Eye on Earnings: USA Technologies And Fleetcor Look for a Near-Term Rebound

With the coronavirus pandemic having reduced traffic to vending machines and other unattended retail devices, USA Technologies Inc. on Thursday reported quarterly results that included drops in both machine connections and revenue. But chief executive Sean Feeney sought to reassure investors that better days will arrive soon. 

“While the rebound in our industry from the impact of the pandemic, and in turn our business, has been slower than we expected … we are incredibly proud of all the company has accomplished … We believe we have the right team in place, with tailwinds that we expect will help drive our business,” Feeney said in a statement. 

While the pandemic has discouraged consumers from touching devices not under their direct control, Feeney argued the pre-pandemic trend toward unattended devices will reassert itself, buttressed by the availability of contact-free payments. “The increasing shift to contactless payments and unattended retail have created demand for cashless products,” he said.

The Malvern, Pa.-based company, which provides the technology and connections that allow self-serve kiosks to accept electronic payments, reported 1,358,000 total connections for its fiscal second quarter, ended Dec. 31, up 8% year-over-year. But revenue of $38.3 million was down 13.1%. Some 87% of total revenue consists of license and transaction-fee revenue.

Active devices, defined as those that have run transactions with the company in the previous 12 months, came to 1,154,932 at quarter’s end, up slightly from 1,133,754 a year ago.

The results, though mixed, were enough to lead analysts to express optimism. “Clearly, the new management team has its hands full, with issues exacerbated by the pandemic. However, we continue to believe the unattended retail payments market is very attractive and that [USA Technologies] is well positioned to be one of the leaders in the industry,” said Robert Napoli, an analyst at Chicago-based William Blair & Co. LLC, in a research note.

USA Technologies has had other battles to fight besides its struggle with Covid-19. Long-time software executive Feeney took over in May following a bruising proxy fight that deposed the company’s former management and board of directors. The new board is backed by hedge fund Hudson Executive Capital. In the following months, Feeney restocked the company’s executive ranks with new personnel.

In other earnings news, business-to-business payments provider Fleetcor Technologies Inc. reported its revenue for the quarter ended Dec. 31 dropped 12% year-over-year to $617.3 million. For all of 2020, revenue fell 10% to $2.39 billion. Transactions in the company’s fleet-fueling segment, its largest, fell 13% to 110.4 million.

Still, business started to perk up toward the end of the period, management said Thursday. The Atlanta-based company’s fourth quarter “finished better than expected, with improving trends across the board. Our 2021 setup looks good, with the potential for high-teens revenue and profit growth from [the second quarter] on,” said Ron Clarke, chairman and chief executive, in a statement.