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Edited Transcript of PYDS earnings conference call or presentation 14-Nov-18 10:30pm GMT

Q3 2018 Payment Data Systems Inc Earnings Call

San Antonio Jan 11, 2019 (Thomson StreetEvents) -- Edited Transcript of Payment Data Systems Inc earnings conference call or presentation Wednesday, November 14, 2018 at 10:30:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Houston Korth Frost

Payment Data Systems, Inc. - SVP of Corporate Development & Prepaid Products

* Joseph Hassett

Gregory FCA - SVP of IR

* Louis A. Hoch

Payment Data Systems, Inc. - Co-Founder, Vice-Chairman, President, CEO & COO

* Lowell Thomas Jewell

Payment Data Systems, Inc. - Senior VP & CFO

* Vaden C. Landers

Payment Data Systems, Inc. - Executive VP & Chief Revenue Officer

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Conference Call Participants

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* Barry Michael Sine

Dawson James Securities, Inc., Research Division - MD of Equity Research & Senior Research Analyst

* Brian David Kinstlinger

Alliance Global Partners, Research Division - Head of TMT Research, MD & Senior Technology Analyst

* Michael Keelan Diana

Maxim Group LLC, Research Division - MD

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Presentation

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Operator [1]

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Good day, everyone, and welcome to the Payment Data Systems Third Quarter 2018 Earnings Results Conference Call. (Operator Instructions) And please note that today's event is being recorded.

I would now like to turn the conference over to Joe Hassett. Please go ahead with your presentation.

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Joseph Hassett, Gregory FCA - SVP of IR [2]

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Thanks, William, and thank you, everyone, and welcome to Payment Data Systems' Third Quarter 2018 Financial Results Conference Call. The earnings release, which Payment Data issued earlier this afternoon, is available on the company's Investor Relations website at paymentdata.com/invest, under News.

On the call today are Louis Hoch, President and CEO; Vaden Landers, EVP and Chief Revenue Officer; Tom Jewell, Senior Vice President and Chief Financial Officer; and Houston Frost, Senior Vice President of Prepaid Services. Management will provide prepared remarks, and then we will open the call to your questions.

Before we begin, please remember that comments on today's call include forward-looking statements. Forward-looking statements can be identified by the use of such words as estimate, anticipate, expect, believe, intend, may, will, should, seek, approximate or plan or the negative of these words and phrases or similar words and phrases. Forward-looking statements, by their nature, involve estimates, projections, goals, forecasts and assumptions and are subject to risks and uncertainties that could cause actual results or outcomes to differ materially from those expressed in the forward-looking statements, including risks related to the integration of Singular -- of the Singular assets; the realization of the anticipated opportunities from the Singular acquisition; management of the company's growth; the loss of key resellers; the relationships with the Automated Clearing House Network, bank sponsors, third-party card processing providers and merchants; the loss of key personnel; growing competition in electronic commerce market; the security of the company's software, hardware and information; and compliance with complex federal, state and local laws and regulations.

These forward-looking statements speak only as of the date of this conference call and should not be relied upon as predictions of future events. Payment Data expressly disclaims any obligation or undertaking to update or revise any forward-looking statements made today to reflect any change in Payment Data's expectations with regard thereto or any other changes in the events, conditions or circumstances on which any such statement is based, except as required by law. Please refer to the company's SEC filings on its Investor Relations website for additional information.

With that, I would now like to turn the call over to Louis. Louis?

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Louis A. Hoch, Payment Data Systems, Inc. - Co-Founder, Vice-Chairman, President, CEO & COO [3]

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Thank you, Joe, and welcome, everyone. Payment Data Systems achieved a record third quarter from the continued execution of our revenue growth plans. We reported record quarterly transaction volumes and record quarterly revenues. The results demonstrate the success of our strong product offerings and the effect of our aggressive sales and marketing efforts across all of our business lines.

