Q4 2020 USA Technologies Inc Earnings Call
Thank you for standard.
Welcome to the USA technologies fourth quarter fiscal year 2020, <unk> earnings conference call. At this time all participants are in listen only mode. After the speakers presentation. There will be a question and answer session I would now like to hand your conference over to your first speaker for today, we shouldn't ways.
Great Vice President corporate Communications and Investor Relations for USA technologies. Please go ahead.
Thank you and good afternoon, everyone.
Welcome to the USA technologies fourth quarter fiscal 2020 earnings conference call.
With me on the call this afternoon, or some Feeney Chief Executive Officer, Wayne Jackson, Chief Financial Officer, an onto our Burwell Chief revenue Officer.
Before we begin today's call I would like to remind you that all statements included in this call other than statements of historical sites.
Looking in nature.
Actual results could differ materially from those contemplated by the forward looking statements of the results of certain factors, including but not limited to business financial markets and economic conditions.
A detailed discussion of the risks and uncertainties that could cause actual results and events to differ materially.
Such forward looking statements included with our filings with the efficacy and in the press release issued earlier today.
Listeners are cautioned not to put them doing reliance on any such forward looking statements, which reflect management's views only as of the date. They are made.
USA technologies undertakes no obligation to update any forward looking statements, whether as a result of new information future events or otherwise.
This call will also include a discussion of certain non-GAAP financial measures that we believe are useful for among other things evaluating USA technologies operating results.
These non-GAAP financial measures supplemental to and not to substitute for GAAP financial measures such as net income.
He tells the these non-GAAP financial measure a presentation of the most directly comparable GAAP financial measure the reconciliation between those non-GAAP financial measure.
Well most comparable GAAP financial measures can be found in our press release issued this afternoon, which are posted on the Investor Relations section of our website at Www talk to USA truck's dotcom.
And with that I'd like to now turn the call over to shopping Sean.
Thank you list and thank you everyone for joining us today.
It's hard to believe that I'm already in my fourth month when the company.
Team has done a lot of work in a short time and I'm very excited to update you on our progress.
I will start by reviewing our fourth quarter results, giving you some perspective behind the numbers.
No not and I will review, our strategic initiatives for the year.
And then Wayne will follow to fully detail or fourth quarter results.
Lastly, I will discuss our financial guidance for this fiscal year.
As you saw in our earnings release and as we touched on during the last earnings call Cobot 19 pandemic had a material impact on the company in the fourth quarter.
Revenue of 32 point Sixmillion decreased 15.2% year over year.
Gross margin was 34% compared with 25.3% in the prior year period due to mix of revenue during the quarter.
Which wayne will discuss in more detail in a few minutes.
Adjusted EBITDA of negative 1 million compared to negative 4.6 million in the prior year period.
While these results were clearly impacted by the pandemic.
From a top line perspective, we're pleased with our ability to control costs during the quarter.
On our last call I mentioned, some key cost cutting moves such as consolidating and eliminating certain positions in the company.
That trend continues as we work through our new management initiatives as does the focus on reducing the number of consultants the company utilizes.
We also implemented a 20% salary reduction for the senior leadership team for the rest of the year.
Lastly, we noted that the board had deferred any cash based director fees until calendar year 2021.
So the kids some additional key points, you should know about which happened during the quarter included.
That we watch launched the new company web site.
It was an important first step to redefining who we are in showcasing our platform as a service for unattended retail.
We debuted the first unattended retail or you are summit virtual customer and industry event, which was a resounding success with over a thousand registrations.
We announced the long awaited feature remote price change RPC.
In late June.
We're currently testing with customers be able to take advantage of <unk> Rolling This initiative out.
Later this year.
We have also formed a team to focus on improving our working capital, where we see ample opportunity to make improvements.
We've also launched a series of other marketing initiatives, including a program.
Okay. So the ability of seed to better prepare our customers for demanding times like we have seen in calendar year 2020.
This has been well received by our customers and we expect to continue these efforts over the next few months.
Most importantly, as we move towards a more customer centric organization. We have added staff in sales as well as customer support to make sure our customers are taking care of properly.
