Cantaloupe, Inc. (NASDAQ: CTLP ) has been trading at around $11 a share since the announcement that it will be acquired by a private equity company and taken private. However, it is not a done deal yet, so I wanted to take a lookMSc in Finance. Long-term horizon investor mostly with 5-10 year horizon. I like to keep investing simple. I believe a portfolio should consist of a mix of growth, value, and dividend-paying stocks but usually end up looking for value more than anything. I also sell options from tim ...

Cantaloupe Inc. (NASDAQ:CTLP) dropped 1.8% after receiving a second request from the Federal Trade Commission for its planned sale to 365 Retail Markets. Cantaloupe and 365 Retail received the request for additional information from the FTC on Wednesday, according to an ...

PART I [Business](index=5&type=section&id=Item%201.%20Business) Cantaloupe, Inc. is a global leader in self-service commerce solutions, with a pending acquisition by 365 Retail Markets, LLC - Cantaloupe, Inc. is a global technology leader powering self-service commerce, offering micro-payment processing, self-checkout kiosks, mobile ordering, connected POS systems, and enterprise cloud software[15](index=15&type=chunk) Customer and Device Metrics (as of June 30) | Metric | 2025 | 2024 | Change (YoY) | | :----------------- | :----- | :----- | :----------- | | Active Customers | 34,896 | 31,466 | +11% | | Active Devices | 1.28M | 1.22M | +5% | - On June 15, 2025, Cantaloupe entered into an agreement to be acquired by 365 Retail Markets, LLC in an all-cash transaction for **$11.20 per share** of common stock, expected to close in the second half of calendar year 2025[19](index=19&type=chunk)[21](index=21&type=chunk) - The company's revenue streams consist of subscription, transaction processing, and equipment sales, with the majority derived from subscription and transaction fees[17](index=17&type=chunk) - Key growth opportunities include maximizing growth in existing customers, capitalizing on cashless and mobile payment trends globally, expanding into micro markets and smart stores, and further penetrating international and adjacent markets[41](index=41&type=chunk)[42](index=42&type=chunk)[43](index=43&type=chunk)[44](index=44&type=chunk)[45](index=45&type=chunk)[46](index=46&type=chunk)[47](index=47&type=chunk) [Risk Factors](index=17&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks from its pending merger, economic conditions, supply chain, competition, cybersecurity, and financial covenants - The pending merger with 365 Retail Markets, LLC poses risks including business disruptions, uncertainty for employees, potential adverse impact on stock price if not consummated, and significant transaction costs[67](index=67&type=chunk)[68](index=68&type=chunk)[69](index=69&type=chunk)[70](index=70&type=chunk)[71](index=71&type=chunk)[72](index=72&type=chunk)[76](index=76&type=chunk) - General economic conditions, including inflation, elevated interest rates, supply chain disruptions, and geopolitical conflicts, could adversely affect business by reducing consumer spending and impacting the company's ability to purchase devices[81](index=81&type=chunk)[82](index=82&type=chunk)[83](index=83&type=chunk)[85](index=85&type=chunk) - The company's success depends on its ability to develop new products and services to address rapidly evolving market and technological changes, with failure to do so materially affecting the business[86](index=86&type=chunk)[87](index=87&type=chunk) - Substantially all service contracts with customers are terminable with thirty days' notice, making consistent demand and customer satisfaction critical to financial success[88](index=88&type=chunk) - Cybersecurity threats, system breaches, and failures of processing systems could adversely affect reputation, business, and results of operations, potentially leading to significant remedial expenses, fines, and litigation[96](index=96&type=chunk)[97](index=97&type=chunk)[98](index=98&type=chunk) - Failure to comply with financial covenants under the **$100 million 2025 Credit Facility** could result in an event of default, accelerating outstanding indebtedness and materially impacting liquidity and financial position[114](index=114&type=chunk)[115](index=115&type=chunk)[116](index=116&type=chunk) [Unresolved Staff Comments](index=26&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments.) The company reported no unresolved staff comments from the SEC - There are no unresolved staff comments[135](index=135&type=chunk) [Cybersecurity](index=26&type=section&id=Item%201C.%20Cybersecurity.) Cantaloupe maintains a robust cybersecurity program with continuous monitoring, penetration testing, and CISO oversight, adhering to industry best practices - Cantaloupe's cybersecurity program safeguards information assets by monitoring threats, developing controls, and undergoing annual third-party reviews for PCI DSS and AICPA SOC compliance[136](index=136&type=chunk)[137](index=137&type=chunk) - The program includes routine external and internal penetration testing, an Incident Management Policy (IMP), and Incident Response Plan (IRP) to detect, respond to, and recover from security incidents[138](index=138&type=chunk)[139](index=139&type=chunk) - Cybersecurity oversight is led by the CISO, who reports to the CTO and the Board of Directors, possessing over **20 years of experience** and industry-recognized certifications (CISSP, CISM, PCI ISA & PCIP)[140](index=140&type=chunk)[141](index=141&type=chunk)[142](index=142&type=chunk) [Properties](index=27&type=section&id=Item%202.%20Properties.) Cantaloupe leases its headquarters and other facilities, deeming them adequate for current and future operational needs - Cantaloupe's headquarters are in Malvern, Pennsylvania, and it leases other facilities in Atlanta, Georgia, Denver, Colorado (sub-leased), and River Falls, Wisconsin[143](index=143&type=chunk)[144](index=144&type=chunk) - The company believes its existing facilities are sufficient for current and future needs[143](index=143&type=chunk) [Legal Proceedings](index=27&type=section&id=Item%203.%20Legal%20Proceedings.) Cantaloupe is involved in routine litigation and accrues for loss contingencies, with no material pending legal proceedings reported - The company is a party to litigation and other proceedings arising in the ordinary course of business, with accruals made for probable and estimable loss contingencies[145](index=145&type=chunk) - As of the filing date, there are no material pending legal or governmental proceedings other than routine litigation incidental to the business[146](index=146&type=chunk) [Mine Safety Disclosures](index=27&type=section&id=Item%204.%20Mine%20Safety%20Disclosures.) This item is not applicable to Cantaloupe, Inc. - Mine Safety Disclosures are not applicable to the company[147](index=147&type=chunk) PART II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=31&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities.) Cantaloupe's common stock trades on NASDAQ, with no cash dividends declared, and its shareholder return is benchmarked against market indices - Cantaloupe's common stock is traded on The NASDAQ Global Market under the symbol "CTLP"[148](index=148&type=chunk) Stockholder and Dividend Information (as of Sep 2, 2025 / June 30, 2025) | Metric | Amount | | :-------------------------------- | :----------- | | Common Stock Holders of Record | 436 | | Preferred Stock Holders of Record | 203 | | Outstanding Common Stock (Sep 2, 2025) | 73,368,777 shares | | Accumulated Unpaid Preferred Dividends (June 30, 2025) | $19.4 million | | Preferred Stock Liquidation Preference (June 30, 2025) | $23.3 million | - No cash dividends have been declared on the company's common stock or preferred stock to date[149](index=149&type=chunk) 5-Year Cumulative Total Return (Indexed to $100 at June 30, 2020) | Index | Jun-20 | Jun-21 | Jun-22 | Jun-23 | Jun-24 | Jun-25 | | :----------------------------- | :----- | :----- | :----- | :----- | :----- | :----- | | Cantaloupe, Inc. | $100 | $169 | $80 | $114 | $94 | $157 | | US Small-Cap Russell 2000® Index | $100 | $160 | $119 | $131 | $142 | $151 | | S&P 500 Information Technology Index | $100 | $141 | $121 | $168 | $238 | $271 | [Reserved](index=29&type=section&id=Item%206.