USA Technologies, Inc. (USAT) reported results for the first quarter of fiscal 2013 ended Sept. 30, 2012. Revenues for the first quarter of fiscal 2013 were $8.4 million, an increase of 25 percent from the same period a year ago. Revenue growth was fueled by a 27 percent growth in license and transaction fees and a 15 percent increase in equipment sales compared to the first quarter of fiscal 2012.
Revenue from license and transaction fees, which is driven primarily by monthly ePort Connect service fees, JumpStart fees and transaction processing fees, grew to $6.9 million for the first quarter. As of Sept. 30, 2012, USAT’s ePort Connect service base totaled 174,000 connections.
Gross profit was $3.1 million in the first quarter compared to $2.0 million for the same period in the prior year, a 53 percent increase. Increased revenues and actions taken by management over the course of fiscal 2012 to strengthen major supplier contracts and streamline network operations contributed to the increase. Gross margin was 37.5 percent for the first quarter compared to 30.6 percent for the same period a year ago, as stronger gross margins on revenues from license and transaction fees, now 82 percent of total revenues, contributed to a larger share of the overall mix.
Operating expenses of $3.6 million declined by $0.3 million in the first quarter of Fiscal 2013 compared to the first quarter of fiscal 2012. As a result, operating margins improved to 4.9 percent from 27.2 percent a year ago and on a non-generally accepted accounting principles (non-GAAP) basis, which excludes $328,000 in proxy expenses in the fiscal 2013 first quarter, non-GAAP operating margins improved to 1.0 percent compared to a non-GAAP operating margin of 27.2 percent for the same period a year ago — all while supporting double-digit top line growth.
GAAP net income for the first quarter of fiscal 2013 was $39,140. On a non-GAAP basis, which also excludes fair value of warrant liability adjustments for both years in order to track the operational progress of the business, non-GAAP net loss narrowed to $95,993 from a non-GAAP net loss of $1.8 million for the first quarter of Fiscal 2012. Continued, strong revenue growth and actions to enhance gross margins and lower operating expenses led to this $1.9 million improvement.
After preferred dividends, net loss per common share was $.01 for the first quarter of fiscal 2013 compared to $.01 for the same period in fiscal 2012. On a non-GAAP basis, net loss per common share was $.01 for the first quarter of Fiscal 2013 compared to $.07 for the same period in fiscal 2012.
“Our first quarter results reflect steady progress toward our fiscal 2013 goals set out in our year-end conference call in September, particularly our goal for achieving non-GAAP net income in our second fiscal quarter ending Dec. 31, 2012,” said Stephen P. Herbert, chairman and CEO of USA Technologies, in a prepared statement. “In addition, we were extremely pleased to see adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of $730,707. After excluding $328,000 in remaining expenses related to Fiscal 2012’s proxy contest, our adjusted EBTIDA would have crossed the $1 million mark—a tremendous milestone for USAT and we believe a strong indicator of the value inherent in our ePort Connect service model as we continue to grow our base of recurring revenues.
“Net new connections for the first quarter were generally in line with our expectations, particularly in vending, although kiosk–related connections played a smaller role than anticipated this quarter,” continued Herbert. “At the same time, while steady progress continued in expanding our ePort Connect network and recurring revenue base, the first quarter was also marked by a number of important advancements with respect to growing the value of every USAT connection longer-term, particularly with respect to our mobile and diversification strategies,” said Herbert.
