one-time set-up fees and monthly gateway fees. TPP segment revenue for the six months ended September 30, 2011 was approximately $7,476,000, an increase of approximately $1,773,000 or approximately 31.1% from TPP segment revenue of approximately $5,703,000 for the six months ended September 30, 2010. Transaction fees for the six months ended September 30, 2011 were approximately $5,832,000 compared to approximately $4,639,000 for the six months ended September 30, 2010, an increase of approximately $1,193,000 or approximately 25.7%; the amortized portion of one-time set-up fees recognized was approximately $112,000 for the six months ended September 30, 2011 compared to approximately $99,000 for the six months ended September 30, 2010, an increase of approximately $13,000 or approximately 13.1%; and monthly gateway fees for the six months ended September 30, 2011 were approximately $1,016,000 compared to approximately $742,000 for the six months ended September 30, 2010, an increase of approximately $274,000 or approximately 36.9%. The increase in transaction fees, one-time set-up fees and monthly gateway fees was primarily attributable to a 26.6% increase in our merchant base as at September 30, 2011 as compared to September 30, 2010. Software customization fees for the six months ended September 30, 2011 were approximately $226,000 compared to approximately $56,000 for the six months ended September 30, 2010, an increase of approximately $170,000 or approximately 303.6%.

CP segment revenue for the six months ended September 30, 2011 was approximately $1,144,000, an increase of approximately $65,000 or approximately 6% from CP segment revenue of approximately $1,079,000 for the six months ended September 30, 2010. Revenue from our secondary check collections business increased approximately $71,000 or approximately 7.8% from approximately $915,000 for the six months ended September 30, 2010 to approximately $986,000 for the six months ended September 30, 2011. Revenue from our primary check collections business decreased approximately $6,000 or approximately 3.8% from approximately $158,000 for the six months ended September 30, 2010 to approximately $152,000 for the six months ended September 30, 2011.

Cost of revenue increased from approximately $5,772,000 for the six months ended September 30, 2010, to approximately $8,933,000 for the six months ended September 30, 2011, an increase of approximately $3,161,000 or approximately 54.8%. The increase was primarily attributable to an increase in our IPL segment cost of revenue of approximately $2,200,000 from approximately $1,422,000 for the six months ended September 30, 2010 to approximately $3,622,000 for the six months ended September 30, 2011 and partially attributable to an increase in TPP segment cost of revenue of approximately $1,054,000 or approximately 30.5% from approximately $3,460,000 for the six months ended September 30, 2010 to approximately $4,514,000 for the six months ended September 30, 2011. The increase in IPL segment cost of revenue was primarily attributable to the costs incurred in entering into the License Agreements with four of the defendants in the Patent Litigation during the six months ended September 30, 2011. The increase in TPP segment cost of revenue was primarily attributable to an increase in transaction costs which include interchange, assessments and other transaction fees of approximately 21.9% consistent with the increase in transaction fee revenue and partially attributable to an increase in customer service representation costs of approximately $154,000 or approximately 47.4% due to an increase in staffing within the customer service department.

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