This should lead to higher retention, a better value proposition for our customers in a better place for our team to work.
As for more recent events worth highlighting.
When I got here I founded team that had been understandably demoralised over the past 18 months.
Since my arrival, we have started a regular cadence of all hands meetings and we'll continue to focus on improving communications in team building.
In August we closed a new debt financing with JP, Morgan Chase, which replaces the company's previous debt facility.
We're excited to welcome it financing partner.
Focused on the long term success of the company.
The terms of the new facility reduce our interest rate from 9.75% to LIBOR plus 4.75.
Which represents a significant cost savings going forward.
Our processor migration to Pfizer is proceeding as planned and is on schedule to be completed by the end of the calendar year.
Now that we have our team assembled and it put many hurdles behind us we're reallocating capital from wasteful corporate overhead.
Stick development and customer service.
We spent 37 million.
For the past two years on investigations proxy solicitation and restatement expenses.
These events and costs are now behind US, we now look to accelerate our growth by investing in the platform products internal systems.
International expansion.
So in addition to having better communication throughout the organization, we will be providing the team the financial and human resources to help them do their job better make them proud to work for this organization again.
The strategic initiatives at the management board laid out for this fiscal year, our to drive sustainable organic growth.
Right size, the company's cost structure and invest in people in culture in order to achieve excellence.
To talk about organic growth I wanted to turn the call over two and not our chief revenue officer to review our opportunities to grow the top line.
Uh huh.
Thanks, Sean as we exit fiscal year, 2020, and we refocused on our growth potential.
It's helpful to start with understanding where we stand today.
We are the largest and most respected Claire large and underpenetrated industry.
Also we have clear leadership position and technology with innovative solutions and a robust roadmap backed by valuable intellectual property.
In addition, despite the near term challenges of close to 19, we believe we have strong tailwinds in our industry, helping our business, which will only accelerate further and postcode world.
For example, we released yesterday that were based off the study that included hundreds of unattended retail operators better cross the U.S.
He found out one over 60% of their sales in July 20 is funny, we're actually made with cashless payment.
This is up from 53% ingest January of this year, that's a huge shift in consumer preference of cashless over cash in a very short amount of time.
And to these trends are important to the industry because on average consumers spend more when the pay with cashless versus cash.
Our data says, it's approximately 43% more.
Hi, such as location open back up safely in a post cold and World. We believe these trends will encourage operators to excel cashless on more of their machines.
And our existing cashless devices, while higher volumes of processing than we have seen under contract.
As a leader in Spain, We believe we are best positioned to capture the upside driven by these exciting trends.
Independent of the secular Tailwinds supporting further optional cashless, we're well underway with our efforts to drive growth through various key initiatives.
First we want all our customers existing and future to be fully deployed with seat incapsula across their entire business.
Penetration of the seat product within our existing customer base is well below levels that we think we can achieve and that we believed to be optimum for a customer base.
We believe now is the perfect time to drive this initiative.
Let me explain why would the past few months.
He'd customers had benefited even more from our software product, which enabled them to manage their operating costs in real time.
Basically they know exactly where to go when to go and what to take no matter what the volatility on filled that their machine looks like.
This allows them to maximize the profitability and helper right out the pandemic better than competitors, who are flying blind so to speak.
Hi, reinforcing the benefits of seed coupled with the secular cashless tailwinds that I touched on earlier, we are well positioned to convert the vast majority of our customers onto the full platform.
The success of this strategy requires best in class customer experience across our full platform.
We continue to make strides in this area, but we still have a lot of works it.
Customer satisfaction at the top priority at the senior leadership team and is critical in allowing us to expand our offerings current customers as well as introduced some new ones.
And on the topic of new customers. Our second initiative. This year, it's just selectively enter expand within new verticals or unintended markets.
You've heard this before the problem historically was that the company inflated cost us first and only sales approach for cracking, new verticals, which limited our ability to engage with certain customer segments.
For example, we were not set out to effectively engaged with the potential customer for whom cash this was not occurring in top priority, even if I LT and softer solutions mapping.
