USA Technologies Announces First Quarter Fiscal Year 2018 Results
Announced Agreement to Acquire Cantaloupe Systems
First Quarter Financial Highlights:
- Revenue of $25.6 million, a year-over-year increase of 19% marking the 32nd consecutive quarter of growth
- Net connections of 26,000, a year-over-year increase of 37%
- Achieved record license and transaction fee revenue of $19.9 million, a year-over-year increase of 22%
-
Operating loss of
$(0.6) million , compared to an operating loss of$(1.0) million in the prior year period -
Adjusted operating income (operating income as adjusted for
integration and acquisition costs) of
$0.2 million , compared to a loss of$(0.8) million for the prior year period -
Ended the quarter with
$51.9 million in cash -
Net loss of
$(0.2) million , or$(0.01) per share, compared to a net loss of$(2.5) million , or$(0.07) per share for the prior year period -
Adjusted EBITDA of
$2.3 million , a year-over-year increase of 244%
"The first quarter was a strong start to our fiscal year, marked by
continued momentum of cashless acceptance in our target market," said
"I am very pleased with our first quarter results," said
Fiscal Year 2018 Outlook
As a result of the announced agreement with Cantaloupe Systems, USAT is
updating its outlook for fiscal 2018. The company now expects pro-forma
combined revenue to be between
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About
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 (Generally Accepted Accounting Principles). Reconciliations between non-GAAP and GAAP measures are set forth below in Financial Schedule E.
The following non-GAAP financial measures are discussed herein: adjusted EBITDA, adjusted operating income, and non-GAAP net income (loss). The presentation of these additional financial measures is 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, including the net income or net loss of USAT or net cash provided/used by 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 in Financial Schedule E the reconciliations of the non-GAAP financial measures to the most directly comparable GAAP financial measures.
As used herein, non-GAAP net income (loss) represents GAAP net income
(loss) excluding costs or benefits relating to any adjustment for fair
value of warrant liabilities, non-cash portions of the Company's income
tax benefit (provision), non-recurring fees and charges that were
incurred in connection with the acquisition and integration of the
As used herein, Adjusted EBITDA represents net loss before interest
income, interest expense, income taxes, depreciation, amortization,
non-recurring fees and charges that were incurred in connection with the
acquisition and integration of the
As used herein, adjusted operating income represents operating income
before the non-recurring costs and expenses incurred in connection with
the
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; the ability of the Company to sell to third party lenders all or
a portion of our finance receivables; the ability of a sufficient number
of our customers to utilize third party financing companies under our
QuickStart program which would improve our net cash used by operating
activities; whether USAT experiences material weaknesses in its internal
controls over financial reporting in future periods, which would result
in USAT not being able to accurately or timely report its financial
condition or results of operations; the effect of the proposed
acquisition of
Financial Schedules:
A. Statements of Operations for the 3 Months Ended September 30, 2017 and September 30, 2016
B. Five Quarter Select Key Performance Indicators
C. Balance Sheets at September 30, 2017 and at June 30, 2017
D. Statements of Cash Flows for the 3 Months Ended September 30, 2017 and September 30, 2016
E. Reconciliation of GAAP to Non-GAAP Financial Measures for the 3 Months Ended September 30, 2017 and September 30, 2016
|
(A) Statements of Operations for the 3 Months Ended September 30, 2017 and September 30, 2016 |
