Ladies and gentlemen, thank you for standing by, welcome to the USA Technologies Fiscal Year Q2 2021 Earnings Conference Call. At this time, all participants are in a 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 our first speaker today, Alicia Nieva-Ruddick, Vice President of Corporate Communications and Investor Relations for USA Technologies. Please go ahead. Thank you. Good afternoon, everyone. Welcome to the USA Technologies Q2 fiscal 2021 earnings conference call. With me on the call this afternoon are Sean Feeney, Chief Executive Officer, Wayne Jackson, Chief Financial Officer, and Anant Agrawal, 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 facts, are forward-looking in nature. Actual results could differ materially from those contemplated by the forward-looking statements as a result of certain factors, including, but not limited to, business, financial, market, and economic conditions. A detailed discussion of the risks and uncertainties that could cause actual results and events to differ materially from such forward-looking statements is included with our filings with the SEC and in the press release issued earlier today. Listeners are cautioned not to place undue reliance on any such forward-looking statements, which reflect management's view 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 are supplemental to and not a substitute for GAAP financial measures such as net income or loss. Details of these non-GAAP financial measures, a presentation of the most directly comparable GAAP financial measures, and the reconciliation between these non-GAAP financial measures, as well as the most comparable GAAP financial measures, can be found in our press release issued this afternoon, which has been posted on the investor relations section of our website at www.usatech.com. With that, I would now like to turn the call over to our Chief Executive Officer, Sean Feeney. Sean? Thank you, Alicia. Thank you, everyone, for joining us today. I hope everyone is safe and well. During the Q2, we continued to make an enormous amount of progress on the things within the company's control. Even as the COVID-19 pandemic continues to have an adverse impact on most of our customers' operations, which is reflected in our Q2 results that Wayne will walk you through shortly. During the quarter, we continued to build out the team with talented new hires, and we successfully preserved and grew our customer base despite the difficult macro environment. In addition, we further reduced the company spend on external professional services and reallocated some of those savings towards investments in products and services to better serve customers, as well as the systems that the company needs to scale in the years to come. This is the first time in a long time that the company has invested in product innovation and platform infrastructure to drive future growth. Although we made a tremendous amount of progress on the things within our control, the variables beyond our control, namely COVID-19, continue to create a challenging operating environment. As it relates to transaction volumes, we saw a steady recovery from July to October of 2020. In November, we saw a reversal in that trend as COVID cases spiked. The second COVID wave led to additional lockdowns and further delayed openings of office buildings and schools and caused some operators to temporarily deactivate additional devices. I am optimistic that volumes will rebound relatively quickly once schools and businesses reopen. For equipment sales, we are seeing positive momentum in our efforts to upgrade customers to the 4G ePort device. Some operators, still cautious of their liquidity during the pandemic, are committing to upgrades but are waiting to take delivery on hardware until later this calendar year. This upgrade effort is a key initiative as cellular networks sunset 2G and 3G technology over the next two years. As a result of COVID-19's persistence and our updated assumptions around timing of a successful vaccine rollout, we have pushed out our expectations on when the virus will have less of an impact on our market and business. Therefore, we have revised our fiscal year 2021 revenue guidance to be between $163 million and $171 million, down from a range of $170 million to $180 million. We have revised our net loss applicable to common shares to be between $21 million and $17 million, down from $14.1 million and $11.1 million. We have revised our adjusted EBITDA range to positive $1 million-$4 million from the prior guidance of $2 million-$5 million. While the economy's recovery from COVID is several months behind the pace that we had anticipated, my confidence in our growth once we return to normal is higher today than when I started back in May. With the growing consensus amongst the business community that the economic impact of COVID will materially diminish by this summer and into the fall, I am prepared, based on the progress we are making, to tell you that we believe we can drive revenue growth in the mid-teens in fiscal year 2022. Of course, as the circumstances around COVID continue to become clearer, we will update our outlook in future quarters. Turning back to the Q2, we remain focused on the initiatives that position the company to capitalize on an economic rebound and optimize our long-term growth opportunity. As a reminder, the strategic initiatives we laid out for this fiscal year are: position the company to drive sustainable organic growth, right-size the company's cost structure, and invest in people and culture in order to achieve excellence. Keeping these in mind, let me give you some highlights for the