Stephen Herbert, chairman and CEO of USA Technologies, Inc., issued the following letter to shareholders:
To Our Shareholders:
I’m writing you today in my first formal communication as chairman and chief executive officer of USA Technologies. I am deeply honored to have earned the confidence and trust of the board of Directors to lead the company forward.
I want to thank you first for your many good wishes and offers of support during this time of leadership transition. We have worked long and hard together, breaking barriers and setting precedents to make USA Technologies a leader in the markets we serve. Now, I want to assure all of you that my top priorities are to drive the company to profitability, deliver increased customer and shareholder value, and provide improved shareholder visibility by better communicating our progress. These initiatives will be ongoing, and many of these changes will shortly be visible and apparent to shareholders.
I believe that our company is well positioned for considerable upside. Wireless, cashless payments are currently one of the fastest growing segments in the payment industry, and as a consequence, we have grown our customer base, connections, transactions, and dollar processing volume. These successes have been driven by some of the most skilled, talented and dedicated employees in the industry. I could not wish for better, more capable and inspiring co-workers to help lead USAT to new successes.
But I want to be frank with you. The past three months have been extremely challenging. Two issues in particular were very impactful to the company. First, the passage and implementation of the Durbin Amendment, which was perceived as having a negative impact on our business because of the substantial increase it caused on small-ticket debit processing costs. Then, we were faced with the sudden resignation of our former chairman and CEO.
However, my leadership style is to look forward, not backward. And despite these setbacks, the company continued to add customers and connections in the second quarter. In December 2011, we announced preliminary results with projected revenues of about $7 million, an increase of approximately 15 percent from the comparable prior fiscal year quarter, driven by an increase in recurring revenues from license and transaction fees of approximately 50 percent for the quarter ended December 31, 2011 compared to the quarter ended December 31, 2010. My focus is to implement actions that continue to strengthen our revenue, connection and transaction processing advances, overcome our challenges, and leverage the many opportunities we have to drive USAT to accelerated growth and prosperity.
We are moving forward with new leadership and a heightened sense of urgency and accountability. To assure you of my commitment, I would like to share my vision of the future with you, as well as some specific actions we have taken and will take to restore and enhance investor confidence.
Our investors have been supportive of the company, and enabled us to raise capital to fuel our research and development over the years, and more recently, to expand our JumpStart program to more customers. I believe that it is essential that we reward your patience and support with sustainable profitability that will increase shareholder value. It’s essential that we communicate our results and progress to you in a way that is transparent, open, and consistent. And it is essential that we manage our company in accordance with the highest standards of corporate governance to ensure that your board of directors and our management team are held accountable for the company’s performance.
In my prior role as president and chief operating officer, I had the opportunity to meet with and speak with shareholders. Invariably, you expressed concern that while we had made significant progress on many fronts (e.g. connections, transaction growth and revenues), we had not yet reached profitability. I want to change that, and as quickly as practicable. One of the first indicators of progress that management expects to achieve on our path to profitability would be sustainable positive adjusted EBITDA.