ROSH PINNA, Israel -- On Track Innovations Ltd. (OTI), a global provider of near field communication (NFC) and cashless payment solutions, has provided a business update and announced financial results for the fourth quarter and full year ended December 31, 2017.
2017 Company Highlights:
- Revenues in 2017 grew by 9% to $22.4 million, compared to $20.6 million in 2016.
- Recurring revenues accounted for 23% of total revenues in 2017,
- Gross margin in 2017 increased by 125 basis points to 50.9%, compared to 49.6% in 2016.
- Net loss totaled $598,000, or $(0.01) per share, compared to a net loss of $860,000 or $(0.02) per share in 2016.
- Adjusted EBITDA (a non-GAAP financial metric) improved significantly to $240,000, compared to adjusted EBITDA loss of $241,000. 2017 marks OTI's first year of positive adjusted EBITDA in the Company's 28-year operating history.
- Sales of contactless NFC readers to the "smart" ATM market in 2017 increased significantly to 10,000 units, compared to 1,800 units in 2016.
- OTI's fueling division grew revenues by 24% to $5.1 million in 2017, compared to $4.1 in 2016.
Management Commentary
"Two years ago, we decided to make a strategic shift from being a product company, to one focused on utilizing software and offering a complete, turnkey solution for customers," said Shlomi Cohen, Chief Executive Officer of OTI. "Although this process took time, we were confident that this strategy would ultimately increase our value proposition, while generating steady, recurring revenues at higher margins than we've previously experienced. Over this two-year period, we increased our revenues by more than 21%, reduced our debt by 11%, cut operating costs by more than 21% and decreased our net losses by 92%.
"In 2017 alone, we grew revenue by 9%, which is particularly impressive given that 24% of sales in 2016, or $4.9 million, did not re-occur in 2017 due to certain customer transitions.
Cohen, continued: "We expect 2018 to be a breakout year for OTI, driven by particular strength in our 'smart' cashless ATM readers -- which grew five-fold in 2017, continued growth in our fueling division -- which grew revenues over 24% in 2017, traction with our cryptocurrency efforts, and accelerated penetration in Japan."
"As a pioneer and leader in the cashless payment solutions arena, we strongly believe that our technology will continue bringing tremendous value to our industry while generating predictable, high-margin, recurring revenues for the Company and great value for our shareholders."
Full Year 2017 Financial Details
- Revenue increased to $22.4 million in 2017, compared to $20.6 million in 2016.
- Gross margin increased to 50.9% of revenue in 2017, compared to 49.6% in 2016.
- Operating expenses in 2017 totaled $12.7 million, compared to $12.1 million in 2016.
- Net loss in 2017 totaled $0.6 million, or $(0.01) per share, compared to a net loss of $0.9 million or $(0.02) per share in 2016.
- Adjusted EBITDA (a non-GAAP financial term as noted below) totaled $240,000 in 2017, compared with adjusted EBITDA loss of $241,000 in 2016.
Q4 2017 Financial Details
- Total revenue in the fourth quarter increased to $6.7 million, compared to $4.7 million for the prior quarter and $5.6 million in the same year-ago period.
- Gross margin totaled 48% of revenue in the fourth quarter, compared to 43% in the same year-ago period.
- Operating expenses totaled $3.5 million in the fourth quarter, compared to $3.4 million in the same year-ago period.
- Net loss in the fourth quarter totaled $0.7 million, or $(0.02) per share, compared to a net loss of $1.2 million or $(0.03) per share in the same year-ago period.
- Adjusted EBITDA totaled $63,000 in the fourth quarter, compared with an adjusted EBITDA loss of $ 515,000 in the same year-ago period.
