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Usa Technologies Inc (CTLP -2.41%)
Q1Â 2020 Earnings Call
Nov 12, 2019, 8:30 a.m. ET
Contents:
- Prepared Remarks
- Questions and Answers
- Call Participants
Prepared Remarks:
Operator
Good morning, ladies and gentlemen and welcome to the USA Technologies' First Quarter Fiscal Year 2020 Earnings Conference Call.
[Operator Instructions]
I'd now like to turn the conference over to your host, Monica Gould, Investor Relations for USA Technologies. Please go ahead.
Monica Gould -- Managing Director
Thank you, Whitney. And good morning everyone. Welcome to the USA Technologies' first quarter fiscal 2020 earnings conference call. With me on the call this morning are Don Layden, Chairman and Interim Chief Executive Officer and Glen Goold, Interim Chief Financial Officer.
Before we begin today's call, I'd like to remind you that all statements included on 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 this morning.
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 earlier this morning, which has been posted on the Investor Relations section of our website at www.usatech.com.
And with that, I would now like to turn the call over to Don Layden. Don?
Donald W. Layden -- Chairman and Interim Chief Executive Officer
Thanks, Monica, and good morning everyone. Thank you all for joining today's call. Having just completed my third week as CEO, I have now had the opportunity to meet with many of our top customers and employees. These meetings have been very productive and it confirms that our customers are pleased with the USAT solutions they have deployed, which have enabled them to increase revenue and lower their operating costs.
Through our discussions, we have also identified some areas for improvement to help us do an even better job, serving our customers and I will discuss some of those later in my remarks. First, I would like to review a few key highlights of our first quarter of fiscal 2020. We're pleased to report a solid first quarter performance, led by a resumption of strong revenue growth both year-over-year and sequentially.
Total first quarter revenue was a record $42.1 million reflecting a 26% year-over-year and 10% sequential growth from the fourth quarter of fiscal 2019. Revenue growth was driven by the addition of 900 new customers and 46,000 net new connections, which bring our total connection count to over 1.2 million.
Importantly, we continue to have 100% customer retention. Our unique value proposition remains compelling to customers, both large and small, and this is reflected in our continued ability to maintain our industry leadership position, serving almost 19,000 customers, while winning new business and enhancing the competitiveness of our offerings.
For example, USAT was recognized by Retail CIO Outlook, in March as the Top 10 Retail Payment Consulting/Services Company for 2018 and in August, as a Top 10 Retail Kiosk Solution Provider, further validating the leading innovations we offer in self-serve retail and how our best-in-class end-to-end payment and logistics system is enabling operators to connect with consumer preferences and manage, simplify and optimize their business.
We continue to expand into additional verticals outside of our core vending market, and to that end we have signed two important supply agreements this year. First, we are working with CSC ServiceWorks, to equip CSCs air vending machines for tire inflation with USAT's state-of-the-art ePort connection, Cashless Technology platform and upgrade the technology in other machines.
We also established a supply agreement with a large amusement operator to deploy our solution in the arcade game space. Finally, we announced a partnership with G&J Marketing and Sales, which will allow G&J to resale USAT's premier payment technology and enterprise service, to its national customer base of over 2000 unattended retail operators.
Throughout the year, we've also worked to expand our Seed Market software offering, which enables owners and operators of micro-market companies to benefit from one standard set of tools, including simplified route management, efficient warehouse pre-picking and a single reporting interface and cash accountability.
As we look ahead, we expect the value proposition we provided to customers to strengthen, as Seed Markets and Delivery Products mature. USAT is the clear solution provider for operators, looking for a single platform to help them manage all lines of their business, vending, OCS, and markets.
We are also in a position to enable operators to diversify and evolve from being vendor operators to truly being unintended retailers. To that end, I would like to speak with you about the path forward and our expectations for 2020. First, we've launched a series of initiatives to reduce our operating expenses and we've set a target of reducing our selling, general and administrative expenses by $8 million annualized over the next 12 months.
