USATP USA Technologies Inc

USA Technologies Announces Second Quarter Fiscal Year 2016 Results

MALVERN, Pa. – Feb. 12, 2016 – 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 its second quarter ended December 31, 2015.

Second Quarter Financial Highlights:

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Total quarterly revenue of $18.5 million, a year-over-year increase of 44%

 

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20,000 net connections for the quarter compared to 12,000 in the same quarter last year, a year-over-year increase of 67%

 

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369,000 connections to ePort service, a year-over-year increase of 28%

 

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Record 10,625 customers compared to 8,450 in the same quarter last year, a year-over-year increase of 26%

 

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Quarterly record license and transaction fee revenue of $13.7 million, a year-over-year increase of 30%

 

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Quarterly license and transaction fees gross margins increased to 33.7% from 31.7% in the prior year

 

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Quarterly adjusted EBITDA of $2.3 million, a year-over-year increase of 34%

 

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Quarterly GAAP net loss of $0.9 million, including the impact of $1.2 million non-cash expense for the fair value warrant liability adjustment

 

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Quarterly Non-GAAP net income of $0.7 million, or $0.02 per share

 

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Achieved positive free cash flow* for fourth straight quarter fueled by success in the company’s QuickStart third-party leasing program

*(Defined as cash flow from operations less cash used for the purchase of equipment for the JumpStart rental program.)

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Second Quarter Financial Highlights & Transaction Data:

“The growing success at USA Technologies validates that the self-service retail market is moving toward the acceptance and adoption of cashless payments,” said Stephen P. Herbert, USA Technologies’ chairman and chief executive officer.  “This is an exciting time for us as we see major customers move toward migrating all of their machines to the ePort Connect service, as we simultaneously increase our customer base. With the acquisition of Vendscreen we are driving additional value to each connection with the most advanced cloud based interactive content delivery system for the self-service market.  We are enthusiastic about the traction we have made this quarter and our organic growth, coupled with the increasing operating leverage, underpin our confidence that USAT will continue to deliver strong results.”

Fiscal 2016 Outlook

For full fiscal year 2016, management expects to add more than 75,000 net new connections, bringing total connections on the service to over 400,000 and expects total revenue to be between $69 million and $71 million.  Additionally, we anticipate that QuickStart will remain a popular program for customers, and management expects it to drive positive free cash flows in fiscal year 2016.  We also expect to have year-over-year increases of adjusted EBITDA and non-GAAP net income.

Webcast and Conference Call

Management will host a conference call and webcast the event beginning at 8:30 a.m. Eastern Time today, February 12, 2016.

 

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 # 42182812.

A telephone replay of the conference call will be available from 11:30 a.m. Eastern Time on February 12, 2016 until 11:59 p.m. Eastern Time on February 15, 2016 and may be accessed by calling (855) 859-2056 (domestic dial-in) or (404) 537-3406 (international dial-in) and reference conference ID # 42182812.  An archived replay of the conference call will also be available in the investor relations section of the company’s website.

About USA Technologies

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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 financial results, including earnings or taxable income of USAT; the incurrence by USAT 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 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; 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 or violating the intellectual property  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 continue to  increase cash flows from operations; whether USAT’s ongoing remediation of a material weakness that USAT identified in its internal controls over financial reporting, and which was reflected in our annual report on Form 10-K for the fiscal year ended June 30, 2015, would be effective; whether USAT experiences additional material weaknesses in its internal controls over financial reporting in the future, and USAT is not able to accurately or timely report its financial condition or results of 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.

 

Financial Schedules:

A.

Comparative Income Statement For 6 Months Ended December 31, 2015 and December 31, 2014

B.

Comparative Income Statement For 3 Months Ended December 31, 2015 and December 31, 2014

C.

Five Quarter Select Key Performance Indicators

D.

Comparative Condensed Balance Sheets December 31, 2015 to June 30, 2015

E.

Five Quarter Statement of Operations and Adjusted EBITDA

F.

Five Quarter Selling, General, & Administrative Expenses

G.

Five Quarter Condensed Balance Sheet and Other Data

H.

Five Quarter Condensed Statement of Cash Flows

I.

Consolidated Statement of Shareholders’ Equity

J.

Reconciliation of Net Loss to Non-GAAP Net Income (Loss) and Net Earnings Loss Per Common Share – Basic and Diluted to Non-GAAP Net Earnings (Loss) Per Common Share – Basic and Diluted

NEW ACCOUNTING CLASSIFICATION

Commencing with the September 30, 2015 financial statements, the Company changed the manner in which it presents certain uncollected customer accounts receivable and the related allowance in its consolidated balance sheets and the related statements of cash flows. These accounts receivable represent a large number of small balance amounts due from customers for processing and service fees which had not been billed to customers, and as to which, there had been no customer transaction proceeds from which the Company could collect the amounts due in accordance with its normal procedures. The previous accounting classification recorded these amounts as a reduction of its accounts payable in the consolidated balance sheets and the related statements of cash flows. The new accounting classification moves these amounts to accounts receivable and allowance for bad debt.

Accordingly, the respective balances for all prior periods presented in these financial statements were reclassified in order to be consistent and comparable to the accounting treatment of these items in our December 31, 2015 financial statements. The new accounting classification as well as the reclassification for prior periods had no effect on the consolidated statements of operations or the consolidated statements of shareholders’ equity.

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*Includes credit sales with standard trade receivable terms