USAT Receives Frost & Sullivan's 2014 North American Customer Value Leadership Award in Financial Services and Retail M2M Communications
May 7, 2014
MALVERN, Pa.--(BUSINESS WIRE)-- USA Technologies, Inc. (NASDAQ: USAT), "USAT", a leader of wireless, cashless payment and M2M telemetry solutions for small-ticket, self-serve retailing industries, is pleased to announce that it has been awarded the Frost & Sullivan 2014 North American Customer Value Leadership Award in Financial Services and Retail M2M Communications. Based on Frost & Sullivan's Best Practice Research findings, each year Frost & Sullivan presents this award to the company that has demonstrated excellence in implementing strategies that proactively create value for its customers with a focus on improving the return on the investment that customers make in its services or products.
Frost & Sullivan has more than 50 years of experience in business and is a global research organization of 1,800 analysts and consultants who monitor more than 300 industries and 250,000 companies. Frost & Sullivan's Best Practices Awards recognize companies in a variety of regional and global markets for demonstrating outstanding achievement and superior performance in areas such as visionary innovation, competitive strategy, leadership, technology and product development. The companies that are commended as Best Practices Award recipients are those with the diligence, perseverance and dedication required to develop a successful business plan and excel in the increasingly competitive global marketplace.
To be honored with the Frost & Sullivan Award for Customer Value Leadership, analysts compare market participants and measure performance through in-depth interviews, analysis, and extensive secondary research in order to identify best practices in the industry. The award recognizes USA Technologies' inordinate focus on enhancing the value that its customers receive, beyond simply good customer service, leading to improved customer retention and, ultimately, customer base expansion.
"By delivering an impressive range of technologies and services to its customers, USA Technologies has achieved ‘preferred provider' status in next-generation cashless payments solutions for the self-serve retail/POS industry," stated Vikrant Gandhi, principal analyst, Mobile and Wireless Communications, Frost & Sullivan. "Unlike other traditional hardware vendors and commercial merchant acquirers, USA Technologies understands the unique requirements of its customers and offers highly compelling, best-in-class solutions that allow customers to fully leverage the benefits of a connected, cashless payments architecture."
"We are thrilled to receive this prestigious award from Frost & Sullivan," said USA Technologies chairman and chief executive officer, Stephen P. Herbert. "The fact that it points to our longstanding commitment to customer service and customer-driven innovation makes the award especially important to us. It's also a testament to the many groundbreaking accomplishments of the USA Technologies' team that has served to awaken and shape the model for cashless payment, M2M telemetry and consumer engagement services in self-serve retail."
About Frost & Sullivan
Frost & Sullivan, the Growth Partnership Company, enables clients to accelerate growth and achieve best-in-class positions in growth, innovation and leadership. The company's Growth Partnership Service provides the CEO and the CEO's Growth Team with disciplined research and best-practice models to drive the generation, evaluation and implementation of powerful growth strategies. Frost & Sullivan leverages 50 years of experience in partnering with Global 1000 companies, emerging businesses and the investment community from more than 40 offices on six continents. To join Frost & Sullivan's Growth Partnership, visit the website at www.frost.com.
About USA Technologies:
USA Technologies is a leader of wireless, cashless payment and M2M telemetry solutions for small-ticket, self-serve retailing industries. ePort Connect® is the company's flagship service platform, a PCI-compliant, end-to-end suite of cashless payment and telemetry services specially tailored to fit the needs of small-ticket, self-service retailing industries. USA Technologies also provides a broad line of cashless acceptance technologies including its NFC-ready ePort® G-series, ePort Mobile™ for customers on the go, and QuickConnect, an API Web service for developers. USA Technologies has been granted 87 patents; and has agreements with Verizon, Visa, Elavon and customers such as Compass, Crane, AMI Entertainment and others. Visit the website at www.usatech.com.