quarter. First, as part of our ongoing investment in talent, we recently appointed Ravi Venkatesan as Chief Technology Officer, a newly created position for the company. He joined us from Bakkt, a subsidiary of ICE, where he was the head of innovation and was previously the CTO at Bridge2 Solutions, an innovative loyalty platform. He is responsible for our technology, products, and innovation strategy. I'm thrilled to have someone of Ravi's caliber and expertise. We have been successfully educating our customer base on the critical importance of setting a conversion timetable before the inevitable 2G/3G sunset of devices. As a result, as I previously mentioned, we are starting to see the steady migration and transition to 4G. In December, we added a new feature to Seed Mobile that has been very well-received by our customers. This new feature enables real-time feedback from our drivers in the field. This will be an integral feature for some of the future product launches. While we're on the topic of new products, we were recently awarded an exciting new patent, which Anant Agrawal and Mandeep Arora, co-founders of Cantaloupe, authored a few years ago, titled Method and System of Personal Vending. This technology is focused on creating an unmatched shopping experience at an unattended retail location by reimagining the customer journey through the consumer's mobile device. We are thrilled to receive this recognition of our culture of innovation. I will now turn the call over to Anant, our Chief Revenue Officer, to give you more color on the quarter's business performance. Anant? Thanks, Sean. I want to touch on four focus areas today. First, our platform as a service. We continue to make progress with existing and potential new customers who are seeing the value of being on a single platform for both cashless and logistics software. Jackson Brothers of the South is a great example of this. As we recently highlighted in a case study on our website, they decided to make the change from their legacy VMS solution in 2019 to the Seed platform, bringing their ePort cashless devices and software solution onto a single platform. Since then, they have expanded their use of our platform to help manage growing their micro markets and office coffee lines of business. Now, with our recent announcement on upcoming cellular sunsets, Jackson Brothers has decided to upgrade all their devices with us to 4G LTE and EMV simultaneously. As a result, Jackson Brothers now has one central place to view, manage, and adapt to its client needs across their whole business with a single solution provider. Second, penetrating the broader unattended retail market outside of traditional vending. As an example, we recently expanded our business by deploying ePort Cashless on 100% of the machines at a major commercial water dispensing company that has thousands of machines across the country and is growing at a rapid pace. Third, the move to cashless. Following the study we published in September 2020, we continue to see the shift to cashless payments accelerate. In the study sample set from January 2020 to July 2020, we saw cashless grow to nearly 62% of total sales, while the use of cash continued to decline. When we look at our own data, while transactions are down, we've seen cashless accelerate from 61% in September 2020 to 65% of total transaction volume at the end of December 2020. Our customers are seeing similar trends, where cashless continues to accelerate across their business. The Jackson Brothers case study exemplifies how operators are seeing the benefits of enabling all forms of payment, particularly cashless. Fourth, growth in international markets. Since Fernando joined us a few months ago, we have engaged with several potential in-country partners and early anchor customers in Latin America. We're encouraged by the activity and the potential that international unattended retail markets represent as an opportunity for the business. With that, I'd like to turn it over to Wayne to review our Q2 results in full detail. Wayne? Thanks, Anant. Good afternoon, everyone. Revenue for the Q2 of FY 2021 totaled $38.3 million, a decrease of 13% over the prior year Q2 and an increase of 3.8% from Q1. License and transaction revenue totaled $33.2 million for the Q2, a decrease of 7% from the prior year, which was not impacted by the COVID virus. License and transaction revenue increased slightly over Q1 as the transaction momentum gained in the H2 of Q1 and the H1 of Q2 was lost as COVID cases began to increase in mid-November. Equipment sales for the current quarter of $5.1 million decreased 39% compared to the prior year quarter of $8.3 million. The decrease was primarily due to lower hardware shipments during the Q2 of FY 2021 compared to the same period last year, which included a large contract with a new customer. Sequentially, equipment sales increased 35% as we continued our focus on new customer growth and 4G conversions. Total gross profit margin for the quarter was 32.1%, compared with total margin of 29% for the prior year Q2, and 38.6% in the Q1 of FY 2021. License and transaction margin improved to 38% in the Q2 of this fiscal year, up from 36.8% in Q2 of last year, as transaction revenue had higher margins than in the prior year. L&T margins declined from 41.6% in Q1 due to a lower percentage of license revenue to total L&T revenue in Q2. Equipment margin was negative 5.8% for the quarter compared to negative 5% in the prior year, as we provided incentives for 4G upgrades. Equipment margins for Q2 declined from a positive 12.4% in Q1, as the prior quarter included a one-time out-of-period adjustment. Operating