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U.S. Wireless Data Reports Financial Results for Fiscal Fourth Quarter and Year-End 2001
NEW YORK--(BUSINESS WIRE)--Sept. 24, 2001--U.S. Wireless Data, Inc. (USWD) (OTC:USWE), the leader in transaction delivery and gateway services to the payment processing industry, today released operating results for the fiscal fourth quarter and twelve months ended June 30, 2001.
The Company reported year-over-year record increases in revenue, active sites, transactions, resellers, and merchants.
Revenue
USWD had record revenues for the three and twelve months ended June 30, 2001 of $2.0 million and $4.1 million, respectively, as compared to $0.1 million and $0.6 million for the same periods in fiscal year 2000. This improvement from the prior year represents a 20-fold increase for the quarter and an over 6-fold increase for the year. The increases from the prior year were attributed to most revenue categories including recurring services, transaction fees and equipment revenues, all of which are discussed in more detail below.
Recurring service revenue
Recurring service revenue for the three months ended June 30, 2001 was $0.5 million, a $0.4 million or a 5-fold increase as compared to the same period for fiscal year 2000. For the twelve months ended June 30, 2001, service revenues increased over 3-fold or $0.7 million to $1.0 million compared to the same period for fiscal year 2000. This increase is a direct result of significant increases in merchant activations for our Synapse wireless services. Synapse activations for the fourth quarter of fiscal 2001 were 2,121, an increase of 1,224 activations or 136% from the same period in fiscal 2000. In addition, we have shown significant progress in activations during fiscal year 2001, with increases each quarter over the prior quarter of 224 or 24%, 296 or 26%, 308 or 22% and 463 or 28%.
Transaction revenue
Transaction revenue is principally generated by our NXT Gateway Services, which were acquired as part of our acquisition of NXT Corporation. The NXT Gateway Service host utilizes traditional narrowband/dedicated networks (i.e.: dial lines and leased-line circuits) to deliver transactions between merchants and processors.
Transaction revenue for the three and twelve months ended June 30, 2001 was $1.3 million and $2.6 million, respectively. Transaction revenue for the same periods last year were negligible. Total transactions for the three months ended June 30, 2001 were 135 million, compared to 109 million for the same period in 2000, an increase of over 26 million transactions or 24%. Total transactions for the twelve months ended June 30, 2001 were 490 million, compared to 386 million for the twelve months ended June 30, 2000, an increase of over 104 million transactions or 27%.
Equipment revenue
Equipment revenue is derived from the sale of our proprietary wireless conversion devices, the Synapse Adapter and the Synapse Enabler. Equipment revenue increased for both the three and twelve months ended June 30, 2001 to $0.3 million and $0.35 million, respectively, compared to the same periods last year of $0 and $0.2 million.
Unit sales for the fourth quarter of fiscal year 2001 were 1,081 units, as processors and merchant acquirers began to purchase the Synapse Adapters for resale to retail merchants and the Synapse Enabler, to convert taxi meters and other integrated devices to accept credit cards wirelessly. Equipment sales are expected to increase as the Synapse Adapter and Enabler product lines are expanded to support the Synapse family of IP-based services.
Gross profit
Gross profit for the three months ended June 30, 2001 was $501,000, compared to a gross loss of $221,000 in the same period in fiscal year 2000. Gross profit for the twelve months ended June 30, 2001 was $1,205,000, compared to a gross loss of $299,000 in fiscal year 2000.
This improvement in gross profit was primarily the result of: (1) inclusion of the gross profit associated with the recent acquisitions of Cellgate Technologies LLC and NXT Corporation in fiscal year 2001 and (2) an increase in higher margin Synapse service revenues in fiscal year 2001. Fiscal year 2000 gross loss was primarily attributed to the write down of obsolete equipment related to the discontinuation of the point-of-sale product line and price reductions on point-of- sale equipment in order to sell excess inventory.
Gross margin
Gross margin (gross profit as a percentage of net revenues) for the fourth quarter increased from 14% (excluding costs associated with discontinued equipment business) in fiscal year 2000, to 28.5% in fiscal year 2001. This increase was attributed to: (1) higher equipment sales margins of 15% in fiscal year 2001 compared to 11% in fiscal year 2000 and (2) a change in sales mix, as the higher margin recurring service business grew to a larger overall portion of sales during fiscal year 2001, while lower margin equipment sales decreased.
Net losses /EBITDA
For the three months ended June 30, 2001 our net loss was $7.2 million or $0.71 per share, as compared to a net loss of $3.0 million or $0.37 per share, for the same period in fiscal year 2000. The fourth quarter of fiscal year 2001 net loss included $3.4 million of expenses not recorded in the fourth quarter of 2000. These expenses were related to amortization of intangibles associated with the acquisitions of NXT Corporation and Cellgate Technologies LLC, non-cash compensation related to issuance of stock options, incremental research and development costs and $2.4 million in restructuring charges relating to the consolidation of facilities.
For the twelve months ended June 30, 2001, our net loss totaled $19.2 million or $1.88 per share, compared to a net loss of $54.3 million or $9.05 per share for the twelve months ended June 30, 2000. Excluding a non-cash preferred stock dividend charge in fiscal year 2000 related to the Company's March 2000 private placement, the net loss was $0.37 per share.
