USA Technologies (NASDAQ: USAT) issued the following letter to
Shareholders today:
Dear Shareholder,
At the USA Technologies, Inc. (“USAT”) annual shareholders
meeting on June 13, 2011, I stated that the Company would achieve
record revenues for the quarter ended June 30, 2011, as well as
record recurring revenues from license and transaction fees,
cashless transactions processed, and record new customers.
With the quarter now ended, I am delighted to report that USAT
has achieved those anticipated results.
At our shareholders meeting, I indicated that we were headed for
a significant leap in sales for fiscal 2011 compared to fiscal
2010. Our unaudited total revenue for fiscal 2011 is approximately
$22.9 million, an increase of 45 percent compared to $15.8 million
a year earlier. Five years ago, our fiscal year ended June 30, 2006
annual total revenue was $6.4 million.
On June 13, I indicated that annualized recurring revenue in
license and transaction fee revenues would be up significantly.
They were. Unaudited fiscal year recurring revenue from license and
transaction fees totaled approximately $16.4 million, an increase
of 76 percent from $9.3 million a year ago. Five years ago our
recurring revenue was just $1.2 million.
Unaudited gross profit grew by 59 percent, totaling
approximately $7.8 million for the fiscal year, up from $4.9
million for the fiscal year ended June 30, 2010.
I predicted that the quarter ended June 30, 2011 would set a new
record for total revenue of approximately $7 million, of which $5
million would be made up of recurring network service and
transaction processing fees. Once again, we delivered. The
unaudited June 30, 2011 quarter total revenue is up approximately
53 percent from the approximately $4.5 million in total revenue
earned for the same quarter a year ago. Revenues in the June 30,
2011 quarter were more than the entire fiscal year total revenues
just five years ago. The unaudited recurring revenue for the June,
30 2011 quarter grew approximately 72 percent from the $2.9 million
earned for the same quarter a year earlier.
There’s more good news to report. At the shareholder meeting, I
forecasted that by June 30, 2011, we would add 200 new customers
and grow our customer base to 2,000. We did. We almost doubled the
1,050 customers we had just a year earlier.
In addition, we ended the fiscal year 2011 with approximately
119,000 connections. We grew connections 45 percent from the 82,000
connections just a year ago. Finally, I forecasted that the number
of transactions we processed for our customers during the June 2011
quarter would grow to more than 20 million, totaling an aggregate
dollar value of approximately $37 million. We hit our goal. We
processed 22.5 million transactions in the June 30, 2011 fiscal
quarter compared with 11.7 million the same quarter 12 months ago,
up 92 percent. And the dollar value of transactions processed for
our customers grew 80 percent to $37.4 million, from $20.8 million
a year ago.
And still there’s more good news. Today, USA Technologies is
virtually debt free, and we have approximately $13 million
available in cash (unaudited), ready for investment in the
Company’s future growth. As I told shareholders a month ago, based
on the revenues during April 2011, USAT was currently on an annual
run rate of $ 28 million in revenue, and based on anticipated
recurring revenues for the June 30, 2011 quarter, USAT was
currently on an annual run rate of $ 20 million of recurring
revenue.
The reason for this growth is evident. Customers in the self
serve, small ticket traditional food and beverage vending
industries we serve are rewarding us for our product innovation,
our services, and particularly for our unique sales incentives,
such as JumpStart. JumpStart is a sales winner and competition
killer. It allows operators the ability to acquire our ePort
cashless technology and services for a small monthly fee. There is
no need for operators to make an upfront capital investment.
JumpStart is industry unique and our most effective and successful
customer ‘buy-in’ incentive.
USAT pioneered cashless payment, contactless payment, and
JumpStart in the self serve, small ticket vending, kiosks and
self-serve POS industries. No one else in the markets we serve
offers a sales incentive like JumpStart. And we are the small
ticket, traditional beverage and food vending industry’s only
one-stop-shop, total solution provider. We provide our customers
and that industry everything they need to go cashless.
We believe that the recent growth of our business illustrates
that our industry’s conversion to cashless payment is accelerating.
We are convinced that the small ticket food and beverage vending
industry is reaching the “Tipping Point” in going cashless.
Cashless is giving consumers the ease and convenience they want
when making payment at a vending machine. If the consumer has no
cash, they most likely will have a credit or debit card.
