ROSH PINA, ISRAEL--(Marketwired - May 10, 2016) - On Track Innovations Ltd., a global provider of near field communication (NFC) and cashless payment systems, reported financial results for the first quarter ended March 31, 2016.
Q1 2016 Operational Highlights
- Expanded support of payment processing services for vending machines and kiosks across the European Union.
- Formed a strategic partnership with Apriva to bring a unified mobile and cashless payment solution to the global kiosk market.
- Secured partnerships with leading vending distributors to the Spanish, Portuguese, Italian, Slovakian, and Czech markets.
- Partnered with NEXTEP SYSTEMS to equip drive-thru kiosks with oti's SATURN 6500 TRIO reader.
- Received a series of follow-on orders totaling more than 25,000 NFC readers from two major North American customers.
- Continued the implementation of the company's efficiency program, which significantly reduced operating expenses and enhanced gross margins.
- Demonstrated prototypes of NFC-based cashless payments solutions at the RETAILTECH JAPAN trade show with development partner Billing System Corporation.
Q1 2016 Financial Details
Total revenues were $4.9 million compared to $5.0 million in the same year-ago period.
Gross profit increased 3% to $2.55 million (52% of revenue) from $2.47 million (50% of revenue) in the same year-ago period.
Operating expenses decreased 24% to $3.3 million from $4.3 million in the same year-ago period.
Net loss from continuing operations improved to $867,000 or $(0.02) per share from a net loss from continuing operations of $2.1 million or $(0.05) per share in the same year-ago period.
Adjusted EBITDA loss from continuing operations improved to $395,000 from a loss of $1.1 million in the same year-ago period (see discussion about the presentation of adjusted EBITDA from continuing operations, a non-GAAP financial measure, below).
At quarter-end, cash and cash equivalents and short-term investments totaled $9.6 million, compared to $10.9 million at the end of the prior quarter.
Management Commentary
"Our performance in the first quarter began to demonstrate some of the positive financial and operational results from the key strategic initiatives we implemented in the second half of last year," said oti CEO, Shlomi Cohen. "These measures were designed to optimize our internal processes and manufacturing practices, as well as reduce costs and accelerate growth. With the major phase of the efficiency program now complete, oti is a leaner, more flexible, and more capable organization today than ever before.
"More specifically, these benefits had a direct impact on our financial results, as seen by the meaningful improvement in our gross margins and operating expenses during the quarter. In fact, our total operating expenses were at their lowest level in over two years. The significant decrease in our operating expenses, coupled with the improvement of our gross margin, allowed us to achieve another two-year milestone -- the lowest quarterly adjusted EBITDA loss. It's also important to note that from a topline perspective, our revenue was up on a sequential basis, excluding the one-time license fee we recognized in the prior quarter.
"Our progress executing on our growth plan was evident by the number of new partnerships and wins we secured during the quarter, including a series of significant follow-on orders from two of our major North American customers. On top of this, we now support payment-processing services in the European Union. We believe this makes us one of the few, if not the only cashless payments solutions provider with full payment processing coverage in both the EU and U.S. -- the two largest unattended markets. We are seeing increasing demand for our turn-key solution that integrates the cashless payment hardware with telemetry, low-fee payment processing, and cloud-based system management. This is reaffirmed by not only the growing level of interest from our prospective customers, but also from our expanding pipeline of opportunities and the initial purchase orders we have secured for our otiMetry system. We plan to start generating recurring revenue starting in the second quarter.
"Since my appointment as CEO in August, we underwent a transformation in our business model that expanded our focus from purely a product-oriented company to a platform-based company. This included launching a new product line that not only enables point-of-sale transactions, but also facilitates the ongoing support and monitoring of unattended vending operations. We are now able to target a significantly larger addressable market, while providing an opportunity to generate multiple recurring revenue streams.
"Along those lines, our success in 2016 will be measured by our continued ability to penetrate new markets and verticals and to generate recurring revenue, as well as our ability to leverage our relatively fixed cost structure. We are confident the successful execution of this plan will position oti as a growing technology leader for the Internet of Things." Full report.
