USA Technologies, Inc. (NASDAQ:USAT) investors have reason to be excited given the new developments and new board members to take the company to the next level. The share price has steadily advanced since 2011 establishing a series of higher lows. The share price has been attempting to breakout of the $3.40 range but failed to do so multiple times until mid-February. Since then, the stock has advanced over 30% and now in breakout mode.
USAT growing customer base is indicative of a broadening adoption and acceptance of cashless payments in the industries it serves. The company estimates the United States market generates over $120 billion in annual cashless transaction revenues, representing 13-15 million potential connections in the self-serve retail market. Included in the self-service retail market is the USAT’s largest market segment, vending. This supports the USAT’s position in the market and opportunities for growth.
Some highlights of the company include Over 20,000 customers and 369,000 connections to our service. Three direct sales teams at the national, regional, and local customer-level and a growing number of OEMs and national distribution partners. It has 78 United States and foreign patents that are in force.
USA Technologies, Inc. (NASDAQ:USAT) announced an extraordinary 2nd quarter for fiscal year 2016 which highlights its growth strategy. Revenue surged 44% year over year basis to $18.5 million. The company reported 67% increase in net connections and 28% increase connections in ePort services. Quarterly record license and transaction fee revenue of $13.7 million, a year-over-year increase of 30%. Quarterly license and transaction fees gross margins increased to 33.7% from 31.7% in the prior year. Adjusted EBITDA of $2.3 million, a year-over-year increase of 34%.
For full fiscal year 2016, management expects to add more than 75,000 net new connections, bringing total connections on the service to over 400,000 and expects total revenue to be between $69 million and $71 million. Additionally, it anticipates that QuickStart will remain a popular program for customers, and management expects it to drive positive free cash flows in fiscal year 2016.
In recent developments, USA Technologies, Inc. (NASDAQ:USAT) has shaken up its C-suite. It recently added to its board and C-suite executives. It has appointed Robert L. Metzger to its board of directors. Rob brings with him a wealth of knowledge in finance and accounting, and especially dealing with public companies and capital markets. His extensive experience with the fin-tech and payments space will help guide us as we continue its growth and pursue its goal of driving additional value to each customer connection. USAT also added Michael Lawlor and appointed him as Chief Service Officer. He will oversee the growth and penetration of ePort Connect services, including client service and support, consumer engagement services, and strategic partnerships. He will work with the company’s key strategic partners to identify new opportunities that further accelerate USAT’s growth.
USAT provides wireless networking, cashless transactions, asset monitoring, and other value-added services principally to the small ticket, unattended Point of Sale (“POS”) market. Its ePort technology can be installed and/or embedded into everyday devices such as vending machines, a variety of kiosks, amusement, commercial laundry, kiosk and smartphones via its ePort Mobile solution. Its associated service, ePort Connect, is a PCI-compliant, comprehensive service that includes simplified credit/debit card processing and support, consumer engagement services as well as telemetry, Internet of Things (“IoT”), and machine-to-machine (“M2M”) services, including the ability to remotely monitor, control and report on the results of distributed assets containing its electronic payment solutions.
The Company generates revenue in multiple ways. During fiscal year 2015, it derived approximately 75% of its revenues from recurring license and transaction fees related to its ePort Connect service and approximately 25% of its revenue from equipment sales. Connections to its service stem from the sale or lease of its POS electronic payment devices or certified payment software or the servicing of similar third-party installed POS terminals. Connections to the ePort Connect service are the most significant driver of the Company’s revenues, particularly the recurring revenues from license and transaction fees.
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USAT is currently trading at a $161 million market valuation. This company is fundamentally strong showing signs of explosive growth. It has added new C-suite members to help grow the company and find new opportunities. The stock has broken out from a technical perspective and it wouldn’t be surprising to see the stock double or triple from current levels. Stay tuned as we will update on new developments.
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Disclosure: we hold no position in USAT either long or short at the publication of this article and we have not been compensated for this article.