%20%5BReserved%5D.) This item is reserved and contains no information [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=33&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations.) Cantaloupe reported strong FY2025 revenue growth, increased net income and Adjusted EBITDA, driven by transaction and subscription fees, with a pending merger Key Financial and Operational Highlights (FY2025 vs. FY2024) | Metric | FY2025 | FY2024 | Change (YoY) | | :-------------------------------- | :------- | :------- | :----------- | | Total Revenues | $302.5M | $268.6M | +13% | | Transaction Fees Revenue | $179.5M | $156.2M | +15% | | Subscription Fees Revenue | $83.6M | $75.3M | +11% | | Equipment Sales Revenue | $39.4M | $37.1M | +6.3% | | Total Dollar Volume of Transactions | $3.4B | $3.0B | +13% | | Active Devices | 1.28M | 1.22M | +5% | | Active Customers | 34,896 | 31,466 | +11% | | Net Income | $64.5M | $12.0M | +437.5% | | Adjusted EBITDA | $46.7M | $34.0M | +37.6% | - The company's revenue breakdown for FY2025 was approximately **59% from transaction fees**, **28% from subscription fees**, and **13% from equipment sales**[159](index=159&type=chunk) - Significant product launches and initiatives in FY2025 included Suites (stadiums/venues), a modernized Seed vending management system, AdVantage digital advertising program, Smart Store self-service retail solutions, Engage Pulse card readers for amusement, and the Go Micro micro market kiosk[163](index=163&type=chunk) - Cantaloupe acquired SB Software, a UK-based vending and coffee management business, enhancing its operational capabilities and market reach in Europe[163](index=163&type=chunk) - The company amended its credit facilities in January 2025, establishing a new 2025 Credit Facility with a total borrowing capacity of **$100 million**, comprising a **$40 million term loan**, a **$30 million revolving credit**, and a **$30 million delayed draw term loan**[163](index=163&type=chunk) Gross Profit and Margin (FY2025 vs. FY2024) | Metric | FY2025 | FY2024 | Change (YoY) | | :-------------------------------- | :------- | :------- | :----------- | | Total Gross Profit | $112.1M | $95.9M | +17.0% | | Total Gross Margin | 37.1% | 35.7% | +1.4 pp | | Adjusted Gross Profit (non-GAAP) | $123.8M | $102.7M | +20.6% | | Adjusted Gross Margin (non-GAAP) | 40.9% | 38.2% | +2.7 pp | Cash Flow Summary (FY2025 vs. FY2024) | Cash Flow Activity | FY2025 | FY2024 | Change (YoY) | | :-------------------------------- | :------- | :------- | :----------- | | Net cash provided by operating activities | $20.3M | $27.7M | -$7.4M | | Net cash used in investing activities | $28.1M | $18.6M | +$9.5M | | Net cash provided by (used in) financing activities | $0.1M | -$1.1M | +$1.2M | [Quantitative and Qualitative Disclosures About Market Risk](index=44&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk.) Cantaloupe faces interest rate risk on its variable-rate debt, with a 100 basis point SOFR increase impacting interest expense by $0.4 million - The company is exposed to interest rate risk on its **$39.0 million** outstanding borrowings under the 2025 Credit Facility, which has variable interest rates (SOFR-based), where a **100 basis point increase in SOFR** would result in a **$0.4 million change in interest expense**[219](index=219&type=chunk) - Excess cash is invested in highly liquid money market funds that earn a floating rate of interest, and the market risk for these investments is not material[220](index=220&type=chunk) - Cantaloupe also faces foreign currency exchange rate risks on its cash investments, inventory, accounts payable, and accounts receivable, but holds no freestanding derivative instruments[220](index=220&type=chunk) [Financial Statements and Supplementary Data](index=45&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data.) This section presents Cantaloupe's audited consolidated financial statements, with unqualified opinions from Deloitte & Touche LLP and BDO US, P.C., and detailed financial disclosures - Deloitte & Touche LLP issued an unqualified opinion on the consolidated financial statements for the years ended June 30, 2025 and 2024, and on the effectiveness of internal control over financial reporting as of June 30, 2025[227](index=227&type=chunk)[228](index=228&type=chunk) - BDO US, P.C. issued an unqualified opinion on the consolidated financial statements for the year ended June 30, 2023[237](index=237&type=chunk) - A critical audit matter identified by Deloitte was the determination of performance obligations within revenue contracts, requiring significant auditor judgment[232](index=232&type=chunk)[233](index=233&type=chunk) Consolidated Balance Sheet Highlights (as of June 30, in thousands) | Metric | 2025 | 2024 | | :-------------------------- | :------- | :------- | | Total Assets | $381,858 | $335,568 | | Total Liabilities | $128,107 | $151,102 | | Total Shareholders' Equity | $251,031 | $181,746 | Consolidated Statements of Operations Highlights (Year ended June 30, in thousands) | Metric | 2025 | 2024 | 2023 | | :-------------------------------- | :------- | :------- | :------- | | Total Revenues | $302,548 | $268,596 | $243,641 | | Operating Income | $22,330 | $14,169 | $760 | | Net Income | $64,533 | $11,993 | $633 | | Basic EPS | $0.87 | $0.16 | $0.00 | | Diluted EPS | $0.86 | $0.15 | $0.00 | Consolidated Statements of Cash Flows Highlights (Year ended June 30, in thousands) | Cash Flow Activity | 2025 | 2024 | 2023 | | :-------------------------------- | :------- | :------- | :------- | | Net cash provided by operating activities | $20,340 | $27,745 | $14,192 | | Net cash used in investing activities | $(28,135) | $(18,636) | $(51,865) | | Net cash provided by (used in) financing activities | $42 | $(1,058) | $20,475 | | Cash and cash equivalents at end of year | $51,146 | $58,920 | $50,927 | [Changes in and Disagreements With Accountants on Accounting and Financial Disclosure](index=87&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20With%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure.) Cantaloupe dismissed BDO USA P.C. and appointed Deloitte & Touche LLP as its auditor, with no disagreements reported despite prior material weaknesses - Cantaloupe dismissed BDO USA P.C. and appointed Deloitte & Touche LLP as its independent registered public accounting firm on October 10, 2023[434](index=434&type=chunk)[438](index=438&type=chunk) - There were no disagreements with BDO on accounting principles, financial statement disclosure, or auditing scope/procedure[435](index=435&type=chunk) - BDO's reports for FY2023 did not contain adverse or qualified opinions, but did note material weaknesses in internal control over financial reporting[436](index=436&type=chunk)[437](index=437&type=chunk) - The company did not consult Deloitte on any accounting, auditing, or financial reporting issues prior to their appointment[439](index=439&type=chunk) [Controls and Procedures](index=87&type=section&id=Item%209A.%20Controls%20and%20Procedures.) Management concluded that Cantaloupe's disclosure controls and internal control over financial reporting were effective as of June 30, 2025, with an unqualified attestation report - The company's disclosure controls and procedures were deemed effective as of June 30, 2025[441](index=441&type=chunk) - Management concluded that Cantaloupe maintained effective internal control over financial reporting as of June 30, 2025, based on the COSO framework[445](index=445&type=chunk) - Deloitte & Touche LLP issued an unqualified attestation report on the effectiveness of the company's internal control over financial reporting[446](index=446&type=chunk) - There were no material changes in the company's internal controls over financial reporting during the fourth quarter of fiscal year 2025[447](index=447&type=chunk) [Other Information](index=92&type=section&id=Item%209B.