The net loss for fiscal year 2001 included $7.0 million of expenses not recorded in fiscal year 2000. These expenses were related to amortization of intangibles associated with the acquisitions of NXT Corporation and Cellgate Technologies LLC, non-cash compensation related to issuance of stock options, incremental research and development costs and restructuring charges. Excluding these charges the net loss for fiscal year 2001 was $12.2 million or $1.19 per share.
During the third and fourth fiscal quarter of 2001 and continuing into the first fiscal quarter of 2002, we have been implementing the integration and consolidation plan for our recent acquisitions. This plan will reduce overall operating expenses by approximately $0.7 million per month or $8.4 million on an annual basis, representing approximately 42% of our on-going annual operating expenses. These expense reductions are related to personnel, professional fees, consulting services, facilities expenses, travel expenses, public relation expenses and advertising and promotion expenses. As of June 30, 2001 our monthly consolidated net losses before depreciation, amortization, interest and taxes ("EBITDA") was averaging approximately $1.4 million. EBITDA loss will improve, as we begin to realize the benefits from the reductions in operating expense, to an estimated $1.0 million per month beginning in the first quarter of fiscal 2002. Further improvements will be attained as revenue increases in excess of its current levels and all the benefits from the cost reductions are realized in future quarters.
Operating Highlights
We have made significant progress on our key business objectives. These objectives are intended to establish our Synapse services and products and NXT Gateway Services as the standard for wireless, wireline and other IP-based transaction payment services. Operating highlights for the fiscal year ended June 30, 2001 include:
-- Signed reseller agreements exceeded 150 compared to 54 as of
June 30, 2000.
-- Active wireless sites using Synapse equipment and services for
fiscal year 2001 increased 165%, to 6,600 from 2,600 during
the same period last year.
-- Transactions processed through Synapse for the fourth fiscal
quarter of 2001 increased 47% compared to the fourth fiscal
quarter of 2000, to 832,000, an increase of over 264,000.
-- NXT Gateway Services sites increased 8%, to over 43,300 from
40,000 active sites during the same period last year, an
increase of over 3,300 sites.
-- NXT Gateway Services transactions increased 24%, for the
fourth quarter of fiscal year 2001 to 135 million from 109
million during the same period last year.
-- Growing market acceptance of Synapse is evidenced by
acceleration in sell-through of product to end-users.
-- Continued penetration of new vertical markets, including ATMs,
quick-service restaurants, taxis, vending machines, retail
outlets and sports arenas.
-- Synergies associated with successful integration and
consolidation of the NXT Corporation and CellGate Technologies
LLC acquisitions will ultimately result in $8.4 million in
annual operating expense reductions
Dean M. Leavitt, chairman and CEO stated, "An accurate picture of our progress on all fronts can be best illustrated by reviewing our financial results on a quarterly basis and noting the important milestones that we have achieved thus far in calendar 2001. The acquisitions of NXT Corporation and Cellgate Technologies late last year were important catalysts for expanding our offerings and, thereby, increasing revenues. The Synapse Adapter, which is based on the Cellgate technology, had sales of over $300,000 through June 30, 2001. These sales will translate into additional recurring revenue as the units are activated on Synapse. Also notable among our accomplishments has been the reduced EBITDA loss that was achieved through data center consolidations, workforce reductions and maximizing the synergies that exist between our company and those we acquired."
Leavitt continued, "The technology acquired from NXT enables us to provide its services through landline and broadband platforms, in addition to wireless access making us a "one-stop-shop" for data delivery to the payment processing industry. This establishes our leadership position in facilitating the evolution of wireless data transport from a niche technology to a viable high speed and cost-saving alternative technology. Together, these capabilities substantially extend the potential use of card acceptance and other data transport services to a wide range of new applications."
Discussing financial results, CFO Rick DeVincenzo said, "We have made significant progress in revenue growth and expense reductions, while successfully implementing our acquisition integration and consolidation plan, which is expected to reduce overall operating expenses by over $8.0 million a year. These savings are in the form of reductions in personnel, professional fees, and facilities as well as various other cost-cutting measures implemented throughout the organization. Going forward, assuming revenues continue to grow at our current levels, we expect EBITDA loss to continue to improve from its current levels of $1.0 million per month and to achieve EBITDA breakeven by the third fiscal quarter ending March 31, 2002."
U.S. Wireless Data will conduct an investor conference call at 11:00 a.m. EDT today to discuss results for the fiscal year ended June 30, 2001. The dial-in number for the live conference call will be 212-896-6042. A live webcast of the conference call will be available at the U.S. Wireless Data Web site www.uswirelessdata.com. The call will also be simulcast at www.streetevents.com. For those who cannot listen to the live broadcast, a replay of the call will be available on these Web sites for at least 30 days. There will also be telephone replays of the call available until 1:00 p.m. on October 1. To listen to the telephone replay, dial 800-633-8284 (858-812-6440 outside the U.S.) and enter reservation number 19732782. |
