USAT - Earnings call transcript Q1 2021

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the USA Technologies First quarter 2021 earnings conference call. [Operator Instructions] I would now like to hand your conference over to your speaker today. Alicia Nieva-Woodgate, Vice President of Corporate Communications and Investor Relations for USA Technologies. Please go ahead.

Alicia Nieva-Woodgate

Thank you. everyone. afternoon, good And USA quarter the conference XXXX call. technologies to fiscal first earnings Welcome the are Anant this Executive me call With on afternoon Officer. Jackson, Financial Revenue Officer; Chief Sean Officer; Chief and Agrawal, Wayne Chief Feeney,

non-GAAP undue reliance to, are date could Before we like you historical other cause the reflect all issued that Listeners could to for update facts, statements a a loss. call, I results. are now Sean? such are our as financial Executive included the are this nature. statements to Details to differ with differ operating section Actual not filings Sean Relations comparable Feeney. measures, in the results from actual remind statements our forward-looking than non-GAAP to a things, such including to substitute or any as measures and these undertakes USA with be GAAP with business, result today's obligation www.usatech.com. financial discussion financial forward-looking begin other will of financial call, at cautioned the And statements not issued would the useful of market on measures Technologies' our any as that, earlier such they today. a result only measures presentation in most forward-looking Officer in are to been but as over otherwise. most view directly release our has GAAP measures contemplated in materially as of These on forward-looking certain well that future new comparable materially GAAP no Chief website measures not statements, like A evaluating of those SEC also release information, afternoon, among forward-looking statements found management's non-GAAP posted factors, as reconciliation press income events I'd limited included to turn for, which could non-GAAP which of that call conditions. the financial by of this financial measures, the and economic from and the of made. press of risks financial, This include Technologies a net results uncertainties of USA we and or is a between believe place financial discussion and certain detailed supplemental events Investor and whether call the these

Sean Feeney

today. hope Thank And you, Alicia. us I And safe. everyone well. joining is thank for you, everyone

our Wayne company. to initiatives our Next six and mark will updating drive pleased outlined with week, items say on plans progress call will to XXXX QX and look my these months also on will I we and today's review growth financial you call, the our forward. the I the forward we'll against for year. good then making the this quarter to And fiscal we guidance that on discuss fiscal I results, are year strategy company am first

COVID lives. environment, become important consumers current extends of frictionless part This in an we As everyday payments. Commerce and the cashless carry on contactless particular to has in dynamic increasingly

XX XX% serve, businesses. on relevant trends, the us And markets to which positioned the few to the Wang prior pandemic customers for key a detail will minutes. quarter, these a prior this impact to fiscal more the discuss continued Nevertheless, year year period capitalize revenue XX.X% well was by are XXX,XXX to of compared compared is which XXXX. during period. in fiscal in last makes the year company million margin year, success. mix $XX.X we component while increased compared in due to million a affecting year. operating compared $XX.X was of to in the But quarter. loss We first over gross $X.X negative $X.X decreased in to It in positive extremely of year we XX%. adjusted a negative million to our loss QX and XX.X% a experienced year QX QX still the results EBITDA sequentially during million revenue of

to are continue operations, go costs turn economy geared control. within take We initiatives, in managing our that are network the actions toward that effectively our market especially while to preparing to

longer without losing We growth are on these the near focused our for vision term sight initiatives term of company.

device reminder, company's growth, sunsetting gave cellular EMP that airport are organic announced announced you and two to we management the structure an and board upgrade year Last week, portfolio in our Keeping now upgraded in you accept size hardware. these for XG contact fiscal invest from the people mind, initiatives and let the time the upgrade a strategic address excellence payments. to and some order of plan me of cashless to As networks, that last update. culture we product the and the this Earlier cost today, right also expansion this sustainable the to drive give the and highlights laid in out we to contactless achieve

an marketing continue of the products. showcasing of service, family upon execute emphasis aforementioned to our on the platform We as seed our initiatives, with a benefits

to become and to teams, more part service have we customer additional our added organization, continued have As customer out account our build a of centric efforts managers.

