USA Technologies, Inc. reported results for the second quarter of fiscal 2011 ended Dec. 31, 2010.
Total revenue for the quarter increased 60 percent to $6.0 million, compared to $3.8 million in the second quarter of the prior year, while revenue from recurring license and transaction fees increased 81 percent to $3.8 million compared to $2.1 million for the quarter a year ago. Gross profit for the quarter was $2.5 million, or 41 percent of revenue, and was up 146 percent versus $1.0 million, or 27 percent of revenue, in last year's fiscal second quarter. Earnings before interest, taxes, depreciation and amortization (EBITDA) was $456,000 for the quarter, the company's first positive EBITDA quarter since listing on NASDAQ. In the second fiscal quarter of the prior year the company had an EBITDA loss of $3.8 million.
During the second quarter the company recorded significant growth across its operating performance metrics, including:
- Increased the number of devices connected to its network by 73 percent, bringing the total number of devices connected at quarter end to approximately 109,000, compared to 63,000 as of Dec. 31, 2009, driving an 81 percent increase in license and transaction processing revenue as compared to the prior corresponding quarter;
- The number of cashless transactions processed during the quarter increased to 15.9 million and processing volume reached $26.2 million, representing increases of 94 percent and 75 percent, respectively;
- Customers on the company's USALive® Network up 81 percent compared to a year ago, with approximately 200 new customers added during the past three months, bringing the total number of such customers to over 1,400 as of Dec. 31, 2010. By comparison, in the second quarter of last fiscal year the company added 175 new customers to end the quarter with approximately 775 customers;
Decreased selling, general and administrative expenses by 53 percent compared to the second quarter of the previous year.
"The second quarter of fiscal 2011 was the most successful quarter in the company's history as we sustained our momentum to surpass two milestones, generating positive quarterly EBITDA and exceeding 100,000 devices connected to our network," said George Jensen, chairman and CEO of USA Technologies in a prepared statement. "During the quarter, we added over 21,000 new connections to our network. This widening base of connected devices not only provides incremental revenue, but we believe provides our small-ticket, unattended point-of-sale target markets with the added validation it has been awaiting."
In addition, as the company has attained positive EBITDA for the quarter and had at least 100,000 connections to its network as of Dec. 31, 2010, Shareholder Advocates For Value Enhancement does not have the right to name an additional director pursuant to the Feb. 4, 2010 settlement agreement.
Jensen concluded, "At the same time we have grown revenues, we have significantly reduced our selling, general and administrative expenses. Over the long term, we believe we can effectively leverage our growing stream of monthly revenues while maintaining a tight control on expenses. We are excited about our recent successes and the significant growth we have achieved over past several quarters and look forward to building upon that growth and solidifying our place as the leader in small ticket, unattended wireless transactions."
