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PPDA News Pipeline Data Announces Record Financial Results for Year-Ended December 31, 2006

QUINCY, Mass.--(BUSINESS WIRE)--Pipeline Data Inc. (OTCBB: PPDA) a value-added provider of merchant payment processing services and other related software products, today announced its financial results for the fourth quarter and year-ended December 31, 2006.

The main drivers of the Company's financial and operational performance for fiscal year 2006 include;

• Increase in Revenue: Revenue increased 74% to $41.8 million as compared to $24.1 million for 2005. The increase in revenue was attributed to stronger marketing efforts abetting organic growth, the Valadata and Paynet acquisitions and other merchant portfolio acquisitions.
• Increase in Gross Profit: Gross profit increased 129% to $14.9 million as compared to $6.5 million for 2005. Overall gross margin increased to 35.7% as compared to 27.1% in 2005. The Company’s gross margin improved as transaction processing costs decreased while revenue per unit increased.
• Increase in EBITDA: EBITDA increased 320% to $5.1 million or 12.2% of revenue, versus $1.2 million or 5% of revenue in 2005. Income from operations increased 753% to $2.6 million. The increase in EBITDA is based on Pipeline’s enhanced operational efficiencies.
• Increase in Operating Expenses to support corporate expansion: Operating expenses increased to $12.3 million as compared to $6.2 million in 2005. The increase in operating expenses was due to an increase in personnel, additional sales and marketing efforts and the expenses incurred in servicing additional merchant accounts. SG&A costs increased as the Company ramped up an advertising campaign late in the third quarter and through the fourth quarter of 2006. Operational expenses were also incurred due to a fourth quarter expansion of corporate facilities in response to strong organic growth and completed acquisitions.
• Increase in Other Expenses: During fiscal 2006, the Company had other expenses of approximately $6.7 million. The expenses, mainly characterized as interest expense, were primarily attributed to debt servicing and debt retirement. Interest expense included both a cash component of $3.1 million and a non-cash interest expense of $1.6 million. Additionally, the company incurred an expense of $2.1 million for the early retirement of debt.

For the fourth quarter 2006, revenue was $11.1 million, a 56% increase as compared to the $7.1 million reported for the fourth quarter of 2005. The Company reported income from operations of $902,000, a 501% increase as compared to $150,000 reported for the fourth quarter of 2005. EBITDA for the fourth quarter of 2006 increased 346% to $1.7 million or 15.3% of revenue, versus $381,000 or 5.4% of revenue last year.

“Overall, the year and quarter were quite successful as we continued the expansion of our core business. We are extremely pleased with the outstanding results we achieved in 2006, specifically, revenue of $41.8 million, a significant improvement in operating income, and EBITDA of $5.1 million. Management remains confident the Company will be able to continue its current trend of strong and profitable growth in the foreseeable future," stated Pipeline Data’s CEO, Macallister Smith.

PPDA presents its financial results in accordance with GAAP. However, in order to provide the investment community with a broader means of evaluating the operating performance of its operations, PPDA is providing non-GAAP measures, including earnings before interest, taxes, depreciation and amortization (“EBITDA”). Any non-GAAP measures should be considered in context with the GAAP financial presentation and should not be considered in isolation or as a substitute for GAAP net earnings.

Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures

The following table reconciles the differences between Pipeline Data’s net income as determined under US generally accepted accounting principles (GAAP) and EBITDA.

About Pipeline Data Inc.

Pipeline Data Inc. (PPDA) is a value-added provider of merchant payment processing services and other related software products. The Company currently delivers credit and debit card-based payment processing and related services to small to medium-sized merchants who operate either in a physical “brick and mortar” business environment or over the Internet. Pipeline’s payment processing services enable merchants to process traditional card-present, or “swipe” transactions, as well as card-not-present transactions. For more information, please visit www.pipelinedata.com.

Except for the historical information presented, this press release contains "forward-looking statements" made in reliance upon the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 or regulations hereunder including, but not limited to expected and estimated revenue and earnings. Forward-looking statements are made based upon management's expectations and belief concerning future developments and their potential effect upon the Company. There can be no assurance that future developments will be in accordance with management's expectations or that the effect of future developments on the Company will be those anticipated by management.

The words “believes,” “expects,” “intends,” “plans,” “anticipates,” “hopes,” “likely,” “will,” and similar expressions identify such forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause the actual results, performance or achievements of the Company or its subsidiaries or industry results, to differ materially from future results, performance or achievements expressed or implied by such forward-looking statements.