We plan to reinvest a portion of these costs savings into enhancing our customer service organization. Based on the actions we've taken so far in the second fiscal quarter, we have achieved $2 million in annualized cost savings. These cost savings had and will come from a variety of efforts, including a reduction in professional service fees, the renegotiation of our payment processing terms, the implementation of sales tax collection and improved management of our hardware supply chain.
Additionally, we've retained Michael Wasserfuhr, who is the former CFO of Ingenico North America; Worldpay investor, as Chief of Staff to me to work with our Senior Management on a consulting basis to identify additional cost reduction opportunities and to assist in the execution of those initiatives.
With respect to our efforts to improve our customer service organization, we've promoted Maeve Duska to Chief Marketing Officer, reporting directly to me. Maeve's deep industry experience and strong customer relationships, make her the clear choice to lead our efforts in communicating with our customers and the market.
I like to speak briefly of our listening on NASDAQ. As you know, on September 24th, we disclosed that the NASDAQ hearings panel, notified us that it issued a final de-listing determination for USAT securities, as a result of our failure to regain compliance by September 23. As such, our securities were suspended from trading on NASDAQ on September 26. We requested an appeal and we're awaiting a determination, which we expect to receive before the end of the year.
If our appeal is not granted, we will then refile for listing on NASDAQ, which could take up to 90 days. As such, we expect to be back on the NASDAQ, by the end of March. We realize that this de-listing has created liquidity challenges for our investors and we appreciate your continued support.
We're also planning for our annual shareholders meeting, but before we do so, we want to ensure that we're able to address all of the items that NASDAQ may require us to remediate and get back and listed on NASDAQ. We are awaiting additional clarity from NASDAQ on these remediation actions and we will schedule the annual meeting, as soon as we have a clear sense of the items that we'll need to address.
Finally, in order to further strengthen our balance sheet. We plan to sell lease receivables, which would generate $8 million to $10 million in cash proceeds to the Company. We expect this transaction to close late in the second quarter or early in the third quarter of fiscal 2020. With respect to the outlook for 2020, we now expect revenue -- we continue to expect revenue to be between $165 million and $175 million and expect to add 170,000 to 190,000 net new connections this year.
Based on the strong performance in the first quarter, I'd expect that we would be at the top-end of both of those ranges. Adjusted EBITDA was lower than expected in the first quarter of fiscal year 2020, primarily because the Company determined that it could only add-back a portion of the increased professional service fees, related to its restatement audit. Despite the first quarter loss, we continue to believe that we'll produce between $10 million and $11 million in adjusted EBITDA, for the full 2020 fiscal year. Although, I'd expect that we would be at the low-end of that range. With that I will now turn -- let me just add one other thing.
As you probably also saw, the Board made a determination on Friday, to accept Al Moschner's resignation and retirement as a Director. Al has provided tremendous service to the Company in serving, as a board member and over the past year as its Chairman. Personally, I'll very much miss Al's advice and guidance and the Company will also miss, his wise counsel. The -- upon accepting his resignation, the Board asked me to serve as the Executive Chairman, which I've agreed to do and Bill Schoch, has agreed to serve as our lead Independent Director.
Let me just reiterate for a moment my key priorities, as I've now had three months to set a direction at least for the next 30 days to 60 days for the Company. The first and most important priority is to get back on NASDAQ. The second and almost as important is to lower our operating expenses, so that we can better serve our customers and our investors. Third, we'll continue to expand it to new verticals and I believe that based on the initiatives that we have right now in the pipeline, we will see in some additional new verticals added this quarter. Fourth, we need to continue to allow our customers with even better customer service. And fifth, we're going to improve our already strong capital position through the sale of receivables.
With that, I will now turn the call over to Glen to provide details on our first quarter results.
Glen Goold -- Interim Chief Financial Officer
Thanks Don. And I will echo the thanks to everyone for joining the call. Good morning. I'll start by providing an update on some of the key financial highlights since our last earnings call. Certainly recognize that it is been some time since our last earnings call, we appreciate your patience. We are excited that we can now dialogue with you in this way and have these communications.