The new pop from sales approach will allow us to sell any of our solutions that entry points to our platform rather than solely leading with cashless.
This takes us from being a traditional widget sale model cashless.
Full enterprise solution that has enabled with Aiotv cashless and best in class software as a service.
We believe this is the optimal way to capitalize on white space opportunities in each of our newer verticals and geographies.
And speaking of geographies that leads me to our third initiative for growth in this year, we have a great opportunity in front of bus with international expansion.
As a reminder, our international strategy is to leverage our SaaS platform partnering with incumbent payment providers to avoid the Compton delay of getting payments certification.
Internationally. We are currently focused on two regions in Asia, we are assessing partnership opportunities, where we believe the company and its seed offerings could be high value add to local providers and the underlying customers.
Also as you may have seen in this morning's announcement, we recently hired Fernando Lopez lacrosse to lead our Latin America and Caribbean expansion.
We're very excited to welcome him to the team.
Fernando was formerly Vice President General manager of Verifone, Latin America, and Caribbean, where your reported directly to our chairman does very strong for 12 years, while anywhere phone. He grew revenue from 30 million to 250 million roughly eight.
Over his tenure.
And the great thing here that we aren't starting from scratch in Mexico, we already have to customers using eat and our T. solutions. We are now testing the full market opportunity by building off these early learnings.
I'll now turn it over coffee shop.
Thank you cannot.
Not to move on.
Our two other strategic initiatives for the year, starting with the rationalization of our cost structure.
While cobot isn't exogenous factor to which we must adapt rationalizing the cost base is something completely within our control.
And is a major focus this caused this fiscal year.
As I mentioned on our last call. My focus is on profitable growth not just growth for the sake of growth.
While we will continue to invest in our growth. It has become clear to me. During my short tenure that there is plenty of opportunities significantly cut costs that have nothing to do with driving our topline or better servicing our customers.
Acting the over reliance on third party consultants and elevated corporate overhead is a big focus of mine.
And our final initiative investing in our people and culture in order to achieve excellence, we've made a lot of changes and the leadership team over the last 100 days.
My goal and the goal of these new leaders is to come together as a team to bring back a laser focus on our customer our people.
And our stakeholders.
Lastly, and very important for me very sincere. Thank you to our employees for their continued dedication and resourcefulness over the past several months.
Safety and well being of our employees is always a top priority and it has been inspiring to see such a successful transition as they work from home.
While continuing to support our customers.
With that let me hand, it over to wane to walk you through the Q4 financial results.
Thanks, Sean good afternoon, everyone.
I'm excited to be with the company as a CFO. During this transformational period and I look forward to getting to know many of our stakeholders over the coming month.
I will begin by discussing the companies like 24th quarter results.
Revenue for Q4, F., why 20 totaled $32.6 million.
Decrease of 15.2% from the prior year fourth quarter.
License and transaction revenue totaled 27.8 million for the quarter.
Decrease of 15.6 million from Q4, F. why 19.
Primarily as result of lower transaction volume in Q4 420 over the prior year.
Equipment sales of $4.8 million decreased by 13% from the prior year quarter.
Primarily as result of the impact of cobot on sales and chip.
Total gross profit margin for the quarter was 34% compared with total margin of 25.3% for Q4 590.
License and transaction margin improved to 42.3% in Q4.
From 33.8%, while equipment margin was a negative 14.1% for the quarter compared with a negative 25.6% in the prior year.
The primary driver of the improvement in overall margin was due to the revenue mix for the quarter.
As the transaction volume and equipment revenues decreased due to cope with.
The higher margins associated with our license revenue stream positively impacted the overall mark.
While the discussions on this call are primarily related to our fourth quarter results. There is one item, but hira highlight related before year.
As more fully disclosed in the earnings release, we have reclassified certain items from SDMA.
Into investigation proxy solicitation and restatement expenses.
We reclassified these amounts in order to more succinctly highlight approximately $37 million, we incurred related to these activities over the past two years as well as allow us to prospectively highlight the changes in Sq net.
