Vending

USA Technologies reports higher 3Q losses despite revenue gains

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June 25, 2020

USA Technologies Inc., a cashless payments and software services provider, reported higher losses in the fiscal third quarter ending March 31, 2020 despite a 14.3% year-over-year revenue increase to $43.1 million for the period ending March 31, 2020, according to the report.

The non-GAAP loss was $7 million or a negative 11 cents per share compared to non-debt net loss of $1.5 million on negative 2 cents per share in the prior year period, CFO Michael Wasserfuhr said, while the EBITDA of negative $7.4 million compared to negative $1.8 million in the prior year period. Adjusted EBITDA was a negative $5.9 million compared to a positive $0.2 million in the prior year period, according to a transcript of the earnings call.

Company officials said that earnings were impacted by higher expenses in the quarter, and would take strong steps to address the issue.

"In recent past, this company has relied heavily on third-party consultants, and that has reflected in our operating expenses," CEO Sean Feeney told analysts on the call. "The board and I are addressing these costs aggressively. This is an area of key focus as we look forward to our fiscal year 2021 budget."

Net loss for the quarter was $9.6 million or a negative 15 cents per share compared to a net loss of $4.6 million or a negative 8 cents per share in the prior year period, Wasserfuhr said. Year-to-date, net loss increased by 44% to $29.8 million.

As previously disclosed on May 7, 2020 on Form 8-K, given the uncertainty surrounding the magnitude and duration of COVID-19, management withdrew its guidance and will not be issuing further guidance until the full impact of COVID-19 is better understood.

The company improved its liquidity in May by receiving approximately $3 million from the Paycheck Protection loan program.

Feeney said during the call that it will take a number of months to get back to where the company was in the January, February time of this year, but the company is confident that it will get back there at some point in fiscal 2021.

"Our customers who predominantly service offices and schools, coffee services, micro markets in those areas, those are still way down," Feeney said. "The rest of the customer base, where they have a diversified or are in more of a manufacturing type of environment or hospitals for example, have really begun to see a recovery that is similar and in some cases even ahead of ours. And so, we remain confident if there's not another reoccurrence of COVID and people returned to school and offices after labor day. We'll be back on the upward swing."

License and transaction fee revenue was $35.0 million for the third quarter, increasing 10.9% year-over-year, while equipment revenue of $8.1 million, increasing 31.5% year-over-year. This included net new connections of 34,000 bring total connections to 1,289,000.

Gross margin was 25.5% compared with 26.4% in the prior year period, while license and transaction gross margin of 36.4% increased from 35.6% in the prior year period.

Equipment gross margin was 21.1% compared with 20.3% in the prior year period.