Overall revenues in the third quarter were up 80% with contributions from both organic growth and growth through acquisitions. Organic growth contributed a strong 18% with the balance of growth attributable to acquisitions. At $6.5 million, revenue were an all-time quarterly record, keeping us on pace for a record revenue for this year. Total dollars processed during the third quarter were almost $900 million and was the highest quarterly volume in the history of our company. Our ACH business volumes increased sequentially for the fifth consecutive quarter, and we're positioned to build upon that growth.

This quarter, we recorded year-over-year growth of 28% in electronic check volumes and 34% in returned check volumes. NACHA recently reported that ACH payments grew 6% in 2018 versus 2017 for the second quarter, which means we are growing faster than the market. Given this favorable industry tailwind, the competitive advantage of our NACHA certification, expanding bank sponsorships and portfolio of attractive ACH products, we expect to see continued organic growth in both ACH revenues and associated profits for the foreseeable future.

In our card business, revenues were up significantly in the quarter as transaction processing volume was up 109%, and the associated dollars was up 112% as compared to the same time period in 2017. While we continue to grow our legacy card business, our primary focus is on the development and rollout of our proprietary payment facilitation platform.

The prepaid business continues to grow. During this quarter, we announced the addition of 3 new clients. We're excited about all 3. SVM, a leading global provider of business and gift prepaid card solution, recently entered into a strategic partnership with our FiCentive prepaid subsidiary to offer their customers a virtual open-loop prepaid card that can be used at retail locations using Apple Pay, Android Pay or Samsung Pay.

Another announcement included a win with the company UniTeller. And UniTeller is a leader in international money transfer processing services, offering remittance solutions through business partners and individuals. UniTeller will use FiCentive to create a comprehensive white-label prepaid caller card offering, called UniLink card, for its UniLink digital remittance program, where customers will enjoy preferred rates using the card to send remittances.

And finally, University Fancards, is a provider of university-branded gift and reloadable prepaid cards with several dozen Power 5 conference programs like University of Alabama, University of Florida, Texas and Michigan. Initially, FiCentive will support Fancards' consumer reloadable card program, including the card program management, processing and the development of web and mobile applications. Longer-term, we see prepaid, not only as a fantastic growth opportunity but as a tremendous complement to our other business lines.

Based on the strength of our first 9 months, we believe Payment Data Systems will report record revenues this year. To continue this momentum into 2019, we're actively investing in our technology and products to propel this growth. We also continue to evaluate strategic acquisitions as we enjoy a balance sheet that supports both our organic and acquisition growth aspirations.

With that, I'd like to conclude my opening remarks and turn the call over to Tom Jewell, our Senior Vice President and Chief Financial Officer, to discuss our financial results in more detail. Tom?

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Lowell Thomas Jewell, Payment Data Systems, Inc. - Senior VP & CFO [4]

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Thank you, Louis. And welcome, everyone. Thanks for joining our call and expressing an interest in Payment Data Systems. I'm going to provide a brief review of our financial results before turning the call over to Vaden.

We continue to have a strong balance sheet with cash of $2.7 million, which is unchanged from June 30. We have no debt and a clean capital structure as of the end of the quarter. And as Louis briefly mentioned, through a number of strategic actions as well as our continually improving financial performance, we are nearing our quarterly breakeven cash flow objectives.

For the third quarter, we recorded quarterly revenues of $6.5 million, up 80% from $3.6 million from the third quarter last year. Organic revenue growth from our legacy card ACH and prepaid businesses was 18%. Revenue this quarter included 3 months of Singular Payments whereas we had 1 month of Singular revenues in the year-ago quarter.

Gross profits for the quarter were $1.5 million, up 77% from $0.8 million a year ago. While Singular Payments is generating strong gross margin dollars, they report lower margins due to recording pass-through expenses as both revenues and costs. As a result, consolidated gross margins were 22.5% in the quarter, down from 23% a year ago. However, more reflective of our efforts to expand margins, gross margins improved sequentially from 21% recorded in the second quarter of this year due primarily to the revenue and profit improvements in our profitable ACH business, as Louis mentioned previously.

