USATP USA Technologies Inc

MALVERN, Pa. – May 11, 2015 – USA Technologies, Inc. (NASDAQ:USAT) ("USAT"), a leader of wireless, cashless payment and M2M/IoT solutions for small-ticket, self-serve retailing industries, today reported results for the third quarter of fiscal 2015 ended March 31, 2015.

Third Quarter Financial Highlights:

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Total revenue of $15.4 million, a year-over-year increase of 47%

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License and transaction fee revenue of $11.1 million, a year-over-year increase of 23%

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Adjusted EBITDA of $2.4 million

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GAAP net loss of $0.6 million, including the impact of $1.1 million non-cash expense for the fair value warrant liability adjustment

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Non-GAAP net income of $0.5 million, or $0.01 per share

Total revenue for the third quarter of fiscal 2015 was $15.4 million, a 47% increase from $10.4 million in the third quarter of fiscal 2014.  License and transaction fees were $11.1 million compared with $9.0 million in the year ago quarter, a 23% increase. These fees, which are comprised of recurring monthly service fees as well as transaction processing fees, accounted for approximately 72% of total revenue. Equipment sales were $4.3 million compared to $1.4 million in last year's third quarter, a 200% increase.

“USA Technologies is in a position to take advantage of the cashless momentum in the self-service market, and the excitement surrounding mobile payments," said Stephen P. Herbert, USA Technologies’ chairman and chief executive officer.  “We are accelerating revenue growth and improving our cash flow, while simultaneously forming strategic relationships with companies such as Chase and MasterCard.  Our QuickStart program drove the dramatic increase in equipment revenue, and helped bolster our cash position. We believe that the results for the quarter are a validation of the broad opportunity in self-service market and that we are poised for growth as we continue to capitalize through partnerships and drive customer connections.”

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GAAP operating income for the third quarter of fiscal 2015 was approximately $0.7 million compared with GAAP operating income of $0.4 million in the prior corresponding quarter. For the third quarter of fiscal 2015, adjusted EBITDA was $2.4 million compared with $1.8 million for the third quarter of fiscal 2014.

GAAP net loss for the third quarter of fiscal 2015 was approximately $0.6 million, compared with GAAP net income of $26.9 million, or $0.75 per share, for the third quarter of fiscal 2014.  After Preferred dividends, GAAP net loss per common share was $(0.03).

On a non-GAAP basis, net income was $0.5 million, or $0.01 per share, for the third quarter of fiscal 2015, compared to net income of $0.3 million, or $0.0 per share, for the third quarter of fiscal 2014.

Cash was $8.5 million as of March 31, 2015, and increase of $1.8 million from December 31, 2014.

Forward-looking Statements:

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: All statements other than statements of historical fact included in this release, including without limitation the business strategy and the plans and objectives of USAT's management for future operations, are forward-looking statements. When used in this release, words such as "anticipate", "believe", "estimate", "expect", "intend", and similar expressions, as they relate to USAT or its management, identify forward looking statements. Such forward-looking statements are based on the beliefs of USAT's management, as well as assumptions made by and information currently available to USAT's management. Actual results could differ materially from those contemplated by the forward-looking statements as a result of certain factors, including but not limited to, the ability of management to accurately predict or forecast future earnings or taxable income of USAT; the incurrence by us of any unanticipated or unusual non-operational expenses which would require us to divert our cash resources from achieving our business plan; the ability of USAT to retain key customers from whom a significant portion of its revenues is derived; the ability of USAT to compete with its competitors to obtain market share; whether USAT's customers continue to utilize USAT's transaction processing and related services, as our customer agreements are generally cancelable by the customer on thirty to sixty days' notice; the ability of USAT to obtain widespread commercial acceptance of it products; the ability of USAT to raise funds in the future through the sales of securities or debt financings in order to sustain its operations if an unexpected or unusual non-operational event would occur; the ability of USAT to use available data to predict future market conditions, consumer behavior and any level of cashless usage; the ability to prevent a security breach of our systems or services or third party services or systems utilized by us; the ability of USAT to efficiently and securely integrate cashless payment with new machine technologies; whether any patents issued to USAT will provide USAT with any competitive advantages or adequate protection for its products, or would be challenged, invalidated or circumvented by others; the ability of USAT to operate without infringing the proprietary rights of others; whether USAT would be able to sell sufficient ePort hardware to third party leasing companies as part of the QuickStart program in order to significantly reduce cash flows from operations; and whether USAT's existing or anticipated customers purchase, rent or utilize ePort devices or our other products or services in the future at levels currently anticipated by USAT. Readers are cautioned not to place undue reliance on these forward-looking statements. Any forward-looking statement made by us in this release speaks only as of the date of this release. Unless required by law, USAT does not undertake to release publicly any revisions to these forward-looking statements to reflect future events or circumstances or to reflect the occurrence of unanticipated events.

Discussion of Non-GAAP Financial Measures:

This press release contains certain non-GAAP financial measures. Generally, a non-GAAP financial measure is a numerical measure of a company's performance, financial position or cash flows that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with GAAP. Reconciliations between non-GAAP and GAAP measures are set forth below.

The following non-GAAP financial measures are discussed herein: adjusted EBITDA, non-GAAP net income (loss) and non-GAAP net earnings (loss) per common share – basic and diluted. The presentation of these additional financial measures are not intended to be considered in isolation from, or superior to, or as a substitute for the financial measures prepared and presented in accordance with GAAP (Generally Accepted Accounting Principles), including the net income or net loss of USAT or net cash used in operating activities. Management recognizes that non-GAAP financial measures have limitations in that they do not reflect all of the items associated with USAT's net income or net loss as determined in accordance with GAAP. These non-GAAP financial measures are not required by or defined under GAAP and may be materially different from the non-GAAP financial measures used by other companies. USAT has provided below the reconciliations of the non-GAAP financial measures to the most directly comparable GAAP financial measures.

Non-GAAP net earnings (loss) per common share - diluted is calculated by dividing non-GAAP net income (loss) applicable to common shares by the number of diluted weighted average shares outstanding.

Adjusted EBITDA represents net income (loss) before interest income, interest expense, income taxes, depreciation, amortization, and change in fair value of warrant liabilities and stock-based compensation expense.  We have excluded the non-operating items, benefit from reduction of the deferred tax asset valuation allowances and change in fair value of warrant liabilities, because they represent a non-cash charge that is not related to USAT's operations. We have excluded the non-cash expense stock-based compensation as it does not reflect the cash-based operations of USAT. Adjusted EBITDA is presented because we believe it is useful to investors as a measure of comparative operating performance and liquidity, and because it is less susceptible to variances in actual performance resulting from depreciation and amortization and non-cash charges for changes in fair value of warrant liabilities and stock-based compensation expense.

Management believes that non-GAAP net income (loss) and non-GAAP net earnings (loss) per common share - diluted are important measures of USAT's business. Management uses the aforementioned non-GAAP measures to monitor and evaluate ongoing operating results and trends and to gain an understanding of our comparative operating performance. We believe that these non-GAAP financial measures serve as useful metrics for our management and investors because they enable a better understanding of the long-term performance of our core business and facilitate comparisons of our operating results over multiple periods, and when taken together with the corresponding GAAP financial measures and our reconciliations, enhance investors' overall understanding of our current and future financial performance.