Slide 1: ISS Presentation June 2012
ISS PRESENTATION June 2012
Slide 2: Safe Harbor Statement
SAFE HARBOR STATEMENT 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, b
Slide 3: Agenda
Agenda I. Business Overview II. USAT is Executing In Line with Strategic Plan to Generate Maximum Shareholder Value III. Delivering on Shareholder Commitments IV. Stronger Governance and a USAT Board that is Highly Qualified and Already Actively Engaged in the Business V. Why we Believe SAVE is Wron
Slide 4: I. Business Overview
I. Business Overview
Slide 5: USA Technologies Overview
USA TECHNOLOGIES OVERVIEW MARKET LEADERSHIP • Leading provider of wireless, cashless payment and machine-to-machine solutions for small ticket, self-serve retail industries such as vending & kiosk • Provider of energy saving technology to the cold beverage industry LARGE, UNTAPPED MARKET OPPORTUNITY
Slide 6: Financial/Business Snapshot
FINANCIAL/BUSINESS SNAPSHOT REVENUES Annual Revenues * $30 million annualized (based on 3Q % Growth in Licenses & Transaction Fees ended 3/31/12) * 80% of revenue mix from reliable, Customers and connections drive recurring revenues (inthousands) _ License and Transaction Fee growth 25, TWO TECHNOLO
Slide 7: USA Technologies' Service Offerings
USA TECHNOLOGIES’ SERVICE OFFERINGS
Slide 8: ePort Service and Product Profile
EPORT SERVICE AND PRODUCT PROFILE ePort Products ePort Connect Service Telemetry and Cashless Payment Systems Payment Processing, Product, Customer and Operational Data • Targeted gross margin of 30-35% • ePort G8 NFC enabled; 75,000 installed and mobile-ready • Wireless • PCI compliant • USAT has a
Slide 9: Competitive Landscape: USAT Has 80% of Emerging Market
COMPETITIVE LANDSCAPE USAT HAS 80% OF EMERGING MARKET (1) USA TECHNOLOGIES InOne Technology/Coinco Cantaloupe Sys. Crane Mdse Sys. MEI Device Solution Sales/Accounting Solution Card Processing/ Merchant Services USAT is the only company that offers a complete turn-key solution, from activation to cu
Slide 10: Market Opportunity Is Vast
MARKET OPPORTUNITY IS VAST Sources: US Department of Transportation, 2008 IHL Kiosk Study, 2010 (2011 projections) First Research, March 2011, June 2010 Automatic Merchandisers State of the Coffee Industry 2009 Vending Times Census 2010 Smart Card Alliance 2006 *Includes self-checkout systems, ticke
Slide 11: II. USAT is Executing In Line With Strategic Plan
II. USAT is Executing In Line With Strategic Plan to Generate Maximum Shareholder Value
Slide 12: USAT Strategic Pillars - Overview
USAT STRATEGIC PILLARS - OVERVIEW FINANCIAL STABILITY AND FOOTPRINT LEVERAGE PROPERTY CONTINUOUS INNOVATION CUSTOMER FOCUSED MARKET LEADERSHIP INTELLECTUAL • Fundamental financial strength (profitability; healthy balance sheet) • Leveraging key strategic partners (e.g., Verizon, Visa, Elavon, etc) •
Slide 13: Market Forces Driving Adoption
MARKET FORCES DRIVING ADOPTION The confluence of several compelling trends should further drive market adoption. CONSUMER MARKET(STAKEHOLDERS) • VISA/MasterCard see opportunity to drive acceptance • Mobile payments • Incremental business CUSTOMERS • Meet customer desire for cashless • Reverse shrink
Slide 14: Growth Through More Connections
GROWTH THROUGH MORE CONNECTIONS Connections and Time Existing Customer Base Expanded Reach Vertical Markets Vertical Markets • USAT’s 3,000 customers operate approximately 2.5 million locations (USAT est.) • Drive penetration in these accounts • Leverage performance data and new services • e.g. Kios
Slide 15: Growth Through Connections - JumpStart
GROWTH THROUGH CONNECTIONS - JUMPSTART Jumpstart has accelerated adoption, increased revenues and created competitive advantage
Slide 16: Growth Through Connections - Expanding Customer Base