Operating expenses in the fourth quarter totaled $21.5 million.
An 11.7% increase over the prior year.
SDN expenses in Q4 up like 20 were $12.5 million.
Which decreased 18.3% from $15.3 million Q4 at White Knight team.
The decrease was primarily a result.
Reduced professional services costs of $3.2 million.
As well as a reduction in marketing related expenses of $900000, partially offset by increases in payroll facility related expenses of $1.4 million.
The other large movement in Opex related to the increase in Q4 investigation proxy solicitation a restatement costs.
As noted earlier, while these costs are behind US we did have $5.2 billion more of expense in Q4 up like 20 than the prior year quarter.
Our operating loss for Q4 airports warranty is $10.4 billion, which compares to a loss of $9.5 million in the prior year period.
Net loss for the fourth quarter was $11.4 million.
Or 18 cents per basic share compared to net loss of 9.9 million.
Or 16 cents per basic share in the prior year period.
Adjusted EBITDA for the fourth quarter was a negative $100000 compared to negative $4.6 million in the prior year period.
Regarding liquidity the company had $31.7 million of cash cash equivalents as of June 30, 2020.
In addition, as John indicated on August 14, the company entered into a new credit agreement with JP Morgan Chase and repaid all amounts outstanding under the loan agreement Tara.
The new credit agreement provides $45 million secured revolving credit facility.
And a $15 million secured term facility, which includes an uncommitted expansion feature that allows the company to increase the total revolving commitment and or add new trucks is of the term loan and an aggregate amount not to exceed $5 million.
I'll now turn the call back over to Sean.
Thank you Wayne.
You may have seen in our earnings release, while many of our peers are not giving financial guidance due to the uncertainty presented by cobot, we did introduce guidance for fiscal year 2021.
For top line, we're expecting a range of 170 million to 180 million in revenue.
As many of you know cobot still raises a lot of uncertain.
This range assumes no further unforeseen cobot related impacts, which could create substantial economic duress later this year and into calendar year 2021.
This range also expects that the first half of the fiscal year will be impacted both by the cobot 19 pandemic.
And our continued turnaround in the business. It also assumes that the second half of our fiscal year will be a more amenable environment than the first half in terms of office school.
And hotel traffic.
We expect that most of the heavy lifting of the turnaround will be completed during this calendar year.
And anticipate that we will begin to see the benefits of our investment and refocus sales efforts.
In the second half of our fiscal year.
Well the impact of coded to our topline is largely beyond our direct control. There are many other levers within our control as it relates to adjusted EBITDA for the fiscal year, we're expecting a range of 2 million and 5 million.
Just like the topline, we expect EBITDA growth to accelerate in the second half of the fiscal year.
The fourth quarter, we achieved improvements and important areas, which we will bleed.
Which we believe are reflective of disciplined execution of this new management team.
Well, we're encouraged by the short term results, our turnaround and full transformation of the business is not a short term exercise.
But the new senior management team now in place reorganized business structure redesign salesforce and a stronger capital structure I am excited about our jumping off point for F. Why 2021.
Well, we are not yet out of the woods in terms of the headwinds presented by coated.
And our DNA is not consistent with the business of our size I strongly believe the work and investment we're putting in during the first app start to bear fruit in the second half of the year.
Lastly.
I know everyone is interested in getting an update on our NASDAQ relisting efforts I.
Im personally involved in making sure we do everything we can do to achieve this goal as expeditiously as possible.
We will provide updates.
As we know more.
Just to wrap up while we may experience a few bumps this year due to legacy an external factors.
We have an incredible foundation from which to grow this business and will emerge stronger.
With that we will hand, it back over to the operator for questions operator.
Certainly ladies and gentlemen.
As we begin the Q in a we will now open the call for questions. Please limit your call to two questions. If you have any additional questions. Please had yourself back into queue. Thank you. Our first question comes from the lined up Mike Latimore from Northland Capital markets. Your question. Please.
Great. Thanks.
So I guess on the on the gross margin.
License and transaction gross margin.