%20Other%20Information.) During the fiscal quarter ended June 30, 2025, none of Cantaloupe's directors or executive officers adopted, modified, or terminated any Rule 10b5-1 trading plans - No Rule 10b5-1 trading plans were adopted, modified, or terminated by directors or executive officers during the fiscal quarter ended June 30, 2025[448](index=448&type=chunk) [Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=92&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections.) This item is not applicable to Cantaloupe, Inc. - Disclosure regarding foreign jurisdictions that prevent inspections is not applicable[448](index=448&type=chunk) PART III [Directors, Executive Officers and Corporate Governance](index=93&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance.) This section details Cantaloupe's Board of Directors, executive officers, and corporate governance practices, including committee structures and a Code of Conduct - The Board of Directors includes Douglas G. Bergeron (Chairman), Lisa P. Baird, Ian Harris, Jacob Lamm, Michael K. Passilla, Ellen Richey, Anne M. Smalling, Ravi Venkatesan (CEO), and Shannon S. Warren[449](index=449&type=chunk)[450](index=450&type=chunk)[452](index=452&type=chunk)[454](index=454&type=chunk)[456](index=456&type=chunk)[459](index=459&type=chunk)[463](index=463&type=chunk)[466](index=466&type=chunk)[469](index=469&type=chunk)[471](index=471&type=chunk) - Key executive officers include Ravi Venkatesan (CEO), Scott Stewart (CFO), Jeffrey Dumbrell (CRO), Gaurav Singal (CTO), Anna Novoseletsky (CLCO & General Counsel), and Jared Grachek (CAO)[469](index=469&type=chunk)[474](index=474&type=chunk)[475](index=475&type=chunk)[478](index=478&type=chunk)[479](index=479&type=chunk)[480](index=480&type=chunk)[481](index=481&type=chunk) - The company has a Code of Business Conduct and Ethics applicable to all directors, officers, and employees, and an Insider Trading Policy to ensure compliance with securities laws[484](index=484&type=chunk)[487](index=487&type=chunk) - The Board has four standing committees: Audit & Risk, Compensation, Nominating & Corporate Governance, and Finance, with Ms. Shannon S. Warren identified as an "audit committee financial expert" and chairing the Audit and Risk Committee[485](index=485&type=chunk)[486](index=486&type=chunk) - Certain Section 16(a) reports for RSU grants to directors and executive officers were filed late due to an administrative error[483](index=483&type=chunk) [Executive Compensation](index=95&type=section&id=Item%2011.%20Executive%20Compensation.) Cantaloupe's executive compensation links pay to performance and shareholder value, with FY2025 bonuses based on Adjusted EBITDA and Revenue, and a CEO to median pay ratio of 12:1 - The company's compensation philosophy emphasizes attracting and retaining key executives, pay-for-performance, and aligning management's interests with long-term shareholder value, with a significant focus on equity awards[493](index=493&type=chunk)[494](index=494&type=chunk) FY2025 Annual Bonus Performance Metrics and Achievement | Metric | Weighting | Goal Objective | Actual Achieved | Percent Achieved | | :----------------------------- | :-------- | :------------- | :-------------- | :--------------- | | Adjusted EBITDA ($) | 40% | $47,800,000 | $46,740,000 | 93.4% | | Revenue ($) | 25% | $315,000,000 | $302,548,000 | 0% | | Monthly Recurring Revenue Growth (%) | 20% | 15% | 11% | 82.2% | | Board Discretion (%) | 15% | N/A | N/A | 120% | | **Total Corporate Percent Achieved** | | | | **71.8%** | - The estimated ratio of the annual total compensation of the CEO (**$957,707**) to the median employee (**$80,000**) for fiscal year 2025 is **12:1**[534](index=534&type=chunk)[535](index=535&type=chunk) - The Compensation Committee engaged Aon's Human Capital Solutions practice as its executive compensation consultant, determining Aon to be independent[497](index=497&type=chunk)[500](index=500&type=chunk) Potential Payments Upon Change of Control (Merger Scenario) | Named Executive Officer | Cash ($) | Equity ($) | Total ($) | | :---------------------- | :--------- | :--------- | :-------- | | Ravi Venkatesan | 1,350,000 | 1,866,538 | 3,216,538 | | Scott Stewart | 1,032,000 | 869,781 | 1,901,781 | | Jeffrey Dumbrell | 416,000 | 869,781 | 1,285,781 | | Gaurav Singal | 373,118 | 153,776 | 526,894 | | Anna Novoseletsky | 450,000 | 340,090 | 790,090 | [Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters](index=111&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Shareholder%20Matters.) Hudson Executive Capital LP, BlackRock, Inc., and Oakland Hills BV are major beneficial owners of Cantaloupe's common stock, with directors and officers holding 7.3% Beneficial Ownership of Common Stock (as of September 2, 2025) | Name of Beneficial Owner | Number of Shares Beneficially Owned | Percent of Class | | :-------------------------- | :---------------------------------- | :--------------- | | Hudson Executive Capital LP | 9,319,372 | 12.7% | | BlackRock, Inc. | 4,423,558 | 6.0% | | Oakland Hills BV | 3,667,000 | 5.0% | | All 5% Shareholders | 17,409,930 | 23.7% | | All directors and executive officers as a group (13 persons) | 5,364,197 | 7.3% | - As of September 2, 2025, there were **385,782 shares of Series A Preferred Stock** outstanding, with no directors or executive officers beneficially owning more than **5%** of this class[557](index=557&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=112&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence.) Cantaloupe's Audit and Risk Committee reviews related-party transactions, and the Board assesses director independence, confirming key directors' independent judgment - The Audit and Risk Committee reviews and approves all related-party transactions exceeding **$120,000**, ensuring terms are no less favorable than those available to unaffiliated third parties[558](index=558&type=chunk)[559](index=559&type=chunk) - The Board determined that Mr. Passilla and Mr. Harris are independent directors, concluding that their relationships would not interfere with their independent judgment[561](index=561&type=chunk)[562](index=562&type=chunk) - The company paid Optimized Payments, Inc. **$0.2 million** for payments analytics and advisory services in both fiscal years 2025 and 2024[561](index=561&type=chunk) [Principal Accounting Fees and Services](index=113&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services.) Cantaloupe incurred audit fees from Deloitte & Touche LLP and BDO USA, P.C., with additional audit-related fees for specific services, but no tax or other fees Principal Accounting Fees (in thousands) | Fee Type | Auditor | FY2025 (Estimated) | FY2024 | | :-------------------- | :-------- | :----------------- | :------- | | Audit Fees | Deloitte | $2,393 | $2,641 | | Audit Fees (Consent) | BDO | $250 | $375 | | Audit-Related Fees | Deloitte | $153 | $30 | | Audit-Related Fees | BDO | $50 | $0 | | Tax Fees | Deloitte | $0 | $0 | | Tax Fees | BDO | $0 | $0 | | All Other Fees | Deloitte | $0 | $0 | | All Other Fees | BDO | $0 | $0 | PART IV [Exhibits, Financial Statement Schedules](index=115&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules.) This section lists all exhibits and financial statement schedules, including the Merger Agreement, organizational documents, and various credit and employment agreements - The exhibits include the Agreement and Plan of Merger with 365 Retail Markets, LLC, Amended and Restated Articles of Incorporation, Second Amended and Restated Bylaws, and various credit and payment solutions agreements[572](index=572&type=chunk)[573](index=573&type=chunk) - Other significant exhibits cover stock incentive plans, employment agreements for executives, the Insider Trading Policy, auditor consents from Deloitte & Touche LLP and BDO USA, P.C., and certifications from the CEO and CFO[572](index=572&type=chunk)[573](index=573&type=chunk) [Form 10-K Summary](index=117&type=section&id=Item%2016.%20Form%2010-K%20Summary.) This item is not applicable to the report - Form 10-K Summary is not applicable[575](index=575&type=chunk)

Financial Data and Key Metrics Changes - The meeting confirmed that sufficient votes were cast for the merger proposal and the compensation proposal to pass, with final vote counts to be reported in a current report [11]. Business Line Data and Key Metrics Changes - No specific data on business lines or key metrics was provided in the meeting. Market Data and Key Metrics Changes - No specific market data or key metrics were discussed during the meeting. Company Strategy and Development Direction and Industry Competition - The company is moving forward with a merger agreement involving multiple entities, indicating a strategic direction towards consolidation and potential growth opportunities [7][9]. Management's Comments on Operating Environment and Future Outlook - Management did not provide specific comments on the operating environment or future outlook during this meeting. Other Important Information - The meeting was held virtually, with 82.3% of possible votes represented, ensuring a quorum was present [5]. - The proposals included the adoption of a merger agreement and a nonbinding advisory vote on executive compensation related to the merger [8]. Summary of Q&A Session - There were no questions or answers recorded during this meeting.