||||||||||||||||||||||
|
Three months ended |
Percent | |||||||||||||||||||||
| ($ in thousands, except shares and per share data) | 2017 | % of Sales | 2016 | % of Sales | Change | Change | ||||||||||||||||
| Revenues: | ||||||||||||||||||||||
| License and transaction fees | $ | 19,944 | 77.9 | % | $ | 16,365 | 75.8 | % | $ | 3,579 | 21.9 | % | ||||||||||
| Equipment sales | 5,673 | 22.1 | % | 5,223 | 24.2 | % | 450 | 8.6 | % | |||||||||||||
| Total revenues | 25,617 | 100.0 | % | 21,588 | 100.0 | % | 4,029 | 18.7 | % | |||||||||||||
| Costs of sales/revenues: | ||||||||||||||||||||||
| Cost of services | 13,326 |
66.8 |
% | 11,243 |
68.7 |
% | 2,083 | 18.5 | % | |||||||||||||
| Cost of equipment | 5,090 |
89.7 |
% | 4,178 |
80.0 |
% | 912 | 21.8 | % | |||||||||||||
| Total costs of sales/revenues | 18,416 | 71.9 | % | 15,421 | 71.4 | % | 2,995 | 19.4 | % | |||||||||||||
| License and transaction gross profit | 6,618 | 33.2 | % | 5,122 | 31.3 | % | 1,496 | 29.2 | % | |||||||||||||
| Equipment gross profit | 583 | 10.3 | % | 1,045 | 20.0 | % | (462 | ) | (44.2 | %) | ||||||||||||
| Gross profit | 7,201 | 28.1 | % | 6,167 | 28.6 | % | 1,034 | 16.8 | % | |||||||||||||
| Operating expenses: | ||||||||||||||||||||||
| Selling, general and administrative | 6,746 | 26.3 | % | 6,808 | 31.5 | % | (62 | ) | (0.9 | %) | ||||||||||||
| Integration and acquisition costs | 762 | 3.0 | % | 101 | 0.5 | % | 661 | 654.5 | % | |||||||||||||
| Depreciation and amortization | 245 | 1.0 | % | 208 | 1.0 | % | 37 | 17.8 | % | |||||||||||||
| Total operating expenses | 7,753 | 30.3 | % | 7,117 | 33.0 | % | 636 | 8.9 | % | |||||||||||||
| Operating loss | (552 | ) | (2.2 | %) | (950 | ) | (4.4 | %) | 398 | 41.9 | % | |||||||||||
| Other income (expense): | ||||||||||||||||||||||
| Interest income | 80 | 0.3 | % | 73 | 0.3 | % | 7 | 9.6 | % | |||||||||||||
| Interest expense | (209 | ) | (0.8 | %) | (212 | ) | (1.0 | %) |
(3 |
) |
(1.4 | %) | ||||||||||
| Change in fair value of warrant liabilities | — | — | (1,490 | ) | (6.9 | %) |
(1,490 |
) |
(100.0 | %) | ||||||||||||
| Total other expense, net | (129 | ) | (0.5 | %) | (1,629 | ) | (7.5 | %) |
(1,500 |
) |
(92.1 | %) | ||||||||||
| Loss before income taxes | (681 | ) | (2.7 | %) | (2,579 | ) | (11.9 | %) | 1,898 | 73.6 | % | |||||||||||
| Benefit for income taxes | 468 | 1.8 | % | 115 | 0.5 | % | 353 | 307.0 | % | |||||||||||||
| Net loss | (213 | ) | (0.8 | %) | (2,464 | ) | (11.4 | %) | 2,251 | 91.4 | % | |||||||||||
| Cumulative preferred dividends | (334 | ) | (1.3 | %) | (334 | ) | (1.5 | %) | — | — | ||||||||||||
| Net loss applicable to common shares | $ | (547 | ) | (2.1 | %) | $ | (2,798 | ) | (13.0 | %) | $ | 2,251 | 80.5 | % | ||||||||
| Net loss per common share - basic and diluted | $ | (0.01 | ) | $ | (0.07 | ) | $ | 0.06 | 84.2 | % | ||||||||||||
| Weighted average number of common shares outstanding - basic and diluted | 47,573,364 | 38,488,005 | 9,085,359 | 23.6 | % | |||||||||||||||||
|
(B) Five Quarter Select Key Performance Indicators |
||||||||||||||||||||
| As of and for the three months ended | ||||||||||||||||||||
|
|
|
|
|
|
||||||||||||||||
| ($ in thousand) | 2017 | 2017 | 2017 | 2016 | 2016 | |||||||||||||||
| Connections: | ||||||||||||||||||||
|
New connections (gross) |
28,000 | 70,000 | 40,000 | 25,000 | 22,000 | |||||||||||||||
| % from existing customer base | 82 | % | 93 | % | 88 | % | 80 | % | 86 | % | ||||||||||
|
New connections (net) |
26,000 | 64,000 | 35,000 | 21,000 | 19,000 | |||||||||||||||
| Total connections | 594,000 | 568,000 | 504,000 | 469,000 | 448,000 | |||||||||||||||
| Customers: | ||||||||||||||||||||
| New customers added | 550 | 300 | 500 | 500 | 350 | |||||||||||||||
| Total customers | 13,250 | 12,700 | 12,400 | 11,900 | 11,400 | |||||||||||||||
| Volumes: | ||||||||||||||||||||
| Total number of transactions (millions) | 121.1 | 114.8 | 104.9 | 100.1 | 95.1 | |||||||||||||||
| Transaction volume (millions) | $ | 239.2 | $ | 225.6 | $ | 202.5 | $ | 191.5 | $ | 183.4 | ||||||||||