After the financial highlights since our last earnings call, I will review our financial and operating performance for the first quarter of 2020 of our fiscal year 2020. And I will conclude with an outlook for the full fiscal year 2020. In October, we reported our financial and operating results for the fiscal year 2018 and 2019. And we completed our restatement of certain select financial data for fiscal year 2015, 2016 and 2017 and quarterly periods from September 2016 to March 2018. As a result of these filings and our Q1 report that will come out later today, we are pleased to report that we are now current on our periodic filing requirements.
We made a number of improvements to our control environment. We've enhanced our internal compliance, through the creation of a compliance committee of the Board of Directors and hired a Chief Compliance Officer, who reports directly to the Committee. Now these additions have provided great value to our Company already and we continued to seek improvements in these areas.
Additionally, we took significant steps in improving our financial position. As subsequent to quarter-end, we entered into an equity financing and debt arrangement with Antara Capital that will support our operating activities. Under the agreement, we received approximately $20 million from the sale of our common stock in a private placement and we entered into a commitment for a $30 million senior-secure debt facility. So the three primary reasons for this financing from our perspective. We wanted replace the capital that we had spent on the investigation, the restatement and the audit fees. We wanted to retire the JPMorgan debt and we want to return the Company back to our strategic growth plans, which as Don have described, we're well-under way of doing. So from these perspectives we are able to achieve what we set out to do with its financing.
Looking ahead, as Don has mentioned, we plan to further strengthen our balance sheet by selling a portfolio of our lease receivables. As Don mentioned, we expect it to generate approximately $8 million to $10 million of additional capital for us and we expect this will close late in Q2 or early Q3 of our fiscal year 2020.
Moving on to our fiscal first quarter results, we are pleased to deliver record revenue during the first fiscal quarter. As Don has mentioned, the total revenue grew 25.7% year-over-year, 10.3% sequentially over last quarter to $42.1 million. License and transaction fee revenue increased 16.8% year-over-year to $33.8 million and accounted for over 80% of our total revenue in the first fiscal quarter.
Equipment revenue increased 82.7% year-over-year to $8.3 million. We continue to make strides in growing our connection base and customer count, as well as sell diversified suite of services to an expanded customer base. As Don mentioned, we added 46,000 net new connections in the first quarter, bringing our total to over 1.2 million connections, up 16% compared to the same quarter last year. We also added, as Don mentioned, 900 new customers and in the quarter, with a total of 20,300 customers, an increase of 19% compared to the 17,000 customers in the same quarter last year.
Turning to margins. Our gross margin of 23.9% decreased from 30.2% in the first quarter of fiscal year 2019. The decrease was primarily related to the lower equipment margin, due to a large equipment sale made to a strategic customer, with CSC customer that Don mentioned in his comments. And it's a very large deal. As we said in the past, our strategy is to use equipment sales, as an enabler for driving longer-term, higher margin license and transaction fees. On our license and transaction margin of 36%, those remain consistent compared to the same period last year.
Looking forward, we expect our L&T margins to remain in that same range. We're exploring improvements to our cost structure there and expect to have improvements. But we expect those improvements over the next two quarters to be modest and a guide to the same 36% -- the 35% to 37% range for our L&T margins. Our equipment margin was 25.7% compared to -- I'm sorry, negative 25.7% compared to the negative 7% last year, due to the strategic large equipment order we made during the quarter, I mentioned above.
Our margin on the equipment side will be modest. We do expect them to be better than the negative 25.7% experienced in the first quarter, but expect themselves to be in the zero to low-single -- negative single-digits going forward in fiscal 2020. As Don mentioned, our adjusted EBITDA was lower than expected, came in at negative $7.5 million compared to negative $2.1 million -- I'm sorry, positive $2.1 million in the same period from the prior year. The primary drivers of that variant as Don mentioned, was the increased professional service fees we recognized in our restatement and audit project, as well as the difference in our equipment margin as we've referenced.