Our third quarter operating loss was $0.8 million, down from an operating loss of $0.9 million in the third quarter of last year despite the added cost of Singular Payments as well as investments we are undertaking in our prepaid and PayFac platforms. These results are reflective of our focus on disciplined cost control while investing in our growth initiatives.

Adjusted EBITDA was a real bright spot in the quarter. The net loss for the quarter was $60,653, down nearly $300,000 from an adjusted EBITDA loss of $347,000 in the same period last year as well as a sequential improvement from a loss of $275,000 adjusted EBITDA in the second quarter this year. Looking forward, management expects to generate positive adjusted EBITDA in this year's fourth quarter.

Bottom line, the net loss for the quarter was $0.8 million or $0.07 per share, an improvement over the net loss of $0.9 million or $0.10 per share for the third quarter last year. The bottom line also improved sequentially from this year's second quarter.

Quickly looking at results for the year-to-date through September 30, 2018, revenues were up 108% to $18.6 million with organic growth of about 9%. Gross profits were up 64% to $4 million. The operating loss for the first 9 months was $2.9 million versus a loss of $1.8 million for the same period last year with the higher loss attributable to the Singular Payments expenses and the additional expenses arising from the investment in our growth initiatives as discussed previously. Adjusted EBITDA for the 9 months was a loss of $0.6 million compared to adjusted EBITDA loss of $0.3 million for the same period last year.

In summary, we saw strong year-over-year gains, primarily in our ACH business, driving improvements in our gross profit and adjusted EBITDA. At the end of the quarter, we had $2.7 million of cash, no debt and a profitable growing ACH business that is providing the company with discretionary funds that we are investing in our prepaid and PayFac growth initiatives.

At this time, I would like to turn the call over to Vaden. Vaden?

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Vaden C. Landers, Payment Data Systems, Inc. - Executive VP & Chief Revenue Officer [5]

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Thank you, Tom and Louis, and welcome, everyone. We believe our third consecutive quarter of record revenues validates that our strategy is gaining momentum. As Louis described, we are reinvesting the strong results from our ACH business into our 2 growth initiatives: prepaid and payment facilitation, both of which are making great progress. Our PayFac business is the latest innovation in the fast-growing and rapidly evolving electronic payments industry. It represents a new generation of technology that not only enables software developers to embed payment acceptance inside their technology but, more importantly, enables quick and easy adoption of a deeply integrated payment solution.

This eliminates the complaint heard most frequently from the ISV community that their customers simply aren't activating their payments module because of the difficult and overly laborious contracting and on-boarding process associated with obtaining a new merchant accounts. When payments aren't plug-and-play and affordable, this costs ISVs money.

Consequently, they see our PayFac-in-a-box platform as the fastest and surest path to increase activation and generate incremental revenue from the payments traveling through their software while simultaneously avoiding the compliance, operating and regulatory complexities of the commodity ISV technology.

As mentioned, customers are now going live on our system. As an example, a property management software developer recently batch boarded 95 of its merchant clients in less than 10 minutes. So in 10 minutes, we and the software vendor added what we estimate to be several million dollars in combined monthly card and ACH transaction volume. This is a great illustration of how our one-to-many leverage distribution model allows us to quickly scale. We are now working with a number of other ISVs to develop a strategy for the on-boarding and activation of their collective customer communities, which we estimate represents tens of thousands of potential merchant locations.

In December, we anticipate a staged launch of 2 sizable health care players whose volume, once fully implemented, will have a significant impact on both our card processing and ACH volumes. To further strengthen our competitive advantage, over the next few quarters, we will also be looking to enhance our expansive API libraries to include other value-added payment functionality, including integrating with our own robust ACH and prepaid technologies.

As has been mentioned by both Louis and Tom during this call, the prepaid business continues to show solid growth. Among our many strengths and competitive advantages is the technology behind our card provisioning platform, which enables us to issue a virtual card in seconds, cutting the cost of delivery and adoption from dollars to pennies. This also dramatically reduces the time to get cards into circulation, all of which is music to a prepaid issuer's ears.