expenses in the Q2 totaled $14.9 million, a 28% decrease over the prior year. SG&A expenses in the Q2 of FY 2021 totaled $13.8 million, which decreased 14% from $16.2 million in Q2 of the prior year. The change was driven by lower professional services cost and lower severance expense in the current quarter compared to the prior year. Sequentially, SG&A decreased 18%, primarily due to lower professional service fees and network outage costs incurred in Q1 compared to the current quarter. The operating loss for the Q2 was $2.6 million, compared to the loss of $7.8 million in the Q2 the prior year. In addition to SG&A savings, the other primary driver of the improvement from the Q2 of FY 2020 is a $3.3 million reduction in investigation, proxy solicitation, and restatement expenses. Net loss applicable to common shareholders for the Q2 was $2.9 million, or a loss of $0.04 per basic share, compared to $8.4 million, or a loss of $0.13 per basic share in the prior year period. I will now turn the call back over to Sean for closing remarks. Sean? Thanks, Wayne. Before we open it up for questions, there are three more important Q2 updates to highlight. First, in November, we were relisted on the Nasdaq Global Select Market. This represents an important milestone in our journey to build a better, stronger company for our customers, employees, and stakeholders. The achievement reflects the operational and financial progress we have accomplished in the past six months, the fundamental strengths of our core business, and our ability to capitalize on the opportunities that lie ahead. In November, we also announced that we will transition our corporate identity to exclusively operate under the name Cantaloupe, Inc. with a new ticker symbol. This is another major milestone for us as the Cantaloupe name has great brand equity in the industry, strong customer loyalty, and communicates our vision as the leading hardware and software platform for a contactless economy. The adoption of the new brand later in 2021 puts our company in a great position to better compete in the growing global market and delivers on our mission to help the world buy it and go. Third, as I'm sure you saw in the earnings release, we have updated our device and customer count disclosures, which we believe are both better representations of our business. This is the result of my team digging into the historical data and creating systems to monitor key operating metrics, which I will use to track our business drivers and measure progress against our targets. First, active devices, which includes devices that have connected with us in the last 12 months, was 1.15 million during the quarter. Second, active customers, which now includes customers with at least one active connection in the last 12 months, was 18,000 during the quarter. To wrap up, we continue to increase active devices and active customers throughout the pandemic. While growth has been slower than anticipated, we are not sitting idle. We are squarely focused on positioning the business to capitalize on the rebound. Over the past six months, we've introduced new products, brought on Ravi, and the increased investments we are making in our tech roadmap and product development. We are very excited about our future offerings, which we will roll out in the next 12 months. We continue to make investments in our go-to-market team and strategy that we believe will pay dividends in both growing our current customer base domestically and internationally, as well as fortifying our existing customer base as they migrate their devices to 4G technology. While our near-term 2021 guidance has been impacted by the pandemic, I'm optimistic that we are taking the necessary actions within our control to best position ourselves to capitalize on the exciting market opportunity in front of us. We believe we have the right team in place with tailwinds that we expect will drive our business for years to come, such as the shift to unattended retail and the increased demand for cashless products, as well as making the right investment to position us for success. With that, let me hand it over to the operator. Thank you. We will now open the call for questions. Please limit your call to two questions. If you have additional questions, please add yourself back to the queue. Thank you. We will now take our first question from the line of George Sutton. Your line is now open. Thank you. Sean, I wondered, you had mentioned that you are continuing to grow in spite of the COVID-19 scenario. As you know, industry numbers are hard to come by. I'm curious if you think you are gaining share in this environment. Could you just give us some perspective there? George, I think that what we are seeing is, we're seeing some conversions from other providers. We're probably seeing more kind of some of our current operators expanding their cashless devices as well as some new operators that are coming in as There is a lot of, kind of, in the, probably the lower end of the market, those guys come in and out of business and there's been a number of sales of those businesses. Some chip away, some new customers, and then some expansion of existing customers is what we've seen. Got you. My other question, you and we've been thirsting for new KPIs, so we appreciate those. There is about a 200,000 delta between active devices and total connections. I'm curious if you could give us a sense of, is that an opportunity set that exists if once COVID becomes sort of normalized? No, I don't think the way to look at it is as an opportunity, George. I think it's active devices is just a better way to look at what we have. Essentially, the