On the SG&A side, SG&A expenses for the first quarter were $18.2 million or 43.1% of revenue compared to $9.5 million or 28.2% of revenue over the prior period. Our SG&A expenses increased year-over-year, primarily due to the increase in professional service costs related to the Company's restatements and the audit activities.
As Don mentioned, we've a number of initiatives to progress to reduce our operating expenses. And with the completion of our filings, we expect the professional services expenses to decline substantially in the second fiscal quarter. Overall, we expect SG&A expenses in the -- in fiscal year 2020 to decrease as the Company has completed our multi-period audit and our restatement project.
Non-GAAP net loss was $8 million or negative $0.13 per share, compared to non-GAAP net income of $3 million or $0.01 per share at the same period last year. Looking at the balance sheet, our cash balance at the end of the first fiscal quarter was $25.5 million, compared to $68.3 million at the end of the first fiscal quarter, last year. This does not include proceeds from the Antara transactions, which were affected after the close of the quarter. Including these transactions, our cash balance grew to $42.2 million as of November 1.
Net working capital totaled negative $9.7 million at the end of the first quarter, compared to $2.8 million at the end of the first quarter of last year. Note that working capital has also improved, since our financing transaction with Antara. Subsequent to quarter-end, we drew $15 million on our term facility with Antara and use the proceeds in part to repay that outstanding balance on our revolving line of credit with JPMorgan of $10 million and associated transaction expenses, the JPMorgan debt is now completely retired.
Turning to our outlook, as Don mentioned, we're reaffirming our guidance for fiscal year 2020. We expect our fiscal year 2020 revenue to be in the range of $165 million to $175 million. And we expect to add between 170,000 and 190,000 net new connections to our service. In spite of our Q1, based [Phonetic] on our adjusted EBITDA, with our deliberate focus on our cost structure and our SG&A spend, we believe that adjusted EBITDA will be in the range of $10 million to $11 million as Don mentioned, we're guiding to the lower end of that range, due to our Q1 net.
Overall, this is the completion of an enormous amount of work. I would like to thank our entire finance team, our legal and accounting partners for their immense efforts that have gone into this process. We are delighted that we are back on filing, again that we can engage in these conversations with you again. Looking ahead, if we believe that our scalable, financial model through our recurring revenue streams, improved financial position and enhanced compliance controls, position us very well to capitalize on the growth opportunities ahead of us and the strategic plans that we are putting into place and acting upon it. This concludes our financial update.
I will turn the call back to Don for closing remarks. Thank you very much.
Donald W. Layden -- Chairman and Interim Chief Executive Officer
Thanks Glen. Before I open up the line for questions, I would like to briefly address the public statements made by one of our shareholders, Hudson Executive Capital. Through the effect that intends to nominate several individuals to stand for election to the Board of Directors. As you have seen from the press releases issued by the Company, members of the Board and Management have engaged in good faith discussions with Hudson and we continue to be open to a constructive dialogue. The purpose of today's call, however is to discuss our earnings and as such, I'd ask that you keep your questions confined to our earnings for the quarter.
With that, we can open up the line for questions.
Questions and Answers:
Operator
[Operator Instructions] Your first question is from George Sutton.
Adam Kelsey -- Craig-Hallum -- Analyst
Good morning. This is Adam on for George. Thanks for taking my questions. Don and Glen, I just wanted to get a little clarification. You talked about reducing opex, but as well adding different verticals. Could you go into a little more detail about the balance there between growth and profitability?
Glen Goold -- Interim Chief Financial Officer
I mean, we have focused on both areas, certainly with our cost structure and our struggle historically been positive on our operating income. We have immediately looked at some improvements that we can readily make on our SG&A line. That is a focus of ours, but at the same time, the improvements that we are seeking to make are in no-way impacting our ability to grow.