| Financing structure of connections: | ||||||||||||||||||||
| JumpStart | 4.1 | % | 3.3 | % | 8.6 | % | 6.8 | % | 7.7 | % | ||||||||||
| QuickStart & All Others * | 95.9 | % | 96.7 | % | 91.4 | % | 93.2 | % | 92.3 | % | ||||||||||
| Total | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||||
| *Includes credit sales with standard trade receivable terms | ||||||||||||||||||||
|
(C) Balance Sheets at September 30, 2017 and at June 30, 2017 |
||||||||
|
|
|
|||||||
| ($ in thousands, except shares) | 2017 | 2017 | ||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 51,870 | $ | 12,745 | ||||
|
Accounts receivable, less allowance of |
10,288 | 7,193 | ||||||
|
Finance receivables, less allowance of |
3,082 | 11,010 | ||||||
| Inventory | 8,240 | 4,586 | ||||||
| Prepaid expenses and other current assets | 1,122 | 968 | ||||||
| Total current assets | 74,602 | 36,502 | ||||||
| Non-current assets: | ||||||||
| Finance receivables, less current portion | 7,742 | 8,607 | ||||||
| Other assets | 750 | 687 | ||||||
| Property and equipment, net | 11,850 | 12,111 | ||||||
| Deferred income taxes | 28,205 | 27,670 | ||||||
| Intangibles, net | 578 | 622 | ||||||
|
|
11,492 | 11,492 | ||||||
| Total non-current assets | 60,617 | 61,189 | ||||||
| Total assets | $ | 135,219 | $ | 97,691 | ||||
| Liabilities and shareholders' equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 14,211 | $ | 16,054 | ||||
| Accrued expenses | 3,795 | 4,130 | ||||||
| Line of credit, net | 7,051 | 7,036 | ||||||
| Capital lease obligations and current obligations under long-term debt | 2,649 | 3,230 | ||||||
| Income taxes payable | 10 | 10 | ||||||
| Deferred gain from sale-leaseback transactions | 197 | 239 | ||||||
| Total current liabilities | 27,913 | 30,699 | ||||||
| Long-term liabilities: | ||||||||
| Capital lease obligations and long-term debt, less current portion | 1,049 | 1,061 | ||||||
| Accrued expenses, less current portion | 62 | 53 | ||||||
| Deferred gain from sale-leaseback transactions, less current portion | 99 | 100 | ||||||
| Total long-term liabilities | 1,210 | 1,214 | ||||||
| Total liabilities | $ | 29,123 | $ | 31,913 | ||||
| Shareholders' equity: | ||||||||
| Preferred stock, no par value, 1,800,000 shares authorized, no shares issued | — | — | ||||||
|
Series A convertible preferred stock, 900,000 shares authorized,
445,063 issued and outstanding, with liquidation preferences of
|
3,138 | 3,138 | ||||||
|
Common stock, no par value, 640,000,000 shares authorized,
50,194,731 and 40,331,645 shares issued and outstanding at |
286,463 | 245,999 | ||||||
| Accumulated deficit | (183,505 | ) | (183,359 | ) | ||||
| Total shareholders' equity | 106,096 | 65,778 | ||||||
| Total liabilities and shareholders' equity | $ | 135,219 | $ | 97,691 | ||||
|
(D) Statements of Cash Flows for the 3 Months Ended September 30, 2017 and September 30, 2016 |
||||||||
|
Three months ended |
||||||||
| ($ in thousands) | 2017 | 2016 | ||||||
| OPERATING ACTIVITIES: | ||||||||
| Net loss | $ | (213 | ) | $ | (2,464 | ) | ||
| Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||||||||
| Non-cash stock based compensation | 576 | 211 | ||||||
| Gain on disposal of property and equipment | (18 | ) | — | |||||
| Non-cash interest and amortization of debt discount | 15 | 105 | ||||||
| Bad debt expense | 118 | 97 | ||||||
| Depreciation and amortization | 1,492 | 1,301 | ||||||
| Change in fair value of warrant liabilities | — | 1,490 | ||||||
| Excess tax benefits | 67 | — | ||||||
| Deferred income taxes, net | (535 | ) | (115 | ) | ||||
| Recognition of deferred gain from sale-leaseback transactions | (43 | ) | (215 | ) | ||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | (3,192 | ) | (1,038 | ) | ||||
| Finance receivables | 8,771 | (5 | ) | |||||
| Inventory | (3,648 | ) | (2,223 | ) | ||||
| Prepaid expenses and other current assets | (217 | ) | (224 | ) | ||||
| Accounts payable and accrued expenses | (2,168 | ) | (3,175 | ) | ||||
| Income taxes payable | — | (10 | ) | |||||