connections number was basically all the active devices that were, or devices that were sold at one time. They may have been lost, they may not have been connected. It just is a tighter representation of what's active in the field. There may be some there, but I wouldn't look at it as, "Boy, there's 200,000 there we just need to turn on. Got you. Perfect. Thank you. Sure. Thank you. Your next question comes from the line of Gary Prestopino from Barrington Research. Your line's now open. Good afternoon, everyone. Hey, Gary. Could we get a read on, Anant talked about the cashless and logistics software on a single platform. As I recall, when Legacy Cantaloupe was purchased, there was very little penetration across the legacy customer base of USAT. could you give us some idea of where that penetration stands right now and what you are doing to try and really aggressively get an uptake from customers that are not taking the logistics software? Sure. I think what we've talked about is the penetration of Seed probably being somewhere in the neighborhood of 50% of our existing customers, and probably tilted more towards the large end of that. We're beginning to put in place some sales or some incentives for our salespeople. Really what we're trying to drive is kind of all in. We are focused on ePort devices that don't have Seed, and trying to expand that. We've talked about our motto of being all in. We're also looking at, I think one of the things that Anant's talked about is, for a couple of years post-acquisition, the company used the Seed software, and probably deeply discounted it. We're living with some of those deals in order to get connections. What we are doing is we're working with some potential partners that we think can increase the penetration in the entire market. We're also working on trying to make it easier to install at the lower end of the market. We're really kind of got our entire team incented around pushing all in, not just selling connections, but selling our total solutions. Okay. That's helpful. Then, in terms of the active devices that you signed up, which is, I think phenomenal considering half the country is closed. Are you basically seeing more of a concentration with the new devices with bigger entities? I guess the other question would be is that, given what's going on in the industry, are you seeing a lot of consolidation? Are a lot of the smaller operators just basically selling out to the bigger players in the market? As always, you've artfully wrapped several questions into your one. Right Let me take a crack at it. I do think that you've seen a good amount of what I would call movement in the market, and we see that when we get contacted to transfer devices. I would say what we saw in this quarter was probably a little bit of an acceleration of some of the M&A opportunities. I think what we also saw as we talked about the deactivations, is we saw some operators, more on the smaller end, just get to the point where they couldn't hang in anymore without another PPP loan. We saw increased deactivations, where they just had to take the devices out and movement there. On the new devices, it's really kind of spread across. Of course, a larger operator can move the needle a little bit more, but I would say it's been fairly consistent across the customer base of where we've picked up active devices. There are some areas where people are doing quite well, around manufacturing, and those sorts of facilities. We have a number of operators who are supporting some retail players who are expanding greatly. You can kind of guess who they are. Those operators are doing well and adding additional devices because those retail outlets are building out additional warehouses and delivery centers. Okay. Thank you. You're welcome. Thank you. Your next question comes from the line of Mike Latimore from Northland Capital Markets. Your line is now open. Great. Yeah. Thanks a lot. Good afternoon. On the move to the new payment processor, can you give an update there? I think as you said it was on track, but maybe an update there and when you see that might maybe influencing the license and transaction gross margin? I think you're talking about our move to Fiserv, and we are in the process, continuing to move forward. I think we're finishing up one last certification. We're testing data, and we will begin migrating customers within this current quarter. It's going well. We're probably 30 or 60 days behind where I would've liked to have been when I got here. Anytime I've been involved with this, you always run into a few issues at the very end. We're working very closely. We're getting great support from Fiserv, and they are doing a great job helping us move that. I think when you begin to see some of the savings that have been outlined in past quarters by prior management, really that full impact will be in 2022. We're going to be careful in moving people over, and it'll take us most of the H2 to kind of get everybody over. Think about it in 2022, not really having much impact this fiscal year. Got it. In terms of just the upgrade to 4G devices, can you give some sense of what% of the hardware volume you're seeing relates to that? Yeah. What we've seen, and as I highlighted in my comments, that we're seeing people very interested. I think we've seen some of our competitors trying to scare people that they've got to go right now. We've been educating that you have time. Also, I think, we thought that people would be going a little bit quicker. With the ongoing COVID, people are being very careful with their liquidity, so they're holding off or they're committing and then taking orders