USA Technologies Announces Third Quarter Fiscal Year 2018 Results

MALVERN, Pa.--(BUSINESS WIRE)-- USA Technologies, Inc., a premier payment technology service provider of integrated cashless and mobile transactions in the self-service retail market, reported results for its third quarter ended March 31, 2018. 

Third Quarter Financial Highlights: 

• Revenue of $35.8 million, increased 35% year-over-year, marking the 34th consecutive quarter of growth 
• On a pro-forma basis, as if the acquisition of Cantaloupe had occurred on July 1, 2016, overall revenue increased 12% year-over-year and License and transaction fee revenue increased 25% year-over-year 
• New net connections of 64,000 bring total connections to 969,000 
• License and transaction fee revenue of $27.0 million, an increase of 55% year-over-year 
• Gross margins of 33.3% increased from 25.0% in third quarter of fiscal year 2017 
• License and transaction margin of 40.7% increased from 32.0% in third quarter of fiscal year 2017 
• Operating loss of $(0.5) million 
• Adjusted operating income (non-GAAP) of $2.0 million 
• Net income of $1.2 million, or $0.02 per share 
• Non-GAAP net income of $2.2 million, or $0.04 per share 
• Adjusted EBITDA of $4.3 million, an increase of 130% year-over-year 
• Ended the quarter with $17.1 million in cash 

"Our third fiscal quarter results demonstrate the successful integration of Cantaloupe, including additional cross-selling wins, improved operational efficiencies, as well as revenue and margin expansion across our business," said Stephen P. Herbert, USA Technologies' Chairman and Chief Executive Officer. "Our commercial success in cross-selling our combined offering is allowing us to reach new customers, displace competitive solutions, as well as expand our footprint within our existing customer base. Additionally, subsequent to quarter end, we announced a new three-year strategic agreement with Ingenico. We are thrilled to strengthen our relationship with Ingenico via this strategic alliance, which we believe will help expand our reach in North America, as well our global presence into agreed upon markets, ultimately positioning us to gain additional penetration and market share in the global unattended retail market." 

"We are pleased to have exceeded the long-term margin targets relating to our gross margins, license and transaction fees, and equipment revenues that we set less than six months ago," said Priyanka Singh, USA Technologies' Chief Financial Officer. "Our third quarter L&T margin was the highest we have seen in the past 5 years, reflecting our commitment to driving L&T margin expansion. Additionally, certain actions made in connection with our integration of Cantaloupe have resulted in approximately $3 million in annualized cost savings." 

Fiscal Year 2018 Outlook 

For full fiscal year 2018, the company expects revenue to be between $138 million to $142 million and adjusted EBITDA to be between $14.5 million and $15.0 million. USAT expects total connections to its service as of the end of the fiscal year to be in the 1.03 million to 1.07 million range. USAT continues to expect the Cantaloupe transaction to be accretive in fiscal 2018, net of one-time transaction and integration expenses and any purchase accounting adjustments. 

USA Technologies has not reconciled the company's adjusted EBITDA outlook to GAAP net income (loss) due to the uncertainty and potential variability of the provision for (benefit from) income taxes, and integration and acquisition costs, each of which is a reconciling item between adjusted EBITDA and GAAP net income (loss). Because these items are uncertain, depend on various factors, cannot be reasonably predicted, and could have a significant impact on the calculation of GAAP net income (loss), USA Technologies has not provided guidance for GAAP net income (loss) or a reconciliation of the company's adjusted EBITDA outlook to GAAP net income (loss). Accordingly, a GAAP net income (loss) outlook and a reconciliation of adjusted EBITDA outlook to GAAP net income (loss) is not available without unreasonable effort. For information regarding the reconciliation of historical non-GAAP financial measures to the nearest comparable GAAP measures, see "Discussion of Non-GAAP Financial Measures" below and the reconciliation tables included in this press release under "Financial Schedules". 

Webcast and Conference Call 

USA Technologies will host a conference call and webcast the event beginning at 8:30 a.m. Eastern Time today, May 8, 2018. 

To participate in the conference call, please dial (866) 393-1608 approximately 10 minutes prior to the call. International callers should dial (224) 357-2194. Please reference conference ID # 5974998. 

A live webcast of the conference call will be available at http://usat.client.shareholder.com/events.cfm. Please access the website 15 minutes prior to the start of the call to download and install any necessary audio software. A telephone replay of the conference call will be available from 11:30 a.m. Eastern Time on May 8, 2018 until 11:30 a.m. Eastern Time on May 11, 2018 and may be accessed by calling (855) 859-2056 (domestic dial-in) or (404) 537-3406 (international dial-in) and reference conference ID # 5974998. An archived replay of the conference call will also be available in the investor relations section of the company's website. 

About USA Technologies 

USA Technologies, Inc. is a premier payment technology service provider of integrated cashless and mobile transactions in the self-service retail market. The company also provides a broad line of cashless acceptance technologies including its NFC-ready ePort® G-series, ePort Mobile™ for customers on the go, ePort® Interactive, and QuickConnect, an API Web service for developers. Through its recent acquisition of Cantaloupe, the company also offers logistics, dynamic route scheduling, automated pre-kitting, responsive merchandising, inventory management, warehouse and accounting management solutions. Cantaloupe is a premier provider of cloud and mobile solutions for vending, micro markets, and office coffee services. USA Technologies and Cantaloupe have 86 United States and foreign patents in force; and have agreements with Verizon, Visa, Chase Paymentech, Ingenico, and customers such as Compass, AMI Entertainment and others. For more information, please visit the website at www.usatech.com. 

Full release