Let me just quickly expand on Louis' description of our new University Fancard relationship. This is a program that has begun its launch in earnest and currently has more than 25,000 cards in circulation. Fancards has already partnered with major universities across the country, as we detailed earlier, and its cards can be found in over 15,000 retail outlets, including the likes of Walmart, H-E-B and Dollar General stores. They expect to add more schools and further expand retail distribution, all of which will directly benefit our prepaid business. This success is extremely encouraging, most importantly because it validates that we are well positioned to win in a sector where we believe there is plenty of remaining runway.

Very briefly, we continue to see modest growth in our legacy merchant portfolios due to the addition of new customers and our ability thus far to maintain customer retention rates that are well above industry standards. Our ACH business continues to generate outstanding growth led by its unique NACHA certification, strong bank sponsorship and growing channels of distribution.

This quarter, we recorded our fifth consecutive quarter of organic growth. We expect this momentum to continue, affording us the ability to opportunistically invest the cash generated from this business unit in the prepaid and payment facilitation sectors of our business. As you can tell, as a provider of a number of complementary electronic payment technologies, we are working diligently to integrate our various product offerings into more comprehensive, all-in-one payment solution. In this manner, we enable our various end users the ability to take payments in a multitude of formats: ACH, card, et cetera, which remains the industry's Holy Grail.

At this time, we'd like to open up the call to questions. As a reminder, in addition to Tom, Louis and myself, we also have Houston Frost, our Senior Vice President of Corporate and Prepaid Development on the line to assist in answering your questions. Operator?

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Questions and Answers

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Operator [1]

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(Operator Instructions) And the first questioner today will be Barry Sine with Dawson James.

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Barry Michael Sine, Dawson James Securities, Inc., Research Division - MD of Equity Research & Senior Research Analyst [2]

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Congratulations on the quarter. I wanted to continue on -- you were talking about the integrated software vendors, the ISVs. Obviously, that's a great way to accelerate growth. Do you have numbers? If you could share with us, what percentage of your current revenue base is coming through those? What percent of your growth in the quarter, the sequential revenue increase, is coming from them? And then if you have any backlog numbers, what does the pipeline look like? And what does the success rate look like with that distribution channel?

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Joseph Hassett, Gregory FCA - SVP of IR [3]

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Louis, you want me to take that one? Louis?

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Vaden C. Landers, Payment Data Systems, Inc. - Executive VP & Chief Revenue Officer [4]

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Barry, as you and I may have discussed briefly at the Dawson James conference a few weeks ago, the last 3 quarters have really been spent on the buildout, architecting and launching of the PayFac platform that we believe will allow us to significantly grow processing volumes on both the card side and the ACH sides of our business and potentially prepaid as we move into some interesting opportunities.

In the third quarter -- and again, we don't segment revenues, so we don't report them individually or separately. We had very little impact from the PayFac business, if you will. Our expectation, as I mentioned in my comments, is that as we have these staged implementations that are taking place as we speak of a number of health care companies and other ISVs is that in the out quarters, in future quarters, we will be able to talk more specifically about those clients and about those impacts that we're seeing within that particular business. But I don't think it's any secret, and we certainly said it at these conferences that we've attended, we've said to many of -- those of you who are on the phone, but the growth channel of the PayFac business is one where we expect to see exponential growth going forward. So hopefully that answers your question somewhat directly.

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Barry Michael Sine, Dawson James Securities, Inc., Research Division - MD of Equity Research & Senior Research Analyst [5]

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And your pipeline and your success rate, when you pitch this to an ISV, what is the reaction? What is the success rate?

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Vaden C. Landers, Payment Data Systems, Inc. - Executive VP & Chief Revenue Officer [6]

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Well, I'd tell you, if we talk to a software company -- and then people ask us all the time, hey, how do you find these guys? Luckily for us, we haven't had to find any of them at this point in time. They've found us, and they find us either through people that we know or through relationships that we have or resellers that we work with. But we have a pipeline that is -- in fact, I have a sheet sitting here on my desk with 55 different companies that are in various stages of whether negotiating contracts, working on integrations, completing integrations, on-boarding customers or what have you. And these are just customers that are what we would deem to be in sort of an imminent stage of working with us.