GROWTH THROUGH CONNECTIONS - EXPANDING CUSTOMER BASE Customer base has more than tripled since introduction of the JumpStart rental program
Slide 17: Growth Through More Revenue Each Connection
GROWTH THROUGH MORE REVENUE EACH CONNECTION Prepaid and Loyalty Program (1) Interactive Media Services (1) Two-tier Pricing Program TRADITIONAL OFFERINGS NEW SERVICES PLUS (1) Anticipated commercial launch 3Q 2012 $ $
Slide 18: Improving Operational Performance
IMPROVING OPERATIONAL PERFORMANCE 3Q - 3/31/2012 3Q - 3/31/2011 License and transaction fees $5,985 80% $4,314 78% Equipment fees 1,542 20% 1,209 22% Total revenues 7,527 100% 5,523 100% Cost of services 3,750 3,188 Services gross margin 37% 26% Cost of equipment 982 782 Gross profit 2,795 1,553 Gro
Slide 19: Balance Sheet 3Q FY12
BALANCE SHEET 3Q FY12 - 3/31/2012 Cash and cash equivalents $ 6,194 Other current assets 6,891 Total current assets 13,085 Property and equipment 9,870 Intangibles, net and goodwill 9,081 Other non-current assets 393 Total assets $ 32,429 Total current liabilities $ 6,756 Warrant liabilities 749 Oth
Slide 20: Path to Profitability Fueled by Growing Recurring Revenue Base
PATH TO PROFITABILITY FUELED BY GROWING RECURRING REVENUE BASE License and Transaction Fees are now 80% of revenues Total Revenue QUARTERLY REVENUE TREND ADJUSTED EBITDA (1) Expect continued growth in recurring revenues • Positive Adjusted EBITDA for 3/31/12 • New customers and connections continue
Slide 21: GAAP Net Income Is Now in Sight
GAAP NET INCOME IS NOW IN SIGHT License and Transaction Fees are now 80% of revenues Total Revenue QUARTERLY REVENUE TREND Expect continued growth in recurring revenues We expect USAT will achieve quarterly net income for the quarter ending December 31, 2012. • Based upon our improved performance an
Slide 22: III. USAT's Board is Delivering on Shareholder Commitments
III. USAT’s Board is Delivering on Shareholder Commitments
Slide 23: Turnaround Strategy: Four Defined Objectives
Turnaround Strategy: Four Defined Objectives USAT made a commitment to these four areas clear in January’s letter to shareholders. USAT has made progress on each and every front. Drive to sustainable profitability Increased customer value Improved visibility, transparency High standards of governanc
Slide 24: Turnaround Priorities - Delivering
Turnaround Priorities - Delivering § First EVER quarterly earnings call, 12/31/2011 (2Q) § In-house investor relations; instituting best practices of public companies Improved visibility, transparency - DELIVERED Increased customer value - DELIVERING § 71% growth in customers; 300% growth in connect
Slide 25: IV. Stronger Governance and a Highly Qualified Board
IV. Stronger Governance and a USAT Board that is Highly Qualified and Already Actively Engaged in the Business
Slide 26: Leadership & Compensation Practices
Leadership & Compensation Practices Board & Management Compensation Improvements Chairman and CEO Selection The Compensation Committee utilizes an outside consulting firm, Buck Consulting for compensation practices for executives and board members. • The Board began working on the leadership transit
Slide 27: Strengthened Governance
Strengthened Governance Board Independence Governance Practices Board Composition The Board of Directors has taken a proactive approach to corporate governance and has adopted best corporate governance practices. These steps include the following : • The board has adopted, is subject to, and is requ
Slide 28: Experienced Board of Directors
Experienced Board of Directors The Nominating Committee agreed on specific criteria and areas of experience believed to be most relevant in support of USAT’s strategic direction. Those criteria included the following: • Public company senior leadership experience; • Independence; • Payment and wirel