Group 1 - The Fund initiated two new positions in niche technology-related industries during Q2 2025 [2] - Cantaloupe Inc. is identified as a payment processing business [2] - Visteon Corp is also mentioned as a new position, although further details are not provided [2]

Financial Performance - Cantaloupe reported quarterly earnings of $0.08 per share, missing the Zacks Consensus Estimate of $0.10 per share, but showing an increase from $0.06 per share a year ago, representing an earnings surprise of -20% [1] - The company posted revenues of $75.43 million for the quarter ended March 2025, missing the Zacks Consensus Estimate by 4.31%, compared to year-ago revenues of $67.9 million [2] - Over the last four quarters, Cantaloupe has surpassed consensus EPS estimates just once and topped consensus revenue estimates only once [2] Stock Performance - Cantaloupe shares have declined approximately 13.6% since the beginning of the year, while the S&P 500 has decreased by -4.3% [3] - The current Zacks Rank for Cantaloupe is 3 (Hold), indicating that the shares are expected to perform in line with the market in the near future [6] Future Outlook - The current consensus EPS estimate for the coming quarter is $0.11 on revenues of $84.48 million, and for the current fiscal year, it is $0.32 on revenues of $307.86 million [7] - The outlook for the Financial Transaction Services industry, where Cantaloupe operates, is currently in the top 36% of over 250 Zacks industries, suggesting a favorable environment for stock performance [8]

Financial Data and Key Metrics Changes - Total revenue increased by 11% year over year to $75.4 million, driven by 10% growth in both transaction and subscription revenue [5][13] - Equipment revenue was $10.2 million, an 18% increase compared to the same quarter last year [6][16] - Adjusted EBITDA for Q3 was $13.9 million, reflecting a 37% increase compared to the prior year [7][19] - Total adjusted gross margin expanded to 41.6% from 39.6% in the same quarter last year [6][16] - Net income applicable to common shares was $48.9 million, or $0.65 diluted earnings per share, significantly up from $4.4 million or $0.06 diluted earnings per share in the prior year [18] Business Line Data and Key Metrics Changes - Subscription revenue reached $21.2 million, a 10% year-over-year increase, while transaction revenue was $44 million, also up 10% [14][16] - The average revenue per unit (ARPU) for Q3 was $2.06, an 11% increase from the prior year [16] - Equipment revenue growth was attributed to the success of the SmartStore offering [16] Market Data and Key Metrics Changes - As of March 31, 2025, the company had over 34,000 active customers and 1.26 million active devices, representing a 114% increase year over year [15] - International revenue is expected to be around 3% to 4% as the company exits FY 2025, with growth anticipated in FY 2026 [50] Company Strategy and Development Direction - The company aims to scale its business in Europe and Latin America while refining its go-to-market strategy across direct and indirect channels [12] - The SmartStore product is seen as a significant growth driver, with expectations of substantial sales increases in the fourth quarter [25][36] Management's Comments on Operating Environment and Future Outlook - Management noted that transaction revenue was impacted by adverse weather events, estimating a $2 million loss primarily in January and February [15][23] - There is optimism regarding a rebound in equipment sales due to settling economic uncertainties and improved market conditions [42][43] - The company is unlocking benefits from accumulated losses, which will positively impact income and free cash flow in upcoming quarters [55] Other Important Information - The company launched Cantaloupe Capital, providing customers with flexible access to cash flow for equipment investments [11] - The Engage Pulse cashless device has been well received, with significant sales increases reported by customers [10] Q&A Session Summary Question: Impact of weather on transaction revenue - Management quantified the weather impact on transaction revenue at approximately $2 million, primarily in January and February [23] Question: Demand for SmartStore product - Management indicated a strong ramp-up in SmartStore demand, noting it as the hottest selling product [25] Question: Updates on international markets - Management provided positive updates on scaling efforts in Europe and Latin America, with more details expected soon [26] Question: Revenue opportunities between different product lines - Management discussed the evolution of self-service commerce, highlighting the growth potential of SmartStores compared to traditional vending and micro markets [30][34] Question: Equipment sales and economic uncertainty - Management confirmed that the slowdown in equipment sales was due to economic uncertainty, but noted a rebound in sales in the fourth quarter [43][44] Question: Expectations for international revenue - Management anticipates international revenue to be around 3% to 4% as they exit FY 2025, with continued growth expected [50] Question: Free cash flow expectations - Management projected free cash flow for the fourth quarter to be in the range of $15 million to $18 million [51]

Financial Data and Key Metrics Changes - Total revenue increased by 11% year over year to $75.4 million, driven by 10% growth in both transaction and subscription revenue [5][14] - Equipment revenue was $10.2 million, an 18% increase compared to Q3 FY24, although lower than anticipated due to weather events and economic uncertainty [6][17] - Adjusted EBITDA for Q3 was $13.9 million, a 37% increase compared to the prior year, reflecting improved margins and operating leverage [7][20] - Total adjusted gross margin expanded to 41.6% from 39.6% in the same quarter last year [6][17] - Net income applicable to common shares for Q3 was $48.9 million, or $0.65 diluted earnings per share, significantly impacted by a tax benefit [19] Business Line Data and Key Metrics Changes - Subscription revenue reached $21.2 million, a 10% year-over-year increase, while transaction revenue was $44 million, also up 10% [14] - The average revenue per unit (ARPU) for Q3 was $2.06, an 11% increase from the prior year [16] - Subscription adjusted gross margin improved to 90.7% from 89.6% in the prior year, while transaction gross margin increased to 24.8% from 22.8% [17] Market Data and Key Metrics Changes - As of March 31, 2025, the company had over 34,000 active customers and 1.26 million active devices, representing a 114% increase year over year [15] - The company is seeing strong growth in micro markets and penetration of seed software among both existing and new customers [7][8] Company Strategy and Development Direction - The company aims to scale its business in Europe and Latin America while refining its go-to-market strategy across direct and indirect channels [13] - The introduction of Cantaloupe Capital aims to provide customers with flexible access to cash flow for equipment investments and business growth [12] Management's Comments on Operating Environment and Future Outlook - Management noted that transaction revenue was materially impacted by adverse weather events, estimating a $2 million loss primarily in January and February [15][23] - The company has revised its fiscal year 2025 guidance, expecting total revenues between $302 million and $308 million, representing growth of 13% to 15% [21] - Management expressed optimism about a rebound in equipment sales in the fourth quarter, driven by improved market conditions [42] Other Important Information - The company released a valuation allowance of $42.2 million associated with deferred tax assets, reflecting sustained profitability and anticipated future earnings [19] - Cash and cash equivalents at the end of Q3 were $46.3 million, representing a sequential growth of $18.6 million [20] Q&A Session Summary Question: What was the impact of weather on transaction revenue? - Management quantified the weather impact on transaction revenue at approximately $2 million, primarily in January and February [23] Question: What are the early indications of SmartStore product demand? - Management indicated a strong ramp-up in SmartStore demand, noting it as the hottest selling product at the NAMMA show [26] Question: Any updates on international revenue, particularly in Latin America? - Management mentioned exciting updates in Latin America but stated it was premature to share specific details [27] Question: How does revenue opportunity compare between traditional vending, smart stores, and other verticals? - Management explained that SmartStore is expected to significantly outperform traditional vending and micro markets in terms of sales and margins [32][35] Question: What is the expected international revenue percentage exiting this year? - Management anticipates international revenue to be in the 3% to 4% range as they exit FY25 [49] Question: What is the expected free cash flow for the upcoming quarter? - Management expects free cash flow to be in the range of $15 million to $18 million for the fourth quarter [50]