So the pipeline is extensive. And as I was going to say at the very beginning of that comment, if we end up talking to a customer and we show them our technology and we get them to what we call a statement of work call, which allows us to dig deep into their requirements and explain what our capabilities are in relation to those requirements, we win every time. So we're having a great degree of success both in terms of talking to people who want to talk to us and also winning the business when we have that opportunity.

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Operator [7]

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And the next questioner today will be Brian Kinstlinger with Alliance Global Partners.

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Brian David Kinstlinger, Alliance Global Partners, Research Division - Head of TMT Research, MD & Senior Technology Analyst [8]

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I think, Vaden, you mentioned some health care customers are staging right now and are expected to be activated in December. I think you said, if I'm correct, it'd dramatically change the volume of your business, which I think revenue then as well. Or were you talking to volume and revenue just to PayFac? So maybe you can put some detail around what kind of volume and revenue you're talking about and maybe some more detail on the type of businesses these are.

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Vaden C. Landers, Payment Data Systems, Inc. - Executive VP & Chief Revenue Officer [9]

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Yes. So we're going to share some details in the way of a press release, Brian, in the next few weeks here. We didn't want to do a press release until we had some business launched and everything was running smoothly. So within the next 2 to 4 weeks, certainly, before the end of the year, our expectation is that we'll do press releases with these 2 particular groups that I've mentioned on the call and provide additional visibility. I think you'll maybe know some of these names, and I think that you'll be impressed with what you see.

And I don't know if we've mentioned before, but we have a partnership with some of the card brands, Visa, MasterCard, if you will, that allow us to do some interesting things in the long-term care space. And so some of the things that we're going to announce will lend itself to those partnerships and relationships. But I think I'd rather do the press release and then maybe answer your question a little bit more directly.

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Brian David Kinstlinger, Alliance Global Partners, Research Division - Head of TMT Research, MD & Senior Technology Analyst [10]

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Okay. And without specifics on that, you mentioned it was -- was I right that you said it would materially change the volume of the overall Payment Data Systems business? Is that what you were implying?

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Vaden C. Landers, Payment Data Systems, Inc. - Executive VP & Chief Revenue Officer [11]

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No, I didn't say materially. I did say that there are substantial players in the health care space. They are -- they're sizable. They're not small merchant accounts. So they're definitely going to add some significant volume to what we're already processing today in terms of both card and ACH, so it'll be visible. And obviously, when we put volume on and the way that we record revenues as a percentage of sales that we charge to the downstream customer, that impact will also be felt on both the top and the bottom lines as well.

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Brian David Kinstlinger, Alliance Global Partners, Research Division - Head of TMT Research, MD & Senior Technology Analyst [12]

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And so -- and I realize it's very early PayFac, but maybe you can update us on the installed base? How many are using it? And what's the feedback? Is it just seamless to them? Is there any feedback?

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Vaden C. Landers, Payment Data Systems, Inc. - Executive VP & Chief Revenue Officer [13]

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Yes, I think so far with the customers that -- and I'll just talk about -- let me just talk about the one that we did mention, and I didn't mention it by name because we're going to do a press release about them as well in the next few weeks. But the property management software company that I talked about had 95 customers. And those customers were landlords of various facilities ranging in size from 10 doors to 1,000 doors. And we worked with them to obtain a file of information that's needed to create merchant accounts or what's called sub-merchant accounts in the payment facilitation world. We loaded those accounts to our system. We automatically, using our technology, underwrote those accounts and activated them in seconds. And then what happens after the activation takes place is an e-mail goes out to those downstream merchants, these landlords, and they have to click to agree to the pricing and terms. And when they do that, they're effectively processing transactions through our system.

So in this particular case -- and this is what we strive to achieve in every one of these relationships that we're implementing on our platform, this particular software company mandated that its downstream clients use our platform for payments. And if they don't use our system for payments inside their technology, then they have to use a system outside their technology, which usually is a credit card machine that sits on somebody's desk. They have to run a manual transaction, then they have to go and manually update the customer record with the payment information to make sure that it jibes with the external system. So anyway, it's an overly laborious manual process that people don't want to use.

