NEW YORK CITY -- USA Technologies Inc. chairman and chief executive Stephen P. Herbert rang the Nasdaq Stock Market closing bell on Jan. 29 in celebration of USAT's first profitable quarter in its 21-year history.
The Malvern, PA, provider of cashless payment and M2M telemetry solutions for vending and other small-ticket, self-serve retailing industries visited the Nasdaq MarketSite in Times Square following its second-quarter earnings announcement. USAT had said it was on track to achieve the profitability milestone when it announced its preliminary second-quarter results on Jan. 8. | SEE STORY
USAT earned $153,758 in the second quarter of 2013, ended Dec. 31. This compares with a loss of $1.8 million in its second quarter of fiscal 2012. The company’s total revenue was $8.9 million, up 29% from $6.9 million the same period a year ago.
Revenue growth was fueled in the recent quarter by a 33% growth in license and transaction fees and a 14% jump in equipment sales compared with the year-earlier quarter.
Revenue from license and transaction fees, which is driven primarily by monthly fees of ePort Connect, JumpStart and processing services, grew to $7.4 million for the second quarter on a total ePort Connect base of 186,000 as of Dec. 31.
USAT’s gross profit was $3.6 million in the second quarter, an 86% improvement over $1.9 million for the same period in the prior year. Gross profit margin improved by 41% in the second quarter, compared with 28% a year earlier.
The company attributed improvements to stronger revenues, actions it took to address the impact of the Durbin Amendment that became effective during the second quarter of the prior year, and other moves to strengthen major supplier contracts and streamline network operations during 2012.
Gross profit margin on revenues from license and transaction fees, which were 83% of total revenues, reached 41% in the quarter, a record high for USAT.
In addition, the numbers of customers and connections to USAT's ePort Connect cashless and telemetry service increased substantially in the second quarter. Milestones included 12,000 net new connections, a 71% increase over the last year’s quarter; 186,000 total connections, a 37% jump; and 375 new customers, a 50% increase, for 4,100 total customers, a 62% increase.
"Our crossover into profitability marks a new beginning for USAT," said Herbert. "It comes at a time when, in our view, there are numerous developments that will continue to attract consumers to cashless forms of payment. Emerging trends such as mobile payments, including loyalty, couponing and other consumer engagement applications, for example, should continue to raise awareness that we believe will further drive adoption of cashless payment and telemetry capabilities in the small-ticket, unattended market."
Herbert said USAT will continue to work toward its target of 60,000 new connections for the year, and hit the 224,000 total ePort Connect target by the end of the fiscal year on June 30. "We expect connection growth to be driven by further penetration of the 4,100 customers on our ePort Connect service, in addition to activity with partners and further expansion into new vertical markets," he said.
Herbert added that USAT is confident it can achieve over 30% revenue growth during its 2013 fiscal year, as well as cash generated from operations in the $4 million to $5 million range.
"In addition, given the improved financial performance in the second quarter and the recurring nature of the majority of our revenues, we believe non-GAAP net income is sustainable; therefore, we also expect to achieve non-GAAP net income for the full fiscal year as well," Herbert said.