We have very deliberate strategies in place that are being executed to help us explore, further expanding our services into our white space in our market as well as, as Don has mentioned, explore other vertical adjacencies that we have. So these are in process, we continued to pursue them, but they're really dual paths that we are trying to make improvements in both areas. And it is certainly possible to do.
Donald W. Layden -- Chairman and Interim Chief Executive Officer
Let me just add some color to Glen's answer and address part of the implication, I think, in your question that moving into new verticals, is a costly proposition. As we expand the capabilities of our products, we have, had initiatives to be able to address additional vertical markets for some period of time. And so what we are now seeing is the conclusion of that product development and sales cycle, generating some returns on investments made in earlier periods.
And in addition, we believe that the vertical markets that we can continue to attract, will require a relatively low product investment to enter into those markets. So those are the markets that we're pursuing most aggressively.
Adam Kelsey -- Craig-Hallum -- Analyst
Great. Thank you. And then in terms of getting relisted on the NASDAQ, what items are you already aware of? Where do you feel that you sit in that process so far and then does that also include holding an annual meeting?
Donald W. Layden -- Chairman and Interim Chief Executive Officer
So let me answer the first part, we are not aware of the remediation requirements or conditions that NASDAQ may impose, we're still going through the appeal process. We have to complete the appeal process before we can begin relisting. We are -- to some extent, we are in a little bit of uncharted waters. And so we don't know exactly what NASDAQ may require. As you know, however, NASDAQ did impose a number of conditions during the remediation process and we suspect that they will have additional things that they may require us to do.
And to the answer to your last question is yes, I expect that the NASDAQ requirements will include holding an Annual meeting. We just want to make sure that we understand what other requirements, may be imposed that may impact the annual meeting. So that we're prepared to address those at the same time and get us back on NASDAQ and provide liquidity back to our investors.
Adam Kelsey -- Craig-Hallum -- Analyst
Great. And then just going through this process, especially you considering other vertical markets, has there been any discussion of a potential M&A?
Donald W. Layden -- Chairman and Interim Chief Executive Officer
Some of you know my background, you know that I have spent my entire career doing deals. And so I think, about doing deals in my sleep. And I suspect that we will continue to have conversations internally and externally about whether that is an opportunity for the Company.
Adam Kelsey -- Craig-Hallum -- Analyst
Great, thank you.
Operator
Your next question is from Jaeson Schmidt.
Jaeson Schmidt -- Lake Street Capital Markets -- Analyst
Hey guys, thanks for taking my questions. Just wondering, if you could comment on what you are seeing from a competitive landscape and more specifically if you've seen your competitors become more aggressive in pricing over the last year?
Donald W. Layden -- Chairman and Interim Chief Executive Officer
Yes. The competitive market remains very strong. We are clearly the leader in vending, but particularly in some other vertical markets, we do see very strong competition in those markets and we see a very strong competition in the global markets as well.
Jaeson Schmidt -- Lake Street Capital Markets -- Analyst
Okay. And can you just comment on how you are thinking about the cross-selling opportunities for the Cantaloupe offering today?
Donald W. Layden -- Chairman and Interim Chief Executive Officer
Sure, those efforts have been ongoing. We intend to continue those efforts and to -- frankly to expand their sales resources to take advantage of those.
Jaeson Schmidt -- Lake Street Capital Markets -- Analyst
And the last one for me and I will jump back into queue. Your comments on expanding into additional vertical markets, what specific markets outside your core, are you most excited about or you think provide the biggest opportunity for the Company?
Donald W. Layden -- Chairman and Interim Chief Executive Officer
Yeah, I think, that we are continuing to see strong growth in the micro-market area. And I think that our software solution is particularly well suited to that market and we need to continue to find strong partners, so that we can deliver our software solution into that space. I do think that the entertainment space, which we closed our first deal in is -- has a very strong opportunities. And when we also think, that a number of our operators have a position in other vertical markets that we ought to be able to cross-sell into those vertical markets. And we are looking very hard at that, once we have a customer relationship to expand the wallet share we have with those customers, is a high priority for us.