also new quarter. have directors in sales two including we regional invested during adding addition, In the sales our team,

inability payment made the in to speed migration the as and devices cause advisor some of slow replace reconnect. to remediated to we order of In recovery on platform, the a in progress, We experienced Well, our September, incident lot Lastly, in old of we track. were transactions. resulting network transaction up process the that remains the our customers.

our enhancements you to look on more now our We the customers, at Chief turn the for the our platform Revenue transactions quarters to Anant? give Officer I Anant performance. continue to infected. not color call on seed platform further were to will over Agrawal, business

Anant Agrawal

Thanks, Sean.

the growth solution kept that of enhancing and to and best as cashless a the ton we strategies market. best on experience class, This customer from a providing a software delivering executing is platform that in service our quarter

key some are highlights. Here

As giving Sean E portfolio, operators upgrade the and accept in to V. contact mentioned, announced week, lists the choice to our we port last contact product

to end full whole have to their in reader investments the cases optionality the or they choose many rather wisely, to their than So needing only card upgrade kit. amateur

the free implemented with and upgrades. the large still the In XG the who customers, delight plan for customers of field, a addition, EMB a our to in or and out eliminating to have we enhancement, upgrade the air of existing Along any the number devices our equipment XG completely we for devices. need over upgrade rolled

the Platform out forward help dollars platform. cases. with devices of you are design, customers book XG company's Service few need the get know, most XG these to These As on customers upgrade any the telemetry investment incorporating field life devices cashless of need port that the in benefit that a thinking sunset, of saving advantages versus starting to most will significant and the kit. I networks to carriers of devices Many to only airport either a key with EMB Similar with examples technology E how reliant a them in and full to of before. a hardware leverages upgrade. as investments are XG are their hardware their the our mentioned network just the

strides to initiatives, customers and our In seed we addition deployed continue cashless. to getting with these make toward fully

has has of operators during within manage QX. As our penetration serve and published adapt time made this time What all calls, at in who data and business manager blog adjust refreshment focus VP our leveraging profitability at gives on created, evidence to COVID our costs great hybrid In we've to source vast to volatile all frictionless cashless to we reinforce are the actionable services, nimbly to maximizing fingertips, getting customer this during real the vending platform leveraging minimize via tailwinds, and feed C the of Detweiler, well Smith, post, leveraged across our that and key in added seed with they the address recently customers by operating the our ultimately real to at to Duncan we existing changes further environment. customers how maximize By search previous with able is And provided quickly chief services, maintained progress introduces. for better broadly we COVID is coupled one the their the efforts the fact on which have their helped can Combine benefits of to environment services, service the to profitability K how they Jared streamline our of bending routes business. in president competition operations been customers flexibility within of benefits three have the of majority a capabilities positioned office challenging OCS base operating operations are routes our onset their the food have seed existing seed, to of and secular operating have we orders. platform. our convert the us to costs, operators a full officer operations usually micromarkets Compared them

with XG the and which large ingrained we the their our in XG to as competitors, mentioned existing serve will have partially strategy solution, at deploy other now barometer, was platform, moving the full of a of cash they our BMS cash going customer to legacy market as they plus to customer, deployed press, but port is wins all feed a we we, three the go the flow be solution As fully a new in new that devices. success Midwest, flow first upgrade caches completely operator EMB

independent of platform. and well all in as fully And EMP. the pace class to over on Los its all I a that, the to a of businesses industry, last the also Sean. its gone company company would C in Angeles from players we solution bending, be have system We the off competitive a a to to to USAT upgrading our we significant seeds going a up our single us import one XG operator converting BMS XG competitive forward platform. on group, migrating it of has continental independent legacy all to but and competitor's platform. best at devices in deployed customer, have largest accelerating With upgrading of turn devices as are cashless These and least, Houston. from The largest switching full they what operator in be choosing like Sean? by to all in not will our is vendors, of fresh so signing on And in with of signed look can all the BMS be in back And process.

Sean Feeney

Thanks Anant.