USA Technologies Announces Third Quarter, Fiscal 2014 Results Tue May 13, 2014 7:00 AM|Business Wire | About: USAT Recurring Revenues Up 19%;
Recognizes Deferred Tax Asset of $26.7 million;
Net Connections to ePort Connect Service Up 100%;
Customer Base Up 47%;
Total Connections to ePort Connect Service, Up 24% (year over year) to 244,000
MALVERN, Pa.--(BUSINESS WIRE)-- USA Technologies, Inc. (NASDAQ: USAT) (USAT), a leader of wireless, cashless payment and M2M telemetry solutions for small-ticket, self-serve retailing industries, today reported results for the third fiscal quarter ended March 31, 2014.
Highlights for the third quarter included:
GAAP net income of $26.9 million which included $26.7 million related to the partial recognition of a deferred tax asset. Non-GAAP net income was $321,526;
Net earnings per common share of $0.75, which included $0.75 per share related to the partial recognition of a deferred tax asset. Non-GAAP net loss per common share was $0.00;
Total revenues of $10.4 million; up 16% from the prior year;
License and transaction fee revenue of $9.0 million, an increase of 19% over the prior year and representing 86% of total revenues; and
Adjusted EBITDA of $1.8 million, up 9% from the prior year.
In addition, USAT achieved a record number of new connections to its cashless payment and M2M telemetry service, ePort Connect®, approximately 22,000, in the third quarter. Net new connections for the third quarter totaled approximately 20,000, a 100% increase from 10,000 net new connections for the third quarter of the prior year. Total connections to USATs cashless payment and M2M telemetry service, ePort Connect®, were 244,000 as of March 31, 2014, a 24% increase from March 31, 2013.
USAT also continued to demonstrate rapid growth in the number of customers using its ePort Connect service across various segments of the self-serve retail market including vending, commercial laundry, amusement/arcade, taxi and transportation, kiosk and mobile applications. During the third quarter, USAT added 575 new customers to its ePort Connect service, for 6,650 total customers as of March 31, 2014. For the three years ended March 31, 2014, the ePort Connect customer base has grown by a compound annual growth rate of 58%.
Our results for the third quarter reflect assertive strategies directed toward growing market share, cashless adoption and long-term customer relationships for USAT in this emerging market, said Stephen P. Herbert, USATs chairman and chief executive officer. Connections were strong and we have a very encouraging pipeline of connections going into our fourth fiscal quarter. We are also looking forward to the additional license and transaction fee revenues associated with a number of new connections achieved through March that had not fully materialized as of quarter endall factors that we believe bode well for future revenue growth and cash generation.
We were particularly excited to be able to recognize a deferred tax asset related to our net loss carryovers in the third quarter. This is another important milestone for USAT that we believe speaks to, among other things, the growing strength of our recurring revenue model and the strategies we have put in place to attract new customers and connections to our service, continued Herbert.
During the third quarter, we continued to leverage our strong foothold in vending by working with those customers to drive cashless payment into a greater percentage of their installed base of machines, said Herbert. Within this same market segment, we also took important steps to extend our value proposition to the other POS touchpoints within a full-service food and beverage operation that can benefit from our ePort Connect service. Beyond vending, third quarter successes also included execution in strategies designed to leverage ePort Connect in adjacent markets, such as commercial laundry and taxi and transportation.
Third quarter strategic highlights included:
Introduction of Integrated Payment Services, an evolution of ePort Connect that is designed to support multiple aspects of a full-service food and beverage operationvending, micro-markets, dining services, distribution/drop off services and loyaltyunder the ePort Connect umbrella;
A new, exclusive agreement with The Pepi Companies, that represented USATs first customer under the new Integrated Payment Services model. The agreement substantially expands The Pepi Companies relationship with USAT by leveraging USAT products, services and add-on integration capabilities across other segments of its business;
Continued expansion of third party technologies supported on ePort Connect that further add to the benefits and convenience of doing business with USAT. Examples include AirVends android-based interactive touchscreen point-of-sale device, and micro-market support for Revive Self Checkout and Breakroom Provisions;
Strong execution in taxi and transportation with 2,000 connections achieved in the quarter as well as additional orders for future connections. USAT offers simplified service-only integration to ePort Connect, as well as ePort GO" USATs one-stop offering for the taxi and transportation market; and
Ongoing enhancements to ePort Connect in the area of consumer engagement that continue to differentiate USAT among its peers. Examples include integration of USATs MORE. loyalty and prepaid program across micro-market and other supported technologies as well as the introduction of the MORE. consumer app with eBeacon" mobile payment powered by Bluetooth low energy "BLE" technology.
