USA Technologies, Inc. (USAT) recently reported results for the second quarter of fiscal 2013 ended Dec. 31, 2012. Second quarter highlights, compared to the corresponding quarter of the prior fiscal year, included:
- 29 percent increase in total revenues to $8.9 million and 33 percent increase in license and transaction fee revenues ("recurring revenues") to $7.4 million, representing 83 percent of total revenues for the quarter;
- 86 percent increase in gross profit to $3.6 million;
- Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of $1,752,721, up from an Adjusted EBITDA loss of ($938,400);
- Generally-accepted accounting principles (GAAP) net income of $153,758, up from a GAAP net loss of ($1,821,061); and,
- Non-GAAP net income of $557,393, up from a non-GAAP net loss of ($997,820) in the same quarter a year ago.
In addition, customers and connections to USAT's cashless payment and M2M telemetry service, ePort Connect®, continued to demonstrate solid growth in the second quarter. Highlights, compared to the second quarter of the prior fiscal year, included:
- 12,000 net new connections, a 71 percent increase;
- 186,000 total connections, a 37 percent increase; and,
- 375 new customers, a 50 percent increase, for 4,100 total customers, a 62 percent increase.
"We are extremely pleased to achieve non-GAAP net income for the first time in USAT's history," stated Stephen P. Herbert, chairman and CEO of USA Technologies, in a prepared statement, "and to deliver that target with such strength that we achieved GAAP net income as well, even after absorbing a sizable warrant adjustment for the quarter. The aggressive actions taken as part of our turnaround plan communicated to shareholders last year are clearly visible in our results, with exceptional improvements in both gross profit margin and operating margin this quarter. In addition, the inherent value of the recurring revenue base that we are building with every new connection is evident in the steady improvement in revenues over the last quarters and the $1.8 million base of Adjusted EBITDA reported for the second quarter — a great improvement from just one year ago.
"Our resolve to achieve non-GAAP profitability by the second quarter of fiscal 2013 included an equally determined commitment to continue to strengthen our prospects for growth," continued Herbert. "In a short period of time, we have accumulated a strong list of customers whose transition to cashless payment and telemetry is, we believe, just getting started. We are also encouraged by acceleration of adoption by a number of our existing customers. This is reflected in some of the customer activity in the second quarter, such as our work with The Pepi Companies— the first full-service food and beverage vending company believed to be 100 percent cashless—and All Stop Vending has also indicated its intent to go 100 percent cashless. It is also evident in the ten additional exclusive agreements for our ePort Connect service that we signed in the second quarter—a testament, we believe, to the confidence these customers have in our service and a greater level of customer interest in planning for more comprehensive cashless and M2M telemetry adoption longer-term.
"Concurrently, we have continued to pursue strategic partnerships and value-added service offerings that further enhance our position in the marketplace," added Herbert. "During the second quarter, our work with key partners, such as Isis, resulted in an extension of our marketing support agreement to March 31, 2013. In addition, at the 2013 International CES, we demonstrated the next phase of our mobile solution for loyalty and couponing services—a result of our co-marketing agreement with Verizon," said Herbert.
Second Quarter Results
Revenues for the second quarter of fiscal 2013 were $8.9 million, an increase of 29 percent from the same period a year ago. Revenue growth was fueled by a 33 percent growth in license and transaction fees and a 14 percent increase in equipment sales compared to the second quarter of fiscal 2012.