Slide 1: Investor Presentation May 22, 2012
Investor Presentation May 22, 2012 Steve Herbert, Chairman and CEO Dave DeMedio, CFO Veronica Rosa, VP Investor Relations
Slide 2: Safe Harbor Statement
SafeHarborStatement . All statements other than statements of historical fact included in this presentation are forward- looking statements. Actual results could differ materially from those contemplated by the forward-looking statements as a result of certain factors, including but not limited to,
Slide 3: USA Technologies Overview
USATechnologiesOverview MarketLeadership . Leading provider of wireless, cashless payment and machine-to-machine solutions for small ticket, self-serve retail industries such as vending and kiosk. . Provider of energy saving technology to the cold beverage industry . Cashless and contactless small t
Slide 4: Cashless, Small-Ticket in Transition
TO: Cashless payments systems and business intelligence at operational and customer level FROM: unattended, cash only options with little insight into customer behavior Cashless,Small-TicketInTransition
Slide 5: Market Opportunity is Vast
MarketOpportunityisVast • The small ticket, self-serve market is largely untapped Sources: US Department of Transportation, 2008IHL Kiosk Study, 2010 (2011 *Includes self-checkout systems, ticketing kiosks projections)First Research, March 2011, June 2010Automatic check-in kiosks, food ordering kios
Slide 6: Market Forces Driving Adoption
MarketForcesDrivingAdoption• Demandforconvenience;cashlesspreferred• Increasingrelianceonmobilephones• Smallticketgrowth• Increasingly“social” • Meetcustomerdesireforcashless• Reverseshrinkingmarginsthroughoperationalbenefits• Visa/MasterCardseeopportunitytodriveacceptance• Mobilepayments• Increment
Slide 7: Revenues Now 80% Recurring
RevenuesNow80%Recurring . Revenues . $30 million annualized (based on 3Q ended 3/31/12) . 80% of revenue mix from reliable, recurring revenues . Two technology platforms . ePort & ePort Connect cashless payment networking and other services . eMiser -energy management technology . Cashless payment a
Slide 8: Products & Services
Products&ServicesePortSoftwareDevelopmentKit-------------Product------------------Services------ ..ePortEDGE,ePortG8 ..G8NFCenabled ..Wireless;PCAcompliant ..Drivingconnectionsthrough“JumpStart” ..CustomersbuyePortConnectservices ..ePortConnectservice ..Currentmonthlyfeecoverstransactionprocessingan
Slide 9: Business Model Example
BusinessModelExample Equipment Sales Gross Profit A US Bank Compa Targets • Range30% -35% • Range30% -40% Transaction Fees ePort Connect Service Fee 9ePort Connect w Terminal Incl. PerDevice• Avg.$100PerDevice• $200-$330• $30activationfeePerconnection: • $7-$10/monthformajorityofconnectedbase• Minim
Slide 10: Unmatched End-to-End Solutions
UnmatchedEnd-to-EndSolutions Device Sales / Accounting Card Processing / Solution Reporting Services Merchant Services Customer Solution USA Technologies InOne Technology / Coinco First Data Crane Mdse Systems Cantaloupe Systems MEI Heartland Payments USA Technologies / Heartland Payments Apriva/USA
Slide 11: USAT is Executing a Strategy for Growth and Path to Profitability
USAT is Executing a Strategy for Growth and Path to Profitability 11
Slide 12: Growth Through More Connections
GrowthThroughMoreConnections… Market Potential VerticalMarkets . e.g. Kiosks . e.g. Leverage strength and breadth of partner Expanded Reach 1,500 + M2M sales team to drive adoption Existing Customer . Existing 2,825 customers operate Base approximately 2.5 million locations . Drive adoption in these
Slide 13: Growth Through Connections - JumpStart
GrowthThroughConnections - JumpStart • Jumpstart has accelerated adoption, increased revenues and created competitive advantage
Slide 14: Growth Through Connections – Expanding Customer Base
GrowthThroughConnections– ExpandingCustomerBase • Customer base has more than tripled since introduction of the JumpStart rental program 14
Slide 15: Expanded Sales Reach Through Strategic Partners
ExpandedSalesReach- ThroughStrategicPartners • Over 1,500 Verizon Wireless M2M sales representatives M2M sales toolkit • National training kickoff in quarter ended 3/31/12 • Co-Marketing Events • April-May 2012 -USAT participates in 10 city M2M Connected Technology Tour • USAT featured in Verizon Wi
Slide 16: Growing the Value of a Connection – Service Expansion
GrowingtheValueofaConnection– ServiceExpansion . 148,000 connections as of 3/31/12 . A PCI compliant, end-to-end suite of cashless payment and telemetry services tailored to fit the needs of self- service retail industries. NewNew Cashless and M2M Prepaid and Interactive contactless Telemetry Loyalt
Slide 17: Driving Growth By Expanding the Value of a Connection
DrivingGrowthByExpandingtheValueofaConnection Jan.2012 CustomerDemonstrationsQ32012 CustomerDemonstrationsQ32012 Introduced two-tier pricing to ePort Connect service • Increases ROI for operators by enabling them to offset processing fees Interactive Media Services • Engage consumers at the point of
Slide 18: Mobile Readiness
MobileReadiness . NFC-based mobile payment is poised to further push cashless . 65,000 NFC-enabled ePort devices already mobilized . Opportunities: couponing, incentives, prepay, loyalty, social media integration…
Slide 19: Improving Operational Performance
ImprovingOperationalPerformance . Substantially stronger recurring revenue base due to increased connections and customers . More than $2 million in annualized efficiencies through revenue, cost and expense actions taken since CEO transition . Enabled USAT to quickly move to positive adjusted EBITDA
Slide 20: Balance Sheet
BalanceSheet20• Nolossesfundedin3Q; thisisexpectedtocontinuefor4Qexcludingproxycosts. • Currently,ourprimaryuseofcashisJumpstart; usingJumpstartstrategicallytoaccelerateadoption, increasedrevenuesandcreatedcompetitiveadvantages
Slide 21: Path to Profitability Fueled by Growing Recurring Revenue Base
PathtoProfitabilityFueledbyGrowingRecurringRevenueBase Quarterly Revenue Trend (in thousands) Expect continued $10,000 $8,000 $6,000 $4,000 $2,000 $0 License&TransactionFeesnow80%ofrevenuesTotalRevenue• PositiveEBITDAfor3/31/12• 2,825customersgrowthin• 148,000connectionsrevenuesrecurring 6/30/2010 9
Slide 22: Summary USA Technologies
SummaryUSATechnologies(Nasdaq:USAT) . Positioned to capture benefits of market shift to cashless . Growing recurring revenue customer & connection base . Growth strategies building scale and closing in on profitability . New verticals and expanded service opportunities
Slide 23: Appendix
Appendix 23
Slide 24: Non-GAAP Reconciliation
Non-GAAPReconciliation Adjusted EBITDA ------- ----- - . Adjusted EBITDA represents net income (loss) before interest income, interest expense, income taxes, depreciation, amortization, and change in fair value of warrant liabilities and stock -based compensation expense. We have excluded the non-op