Points International ( Nasdaq - PCOM ) -- Slower Deal Flow

Points International (PCOM $10.00) appears on track to report somewhat reduced growth in upcoming periods.  We have reduced our financial estimates, accordingly.  The company is the leading provider of loyalty programs for airlines, retailers, banks, and other consumer oriented companies.  Growth has been explosive over the past several years.  Further gains are likely as more companies implement the technology and additional features are introduced. 

Competition is becoming more intense.  Points has several potential deals in the pipeline.  Most of the prospects are large corporations that run their own loyalty programs.  In many cases they employ large consulting companies to help out.  Points's technology is superior.  But it's getting more difficult to dislodge the entrenched consulting companies.  Those firms provide a wide range of services beyond loyalty programs and are using discounts and bundled pricing to retain the business.

Organic growth is being sustained at a 15%-20% pace.  Existing customers are broadening their programs.  And smaller accounts continue to be added.  Growth is poised to moderate somewhat, though, due to the slowdown in landing larger accounts.  The long term outlook remains positive.  Gains are likely to be maintained in the near term but at a reduced rate.

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