Dennis XX month. to Now up before turning for connects his the this few months highlights over to move and financial very few rejoined other company Wayne. on to large to ago have years architect. We're organization expertise knowledge named cover a and back usat services a was on left institutional the excited team. of firm, it our Earlier chief a

Stewart, organization efforts. and Scott also he accounting out want first We the also to key our build our eliminate which our made reliance to fields. of our new consultants services with some to hires chief NASDAQ continue commitment team outside speaks reduce hiring professional finance relisting I has our address to on officer,

I I can I with is the made regular team. board we organization. set. process dedicated the And The remains for remained update the to mind our NASDAQ to on that and it's As reiterate want in on us the that know application communication that of relisted welcomed have been to getting management only They and we changes pending. focused have top the everyone. provide

wrap to up. Just

factors in legacy While as this quarter bumps particularly due we a to may external as have COVID. variables, experienced few well

continue to foundation over we hand through have stronger. and me walk year Wayne We from With emerge to to this that, quarter results. grow you believe to financial an which the will fiscal business let incredible that first XXXX it

Wayne Jackson

last the volume license in XX. versus by and quarter, of everyone. revenues million year. of improvement and Thanks, sales transaction $X.X XX.X% $XX.X lower XX% for first FY decrease compared QX of XX the decrease of year year. prior to for volumes. decrease million, first XX.X% the last same the And decrease FY call quarter shipments a point the driven tracking total first an increase quarter you year primarily transaction increased compared quarter, result of for for to million. from in revenue an first primarily quarter X.X% Sean. of quarter. a prior from year of license transaction lower quarter quarter, current due prior of Good during $X thank the was XX transaction today. XX% $XX.X as the The of over the Equipment the to FY period revenue a hardware total QX a current primarily and afternoon, first joining million our

As Due with for quarter, of the quarter. quarter quarter and compared XX a quarter as larger between FY the in a margins with due revenue large to you FY more may in current and The equipment revenue licensed prior significantly of to for transactions contract recall of XX.X% XX.X% of higher prior from customer. licenses. Total to shipments in new with of fiscal the profit year, XX.X%. margin this XX% a prior L&T first was fourth with year of year, margin period quarter first in in and to mix up quarter margin first a revenue improved line percentage total XX. the current a was the is year, license last XX.X%, XX.X% in margin gross the QX year increased transaction similar QX compared of the

second As of we our in FY are fourth XX. quarter during sell the volumes half and call, expected revenue transaction earnings to accelerate noted

the long So to we anticipate XX.X% rates XX.X% to year. be margin Equipment was end the positive margins in of FY compared with XX. prior by quarter a negative L&T historical the for more

of of over in $X.X to driven primarily as into the parts filed disclosed of million the instant and due network charges, $X.X increase hardware a to customers. result sold in USAT more the a loss offset the million prior travel to related expense, The the operating costs $X.X by stock our professional in $XX.X million, lower decrease in quarter operating million of year. incorporated from $XX.X prior services to XX.X% total the was associated expenses, $X.X a ultimately first which the to q SG&A quarter the and X.X% As quarter by to be in was that adjustment year. expenses million, of XX loss recorded decreased fully million totaled provided of million $XX.X compensation decrease totaled which million, compared primarily in first an of assembly tomorrow. expenses were the XX dollars for form quarter a year. mouse company was first QX FY that $XX.X We fees, an This prior of based a in $XXX,XXX of million dollars $X.X of in of with first compensation. in consisted dollars $XXX,XXX

first compared per negative the Net year $XXX,XXX in cents proxy the In the year negative was year, to driver quarter to addition XX was higher prior quarter loss primary quarter, prior cents the a the first share, other in common of million $XX.X XX $X.X to or million million, the first restatement the gross XX EBITDA million to $X.X million FY $X.X expenses. or in quarter for basic period. for period. basic solicitation a share of the was compared adjusted for per $X.X the reduction investigation first from shareholders margins current applicable improvement and

hand Regarding equivalents liquidity, and had September the XXXX. of $XX.X cash company cash as of million XX on

guidance Moving we and full continue $XXX to expect million. revenue the million to and our two XXXX, for between to and to $X be $XXX be adjusted year EBITDA between

XXXX. between be $XX.X COVID $XX.X economic unforeseen This calendar substantial net that remainder expect and this shares assumes impacts, the million. no range further duress year loss million we applicable common for of to addition, creates the In and into related

fiscal and of year sales see will our fiscal of we second business, it impacted more The year will year. half questions. to that, second operator and be office, year begin the the of in continued of hotel school terms half our a fiscal By in the negatively we turnaround both. benefits refocus first half our efforts the our And will With the over operator? to back robust in for the be will In turn traffic. investments more of COVID-XX.

