"During the second quarter, we continued to drive new connections and
new customers to our ePort Connect® service across all vertical
"We also generated our second highest level of GAAP and non-GAAP net income in the second quarter—solid progress as we work toward our fiscal 2014 objectives that include the doubling of non-GAAP net income for the fiscal year," said Herbert.
Highlights for the second quarter, compared to the corresponding quarter in the prior year, included:
Approximately 82% of total revenues stemmed from license and transaction fee revenues, which are largely driven by connections to USAT's comprehensive and turnkey cashless payment and M2M telemetry service, ePort Connect.
"Last fiscal year, we worked to expand our sales and marketing presence in self-serve retail markets beyond vending, such as commercial laundry, amusement, kiosk and taxi and transportation," continued Herbert. "Similar to vending, many of these markets are in the early stages of cashless adoption and thus, in our view, hold enormous opportunity for growth going forward. During the second quarter, we continued to strengthen our presence in each of these markets through value-added services and innovative programs and products."
Second Quarter Results
Revenue from license and transaction fees, which represented 82% of revenues in the second quarter, is driven by net connections to USAT's ePort Connect service through monthly service fees, including any rental program fees and transaction processing fees.
Gross profit of
Operating expenses of
GAAP and non-GAAP net income were both positive for the second quarter of fiscal 2014, with non-GAAP net income reaching the second highest level for USAT to date.
GAAP net income was
Non-GAAP net income for the second quarter of fiscal 2014 was
Cash and cash equivalents stood at approximately
"We remain encouraged by the 31,000 gross new connections achieved in the first half of fiscal 2014, the continued expansion of our customer base and feedback from our existing customers regarding the value of cashless payment as a vital tool to drive incremental revenue and operational benefits," continued Herbert. "At the same time, we are also mindful of growing competitive pressures and the need to remain agile and aggressive from a marketing perspective.
"For the remainder of fiscal 2014, we will be balancing these market dynamics, our long-term strategies and the customer environment as we work toward achieving our fiscal 2014 financial targets that include over 25% license and transaction fee revenue growth, over 20% total revenue growth and a 100% improvement in non-GAAP net income for fiscal 2014," said Herbert.
Webcast and Conference Call
"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 business strategy and the plans and objectives of USAT'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 USAT or its management, identify forward-looking statements. Such forward-looking statements are based on the beliefs of USAT's management, as well as assumptions made by and information currently available to USAT'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, the incurrence by us of any unanticipated or unusual non-operational expenses which would require us to divert our cash resources from achieving our business plan; the ability of USAT to retain key customers from whom a significant portion of its revenues is derived; the ability of USAT to compete with its competitors to obtain market share; whether USAT's customers continue to utilize USAT's transaction processing and related services, as our customer agreements are generally cancelable by the customer on thirty to sixty days' notice; the ability of USAT to obtain widespread commercial acceptance of it products; the ability of USAT to raise funds in the future through the sales of securities in order to sustain its operations if an unexpected or unusual non-operational event would occur; the ability of USAT to use available data to predict future market conditions, consumer behavior and any level of cashless usage; the ability of USAT to efficiently and securely integrate cashless payment with new machine technologies; whether any patents issued to USAT will provide USAT with any competitive advantages or adequate protection for its products, or would be challenged, invalidated or circumvented by others; the ability of USAT to operate without infringing the proprietary rights of others; and whether USAT's existing or anticipated customers purchase, rent or utilize ePort devices or our other products or services in the future at levels currently anticipated by USAT. 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, USAT 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.
|Consolidated Statements of Operations|
|Three months ended||Six months ended|
|License and transaction fees||$||8,671,085||$||7,403,241||$||17,178,129||$||14,309,598|
|Cost of services||5,495,385||4,363,212||10,904,848||8,555,572|
|Cost of equipment||1,244,996||920,928||2,375,820||1,974,564|
|Selling, general and administrative||3,193,568||2,699,675||6,488,912||5,914,800|
|Depreciation and amortization||126,875||332,856||285,384||676,245|
|Total operating expenses||3,320,443||3,032,531||6,774,296||6,591,045|
|Other income (expense):|
Change in fair value of warrant liabilities
|Total other income (expense), net||(93,587||)||(406,990||)||78,060||53,302|
|Income before provision for income taxes||416,103||160,660||716,668||206,720|
|Provision for income taxes||(6,912||)||(6,902||)||(13,823||)||(13,823||)|
|Cumulative preferred dividends||-||-||(332,226||)||(332,226||)|
|Net income (loss) applicable to common shares||$||409,191||$||153,758||$||370,619||$||(139,329||)|
|Net earnings (loss) per common share - basic||$||0.01||$||-||$||0.01||$||-|
|Weighted average number of common shares outstanding||34,136,884||32,734,394||33,730,590||32,626,|