later in the year. I think if you look at the numbers of our customers, it's sub 10% that have moved so far. Got it. Just, I guess last question would be on transaction volumes. I think December has some of the holidays in it. I guess what about January? Any improvement in January? We saw January was pretty similar to what we saw in December. We plan when we do our forecasting for that seasonality. We've seen, as I said on the call or on the prepared remarks, November, December, and January have kind of been flat. Mm-hmm. Okay. And- Thanks We've done some kind of checks with operators and talked to them, and they've seen similar things. Again, as I said, I'm very optimistic. We've seen kind of two things. One is I think we've increased the number of devices. Secondly, while you look at 61%-65% cashless, that's a pretty dramatic swing in a short period of time. We believe that when things come back, we have more devices, and we're seeing a greater percentage of cashless. I'm optimistic it'll come back pretty well. I think it will take time to get a lot of the devices and things that are in offices to come back. Your line's now open. Hey, guys. Thanks for taking the questions and appreciate the details in the press release. Sean, you mentioned the goal of getting to mid-teens growth in fiscal 2022. Can you talk about the margin profile of the business next year? Well, I think that we expect to see the margin profile probably improve a little bit. We're working hard to take costs out of the business. We're working hard on, as I've talked before, on the margins on our hardware, the piece that I don't know, Bryce, is we will get as aggressive as we have to maintain our share of the 3G, 2G upgrades. We've got competitors, pricing may get to where that has a short-term negative impact on margins. I do expect that it'll be improved, but I'll give you that caveat that we may need to do that. Look, as we've talked before, the value of a cashless endpoint, and we expect that these 4G devices will be out there for anywhere from five to 10 years. If we have to go a little bit short term into margin, I'm willing to do that. I'm very confident in our sales organization that we will do very well in this opportunity that we have. Okay, great. You mentioned the international opportunity. Can you talk about the structural differences outside the U.S. and how that would impact your margins? Well, what I would say is, let us give you a little more detail when we get a little bit closer to kind of being there. One of the reasons we changed the name of the company to Cantaloupe was to be able to go internationally a little bit better. We've been very excited by the gentleman that we've hired down in the LATAM agent. He's got a lot of activity going. We've got some great partnership discussions going. The thing that's nice is he knows everybody, and we've been pleasantly, I wouldn't say surprised, but it confirms that we thought people knew who we were, and we're able to get meetings, and we're working on several partnerships. I would say what we're seeing is that in LATAM, we believe there very well may be a software and a cashless device capability. What we've also talked about is you got to have a local partner to work with that. I've had several conversations with the CEO at Fiserv about how they may be able to help us. We're talking to any number of other partners in certain regions that would be the best place to operate there. It's early days. We're happy with the activity. Revenue kind of contribution would be in the back half of fiscal year 2022 and into 2023, because it'll take us a little time. We've got a little bit more ambitious goals than that, but I would say for you guys to plan, that's probably where I would look. Great. Thanks a lot. Thank you. Your next question comes from the line of Gary Prestopino from Barrington Research. Your line's now open. Yeah. Just in terms of the cost structure of the business now, Sean and Wayne, have you got it to where you want it to be? Your SG&A expenses look like they were $13.8 million this quarter. Obviously, not a lot of T&E in there, so as the business ramps up, you would expect that to go up. Is that kind of the state of play where you want to be? Thanks for the question. This is Wayne. The SG&A for this quarter, we look at SG&A on a sort of a cash basis, which basically is SG&A minus stock-based comp and depreciation amortization. Right. For us, this quarter's a little over $12.2 million. I think as we ramp up some of the costs that Sean talked about in Q3 and Q4 on investments, I think in terms of $12.5 million-$13 million. Then going forward, we don't see any major changes with that unless it's to drive revenue or to drive some development and products that we want to get to the market pretty quickly. That'd be the framework that we're working. I'm sorry, Wayne, that number is without stock comp, and what else was the other thing? Depreciation amortization. Those numbers you can find in the adjusted EBITDA calculation. Right. Yeah, I just want to make sure. Okay. Thank you very much. You're welcome. Thank you. There are no further questions. You may continue. Well, we appreciate your interest in the company. As I said, I'm excited about the things that we're doing, and I've got the team built now, and now it's about executing, and we all need the pandemic to get that thing on a run. I go to bed every night praying for more vaccines and more needles in arms. We look forward to kind of the one-on-one meetings and things with you guys from here, but I appreciate the interest. Thank you. This concludes today's conference call. You may now disconnect. Thank you.