Slide 29: USA Technologies' Board of Directors
Key Areas Herbert Barnhart Brooks Schoch Arnold Petito Moschner Price Reilly Public company leadership experience Finance and deal experience Payments industry Wireless industry High volume transaction processing Bringing technology to market Scaling a growth company Sales & marketing leadership Pub
Slide 30: The Right Team to Lead
The Right Team to Lead…. Stephen P. Herbert Chairman and CEO • Formerly USAT’s President and COO • Pepsi-Cola (field and headquarter roles in operations, sales and marketing), directed development of market strategy for the vending channel and subsequently the supermarket channel for Pepsi-Cola in N
Slide 31: The Right Team to Lead
The Right Team to Lead…. Albin F. Moschner • Formerly COO, Leap Wireless ; President Verizon Card Services , Verizon Communications for Verizon Credit Card - sales and manufacturing leadership roles • USAT Board of Directors since May 2012 Frank A. Petito, III • President of Orbitz for Business , VP
Slide 32: IV. Why we Believe SAVE is Wrong for USAT
IV. Why we Believe SAVE is Wrong for USAT
Slide 33: Tirpak and S.A.V.E.
Tirpak and S.A.V.E. § Tirpak’s recent history with USAT § March 2012 - Tirpak asked to resign, and does, from USAT board § March/April 2012 - Tirpak’s S.A.V.E. group accumulates USAT shares § April 2012 - Tirpak’s S.A.V.E. group commences proxy contest § May 2012 - Federal Judge rules that Tirpak vi
Slide 34: Tirpak's Misleading Information
Tirpak’s Misleading Information S.A.V.E. says The reality… 2. “USAT continues to burn through significant cash.” § The stock price continues to recover from two significant events since Fall of 2011 (1) industry fears created by the Durbin Amendment in September (2) removal of former CEO in October
Slide 35: We Believe Tirpak's Plan is Ill-Advised
We Believe Tirpak’s Plan is Ill-Advised S.A.V.E.’s “plan” The reality… All of the concepts presented by S.A.V.E. are either already underway, under discussion, or have already been considered by the board and rejected . § USAT works to value engineer high-demand service enhancements to keep device c
Slide 36: S.A.V.E.'s Track Record - Direct Insite
S.A.V.E.’s Track Record - Direct Insite S.A.V.E. Takes Control Takeover Nepotism Poor Governance Operational Neglect Lost Value On May 25, 2011, Bradley Tirpak, Thomas, S.A.V.E. and other shareholders in their group gained control of the board of Direct Insite Corp. (OTCB: DIRI) . On May 25, 2011, t
Slide 37: USAT's Board is Best for Shareholders
USAT’s Board is Best for Shareholders
Slide 38: Now Is Not The Time to Halt Our Progress
Now Is Not The Time to Halt Our Progress Turnaround is underway. ü New strategic direction and initiatives implemented by new CEO ü Demonstrating execution at every level ü Increased exposure and accountability to our investors ü New leadership needs time to harvest improvements in business model an
Slide 39: Appendix
Appendix
Slide 40: Non-GAAP Reconciliation
NON-GAAP RECONCILIATION 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-operating item, change in fair valu
Slide 41: 12/31/2012 Net Income Expectation
12/31/2012 NET INCOME EXPECTATION 1. Fair value of warrant liability: Assumes no increase in the fair value of USAT’s warrant liabilities at December 31, 2012 compared to the fair value of the warrant liabilities at September 31, 2012. Changes in fair value of USAT’s warrant liabilities create a non
Slide 42: Steve Herbert Chairman and CEO sherbert@usatech.com David DeMedio CFO ddemedio@usatech.com www.usatech.com 800.633.03…
Steve Herbert Chairman and CEO sherbert@usatech.com David DeMedio CFO ddemedio@usatech.com www.usatech.com NASDAQ: USAT 800.633.0340 Veronica Rosa VP Investor Relations vrosa@usatech.com