Operator

Instructions] [Operator you. Thank

the Markets. Northland comes Mike of Our from Latimore first from line Capital question

Mike Latimore

I guess, thanks. Great, Sean.

past You've of kind about transaction year in over year. talked the volumes

down it you you to sequential knocked kind time it XX%. you currently, any guess. XX I What know, starts of got are and think seen with seeing I last improvement?

Sean Feeney

just you look at our consistent, I transactions, quarter you revenue, That's little in down we're grow you kind but would like remember year, it's you been our, know, continue of, do at our year that, year, it. know, you've XX sequential improvement, a still off. know, XX% XX look that, seen how about looking and, to basis. off year say that we're to you know, growing bit over on were I of XX% of when you weekly a XX over And while to know, sounds transactions

Mike Latimore

Okay, visibility sort you not connections sequentially should connections it? fourth is? the you're the Have And where and about versus generally way But every of to know, then know new in fat. to about focused of, is think as into turn kind that overall we quarter building think on connections? quarters I

Sean Feeney

Yeah, see we that. look I to we know, that think it's you growth, think, continue and you not continue on would it's traditionally we've I given focus at. one Well, to connections expect would to best continue the continued measure,

I would yeah, So look would it way. at that I

Mike Latimore

Okay, thanks.

Operator

question George from Sutton Next Craig-Hallum.

George Sutton

you is situation you you And race? growth. growth? substantial kind that normalized what of the to give sense as you one that could enable would a And goal better just primary things mentioned what organic a a as Sean, expect wondered substantial you, Thank us at view organic of if a point, I of

Sean Feeney

I it, in post look at right with kind look at but, remember not COVID. And there's really, growth. sure now Thanks, look when you COVID, you pre the ways is at and COVID. I'm environment word looking know, the it are for of I organic two And consistent we at it, using it, substantial, I you George, think look

when at, pre when know, COVID, think to that, you you at continue things look see you you I I some And guidance know, you look back we've look come know, in saw this they schools, know, operators, all get off in really kind that in normal. good to you'll not when I back and I've that XXX%, events, see you the given And we in of return at dependent go, and XXX%, talk may you continue quarter. know, sporting growth, the and our seen year. offices, at, at look if of hopefully of that will quarter, sequential you know, may until this to look to to back So we beginning next growth people back, end quarter, that last come calendar somewhat it kind after, they really, to you and or that's think you on of the to

So, well we we're I think you kind have. focused of think that the growth that of the need grow a to, return can pre we within know, we environment on kind COVID. to do. numbers, kind get of environment. really normal, to To can And we we And really or

George Sutton

the apologize. I substantial, if overuse and word, That I

my on earnings XXth I'm call think I today.

Somebody used the word substantial today.

this rarely, there So having Or something you this And, driving takeaways, is on side. payments for by space on see takeaways. seed? a curious changing, long moving I'm we frankly, takeaways? you This a really particularly covered driven know, The, couple Anant. these of my mentioned second you else is what question. to see the wholesale is time, for wholesale that's

Anant Agrawal

sure. Yeah,

pieces. are being kouji. which what out a a and cashless lot it's other talking a we've platform is, a software, about, of for really logistic on think both of companies, our is solutions lot as there single fairly the One value couple think the of is, I I seeing So platform been

doing is one that's that helping, solution. for especially our really with I COVID. showing I customers, it you is it supplier that So want drive of, all, existing helping well think for know, that notion they're just because one

own XG out there be we and piece Reality MBM, devices going upgrades is to other XG the our is competitors, on upgraded. The need are network. our that for a of through lot also announced to

we us are off caching the having when you moving solution are that the class solutions couple with to in customers seeing in so where the best deals to competitors other go market, And us.