When it comes to the very latest NFC (near-field communication)
payment trend, we were there from the beginning, ideally positioned
and ready to capitalize on the anticipated move to NFC payment. As
more advanced contactless and NFC payment methods emerge, and bring
greater operator and consumer convenience, efficiency and security,
we believe that mobile commerce may grow to mainstream usage.
Our ePort G8 cashless terminal is capable of accepting all forms
of payment, from traditional swipe cards, to contactless cards and
tags, and NFC equipped mobile phones where consumers could make
payments with their cell phones.
We have entered the era of the active merchant and mobile
consumer, and that’s where USAT intends to lead, and grow. We
believe that never has the future of vending and self-serve retail
commerce looked more promising or exciting than now.
Small ticket, food and beverage vending is USAT’s biggest market
for cashless solutions, but we are also receiving increasing
requests and seeing more conversion to cashless in ’other’
self-serve retail industries such as kiosks, laundry services,
automotive, and amusement industries. The cashless option is
helping these ‘other’ self-serve businesses overcome the same
challenges the vending industry experienced, such as limitations on
how much cash or coin a consumer carries, price elasticity
barriers, as well as growing demand from consumers wanting to use
credit or debit.
Our over-riding goal is to improve the consumer’s purchasing
experience, and grow business for our customers. The interactivity
that may be offered by mobile commerce where operators could
transmit discounts, coupons, sales incentives and advertising to a
consumer’s cell phone, could create the potential for an entirely
new, and even more convenient shopping experience. We believe that
it could bring the operator and consumer closer together through
communications like never before.
USA Technologies has worked long and hard executing business
plans, overcoming challenges, innovating, leading, and pursuing
opportunities. Now I believe that we are beginning to see the
rewards for our efforts and sacrifices.
Pursuant to its processing agreements with its customers, the
Company earns transaction processing fees equal to a percentage of
the dollar volume processed by the Company, which are included as
licensing and transaction processing revenues in its Consolidated
Statements of Operations. The Company’s transaction processing
volume is not indicative of the gross profit from license and
transaction fees. The Company’s audited financial results for the
fiscal year ended June 30, 2011 will be reported in the Company’s
Form 10-K which the Company anticipates filing with the Securities
and Exchange Commission by no later than September 28, 2011.
Thank you for all your support.
Sincerely,George R Jensen JrChairman and Chief Executive
Officer
About USA Technologies:
USA Technologies is a leader in the networking of wireless
non-cash transactions, associated financial/network services and
energy management. USA Technologies provides networked credit card
and other non-cash systems in the vending, commercial laundry,
hospitality and digital imaging industries. The Company has been
granted 79 patents and has agreements with Verizon, Visa, Compass
and others. Visit our website at www.usatech.com.
Forward-looking Statements:
"Safe Harbor" Statement under the Private Securities Litigation
Reform Act of 1995: All statements other than statements of
historical fact included in this release, including without
limitation the financial position, anticipated connections to our
network, business strategy and the plans and objectives of the
Company's management for future operations, are forward-looking
statements. When used in this release, words such as "anticipate",
"believe", "estimate", "expect", "intend", and similar expressions,
as they relate to the Company or its management, identify
forward-looking statements. Such forward-looking statements are
based on the beliefs of the Company's management, as well as
assumptions made by and information currently available to the
Company's management. Actual results could differ materially from
those contemplated by the forward-looking statements as a result of
certain factors, including but not limited to, business, financial
market and economic conditions, including but not limited to, the
ability of the Company to retain key customers from whom a
significant portion of its revenues is derived; whether the
Company’s customers continue to utilize the Company’s transaction
processing and related services, as our customer agreements are
generally cancelable by the customer on thirty to sixty days
notice; whether the Company’s customers continue to operate or
commence operating ePorts received under the Jumpstart program or
otherwise at levels currently anticipated by the Company; the
ability of the Company to compete with its competitors to obtain
market share; the ability of the Company to obtain widespread
commercial acceptance of it products; and whether the Company's
existing or anticipated customers purchase or rent ePort devices in
the future at levels currently anticipated by the Company. Readers
are cautioned not to place undue reliance on these forward-looking
statements. Any forward-looking statement made by us in this
release speaks only as of the date of this release. Unless required
by law, the Company does not undertake to release publicly any
revisions to these forward-looking statements to reflect future
events or circumstances or to reflect the occurrence of
unanticipated events.
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