Israel-based NFC and contactless technology supplier On Track Innovations reported revenue for the third quarter increased by 27% to $6.8 million, driven by a more than doubling in sales of such payments products as contactless readers of point-of-sale terminals in the U.S. and expansion of equipment for transit-ticketing in Poland.
OTI also saw its operating income grow by $2.4 million for the quarter, but that was due primarily to a gain from a lower severance package that the company paid out to ousted chairman and CEO Oded Bashan and his son, Ohad.
OTI had budgeted $4.3 million more than it paid. The company still showed an operating loss of $2.9 million for the first nine months of the year, even with the $4.3 million gain.
Earlier this month, OTI received what it said was its largest reader order when an unnamed U.S. customer contracted to purchase $10 million worth of OTI’s Saturn 6500 contactless readers over the next three years.
The readers, which accept magnetic-stripe card and contactless payments, will be used at unattended points of sale, such as self-serve Laundromats, vending machines, and pay-at-the-pump stations. The order includes the EMV compliant Saturn 6500 EM+ model, as well as other models in the series. The rollout of EMV POS terminals is widely considered a criterion for mass adoption of mobile payments, especially NFC The order was likely boosted by the planned nationwide rollout of the Isis Mobile Wallet, which has partnered with operators of unattended merchant locations. OTI earlier this month announced that its contactless readers were Isis certified.
“This win also reveals increasing traction for greater adoption of NFC. In fact, we have doubled the number of readers we have shipped globally to date, and expect total shipments to surpass 110,000 this year,” said CEO Ofer Tziperman in a statement during the company’s Q3 earnings call.
The company has focused on NFC and contactless products in recent months and has sold off unrelated units, such as its Smart ID Division and Parx France, a subsidiary distributor of electronic parking products.
OTI announced it had received MasterCard certification in October for its Wave NFC attachment, which plugs into the audio jack of iOS and Android devices to enable NFC capability, said the company. The device is designed to work with payments and loyalty apps installed on the handsets.
Tziperman noted during the conference call that the company had received its first order for Wave, from a consortium of banks, mainly in Hong Kong. The banks belong to interbank group Jetco. OTI is supplying the dongles through its channel partner Tradelink Electronic Commerce, but it’s not clear how many of the Hong Kong banks will actually introduce the device and when.
NFC Times has also learned that large U.S. issuer Capital One is considering launching the device.
Former CEO and chairman Oded Bashan and his son, former chief marketing officer and president Ohad Bashan, resigned following a successful proxy battle by outsiders in Dec. 2012.
Under a deal with the previous board, the two Bashans were set to receive a combined $8 million in severance pay and other termination benefits, but the new board negotiated to reduce the package to a combined $2.5 million.
Even that amount raised some eyebrows, with some on the new board opposed to a golden parachute for the Bashans, in light of the company’s chronic losses during their tenures.
OTI’s share price hit a near historic low in April of 2013 of just under $.85, but is up sharply this month, closing at just over $3.20. The company in recent months has made progress in an NFC patent lawsuit against T-Mobile USA.