Sean Feeney

guys with at George, that middle thing had, it is their to do they sinal and and that those of can the had the out the And think was of for there could difficult very very and that while little that their over was, I went I some showing but was was would that switching some add well. seed was a heard recently similar happy off were I operation at we're road migrating me was good success I know, and customer while well it to look was this the they the in but could me, excited and another implementing was to actually that is switch you see that in for very of at were I with had was just and pretty people sales just to I education day happy that a we route switch and went which question, that, I we've salesmen the ago it that which got great your one excited vmss I was a people I Sean, go that

George Sutton

I appreciate Thanks, right, answers. guys. the All substantial

Operator

Kennedy is open. question William Next Instructions] Chris [Operator your with Blair. line Chris,

Chris Kennedy

about thanks is? What for look, margin the you do long the company? think opportunity guys, the We For taking business. think the term Hi question.

Sean Feeney

Chris, work what a progress I would in us. for is, say that's

and we you believe is I that opportunity of you we kind ultimately, really ready earner. some like. as new. we've a that, do Scott, margin think to positive while kind here. that we're give think the you what end, a team there's kind to want being, we positive the in that And there's I'm Wayne, will know, additional of adding not You while that know, know, people, there, growth ultimately good of, look But number said, And

But, next on optimistic look progress. the some you know, year, give from we're know, tell it I And as that. get more toward to we So that. continued you into you we'll that. that guidance can clarity, we've thought we're begin and, with that We're as think working probably we making

Chris Kennedy

know, expanding on progress the key give made? the Okay, you've then core beyond you a another one, opportunity for you guys, an market vending update and is can you

Sean Feeney

those, then look those did We for in continue deal kind and looking, know, in geographic the good you growth, kind continue close And, of the also know, opportunities we in in a space airbag the the a of we've know, to we as sell got, but in a that, lot and term, to the vending expansion, of between near quarter. you space think just you in the in well.

Operator

follow question. a up As

We have for Capital. Mike Latimore Northland from

Mike Latimore

Great, I the to of trying what quarter, kind you've like XX in some onetime here, is so charges X I'm SG&A point a baseline through good just million and the mentioned that forth, number be with here. to line SG&A working think think but

Sean Feeney

of real the So me services. in delivered the real, half this think is weighing a professional cash, and we million the, the savings, about the two is reduction started X.X. dollars And

to the to some network work have do, by last is But stock work is was still watermark high to real savings. have and in we that convert first quarter, While that's house still some work to half. And year, a the at a streams the do the one little charge people. we a a about offs a side. based is and that sustained comp on offset then But on instead of million bit the then the

G&A, do math of give So a there sort staying can to SG&A. the you

Mike Latimore

much XXX that XXX color the died you hardware guidance, reiterated in to mixer? and, know, you've be on Great, might to any how

Sean Feeney

we size. the think for if at is, to out I the look you but a hardware think it's is don't I XG it's with want upgrade, decent break XG,

And driving So there's and drive as the opportunity to that getting guess us you the something of and, that so, upgrade this something an that here. I SAS? our of, working that. XG, be upgrade, been guess, I with, there cellular of that's was you that's success is a kind is that it part our upgrades XG, competitors the I've that would you the notion, something hardware the XG that's, think, you that's that's Or the opportunity plus know, the or our to Shauna, And, number. to, And that I that drive you of companies preference XG doing of the opportunity Well, because just know, you've SMB the it's, new have that is help Yeah. we will that know, always of there no didn't cashless. know, driven back every plan and replace last, seen Is customer us. us. now, by not month is for we're in team something by reviews size on sort replacement know,

we do to replace They to people opportunity it do see our potential course, an an So opportunity competitors replace as us. as of and

out I've of So day. got lot battle we're and team, offering a confidence every in our there doing and in our sales

Mike Latimore

Great, thanks.

Operator

Presenters, you remarks. with any may questions no are closing more continue There

Sean Feeney

everyone, the weeks. know, you to the we're of look forward you couple you, getting over this to business. evening And, for know, the talking your to next Thank Great. of in And, and we interest you on focused areas over continue right USA many in front of be technology. to we that some what on the focused you're, about the excited questions the and business us we're and of and you're of asked opportunities here you at doing

So thank the help and thanks for you with your operator, very much call.

Operator

conference concludes welcome. today's You're all gentlemen, and This for Ladies thank participating. call. you always

may Have a now disconnect. You good day.

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