NEW YORK – Prior to trading on Friday, USA Technologies (NASDAQ:USAT) released its earnings report for the fourth quarter 2013. Small-cap stock (roughly $ 64 million in market capitalization) announced that license and transaction fee revenues increased by 29 percent in fiscal 2013, to $ 30 million. The company, which is headquartered in the Philadelphia suburb of Malvern, offers payment solutions for small-ticket, self-serve, retailing industries.
Along with an increase in license and transaction fee revenues, total revenues grew by 24 percent in 2013 to almost $ 36 million and adjusted EBITDA increased to $ 5.8 million up a loss of $ 2.8 million in fiscal 2012.
One of the drivers for the company’s growth was the number of total connections to USAT’s cashless payment and M2M telemetry service, ePort Connect, which grew by 30 percent in the year just ended. Additionally, the company’s customer base expanded by 53 percent to slightly more than 5,000 customers in fiscal 2013; the company added 525 customers in the fourth quarter alone.
The increase in profitability and the number of new customers pushed net earnings per common share to $ .01 compared to a loss of $ .18 in fiscal 2012. According to Stephen P. Herbert, USA Technologies’ chairman and CEO, ‘we achieved tremendous improvements in profitability while making great strides in developing new services and marketing partnerships that extend USAT’s capabilities across multiple channels of the small-ticket, unattended market. We continued to lead cashless payment adoption in the sizable vending market with the industry’s largest menu of cashless payment services, including our MORE loyalty program and the upcoming Isis Mobile Wallet “fifth vend free” promotion–relatively new value-added services that we believe are only beginning to shape how a cashless payment platform can be optimized in our market segment.’
Herbert was bullish on its outlook for 2014 saying ‘in fiscal 2014, our priorities include delivering 25 to 30 percent license and transaction fee revenue growth, 20 to 25 percent total revenue growth and over 50 percent growth in non-GAAP profitability, even as we absorb deactivations to our service from a customer in the first quarter of the fiscal year.’
All told, it was a positive year for the small-cap tech company, and their results are sure to catch the attention of bigger players in the space. While shares have underperformed the broader markets this year, the company has outperformed the much larger VeriFone Systems (NYSE:PAY), and USAT might be an intriguing value play in the payment systems space.