USA Technologies, Inc. Reports 36 Percent Revenue Increase In Third Quarter

USA Technologies, Inc., a provider of wireless, cashless payment and M2M telemetry solutions for self-serve, small-ticket retail industries, reported results for the third quarter of fiscal 2012 ended March 31, 2012. Revenues for the third quarter were $7.5 million, an increase of 36 percent from the same period a year ago. Net loss applicable to common shareholders improved by 69 percent for the third quarter of fiscal 2012, narrowing to ($0.9) million or ($.03) per diluted share, from ($2.8) million or ($.11) per diluted share for the same period last year.

Adjusted EBITDA, a measure used by USAT to gauge the progress of its operational performance and liquidity, improved considerably, to $0.3 million, compared to ($0.9) million for the same period a year ago.

Revenue from license and transaction fees, which is fueled primarily by monthly ePort Connect® service fees and transaction processing fees, grew 39 percent to approximately $6 million for the third quarter of fiscal 2012 from $4.3 million for the same period a year ago. These recurring revenues represented 80 percent of total revenue for the third quarter of fiscal 2012.

License and transaction fee highlights included:

12,000 additional net connections to USAT’s ePort Connect service in the third quarter, an increase of approximately 300 percent compared to connections added during the third quarter a year ago;

32 percent increase in the total connected service base, to 148,000 as of March 31, 2012, compared to 112,000 as of March 31, 2011;

Increases in the number of small-ticket, credit/debit transactions and dollars handled in the third quarter of 33 percent and 35 percent, respectively, compared to the same period a year ago; and,

71 percent growth in ePort Connect customers from the prior year third quarter, fueled by 350 new customers in the fiscal 2012 third quarter, for 2,825 customers to date.

“Our results this quarter, particularly our crossover to positive Adjusted EBITDA, underscores our resolve to quickly achieve profitability through improved efficiencies and growth platforms that drive industry adoption and bring our recurring revenue base to scale,” said Stephen P. Herbert, chairman and chief executive Office of USA Technologies, Inc. in a prepared statement. “With each connection, we further strengthen our financial profile. As a result, we are intensely focused on leveraging our strength as a service business, expanding our footprint of connections and the value of those connections through the ePort Connect service pipeline in vending, kiosk and other complementary small-ticket unattended markets.”

Revenues of $7.5 million for the third quarter grew by 36 percent from the prior year and consisted of license and transaction fees of $6 million and equipment sales of $1.5 million. Growth in license and transaction fees of 39 percent, which represented 80 percent of total revenue in the third quarter, was the largest contributor to total revenue growth. As indicated above, license and transaction fees continue to grow as USAT adds more connections, processing dollars and new services to its ePort Connect service base.

Equipment sales, comprised of USAT’s ePort® branded devices for the small ticket, unattended cashless payment industry and USAT’s line of energy-saving EnergyMiser® products, increased 27 percent in the third quarter compared to the prior year.

Gross profit and margin for the third quarter was $2.8 million and 37 percent, up from $1.6 million and 28 percent a year ago. Stronger gross profit was driven primarily by improved gross profit margins from license and transaction fees, which improved to 37% in the third quarter of fiscal 2012, from 26 percent in the third quarter of fiscal 2011 largely as a result of improved efficiencies stemming from recent partnership agreements, such as Verizon Wireless and Elavon, contributing to lower cost of service and cost of handling transactions.

Third quarter operating loss narrowed by approximately $1 million, to $(0.64) million from ($1.67) million in the prior year, driven by increased revenue and stronger gross profit dollars. These increases were slightly offset by increased operating expenses of $212,000 in the quarter when compared to a year ago.

Net loss for the third quarter narrowed by $2.0 million, to ($0.5) million compared to a net loss of ($2.5) million for the third quarter a year ago. Reductions in net loss were driven primarily by improved operational performance and a $0.9 million change in adjustment for fair value of warrant liability. Net loss applicable to common shareholders for the quarter was ($0.9) million or ($0.03) per diluted share, compared to ($2.8) million or ($0.11) per diluted share a year ago.

Improved operational performance led to a $1.3 million improvement in Adjusted EBITDA for the third quarter of fiscal 2012. Adjusted EBITDA was $336,029 compared to an Adjusted EBITDA loss of $(940,170) for the same period in fiscal 2011.

Loading