Jaeson Schmidt -- Lake Street Capital Markets -- Analyst
Okay, thanks a lot.
Operator
[Operator Instructions] Your next question is from Mike Latimore.
Mike Latimore -- Northland Capital Markets -- Analyst
Great, thanks. Yes, It is nice to have an earnings call again. Very good. So on the SG&A comment, I guess, I think you've talked about getting the $8 million in annualized savings. So should we think about that kind of $18.2 million SG&A going to $16.2 million or is that -- is it comment sort of incremental to the professional services there changes that might occur?
Glen Goold -- Interim Chief Financial Officer
I would think that -- that's incremental, Mike. I think, the $18.2 million was kind of a high point with our audit restatement project and the amount of cost that we had to incur to go through that project. Those costs will come significantly down. Those are outside of the $2 million that Don was mentioning. Keep in mind that the $2 million is annualized, so I don't expect that just a straight $2 million that will come-off as to SG&A line in Q2.
That will be benefited from the changes we are making. The largest downturn that you will see from Q1 to Q2, is a reduction in professional service fees, primarily related to our audit activity.
Mike Latimore -- Northland Capital Markets -- Analyst
Right. So it sounds like, just to be clear, the $8 million in annualized savings is, excuse me, is -- are you saying, there will be incremental savings beyond that as additional professional services come down? I am just trying to get a sense of where the -- like where the SG&A line might be by year-end, let's say in the fourth quarter?
Donald W. Layden -- Chairman and Interim Chief Executive Officer
Well, I think quarterly our run rate is roughly $11 million to $12 million. Our SG&A line, I think, you will see that will -- I think, will be a little higher than that in Q2, but we'll get down to that same rate Q3 and start improving on that starting in Q4.
Mike Latimore -- Northland Capital Markets -- Analyst
So then just -- again, just to be clear that $18.2 million should be somewhere -- what around $11 million exiting in year $10 million or $11 million.
Donald W. Layden -- Chairman and Interim Chief Executive Officer
By the end of the year?
Mike Latimore -- Northland Capital Markets -- Analyst
Yeah.
Jaeson Schmidt -- Lake Street Capital Markets -- Analyst
Yeah, I would say by Q4, I think that's a good estimate.
Mike Latimore -- Northland Capital Markets -- Analyst
Okay, got it. And then on the license and transaction gross margin, it improved from the fourth quarter sequentially. I guess, can you give a little bit of explanation of why that occurred and then going forward, you talk about it being stable, I guess -- how should we think about the stability there given, typically the transaction volumes grow pretty rapidly.
Glen Goold -- Interim Chief Financial Officer
Yeah. So, one of the drivers of margin is product mix, as we add connections and add our monthly, our software to our connection base, that is our high margin revenue-line. And as that product mix continues with additional connections to our service that's driving it up. I will say, that we have activities in place to pursue cost improvements, on our license and transactioning fees. And we expect these dialogues that we are having with our supply chain, with some of the services that go into our license and transactioning line of revenue to improve over this year.
So, with the improvement in the cost structure, as well as in additional, connections with our monthly service fees that we are enhancing and selling into the market, that is what's driving the margin improvement.
Mike Latimore -- Northland Capital Markets -- Analyst
Got it.
Glen Goold -- Interim Chief Financial Officer
You are correct. That transaction processing is certainly increasing as well. So that is a dynamic that does impact our L&T margin for sure.
Mike Latimore -- Northland Capital Markets -- Analyst
Okay. And then, in terms of the connection guidance for the year, what percent of that would be sort of the Cantaloupe, VMS Software versus Cashless or is it all kind of considered cashless?
Glen Goold -- Interim Chief Financial Officer
Well, it is both. It is both Cashless and VMS. We have not gone through the exercise of quantifying and breaking-out the full cap between the two. To be honest, as we are going forward, we look at our Company as one Company and now we have not spent a lot of time bifurcating what revenue is coming from historical Cantaloupe activity versus, we are two years beyond the acquisition. We look at ourselves as one unified Company at this point.