Very strong as you think about transaction volumes coming back and the new processor or where does that normalize around.
Mike I think that you know the product mix in Q4 was.
Was was strong as transactions were down and it also showed the strength of our license in Turkey.
Our license line.
We would expect that that will will come back a little bit more in line asked the transactions grow as you know those are not as profitable as our license.
Part of the business. So I would expect that that'll that'll come down a bit from what we saw in Q4.
Yes.
And then.
I think last quarter, you talked a little bit about transaction volumes.
Kind of you know getting to a certain percentage pre covet levels of that.
Improving from there do you have like kind of data sort of more recently here.
Yes, we've seen.
Through the summer I think the cobot kind of.
Increase in transactions flattened a bit what we're seeing is that.
Compared to.
Quarter over quarter transactions are down somewhere 10% to 15% kind of on a weekly.
Basis.
Now that is a little bit not apples to apples and that there are we do have more devices.
That or better in the field.
So we think that when it does begin to come back and people are back and offices, we will see some some acceleration.
If you look at kind of where we were in February kind of at the high watermark for for this year we're off.
Somewhere in the 20% to 25% range on.
Transaction volume, so signet significantly off were earlier in the year.
Got it okay.
Great and its just.
On Opex, you talked about 12, and a half million of SDMA and then I think it was 1.1 and DNA is that kind of a good sort of baseline for the September quarter.
I'll, let Wayne answer that one.
Well, Mike Thanks for the questions so relative to the first quarter were very the revenue and EBITDA.
Guidance that Sean Dave sort of baked in.
All of the although the quarters.
How we see them now maybe more directly answer is is it's it's early innings and as John talked about the first half is going to be continued investment which will impact our.
Our EBITDA on or as DNA Kaufman.
Half of the year, we see that scaling.
Okay, great. Thanks, a lot good luck.
Thank you. Thank you.
Thank you. Our next question comes from the line of Bob Napoli from William Blair. Your question. Please.
Thank you and good afternoon.
I guess first question would CESC I would be on the [noise].
Cantaloupe.
The the cross sell and I think.
That you had said.
That.
Now onto that you felt you could get the penetration rate up too close to 100% of the customer base I was wondering what's the percentage penetration is.
Today, and what gives you the confidence that you could.
Increased the cross sell debt that dramatically.
So this is Sean what I would say is we would love to have it at 100%.
Of our.
One of our.
USA TV customers.
We believe that were around 50% penetrated now.
And we reorganized the sales organization and kind of focused more on the seed platform as an important part of their compensation plans.
So it's early in that we've kind of change that direction and what we think we will see is a growing pipelines in the first half with.
[music].
Growth being starting to be delivered in the second half lives of the year.
Okay.
Maybe let me ask one on capital on the capital levels or the business in getting the financing from JP Morgan are you aware.
Sean where you want to be on.
The capitalization of the business or is there more work to do when do you need to do that.
Not only for the health of the business, but also to get.
Yes, we listed.
I don't think that has an impact on on Relisting, Bob I think that we feel that weekend fund the business.
With the capital we currently have.
And we are looking at kind of are there other actions that we should take but no decisions that at this point.
Okay, maybe just sneak in one last one.
What are your views on the white space for your business to the Tam in the white space in your current share.
The market.
I have applied question.
Yeah, I think as we've talked about we think that there is ample room for penetration.
The seed platform into the USAID key customer base I think that.
We do also believe that there's still room for expansion with our.
With cashless and our platform.
As a whole I think we've seen some of the adjacent kind of industries to vending it'll be very negatively impacted by co bid, which is kind of brought those really to a.
To a halt or a.
A stop or a significant slowdown.
So we think theres ample time to get to the growth that.
We want.
By continue to expand.
Our cash as part of the business and really we're focused on.
The solution sale of our platform as a whole.
And as an I talked about we're beginning to work on some international expansions as well that well probably will not may not bear fruit in this case this fiscal year, we'll we'll definitely be counting on in fiscal year 2022.
Thank you appreciate it.
[noise]. Thank you aren't next question comes from the line George Sutton from Craig Hallum. Your question. Please.