| Net cash provided by (used in) operating activities | 1,005 | (6,265 | ) | |||||
| INVESTING ACTIVITIES: | ||||||||
| Purchase of property and equipment, including rentals | (992 | ) | (810 | ) | ||||
| Proceeds from sale of property and equipment, including rentals | 45 | — | ||||||
| Net cash used in investing activities | (947 | ) | (810 | ) | ||||
| FINANCING ACTIVITIES: | ||||||||
| Cash used in retirement of common stock | — | (31 | ) | |||||
| Proceeds from exercise of common stock warrants | — | 6,193 | ||||||
| Issuance of common stock in public offering, net | 39,888 | — | ||||||
| Repayment of capital lease obligations and long-term debt | (821 | ) | (161 | ) | ||||
| Net cash provided by financing activities | 39,067 | 6,001 | ||||||
| Net increase (decrease) in cash and cash equivalents | 39,125 | (1,074 | ) | |||||
| Cash and cash equivalents at beginning of period | 12,745 | 19,272 | ||||||
| Cash and cash equivalents at end of period | $ | 51,870 | $ | 18,198 | ||||
| Supplemental disclosures of cash flow information: | ||||||||
| Interest paid in cash | $ | 107 | $ | 87 | ||||
| Income taxes paid in cash (refund), net | $ | — | $ | — | ||||
| Supplemental disclosures of noncash financing and investing activities: | ||||||||
| Equipment and software acquired under capital lease | $ | 227 | $ | 254 | ||||
|
(E) Reconciliation of GAAP to Non-GAAP Financial Measures for the 3 Months Ended September 30, 2017 and September 30, 2016 |
|||||||||||||||
| Reconciliation of Net Loss to Adjusted EBITDA: | |||||||||||||||
| Three months ended | |||||||||||||||
|
|
Percentage | ||||||||||||||
| ($ in thousand) | 2017 | 2016 | Change | Change | |||||||||||
| Net loss | $ | (213 | ) | $ | (2,464 | ) | $ | 2,251 | 91.4 | % | |||||
| Less interest income | (80 | ) | (73 | ) | (7 | ) | 9.6 | % | |||||||
| Plus interest expense | 209 | 212 | (3 | ) | (1.4 | %) | |||||||||
| Less income tax benefit | (468 | ) | (115 | ) | (353 | ) | 307.0 | % | |||||||
| Plus depreciation expense | 1,448 | 1,257 | 191 | 15.2 | % | ||||||||||
| Plus amortization expense | 44 | 44 | — | — | |||||||||||
| EBITDA | $ | 940 | $ | (1,139 | ) | $ | 2,079 | 182.5 | % | ||||||
| Plus loss on fair value of warrant liabilities | — | 1,490 | (1,490 | ) | (100.0 | %) | |||||||||
| Plus stock-based compensation | 576 | 211 | 365 | 173.0 | % | ||||||||||
| Plus integration and acquisition costs | 762 | 101 | 661 | 654.5 | % | ||||||||||
| Adjustments to EBITDA | 1,338 | 1,802 | (464 | ) | (25.7 | %) | |||||||||
| Adjusted EBITDA | $ | 2,278 | $ | 663 | $ | 1,615 | 243.6 | % | |||||||
| Reconciliation of Operating Loss to Adjusted Operating Income/(Loss): | |||||||||||||||
| Three months ended | |||||||||||||||
|
|
Percentage | ||||||||||||||
| ($ in thousand) | 2017 | 2016 | Change | Change | |||||||||||
| Operating loss | $ | (552 | ) | $ | (950 | ) | $ | 398 | 41.9 | % | |||||
| Plus integration and acquisition costs | 762 | 101 | 661 | 654.5 | % | ||||||||||
| Adjusted operating income/(loss) | $ | 210 | $ | (849 | ) | $ | (1,059 | ) | 124.7 | % | |||||
| Reconciliation of Net Loss to Non-GAAP Net Income/(Loss): | |||||||||||||||
| Three months ended | |||||||||||||||
|
|
Percentage | ||||||||||||||
| ($ in thousands, except shares and per share data) | 2017 | 2016 | Change | Change | |||||||||||
| Net loss | $ | (213 | ) | $ | (2,464 | ) | $ | 2,251 | 91.4 | % | |||||
| Non-GAAP adjustments: | |||||||||||||||
| Non-cash portion of income tax benefit | (468 | ) | (115 | ) | (353 | ) | 307.0 | % | |||||||
| Fair value of warrant adjustment | — | 1,490 | (1,490 | ) | (100.0 | %) | |||||||||
| Litigation related professional fees | — | 33 | (33 | ) | (100.0 | %) | |||||||||
| Integration and acquisition costs | 762 | 101 | 661 | 654.5 | % | ||||||||||
| Non-GAAP net income/(loss) | 81 | (955 | ) | 1,036 | (108.5 | %) | |||||||||
F-USAT
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Investors:
monica@blueshirtgroup.com
lindsay@blueshirtgroup.com
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