To your point though, we do have, these different connections that we sell and we're seeking to add the VMS type services to our platform. And as a deliberate strategy that we have, we are seeking to add those services to our existing connection base, so that is certainly part of the guidance that you are referring to Mike.
Mike Latimore -- Northland Capital Markets -- Analyst
And just last one. Do you have the amount, the dollar amount of transaction volumes in the quarter?
Glen Goold -- Interim Chief Financial Officer
I do not have that at the tip of my tongue, it is just not something I came prepared with. We can get that though.
Mike Latimore -- Northland Capital Markets -- Analyst
Okay, thanks a lot.
Operator
Your next question is from Cris Kennedy.
Cris Kennedy -- William Blair -- Analyst
Hey guys, it's Cris in for Bob Napoli. Thanks for taking the question. Any update on your long-term margin targets? The prior management team have some targets out there. Any thoughts on those? Thank you.
Glen Goold -- Interim Chief Financial Officer
Yes, so I think, Cris in the previous, guidance in this regard that we have sent-out is long-term range, 30% to 35% gross margin overall, license and transaction fees 40% to 45%. I think, in the near-term we will be hard pressed, especially on the total gross margin line to hit that 30% to 35%. I think, for the near-term, somewhere in the 26% perhaps, 30% as we improve some of the cost structure of our L&T revenue line. Similarly, I think, the 40% to 45% is a little aggressive. I think, for the near-term, I'd say 36% to 38% is more realistic.
I think, as we continue to look for cost improvement and efficiencies that we are working on, we can perhaps improve that guidance upwards. But in the near-term, that is where I see it.
Cris Kennedy -- William Blair -- Analyst
Okay. And then anything on EBITDA margins longer term?
Glen Goold -- Interim Chief Financial Officer
Yes, so I think, on the EBITDA the previous regime had guided to 15% to 18%. Again, I think, that is a little aggressive. If you take our $10 million to $11 million on a $180 million of revenue, that is in the low-single digits, I think guiding to the -- I'm sorry, the high-single digits, I think guiding to 6% to 10% in the near-term is probably where I'd say, we are looking again in the near-term, I -- certainly not long-term where I think we want to be and we're putting in place some strategies to improve that. But near-term, I say that is where we're at.
Cris Kennedy -- William Blair -- Analyst
Okay, great. Thanks for taking my question.
Glen Goold -- Interim Chief Financial Officer
Yeah.
Operator
And I'm showing no further questions at this time. I'd now like to turn the conference back to Don Layden, CEO.
Donald W. Layden -- Chairman and Interim Chief Executive Officer
Thank you. And thanks for everybody for participating in today's call and for the thoughtful questions. I strongly believe that our ability to make it easy and efficient for customers to adopt and deploy our leading technology, continues to provide us with a unique competitive advantage. We remain a trusted brand name known for Quality, Reliability and Innovation. And our market leading installed base, provides a powerful foundation from which to continue to expand and grow our business.
As we look ahead, we are focused on reaching new customers, expanding our footprint within our existing customer base, all while leading the industry in terms of innovation and customer service. I share with you my five priorities, get back on NASDAQ, lower expense base, continue to expand into new verticals, love our customers with even better customer service and improve our already strong capital position through the sale of receivables.
I think you will continue to see us do that and execute on those five priorities. Thanks again for joining us today and for your continued support. We look forward to updating you on our progress next quarter. Thanks.
Operator
[Operator Closing Remarks]
Duration: 41 minutes
Call participants:
Monica Gould -- Managing Director
Donald W. Layden -- Chairman and Interim Chief Executive Officer
Glen Goold -- Interim Chief Financial Officer
Adam Kelsey -- Craig-Hallum -- Analyst
Jaeson Schmidt -- Lake Street Capital Markets -- Analyst
Mike Latimore -- Northland Capital Markets -- Analyst
Cris Kennedy -- William Blair -- Analyst