Thank you and first welcome to Wayne.
So I wondered if you could break down how you're thinking about equipment versus license and transaction business going forward in particular, how you're thinking about equipment sales are you looking to bring more partners and particularly from a financing perspective.
Sure.
You know George we but we focused on.
Looking at the the supply chain part of our business, we hired a gentleman in the fourth quarter to that.
Came to us from Ingenico has evolved to their their supply chain. So we're looking at kind of all aspects of that and ways that we can.
Yes manage the.
That part of the business from a from a cost point of view.
I think that we have partners for leasing.
And financing of of hardware for people and and I think that we will look to expand that NAV as many options as we can poor.
For customers.
So we're kind of looking at all of that but.
Not a lot that decision wise that I can talk about yet.
Could you give us a bit a detail on the Salesforce realignment how're you know structured differently than you were before.
[music].
Sure I'll ask and not to kind of talk through what he has done with his organization to kind of focus them on the on the customer and sales in the various segments or not.
Sure.
So.
In the previous organization.
Sales marketing and customer service, where.
Functions are parties it differently years in that business.
And we found is that it was fairly falling off.
In terms of the overall kind of customer experience of working with our company in our solution.
Lots of hand, all hands on kind of.
Transitional shares when questions or come up or sales opportunities come up and just voluntary attrition.
So what we've done as Weve Untermeyer acquisition brought all assumption under one umbrella.
Our marketing to sale customer service to implementation clones.
In operations all that now comes at a one one umbrella so now in sales opportunity to coming up all the leaders of each of the assumptions are aligned the communicating a lot more.
That kind of what we're evolving here in terms of driving them, our SaaS enterprise level consumer experience working with our business specific the actual sales force it all.
We are realizing what we call different tiers of how the attack the market in terms of kind of the small and medium large operator base and kind of putting the right skills that.
But we're a little bit misaligned before and hiring more people against the enterprise and larger size operators.
Gotcha.
Finally, this is a sense NFL season started tonight, we're going to start betting again I'm going to make a bet that Fernando does better than eight ex that he did it had verifone and Youre Latin American market.
Over the next three years and I'll take any pets and E Commerce, that's it for me.
I I would love to be on that side of the bet. We did George we've got a high expectations for for Fernando and.
He'll hit the ground running and ER and a little at about a week and a half so.
We're excited to have them and he did some great things for Doug merger on it Verifone to Doug strongly endorsed that we bring him on it had been begin working in that part of the Mark.
That's great. Thanks.
Thank you and as a reminder, ladies and gentlemen, if you have a question. Please press Star then one our next question comes in the line of Gary Prestopino from Barrington Research. Your question. Please.
Hi, good afternoon, everyone.
I wanted to just ask on a notch some of the things that you were talking about in terms of.
A new verticals and new markets I didn't quite get the markets first of all did you say Mexico was one of them, we give us another one.
Yes, So we're focused on our international expansion for markets around Asia, and Latin America.
Asia, and Latin America, Okay, and your and your platform Ken.
Can't know working all those different regions you can go international with a platform that you have right.
Correct, and I guess I'd mention in the.
Earlier talk.
Our focus has really to leverage our identity and soccer services as kind of art tip of the sphere into those markets.
Cashless, it's something we're going to lean on partners as we get in these markets, probably because I think a lot of people.
Take a lot of time and is very sensitive to sort of bank acquisitions, and new markets and so that's kind of our strategy as we look at these two engines.
Okay, so that would be to the second question.
You talked about.
They always used to lead with cash lists.
Onto the prior regime.
Now you're going to be moving more towards trying to sell at enterprise solution that you got from.
But with the seed aquas or the cantaloupe acquisition.
Cashless comes it comes you know that's secondary.
Yes, yes way, we view that Oh, sorry, John.
No go ahead enough.
Yes.
The way we hear platform when we talk about platform. It is all the services, we provide right ultimately.
From that provide aiotv data logistics.
Cashless payment all of these are services around is essentially the full tough when they providing our customers that are all in with us leverage all of those technologies and different that's kind of.