[Part I - Financial Information](index=3&type=section&id=Part%20I%20-%20Financial%20Information) This section presents the company's unaudited condensed consolidated financial statements and detailed explanatory notes [Item 1. Condensed Consolidated Financial Statements](index=3&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements) This section presents Cantaloupe, Inc.'s unaudited condensed consolidated financial statements, including the balance sheets, statements of operations, comprehensive income, convertible preferred stock and shareholders' equity, and cash flows, along with detailed notes explaining the company's business, accounting policies, and specific financial line items for the periods ended March 31, 2025 and 2024 [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This statement provides a snapshot of the company's assets, liabilities, and equity at specific points in time Condensed Consolidated Balance Sheets | ($ in thousands) | March 31, 2025 (Unaudited) | June 30, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $46,337 | $58,920 | | Accounts receivable, net | 33,904 | 43,848 | | Inventory, net | 46,207 | 40,791 | | Total current assets | 145,196 | 157,794 | | Goodwill | 102,800 | 94,903 | | Deferred income taxes, net (non-current) | 41,618 | — | | Total assets | $370,524 | $335,568 | | **Liabilities and Equity** | | | | Accounts payable | $59,506 | $78,895 | | Accrued expenses | 17,493 | 24,008 | | Total current liabilities | 80,979 | 105,895 | | Long-term debt, less current portion | 37,226 | 36,284 | | Total liabilities | 127,115 | 151,102 | | Total shareholders' equity | 240,689 | 181,746 | - Total assets increased by **$34.96 million (10.4%)** from June 30, 2024, to March 31, 2025, primarily driven by an increase in goodwill and deferred income taxes[8](index=8&type=chunk) - Total liabilities decreased by **$23.987 million (15.9%)** over the nine-month period, mainly due to reductions in accounts payable and accrued expenses[8](index=8&type=chunk) - Shareholders' equity significantly increased by **$58.943 million (32.4%)** from June 30, 2024, to March 31, 2025[8](index=8&type=chunk) [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This statement details the company's revenues, expenses, and net income over specific reporting periods Condensed Consolidated Statements of Operations | ($ in thousands, except share and per share data) | Three months ended March 31, 2025 | Three months ended March 31, 2024 | Nine months ended March 31, 2025 | Nine months ended March 31, 2024 | | :--- | :--- | :--- | :--- | :--- | | **Revenues:** | | | | | | Subscription and transaction fees | $65,179 | $59,207 | $194,056 | $170,371 | | Equipment sales | 10,248 | 8,690 | 25,929 | 25,568 | | **Total revenues** | **$75,427** | **$67,897** | **$219,985** | **$195,939** | | **Operating income** | **$6,899** | **$4,292** | **$17,168** | **$10,633** | | **Net income** | **$49,156** | **$4,656** | **$57,702** | **$9,787** | | Net earnings per common share - Basic | $0.67 | $0.06 | $0.78 | $0.13 | | Net earnings per common share - Diluted | $0.65 | $0.06 | $0.77 | $0.12 | - Total revenues increased by **11.1%** for the three months ended March 31, 2025, and by **12.3%** for the nine months ended March 31, 2025, compared to the respective prior year periods[10](index=10&type=chunk) - Net income saw a substantial increase, rising from **$4.656 million to $49.156 million** for the three months ended March 31, 2025, and from **$9.787 million to $57.702 million** for the nine months ended March 31, 2025, primarily due to a significant income tax benefit[10](index=10&type=chunk)[98](index=98&type=chunk) - Diluted EPS increased significantly from **$0.06 to $0.65** for the three-month period and from **$0.12 to $0.77** for the nine-month period year-over-year[10](index=10&type=chunk) [Condensed Consolidated Statements of Comprehensive Income](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) This statement presents net income and other comprehensive income items, reflecting total non-owner changes in equity Condensed Consolidated Statements of Comprehensive Income | ($ in thousands) | Three months ended March 31, 2025 | Three months ended March 31, 2024 | Nine months ended March 31, 2025 | Nine months ended March 31, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net income | $49,156 | $4,656 | $57,702 | $9,787 | | Foreign currency translation adjustments | 711 | 17 | (918) | (7) | | **Total comprehensive income** | **$49,867** | **$4,673** | **$56,784** | **$9,780** | - Total comprehensive income for the three months ended March 31, 2025, was **$49.867 million**, a significant increase from **$4.673 million** in the prior year, largely mirroring the increase in net income[12](index=12&type=chunk) - For the nine months ended March 31, 2025, total comprehensive income was **$56.784 million**, up from **$9.780 million** in the prior year, with foreign currency translation adjustments contributing a loss of **$0.918 million**[12](index=12&type=chunk) [Condensed Consolidated Statements of Convertible Preferred Stock and Shareholders' Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Convertible%20Preferred%20Stock%20and%20Shareholders'%20Equity) This statement outlines changes in convertible preferred stock and shareholders' equity over the reporting period Nine Months Ended March 31, 2025: | ($ in thousands) | Balance, June 30, 2024 | Stock-based compensation | Vesting of restricted stock | Exercise of stock options | Other comprehensive loss | Net income | Balance, March 31, 2025 | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Convertible Preferred Stock | $2,720 | — | — | — | — | — | $2,720 | | Additional Paid-in Capital | $482,329 | $2,106 | — | $53 | — | — | $484,488 | | Accumulated Deficit | $(300,459) | — | — | — | — | $57,702 | $(242,757) | | Accumulated Other Comprehensive Loss | $(124) | — | — | — | $(918) | — | $(1,042) | | **Total Shareholders' Equity** | **$181,746** | **$2,106** | **—** | **$53** | **$(918)** | **$57,702** | **$240,689** | - Total shareholders' equity increased from **$181.746 million** at June 30, 2024, to **$240.689 million** at March 31, 2025, primarily driven by net income of **$57.702 million**[18](index=18&type=chunk) - Stock-based compensation added **$2.106 million** to additional paid-in capital during the nine months ended March 31, 2025[18](index=18&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This statement categorizes cash inflows and outflows from operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows | ($ in thousands) | Nine months ended March 31, 2025 | Nine months ended March 31, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $10,914 | $13,481 | | Net cash used in investing activities | $(23,049) | $(13,925) | | Net cash used in financing activities | $(417) | $(293) | | Net decrease in cash and cash equivalents | $(12,583) | $(730) | | Cash and cash equivalents at end of period | $46,337 | $50,197 | - Net cash provided by operating activities decreased to **$10.914 million** for the nine months ended March 31, 2025, from **$13.481 million** in the prior year, primarily due to cash utilized by working capital accounts[22](index=22&type=chunk)[164](index=164&type=chunk) - Net cash used in investing activities increased to **$23.049 million**, up from **$13.925 million**, driven by higher capital expenditures and business acquisitions[22](index=22&type=chunk)[167](index=167&type=chunk) - The company experienced a net decrease in cash and cash equivalents of **$12.583 million** for the nine months ended March 31, 2025, resulting in an ending balance of **$46.337 million**[22](index=22&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) These notes provide detailed explanations and additional information supporting the condensed consolidated financial statements [1. BUSINESS](index=11&type=section&id=1.%20BUSINESS) This note describes Cantaloupe, Inc.'s business operations, services, and target markets - Cantaloupe, Inc. is a digital payments and software services company providing end-to-end technology solutions for self-service commerce[24](index=24&type=chunk) - The company offers a single platform for integrated payments processing and software solutions covering inventory management, logistics, and back-office management[24](index=24&type=chunk) - Customers include vending machine companies, micro-market and smart retail operators, laundromats, metered parking, amusement venues, and IoT services[24](index=24&type=chunk) [2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=11&type=section&id=2.%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This note outlines the key accounting principles and methods used in preparing the financial statements - The financial statements are prepared in accordance with U.S. GAAP for interim financial information and should be read with the June 30, 2024 Annual Report on Form 10-K[27](index=27&type=chunk) - The company is assessing the impact of new accounting pronouncements: ASU 2023-09 (Income Taxes), ASU 2023-07 (Segment Reporting), and ASU 2024-03 (Disaggregation of Income Statement Expenses), with effective dates ranging from fiscal year 2025 to 2027[33](index=33&type=chunk)[34](index=34&type=chunk)[35](index=35&type=chunk) - During the quarter ended March 31, 2025, the Company recognized **$3.0 million** in additional depreciation and amortization charges due to changes in business strategy and evolving technology initiatives rendering certain capitalized internal use software projects no longer expected to provide future economic benefits[32](index=32&type=chunk) [3. ACCOUNTS RECEIVABLE](index=12&type=section&id=3.%20ACCOUNTS%20RECEIVABLE) This note details the composition and changes in the company's accounts receivable and allowance for credit losses - Accounts receivable, net, decreased to **$33.9 million** as of March 31, 2025, from **$43.8 million** as of June 30, 2024, primarily due to timing of payment processor settlements and cash collections[37](index=37&type=chunk) Allowance for Credit Losses Rollforward (Nine months ended March 31): | ($ in thousands) | 2025 | 2024 | | :--- | :--- | :--- | | Balance, June 30 | $13,442 | $10,815 | | Provision adjustments | 2,552 | 3,309 | | Write-offs | (4,008) | (929) | | **Balance, March 31** | **$11,986** | **$13,195** | [4. FINANCE RECEIVABLES](index=13&type=section&id=4.