So anyway, we boarded 95, we activated 95, and 95 are processing on the platform. So that is nirvana for us, and that's what we are -- that's the conversation we're having with every single one of these partners is how do we get to that nirvana state. And some of them we will get there, some of them will get partially there and some of them will have to start in a scenario where we're getting the next new customer and we're working our way towards a batch or mass conversion of all their existing downstream customers onto the platform, which is obviously what we've talked about for a long time, allows us to dramatically and very quickly scale the business. So hopefully that helps.

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Brian David Kinstlinger, Alliance Global Partners, Research Division - Head of TMT Research, MD & Senior Technology Analyst [14]

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Yes, it definitely does. But -- and of those 95 landlords, before, were they doing that laborious process of accepting checks or taking credit cards on their desk? I mean, is that what was happening before they took...

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Vaden C. Landers, Payment Data Systems, Inc. - Executive VP & Chief Revenue Officer [15]

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They actually were using another provider, and we mass converted them off of that provider and onto our platform in 10 minutes.

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Brian David Kinstlinger, Alliance Global Partners, Research Division - Head of TMT Research, MD & Senior Technology Analyst [16]

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Right. Why -- and what benefit -- remind investors, what benefit you are giving over that other provider?

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Vaden C. Landers, Payment Data Systems, Inc. - Executive VP & Chief Revenue Officer [17]

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Yes, good question. Most of the software companies out there that have payment integrations are either integrated to some third-party payment gateway that does nothing more than just afford a downstream software user the opportunity to go get their own merchant account from their local bank or some other competing processing company and then bring that merchant account data back to their software provider, give them certain credentials and then have them activate that account. And in those cases, the software companies make very little, if anything, off of the payments that are still flowing through their system. So that's one problem they seek to fix.

The other is that, a lot of companies who don't do a gateway certification, they'll go integrate with a company like Stripe. And a Stripe integration does little more than allow you to commerce-enable your platform. It doesn't give you access to reporting data that you can pull back into your system through an API call and make available to your downstream customers who might want to see transactional details and different things. So there's lots of enhanced functionality and feature sets that are available through our APIs that aren't available through a Stripe's APIs. And so while it's a good initial sort of solution to a problem, it's not a good long-term solution as their business grows and evolves and as they look to really monetize payments in a meaningful way inside the system.

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Brian David Kinstlinger, Alliance Global Partners, Research Division - Head of TMT Research, MD & Senior Technology Analyst [18]

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Great. And then a big picture question on the company. I mean, you're growing mid double -- mid-teens, it sounds like, in the last 2 quarters on an organic basis. And so far, PayFac has had limited, if any, contribution to revenue. As we look to next year, is this year's growth rate sustainable given the additional demand from PayFac in addition to the core business? How do you think about that?

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Vaden C. Landers, Payment Data Systems, Inc. - Executive VP & Chief Revenue Officer [19]

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You mean the current organic growth rates? Not...

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Brian David Kinstlinger, Alliance Global Partners, Research Division - Head of TMT Research, MD & Senior Technology Analyst [20]

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Yes, the current organic growth rate, I think you guys said it was 18% this quarter. I think it was a little less last quarter. That's pretty high for the payments business obviously. You're much smaller than a lot of the bigger players who can't grow on that volume. So I guess, I'm wondering that mid-teens growth, is that sustainable as PayFac becomes more of a factor in 2019 and the legacy business continues to grow? Or is that going to be a tough comp?

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Vaden C. Landers, Payment Data Systems, Inc. - Executive VP & Chief Revenue Officer [21]

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Well, I can't predict what the growth rates will be. I will tell you that you sort of answered the question from my perspective without maybe knowing it. But the comment you made was that the PayFac business hasn't even yet impacted the results, and yet we've grown at these rates that we've been able to grow. So the expectation, obviously, would be that, that growth would continue, if not expand.