Farm. However, when you go into new market.
The operators you talked customers.
May have cashless as a party some may have logistics optimization of the party. Some may just want connectivity.
And historically if it wasn't castles first we didnt really know how to engage with those customers with the callow platform integrated with the Port platform. We now have a breadth of all the services and now we're making it easier for our sales organization and our customer service or in relation to engage with customers to get onshore.
Platform in any of those services as a first.
But with the eye towards bringing it all on overtime.
Okay.
And then I just wanted to ask about the remote pricing are usually only one in the market now that how's that.
Not you want to comment on that.
Yes, sure so the promise of remote pricing and probably even talked about in this industry for 15 20 years.
And functionally at a high level pending and pricing machine is not it's not.
Hard part the hard part really is how do you build it into an awkward workflows across the fees, where if they're doing remerchandise machine you know they have to get us off a pop on the tells him. He's the parts you want to take will then you will change the prices at the prices are different and so there's a whole bunch of different.
Use cases that use the underlying technology every more price change.
And today I believe we are the only once I have actually delivered on some of these work for processing that take into account not just the actual RPC piece, but how does and offerings that scale.
Okay. Thank you.
Yeah.
Thank you. Our next question is a follow up from a line of Bob Napoli from William Blair. Your question. Please.
Just a question on your health of the customer base, obviously, having your market segment has been portions of it had been hit really hard.
Hi, Kobe have you seen.
Customers go out of business are you seeing many customers go out of business and.
Just maybe some commentary around the strength that the customer base.
Yes, I think we've we've definitely seen some small customers either sell out or in some cases, not many go out of business.
And we've really seen kind of a mix of impact. So if you can imagine.
If your business is predominantly a coffee in an office and a major city.
Your business is really struggling.
I was with a customer the other day that that.
Said that they had seen good.
You know kind of beach season.
But now that Dave This is normally when the beach ends in school and college comes back and.
You know there their school business K through 12 was down 90 plus percent.
Over a year over year and their college was off 45% so.
No.
We really need kind of to to get back as I said earlier and too.
I think it was Georgia talked about the NFL, we need people back in offices kids back in school.
In college fully engaged people back and hotels.
I've been traveling a little bit hotels are well a little bit more than they were a month ago theres still predominantly empty.
And then sporting events, you know there's lot of vending it.
So you know it coated well the stock market is up continues to kind of really hit our our customer base pretty significantly.
Today, we do expect I guess.
On the technology side, what upgrades, where do you need to invest where are you investing in.
No.
What kind of new releases or upgrades there.
We're working on it.
So the biggest thing that jet boat and I and the team has been working on is the the prior management made a lot of commitments.
Two partners a lot of commitments to customers that they did not follow through on and have a really good discipline process and so we've been rationalizing kind of.
Well over 100 kind of deliverables.
Down into the ones that make the most sense and in some cases, we're doing a lot of work or very little revenue, while we let things that could drive good revenue.
And in line behind that.
So that's the main thing that we're working on through the first after the year.
We're working on with our customers with remote price change and getting all of the various airport devices available to work with that and that really begins to unlock the power there.
We're looking at another a number of other things that we think can drive revenue and to the earlier question of around international of course, there would be translation work and some integration work ultimately what we want is our platform to be very easily.
Integratable to.
Other.
Pieces of software and as you get into larger customers that becomes more and more important than that's an area of focus for us of looking at how we can do that faster quicker and it could potentially also be a revenue line for us.
Okay.
Thank you and then just a follow Latin America.
What's the game plan.
From a team hiring or.
Marketing what did said how what's the Expensed, it's going to go along with that.
We expect time to get material results, maybe a year from all or something like that it sounds like what's the opportunity to break.
Great Great question I think that.
What we believe is that the the Fernando who we've hired knows that market very well as he has worked there for a great number of years I think he's had a lot of success with partnering we believe that the success internationally is looking for partnerships that that we can work within drive.
And so in the near term he's basically assessing the various markets and looking for opportunities that we can that we can ultimately grow and as I said earlier I would love to see something in this year, but it's probably you know.