%20FINANCE%20RECEIVABLES) This note provides information on finance receivables, primarily from sales-type leases, and their expected cash collections - Finance receivables primarily consist of non-cancellable sixty-month sales-type leases for devices under the company's financing program[40](index=40&type=chunk) Total Finance Receivables by Payment Performance: | ($ in thousands) | March 31, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Current | $10,820 | $14,743 | | 30 days and under | 330 | 343 | | 31 - 60 days | 233 | 264 | | 61 - 90 days | 196 | 224 | | Greater than 90 days | 3,197 | 2,787 | | **Total finance receivables** | **$14,776** | **$18,361** | Future Cash Collections on Performing Finance Receivables (as of March 31, 2025): | ($ in thousands) | Amount | | :--- | :--- | | Remainder of fiscal year 2025 | $1,873 | | 2026 | 6,042 | | 2027 | 4,172 | | 2028 | 2,188 | | 2029 | 915 | | Thereafter | 178 | | **Total amounts to be collected** | **$15,368** | | Less: interest | (592) | | Less: allowance for credit losses | (2,494) | | **Total finance receivables (net)** | **$12,282** | [5. LEASES](index=14&type=section&id=5.%20LEASES) This note describes the company's operating and sales-type lease arrangements and related revenues Operating Lease Balance Sheet Information: | ($ in thousands) | March 31, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Operating lease right-of-use assets | $7,622 | $7,986 | | Total lease liabilities | $9,710 | $9,777 | - The company recognized **$2.3 million** and **$6.8 million** in revenue from its device rental program (operating leases) for the three and nine months ended March 31, 2025, respectively, included in Subscription and Transaction fees[46](index=46&type=chunk)[47](index=47&type=chunk) Lease Revenue by Type (Nine months ended March 31): | ($ in thousands) | 2025 | 2024 | | :--- | :--- | :--- | | Operating leases | $6,769 | $6,081 | | Sales-type leases | 1,172 | 1,995 | | **Total lease revenues** | **$7,941** | **$8,076** | [6. DEBT AND OTHER FINANCING ARRANGEMENTS](index=16&type=section&id=6.%20DEBT%20AND%20OTHER%20FINANCING%20ARRANGEMENTS) This note details the company's debt structure, credit facilities, and compliance with financial covenants Debt and Other Financing Arrangements: | ($ in thousands) | As of March 31, 2025 | As of June 30, 2024 | | :--- | :--- | :--- | | 2025 Credit Facility/2022 Amended Credit Facility | $39,500 | $37,625 | | Less: unamortized issuance costs | (340) | (75) | | **Total outstanding debt** | **$39,160** | **$37,550** | | Less: current portion | (1,934) | (1,266) | | **Noncurrent debt** | **$37,226** | **$36,284** | - On January 31, 2025, the company entered into a new 2025 Credit Facility, providing a **$40 million** secured term loan, a **$30 million** secured revolving credit facility, and a **$30 million** secured delayed draw term loan, totaling **$100 million** in borrowing capacity[49](index=49&type=chunk)[50](index=50&type=chunk) - The 2025 Credit Facility matures on January 31, 2030, with a weighted average interest rate of approximately **7.24%** as of March 31, 2025[53](index=53&type=chunk)[54](index=54&type=chunk) - The company was in compliance with its financial covenants (total leverage ratio and fixed charge coverage ratio) for the 2025 Credit Facility as of March 31, 2025[56](index=56&type=chunk) [7. ACCRUED EXPENSES](index=18&type=section&id=7.%20ACCRUED%20EXPENSES) This note provides a breakdown of accrued expenses and their changes over the reporting period Accrued Expenses: | ($ in thousands) | As of March 31, 2025 | As of June 30, 2024 | | :--- | :--- | :--- | | Sales tax | $7,429 | $10,574 | | State income tax payable | 1,520 | 1,496 | | Accrued compensation and related sales commissions | 3,225 | 4,061 | | Operating lease liabilities - current | 1,449 | 1,320 | | Accrued professional fees | 2,349 | 4,336 | | Consideration withheld for acquisitions - current | 355 | 1,370 | | Accrued other | 1,166 | 851 | | **Total accrued expenses** | **$17,493** | **$24,008** | - Total accrued expenses decreased by **$6.515 million** from June 30, 2024, to March 31, 2025, primarily due to reductions in sales tax, accrued compensation, and professional fees[64](index=64&type=chunk) [8. GOODWILL AND INTANGIBLES](index=19&type=section&id=8.%20GOODWILL%20AND%20INTANGIBLES) This note presents information on the company's goodwill and other intangible assets, including amortization Intangible Assets and Goodwill (Net): | ($ in thousands) | As of March 31, 2025 | As of June 30, 2024 | | :--- | :--- | :--- | | Brand and trade names | $448 | $509 | | Developed technology | 7,619 | 6,758 | | Customer relationships | 16,545 | 17,359 | | **Total intangible assets** | **$24,612** | **$24,626** | | **Goodwill** | **$102,800** | **$94,903** | - Goodwill increased by **$7.897 million** from June 30, 2024, to March 31, 2025, primarily due to acquisitions[66](index=66&type=chunk)[76](index=76&type=chunk)[80](index=80&type=chunk) - Amortization expense related to intangible assets was **$1.6 million** for the three months and **$4.4 million** for the nine months ended March 31, 2025[66](index=66&type=chunk) [9. ACQUISITIONS](index=19&type=section&id=9.%20ACQUISITIONS) This note details recent business acquisitions, including purchase prices and recognized goodwill and intangibles - The company acquired SB Software Limited on September 5, 2024, for approximately **$11.4 million**, enhancing its operational capabilities and market reach in Europe[69](index=69&type=chunk)[72](index=72&type=chunk) - The SB Software acquisition resulted in **$7.793 million** in goodwill and **$3.303 million** in identifiable intangible assets (developed technology, customer relationships, trade names)[75](index=75&type=chunk)[76](index=76&type=chunk) - The company acquired Cheq Lifestyle Technology, Inc. on February 1, 2024, for **$4.5 million**, positioning Cantaloupe for expansion into the sports, entertainment, and restaurant sectors[70](index=70&type=chunk)[79](index=79&type=chunk) - The Cheq acquisition resulted in **$2.0 million** in goodwill and **$1.750 million** in identifiable intangible assets[79](index=79&type=chunk)[80](index=80&type=chunk) [10. REVENUES](index=22&type=section&id=10.%20REVENUES) This note disaggregates the company's revenues by source and provides details on contract assets and liabilities Disaggregated Revenues: | ($ in thousands) | Three months ended March 31, 2025 | Three months ended March 31, 2024 | Nine months ended March 31, 2025 | Nine months ended March 31, 2024 | | :--- | :--- | :--- | :--- | :--- | | Transaction fees | $44,028 | $40,034 | $132,022 | $114,956 | | Subscription fees | 21,151 | 19,173 | 62,034 | 55,415 | | Equipment sales | 10,248 | 8,690 | 25,929 | 25,568 | | **Total revenues** | **$75,427** | **$67,897** | **$219,985** | **$195,939** | - Subscription and transaction fees accounted for approximately **86%** and **88%** of total revenues for the three and nine months ended March 31, 2025, respectively[110](index=110&type=chunk) - Contract assets were **$2.2 million** as of March 31, 2025, and deferred revenue (contract liabilities) was **$2.046 million**[84](index=84&type=chunk)[86](index=86&type=chunk) - Amortization of capitalized contract costs was **$0.2 million** for the three months and **$0.7 million** for the nine months ended March 31, 2025[90](index=90&type=chunk) [11. STOCK-BASED COMPENSATION](index=23&type=section&id=11.%20STOCK-BASED%20COMPENSATION) This note outlines the valuation assumptions and expense recognized for stock options and restricted stock awards Stock Option Valuation Assumptions (Nine months ended March 31): | Assumption | 2025 | 2024 | | :--- | :--- | :--- | | Expected volatility | 49.5% - 50.5% | 52.6% - 69.7% | | Weighted average expected life (years) | 4.5 | 4.2 - 4.5 | | Dividend yield | 0.0% | 0.0% | | Risk-free interest rate | 3.4% - 3.5% | 4.1% - 4.3% | | Number of options granted | 30,000 | 175,000 | | Weighted average exercise price | $6.86 | $6.92 | | Weighted average grant date fair value | $3.10 | $4.01 | - Total stock-based compensation expense for stock options was **$0.2 million** for the three months and **$0.9 million** for the nine months ended March 31, 2025[93](index=93&type=chunk) - Restricted stock awards expense was **$0.4 million** for the three months and **$1.5 million** for the nine months ended March 31, 2025[94](index=94&type=chunk) - Performance stock awards expense was **$0.1 million** for both the three and nine months ended March 31, 2025[95](index=95&type=chunk) [12. INCOME TAXES](index=24&type=section&id=12.%20INCOME%20TAXES) This note explains the income tax benefit, effective tax rate, and the release of valuation allowance on deferred tax assets - The company recorded an income tax benefit of **$41.9 million** for the three months and **$41.3 million** for the nine months ended March 31, 2025[98](index=98&type=chunk) - This benefit is primarily due to the release of a **$42.2 million** valuation allowance associated with U.S. federal and certain state deferred tax assets, driven by current and sustained cumulative profitability[97](index=97&type=chunk)[98](index=98&type=chunk) - Excluding the valuation allowance release, the effective tax rate was **4.5%** and **5.5%** for the three and nine months ended March 31, 2025, respectively[96](index=96&type=chunk) [13. EARNINGS PER SHARE CALCULATION](index=25&type=section&id=13.