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Operator [22]

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(Operator Instructions) And our next questioner today will be [Ronald Misser], a private investor.

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Unidentified Participant [23]

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I have a couple of questions for Louis. That 21st century payment data services in the growth area and you're $700,000 worth of upgrade has my attention. I'm thinking, in terms of something I'm familiar with, near-field communication, NFC, and I've read that Square readers are upgrading their card readers to accept transactions, NFC transactions. That being said, if called upon, will Payment Data Systems be able to handle and process recurring NFC transactions?

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Louis A. Hoch, Payment Data Systems, Inc. - Co-Founder, Vice-Chairman, President, CEO & COO [24]

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We do process NFC today. We're not a hardware provider, so we work with terminal providers to provide that connection. But we definitely process NFC. On a recurring basis, I don't think NFC is a recurring tool, or payment mechanism, but we definitely process NFC today.

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Unidentified Participant [25]

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All right, sir. If you have these Fancards and they go through a turnstile that's NFC-enabled, that somebody's going to have to handle the billing and processing -- billing and payment processing part of that. And of course, you have to wait for the turnstiles to be enabled with NFC and smartphones and cards. So I think it's a wave of the future, so I'm going to follow that for a while.

One other question, since you started Billserve or helped start it in 1998, to have a complete end-to-end secure solution, you're going to have to encompass the billing process as well as the PayServ process. So with -- what I'm seeing today, with Bitcoins getting crushed, can you comment on the security that you're working with that encompasses billing as well as payments?

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Louis A. Hoch, Payment Data Systems, Inc. - Co-Founder, Vice-Chairman, President, CEO & COO [26]

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Well, we actually have an EBPP platform now. It is through the Singular acquisition, and they are presenting bills in various industries. All of our technology is secure beyond industry standards. All of our data is encrypted, and we're end-to-end secure. So hopefully that answers your question.

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Unidentified Participant [27]

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Yes, it does. I know you try to stay on the cutting edge of all the changes with security, and I'm focused in on this ransomware that's in the health care industry now. So being involved with health care and other endeavors, I'm concerned about how you're going to protect the billing part of the transactions as well as the payment part. So I know you'll do your best, and things keep changing, I just wanted to bring that up because every time you come up with a security solution, somebody tends to hack into it. That's all I had to say. And I want to congratulate you on the hard work that you've done since 1998, and wish you the best.

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Louis A. Hoch, Payment Data Systems, Inc. - Co-Founder, Vice-Chairman, President, CEO & COO [28]

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Well, thanks, [Ron], and thanks for your support.

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Operator [29]

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(Operator Instructions) Okay. And our next questioner today will be Michael Diana with the Maxim Group.

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Michael Keelan Diana, Maxim Group LLC, Research Division - MD [30]

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You mentioned a white-label prepaid card for UniTeller. Can you describe that a little more?

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Houston Korth Frost, Payment Data Systems, Inc. - SVP of Corporate Development & Prepaid Products [31]

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Sure. This is Houston Frost. So we launched a consumer reloadable card for UniTeller just a couple months ago. They're still in kind of an early, what I might call, a beta phase. Although, it is available to the public right now. It's a basic bank account alternative and debit MasterCard consumer reloadable account. So it's got the full capabilities of those types of accounts. They can accept direct deposits, you can link bank accounts to it and fund the card that way. And then it really is a complement to UniTeller's new consumer remittance platform that they call uLink Remit.

So in terms of their overall strategy and marketing strategy, that's something I really have to defer to UniTeller, but the idea is to provide a complementary bank account alternative to an online remittance platform that UniTeller launched a couple of years ago or about a year ago to the public. Does that answer your question? I'm happy to...

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Michael Keelan Diana, Maxim Group LLC, Research Division - MD [32]

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Yes. No, that's great.

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Operator [33]

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(Operator Instructions) Okay, and there looks to be no further questions at this time. So this will conclude our question-and-answer session and today's conference call. Thank you all for attending today's presentation, and you may now disconnect your lines.