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USAT Q2 Has Operating Loss Due To Audit Expenses; Increases In Connections And Transaction Volume Signal Continued Growth

by Staff Reporter
Posted On: 2/9/2012

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USAT Technologies, ePort Connect Service, vending business, vending machine, cashless vending, wireless, cashless payment, M2M telemetry solutions, self-serve, small-ticket retail industries, Stephen P. Herbert, automated retailing, unattended POS

MALVERN, PA -- Cashless vending leader USA Technologies reported an operating loss of $1.9 million for its recently ended second quarter of fiscal 2012, compared with an operating loss of $141,000 a year ago. For the same quarter, the wireless technology company also posted meaningful gains in revenue and connections.

USAT said the recent quarter's loss reflects higher cost of goods sold, attributable to temporarily higher debit interchange rates, and costs associated with an audit committee's investigation and the severance arrangements with the company's former chief executive, George Jensen. | SEE STORY

The operating loss also reflects decreases in revenue from fewer activation fees earned in the current quarter and the absence of Visa support funding received in the prior year's comparable quarter period. Net loss applicable to common shareholders for the quarter was $1.8 million, or $0.06 per diluted share, compared with a net loss of $133,000, or $0.01 per diluted share a year ago. Results for the second quarter of fiscal 2012 include a $152,000 gain on change in fair value of warrant liability, whereas there was no like gain in the year ago quarter.

On the upside, total revenue for the quarter increased 14% to $6.9 million, compared wih $6 million in the second quarter of the prior year. Total dollar gross profits for the quarter were $1.9 million, compared with $2.5 million a year ago. USAT said selling, general and administrative expenses in the quarter were $3.5 million, up from $2.3 million in the like quarter a year ago. A majority of the increase in selling, general and administrative expenses, which was about $886,000, was due to costs associated with the audit investigation of postings made by Jensen on an Internet message board.

USAT highlighted more good news for the quarter. Compared with a year ago, the number of customers on its ePort Connect Service increased 77%; the number and dollar value of small-ticket transactions handled by its network increased 50% and 54%, respectively; recurring revenue from license and transaction fees rose 49%; and the number of connected devices increased 25%.

"The results for the second quarter of 2012 reflect the steady growth of our portfolio of customers in the vending, kiosk and other small-ticket, unattended industries as they continue to adopt cashless payment technology at their historically cash-only points of sale," said USAT chairman and chief executive Stephen P. Herbert. "We are intently focused on our strategy to achieve profitability as soon as practicable by gaining wider acceptance of our technology and improving our operating efficiency."

With 7,000 connections and 250 customers added to ePort Connect during the three months ended Dec. 31, 2011, USAT now hosts some 136,000 connections for 2,475 customers, compared with 109,000 and 1,400, respectively, at the same point a year ago. In the quarter, USAT said it handled 24 million transactions representing $40 million in small ticket purchases, increases of 50% and 54%, respectively, compared with about 16 million transactions representing $26 million in volume during the second fiscal quarter of the preceding year.

Herbert said that the noteworthy increase in recurring revenues suggests that the rate of adoption and the penetration of cashless payments at the unattended, small-ticket point-of-sale is on the rise." The increase in transaction volume on our network is attributable to our expanded footprint, as additional devices are connected to our network, as well as increased usage of cashless payments," he explained.