%20EARNINGS%20PER%20SHARE%20CALCULATION) This note provides the calculation of basic and diluted earnings per share, including potentially dilutive shares Earnings Per Share (Nine months ended March 31): | ($ in thousands, except per share data) | 2025 | 2024 | | :--- | :--- | :--- | | Net income applicable to common shareholders | $57,124 | $9,209 | | Weighted average shares outstanding (basic) | 73,117,081 | 72,770,582 | | Effect of dilutive potential common shares | 1,402,870 | 1,284,238 | | Adjusted weighted average shares outstanding (diluted) | 74,519,951 | 74,054,820 | | **Basic earnings per share** | **$0.78** | **$0.13** | | **Diluted earnings per share** | **$0.77** | **$0.12** | - Diluted EPS for the nine months ended March 31, 2025, was **$0.77**, a significant increase from **$0.12** in the prior year[101](index=101&type=chunk) - Approximately **0.8 million** potentially anti-dilutive shares were excluded from the diluted EPS calculation for the nine months ended March 31, 2025[101](index=101&type=chunk) [14. COMMITMENTS AND CONTINGENCIES](index=26&type=section&id=14.%20COMMITMENTS%20AND%20CONTINGENCIES) This note discusses the company's involvement in litigation and other proceedings, and potential financial impacts - The company is involved in litigation and other proceedings in the ordinary course of business[102](index=102&type=chunk) - No material impact from claims with a reasonably possible adverse outcome is expected, and no material claims have been accrued[102](index=102&type=chunk) [15. RELATED PARTY TRANSACTIONS](index=26&type=section&id=15.%20RELATED%20PARTY%20TRANSACTIONS) This note discloses transactions with related parties, including services provided by a director-affiliated consulting firm - A member of the Board of Directors serves as a strategic advisor to a consulting firm providing payments analytics and advisory services to the company[103](index=103&type=chunk) - Total expense recognized for these arrangements was **$0.1 million** for the three months and **$0.2 million** for the nine months ended March 31, 2025[103](index=103&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=27&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on Cantaloupe, Inc.'s financial condition and results of operations, including an overview of the business, key operating metrics, detailed comparisons of quarterly and nine-month financial performance, non-GAAP financial measures, and discussions on liquidity, capital resources, and critical accounting estimates [Forward-Looking Statements](index=27&type=section&id=Forward-Looking%20Statements) This section cautions that the report contains forward-looking statements subject to various risks and uncertainties - The report contains forward-looking statements subject to known and unknown risks and uncertainties that could cause actual results to differ materially[106](index=106&type=chunk) - Key risk factors include general economic conditions, competition, compliance with debt covenants, regulatory compliance, reliance on third-party processors, customer retention, technology development, international expansion risks, ability to attract and retain key personnel, and cybersecurity risks[106](index=106&type=chunk) [OVERVIEW OF THE COMPANY](index=28&type=section&id=OVERVIEW%20OF%20THE%20COMPANY) This section provides an overview of Cantaloupe, Inc.'s self-service commerce technology business and recent developments - Cantaloupe, Inc. is a global technology leader in self-service commerce, offering micro-payment processing, self-checkout kiosks, mobile ordering, connected POS systems, and enterprise cloud software[109](index=109&type=chunk) - The company's revenue streams are primarily from subscription and transaction fees (**86-88%**) and equipment sales (**12-14%**)[110](index=110&type=chunk) - Key developments include amending credit facilities to increase borrowing capacity to **$100 million**, launching Engage Pulse card readers for the arcade industry, and collaborating with Fundbox to launch Cantaloupe Capital for small business financing[112](index=112&type=chunk) [QUARTERLY RESULTS OF OPERATIONS](index=29&type=section&id=QUARTERLY%20RESULTS%20OF%20OPERATIONS) This section analyzes the company's financial performance and key operating metrics for the reported quarters [Key Metrics](index=29&type=section&id=Key%20Metrics) This section presents key operational metrics such as active devices, customers, transaction volume, and ARPU Selected Operating Metrics: | Metric | March 31, 2025 | December 31, 2024 | September 30, 2024 | June 30, 2024 | March 31, 2024 | | :--- | :--- | :--- | :--- | :--- | :--- | | Active Devices (thousands) | 1,261 | 1,269 | 1,230 | 1,223 | 1,217 | | Active Customers | 34,115 | 32,909 | 32,338 | 31,466 | 30,670 | | Total Number of Transactions (millions) | 296.1 | 299.8 | 293.7 | 290.4 | 283.3 | | Total Dollar Volume of Transactions (millions) | $852.4 | $843.1 | $826.7 | $815.7 | $767.4 | | Subscription and transaction fees - Trailing 12 months (thousands) | $255,181 | $249,210 | $240,153 | $231,497 | $223,342 | | Average revenue per unit (ARPU) | $205.92 | $202.20 | $198.31 | $193.64 | $186.00 | - Active Devices increased by **3.6%** year-over-year to **1.261 million** as of March 31, 2025[118](index=118&type=chunk)[128](index=128&type=chunk) - Total Dollar Volume of Transactions increased by **11.1%** to **$852.4 million** for the quarter ended March 31, 2025, compared to the prior year[118](index=118&type=chunk)[128](index=128&type=chunk) - ARPU grew to **$205.92** as of March 31, 2025, from **$186.00** in the prior year[118](index=118&type=chunk) [Three Months Ended March 31, 2025 Compared to Three Months Ended March 31, 2024](index=30&type=section&id=Three%20Months%20Ended%20March%2031%2C%202025%20Compared%20to%20Three%20Months%20Ended%20March%2031%2C%202024) This section compares the company's financial performance for the three-month periods, focusing on revenue, gross profit, and operating expenses Revenue and Gross Profit (Three Months Ended March 31): | ($ in thousands) | 2025 | 2024 | Change | Percent Change | | :--- | :--- | :--- | :--- | :--- | | Transaction fees | $44,028 | $40,034 | $3,994 | 10.0% | | Gross profit, transaction | $10,909 | $9,108 | $1,801 | 19.8% | | Subscription fees | $21,151 | $19,173 | $1,978 | 10.3% | | Gross profit, subscription fees | $13,831 | $15,632 | $(1,801) | (11.5)% | | Equipment sales | $10,248 | $8,690 | $1,558 | 17.9% | | Gross profit, equipment | $1,264 | $626 | $638 | 101.9% | | **Total gross profit** | **$26,004** | **$25,366** | **$638** | **2.5%** | | **Total gross margin** | **34.5%** | **37.4%** | **(2.9)%** | | - Total revenues increased by **$7.5 million (11.1%)** to **$75.427 million**, driven by increases across all revenue categories[120](index=120&type=chunk)[128](index=128&type=chunk) - Total gross margin decreased to **34.5%** from **37.4%**, primarily due to a **$3.8 million** increase in amortization of internal-use software and developed technology assets, including a **$3.0 million** charge for software no longer expected to provide future economic benefits[119](index=119&type=chunk)[125](index=125&type=chunk)[32](index=32&type=chunk) Operating Expenses (Three Months Ended March 31): | Category ($ in thousands) | 2025 | 2024 | Amount Change | Percentage Change | | :--- | :--- | :--- | :--- | :--- | | Sales and marketing | $5,830 | $5,747 | $83 | 1.4% | | Technology and product development | $4,328 | $4,916 | $(588) | (12.0)% | | General and administrative expenses | $8,471 | $8,552 | $(81) | (0.9)% | | Integration and acquisition (benefits) expenses | $(534) | $907 | $(1,441) | (158.9)% | | Depreciation and amortization | $6,367 | $2,493 | $3,874 | 155.4% | | **Total operating expenses** | **$24,462** | **$22,615** | **$1,847** | **8.2%** | - Total operating expenses increased by **8.2%** to **$24.462 million**, mainly due to increased depreciation and amortization, partially offset by a **$1.441 million** decrease in integration and acquisition expenses (due to a **$0.6 million** gain from contingent consideration fair value adjustment)[127](index=127&type=chunk)[132](index=132&type=chunk) [Nine Months Ended March 31, 2025 Compared to Nine Months Ended March 31, 2024](index=33&type=section&id=Nine%20Months%20Ended%20March%2031%2C%202025%20Compared%20to%20Nine%20Months%20Ended%20March%2031%2C%202024) This section compares the company's financial performance for the nine-month periods, focusing on revenue, gross profit, and operating expenses Revenue and Gross Profit (Nine Months Ended March 31): | ($ in thousands) | 2025 | 2024 | Change | Percent Change | | :--- | :--- | :--- | :--- | :--- | | Transaction fees | $132,022 | $114,956 | $17,066 | 14.8% | | Gross profit, transaction | $32,588 | $24,220 | $8,368 | 34.5% | | Subscription fees | $62,034 | $55,415 | $6,619 | 11.9% | | Gross profit, subscription | $46,138 | $44,455 | $1,683 | 3.8% | | Equipment sales | $25,929 | $25,568 | $361 | 1.4% | | Gross profit, equipment | $2,855 | $1,719 | $1,136 | 66.1% | | **Total gross profit** | **$81,581** | **$70,394** | **$11,187** | **15.9%** | | **Total gross margin** | **37.1%** | **35.9%** | **1.2%** | | - Total revenues increased by **$24.0 million (12.3%)** to **$219.985 million**, driven by strong growth in transaction and subscription fees[137](index=137&type=chunk) - Total gross margin increased to **37.1%** from **35.9%**, primarily due to increased transaction and equipment margins, despite a **$4.2 million** increase in amortization of internal-use software and developed technology assets[141](index=141&type=chunk)[142](index=142&type=chunk) Operating Expenses (Nine Months Ended March 31): | Category ($ in thousands) | 2025 | 2024 | Amount Change | Percentage Change | | :--- | :--- | :--- | :--- | :--- | | Sales