Third Quarter Results
Revenues of $10.4 million in the third quarter of fiscal 2014 grew by 16% from the same period a year ago. Revenue from license and transaction fees, driven by net connections to USATs ePort Connect service through monthly service fees, rental program fees and transaction processing fees, represented 86% of revenues in the third quarter and grew by 19% compared to the same quarter in the prior year.
Gross profit of $4.0 million increased by 9% for the third quarter, from $3.7 million for the same period in the prior year. Gross profit margin was 38.3%, down from 41.0% for the same period in the prior year, due primarily to lower gross margins associated with license and transaction fees in the quarter, which resulted from deactivations over the last year as well as certain marketing programs, and the timing of those programs, that are designed to further accelerate cashless adoption.
Operating expenses of $3.6 million in the third quarter grew from $3.3 million for the same period in fiscal 2013, largely due to additional investments in sales and marketing during fiscal 2014. Operating income was $365,535 and $350,219 for the third quarter of fiscal 2014 and fiscal 2013, respectively.
GAAP net income for the third quarter was $26.9 million compared to a GAAP net loss of ($1.0) million for the third quarter of the prior year. In the third quarter, USAT recognized a deferred tax asset of $26.7 million due to reduction of the valuation allowance established for operating loss carryovers. Under GAAP, such deferred tax assets are recognized when management has determined that it is more likely than not that the operating loss carryovers would be utilized in future periods.
Non-GAAP net income, which excludes the deferred tax benefit as well as the impact of the fair value of warrant adjustment, was $321,526 for the third quarter compared to $293,011 for the third quarter in the prior year (see non-GAAP Reconciliation table).
After preferred dividends, net earnings per common share was $0.75 for the third quarter of fiscal 2014 compared to a net loss per common share of ($0.04) for the third quarter of fiscal 2013. On a non-GAAP basis, net loss per common share was $0.00 for the both the third quarter of fiscal 2014 and fiscal 2013.
Cash and cash equivalents stood at approximately $6.6 million as of March 31, 2014, up from $3.9 million as of March 31, 2013.
Outlook
Our strategies are delivering important results in this emerging marketmore customers, more connections to our service and continued market differentiation, said Herbert. We are encouraged by the higher average rate of new connections achieved for the first nine months of fiscal 2014 compared to last year and, for the fourth quarter, anticipate continued progress in driving revenue growth and operating margin expansion.
Webcast and Conference Call
USA Technologies (USAT) will conduct a conference call and webcast at 10:00 a.m. Eastern Time on May 13, 2014. USA Technologies invites all interested parties to listen to the live webcast of the conference call, accessible on the Investor Relations section of USA Technologies website. The webcast will be archived on the website within two hours of the live call. It will remain available for approximately 90 days. Interested parties unable to access the webcast may also participate by calling (866) 393-1608 or, if an international caller, (224) 357-2194. A replay of the call, available until midnight on May 16, 2014, can be accessed by calling (855) 859-2056; Conference ID#29061568, (toll free).
About USA Technologies:
USA Technologies is a leader of wireless, cashless payment and M2M telemetry solutions for small-ticket, self-serve retailing industries. ePort Connect® is the companys flagship service platform, a PCI-compliant, end-to-end suite of cashless payment and telemetry services specially tailored to fit the needs of small ticket, self-service retailing industries. USA Technologies also provides a broad line of cashless acceptance technologies including its NFC-ready ePort® G-series, ePort Mobile"-for customers on the go, and QuickConnect, an API Web service for developers. USA Technologies has been granted 87 patents and has agreements with Verizon, Visa, Elavon and customers such as Compass, Crane, AMI Entertainment and others. Visit the website at www.usatech.com.
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 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; 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.
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