2022, before we begin to see impact on that but fernando's done it before and I'm I'm counting on him defined as some great opportunities that that we can take advantage of as we sit here today something software.
We know the software works.
There may be some localization that we need to do and maybe some.
Some integration that that we need to do there as well.
Is there or something to acquire it.
Makes sense either platforms are they're small businesses or anything that you're looking data would be interested in.
Yeah.
I think thats all part of our strategy I think in the near term I'm trying to get the company on very solid financial footing. So those sort of opportunities when they arrive we have the capability to take advantage but.
Many times moving into new markets M&A as a way to do it partnering is another way.
I don't think you'll see us just go by ourselves into his new markets. That's just that's very difficult.
Thank you appreciate it.
Great.
Thank you. Our next question is a follow up in the line of Gary Prestopino from Barrington Research. Your question. Please.
I cannot is it possible. It just gets some statistics for Q4 I didn't see him in the release, but can you give like what the gross connections were.
Number of transactions when the dollar volume transaction volume.
[noise] Wayne I don't know if you have that I don't.
Yes.
Yes.
All right and then try and just wanted to ask you is you know as you've gone around and talk to your.
Land base.
What were what were some of the pinch points, there that but the client base maybe side of things that.
We're not done correctly or we're not done to their liking.
With the that you can.
Really strive to improve going forward.
You know I think Theres a couple.
One is.
We need to be better.
In our customer service area.
And you know what I heard from customers was you know you're not service as well and so.
In the near term we are we are adding some people there.
Looking at how we can best.
Do that but we've got some people that.
Our are not happy with the way that we have service them over the last the last couple of years.
Second the.
I think as I talked earlier.
The sales organization made a lot of commitments that weren't necessarily well coordinated through the organization and we're working our way through our through that and working our way out of it.
But you know I think that there are things that we blood sit through.
Various reasons.
That we are.
We are correcting and in some cases, having tough conversations with people that they were not going to do this is just not enough revenue.
In other cases, where we're trying to accelerate deliverables because they they ultimately could drive revenue.
Okay.
Alright, Thank you Gary.
Very excuse me this is why not.
Connections or 35000 for the quarter brings our total connections to 1.3 million.
Uh huh.
No we have that I was asking what the gross connections were and what the transactions in the volume. That's that's data that usually give you put it into Q, but obviously the case not going to be ready for awhile.
So if you don't have that Thats fine yeah I don't.
Okay. Thank you.
Thank you.
Next question is a follow up from the line of Mike Latimore from Northland Capital. Your question. Please.
Okay, Great. Yeah, just had a question about further seed penetration so.
If you're I kind of 50% penetration a base you have another 50% to go how much of that incremental amount is kind of greenfield versus replacing a legacy system that may be in place.
Not you want to comment on that.
Yes sure so.
I don't have the rough percentages for you on this call, but directionally most of the larger operators out there of thousands machines, there usually and they're not on t. It already there are usually on im sort of competitive software solution in the marketplace. They tend to be fairly old legacy.
Platform.
And so thats been a big target our sales organization.
On the small operators side.
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They basically have nothing.
And so we feel like Thats, a really large white space that we're going to go after with some investments on the seats.
Great and then regarding the.
Study you did about where you had some date on contacts less transactions I guess.
Did you have visibility into what percent of.
Your.
Current transactions RVX, some sort of contact list.
Credit card or Apple pay.
Yeah, you know as we said we've seen really.
A lot of growth and contact glass.
Within our.
Transactions, it's grown from about 9% in the beginning of the year.
To the high teens.
Through the first two calendar.
Quarter's now there's a lot of focus around contact less.
In the market and well growing off a small base that that's pretty significant growth.
Yes.
Thanks.
Thank you. This does conclude the question and answer session I'd like to now turned the program back to management for any further remarks.
Well, thanks, everyone for listening and your interest in USA technologies and.
We will we will talk to you soon thank you operator.
Thank you and thank you ladies and gentlemen few participation in today's conference. This does conclude the program you may now disconnect good day.
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