and marketing | $16,663 | $14,256 | $2,407 | 16.9% | | Technology and product development | $13,351 | $12,115 | $1,236 | 10.2% | | General and administrative expenses | $31,638 | $29,493 | $2,145 | 7.3% | | Integration and acquisition (benefits) expenses | $(293) | $1,078 | $(1,371) | (127.2)% | | Depreciation and amortization | $12,405 | $7,976 | $4,429 | 55.5% | | **Total operating expenses** | **$73,764** | **$64,918** | **$8,846** | **13.6%** | - Total operating expenses increased by **13.6%** to **$73.764 million**, with significant increases in sales and marketing, technology and product development, general and administrative, and depreciation and amortization[143](index=143&type=chunk) [Non-GAAP Financial Measures](index=35&type=section&id=Non-GAAP%20Financial%20Measures) This section presents and reconciles non-GAAP financial measures such as Adjusted Gross Profit and Adjusted EBITDA - The company uses non-GAAP measures like Adjusted Gross Profit/Margin and Adjusted EBITDA to evaluate performance, excluding non-cash charges and certain infrequent items[153](index=153&type=chunk)[154](index=154&type=chunk)[157](index=157&type=chunk)[158](index=158&type=chunk) Total Adjusted Gross Profit and Margin (Non-GAAP): | ($ in thousands) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Nine Months Ended March 31, 2025 | Nine Months Ended March 31, 2024 | | :--- | :--- | :--- | :--- | :--- | | Total Adjusted Gross Profit | $31,361 | $26,907 | $90,933 | $75,551 | | Total Adjusted Gross Margin | 41.6% | 39.6% | 41.3% | 38.6% | Adjusted EBITDA Reconciliation: | ($ in thousands) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Nine Months Ended March 31, 2025 | Nine Months Ended March 31, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net income | $49,156 | $4,656 | $57,702 | $9,787 | | EBITDA | $13,823 | $6,991 | $30,997 | $19,588 | | Adjustments to EBITDA | $95 | $3,195 | $2,541 | $6,906 | | **Adjusted EBITDA** | **$13,918** | **$10,186** | **$33,538** | **$26,494** | - Adjusted EBITDA increased by **36.6%** to **$13.918 million** for the three months and by **26.6%** to **$33.538 million** for the nine months ended March 31, 2025, compared to the prior year periods[161](index=161&type=chunk) [LIQUIDITY AND CAPITAL RESOURCES](index=38&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) This section discusses the company's cash position, operating and investing cash flows, and funding sufficiency - As of March 31, 2025, the company had **$46.3 million** in cash and cash equivalents[162](index=162&type=chunk) - Net cash provided by operating activities was **$10.9 million** for the nine months ended March 31, 2025, a decrease from **$13.5 million** in the prior year[164](index=164&type=chunk)[165](index=165&type=chunk) - Net cash used in investing activities increased to **$23.0 million**, primarily due to **$11.9 million** in capital expenditures and **$11.1 million** in acquisitions[167](index=167&type=chunk) - The company believes its current financial resources are sufficient to fund its operating budget for the next twelve months[163](index=163&type=chunk) [CONTRACTUAL OBLIGATIONS](index=38&type=section&id=CONTRACTUAL%20OBLIGATIONS) This section outlines the company's contractual obligations, noting recent changes to debt agreements - No significant changes to contractual obligations were reported during the nine months ended March 31, 2025, other than the amendment to the debt agreement[170](index=170&type=chunk) - The debt agreement was amended in January 2025, deferring the maturity date until January 2030 and increasing borrowing capacity[172](index=172&type=chunk) [CRITICAL ACCOUNTING ESTIMATES](index=40&type=section&id=CRITICAL%20ACCOUNTING%20ESTIMATES) This section confirms no material changes to critical accounting estimates from the prior annual report - There have been no material changes to the company's critical accounting estimates from those disclosed in the Annual Report for the fiscal year ended June 30, 2024[173](index=173&type=chunk) [Recent Accounting Pronouncements](index=40&type=section&id=Recent%20Accounting%20Pronouncements) This section refers to Note 2 for details on recently issued accounting pronouncements - Refer to Note 2 – Summary of Significant Accounting Policies for a description of recent accounting pronouncements[174](index=174&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=40&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section outlines Cantaloupe, Inc.'s exposure to market risks, primarily related to changes in interest rates on its outstanding borrowings and, to a lesser extent, foreign currency exchange rates and credit risks - As of March 31, 2025, the company had **$39.5 million** in total outstanding borrowings, and a **100 basis point** increase in the SOFR Rate would result in a **$0.4 million** change in annual interest expense[175](index=175&type=chunk) - Exposure to market risks from interest rate changes on cash investments and foreign currency exchange rates is not material[176](index=176&type=chunk) - The company is exposed to credit risks on accounts receivable and equipment leases, consistent with prior disclosures[177](index=177&type=chunk) [Item 4. Controls and Procedures](index=40&type=section&id=Item%204.%20Controls%20and%20Procedures) This section details the effectiveness of Cantaloupe, Inc.'s disclosure controls and procedures and confirms no material changes to internal control over financial reporting during the quarter - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of March 31, 2025[179](index=179&type=chunk) - There have been no changes in the company's internal control over financial reporting during the fiscal quarter ended March 31, 2025, that have materially affected, or are reasonably likely to materially affect, these controls[180](index=180&type=chunk) [Part II - Other Information](index=41&type=section&id=Part%20II%20-%20Other%20Information) This section provides additional non-financial disclosures, including legal proceedings, risk factors, and exhibits [Item 1. Legal Proceedings](index=41&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to the Notes to Condensed Consolidated Financial Statements for information regarding legal proceedings - Information on legal proceedings is incorporated by reference to Note 14 – Commitments and Contingencies in Part I, Item 1 of this Quarterly Report[181](index=181&type=chunk) [Item 1A. Risk Factors](index=41&type=section&id=Item%201A.%20Risk%20Factors) This section directs readers to the company's Annual Report for a comprehensive discussion of risk factors - For a discussion of the company's risk factors, refer to Item 1A in the Annual Report for the fiscal year ended June 30, 2024[182](index=182&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=41&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This item is marked as 'N/A', indicating no information to report regarding unregistered sales of equity securities or use of proceeds - No information to report for this item (N/A)[183](index=183&type=chunk) [Item 3. Defaults Upon Senior Securities](index=41&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This item states that there were no defaults upon senior securities - No defaults upon senior securities[183](index=183&type=chunk) [Item 4. Mine Safety Disclosures](index=41&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is marked as 'N/A', indicating no information to report regarding mine safety disclosures - No information to report for this item (N/A)[184](index=184&type=chunk) [Item 5. Other Information](index=41&type=section&id=Item%205.%20Other%20Information) This section confirms that no Rule 10b5-1 trading plans were adopted, modified, or terminated by the company's directors or executive officers during the fiscal quarter - No Rule 10b5-1 trading plans were adopted, modified, or terminated by directors or executive officers during the fiscal quarter ended March 31, 2025[184](index=184&type=chunk) [Item 6. Exhibits](index=42&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed as part of the Form 10-Q, including organizational documents, credit agreements, certifications, and XBRL financial information Key Exhibits: | Exhibit Number | Description | | :--- | :--- | | 3.1 | Amended and Restated Articles of Incorporation | | 3.2 | Second Amended and Restated Bylaws | | 10.1 | Second Amended and Restated Credit Agreement, dated January 31, 2025 | | 31.1* | Certifications of Chief Executive Officer | | 31.2* | Certifications of Chief Financial Officer | | 32.1** | Certification of the Chief Executive Officer pursuant to 18 USC Section 1350 | | 32.2** | Certification of the Chief Financial Officer pursuant to 18 USC Section 1350 | | 101 | iXBRL Financial Information | | 104 | Cover page in Inline XBRL | [Signatures](index=43&type=section&id=Signatures) This section contains the duly authorized signatures of the registrant's Chief Executive Officer and Chief Financial Officer, affirming the submission of the report - The report is signed by Ravi Venkatesan, Chief Executive Officer, and Scott Stewart, Chief Financial Officer, on May 8, 2025[188](index=188&type=chunk)[189](index=189&type=chunk)

Cantaloupe Second Quarter 2025 Earnings Supplement Financial Results & Company Highlights February 6th, 2025 Forward Looking Statements Forward-looking Statements: All statements other than statements of historical fact included in this release, including without limitation Cantaloupe's future prospects and performance, the business strategy and the plans and objectives of Cantaloupe's management for future operations, are forward-looking statements within the meaning of the Private Securities Litigation Re ...