Cantaloupe (CTLP) reported $65.36 million in revenue for the quarter ended December 2023, representing a year-over-year increase of 6.6%. EPS of $0.04 for the same period compares to -$0.01 a year ago.The reported revenue compares to the Zacks Consensus Estimate of $66.92 million, representing a surprise of -2.34%. The company delivered an EPS surprise of +100.00%, with the consensus EPS estimate being $0.02.While investors closely watch year-over-year changes in headline numbers -- revenue and earnings -- ...

Part I - Financial Information [Item 1. Condensed Consolidated Financial Statements](index=2&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements and accompanying notes for the period [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets increased to $302.4 million, driven by growth in accounts receivable, inventory, and equipment Condensed Consolidated Balance Sheets (Selected Data, in thousands) | Metric | Dec 31, 2023 | Jun 30, 2023 | Change | | :-------------------------------------- | :----------- | :----------- | :----- | | Cash and cash equivalents | $43,478 | $50,927 | $(7,449) | | Accounts receivable, net | $40,211 | $30,162 | $10,049 | | Inventory, net | $34,789 | $31,872 | $2,917 | | Total current assets | $131,006 | $123,383 | $7,623 | | Property and equipment, net | $27,751 | $25,281 | $2,470 | | Intangibles, net | $25,400 | $27,812 | $(2,412) | | Goodwill | $92,903 | $92,005 | $898 | | Total assets | $302,388 | $289,612 | $12,776 | | Accounts payable | $50,181 | $52,869 | $(2,688) | | Accrued expenses | $26,955 | $26,276 | $679 | | Long-term debt, less current portion | $37,010 | $37,548 | $(538) | | Operating lease liabilities, non-current | $9,203 | $2,504 | $6,699 | | Total liabilities | $126,572 | $122,020 | $4,552 | | Total shareholders' equity | $173,096 | $164,872 | $8,224 | [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) The company reported increased revenues and a shift to net income from a prior-year loss for the period Condensed Consolidated Statements of Operations (Selected Data, in thousands, except per share data) | Metric | Three months ended Dec 31, 2023 | Three months ended Dec 31, 2022 | Six months ended Dec 31, 2023 | Six months ended Dec 31, 2022 | | :-------------------------------------- | :------------------------------ | :------------------------------ | :---------------------------- | :---------------------------- | | Total revenues | $65,359 | $61,330 | $128,042 | $119,112 | | Gross profit | $24,316 | $18,441 | $48,644 | $32,603 | | Operating income (loss) | $3,585 | $(914) | $6,340 | $(9,433) | | Net income (loss) | $3,124 | $(573) | $5,131 | $(9,147) | | Net income (loss) applicable to common shares | $3,124 | $(573) | $4,842 | $(9,481) | | Basic earnings (loss) per common share | $0.04 | $(0.01) | $0.07 | $(0.13) | | Diluted earnings (loss) per common share | $0.04 | $(0.01) | $0.07 | $(0.13) | [Condensed Consolidated Statements of Comprehensive Income (Loss)](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)) The company reported total comprehensive income, a significant improvement from comprehensive losses in the prior year Condensed Consolidated Statements of Comprehensive Income (Loss) (in thousands) | Metric | Three months ended Dec 31, 2023 | Three months ended Dec 31, 2022 | Six months ended Dec 31, 2023 | Six months ended Dec 31, 2022 | | :-------------------------------------- | :------------------------------ | :------------------------------ | :---------------------------- | :---------------------------- | | Net income (loss) | $3,124 | $(573) | $5,131 | $(9,147) | | Foreign currency translation adjustments | $(24) | — | $(24) | — | | Other comprehensive loss, net of income tax | $(24) | — | $(24) | — | | Total comprehensive income (loss) | $3,100 | $(573) | $5,107 | $(9,147) | [Condensed Consolidated Statements of Convertible Preferred Stock and Shareholders' Equity](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Convertible%20Preferred%20Stock%20and%20Shareholders'%20Equity) Shareholders' equity increased to **$173.1 million**, driven by net income and stock-based compensation Condensed Consolidated Statements of Convertible Preferred Stock and Shareholders' Equity (Selected Data, in thousands) | Metric | Dec 31, 2023 | Jun 30, 2023 | | :-------------------------------------- | :----------- | :----------- | | Convertible Preferred Stock Amount | $2,720 | $2,720 | | Common Stock Amount | $480,441 | $477,324 | | Accumulated Deficit | $(307,321) | $(312,452) | | Accumulated Other Comprehensive Loss | $(24) | — | | Total Shareholders' Equity | $173,096 | $164,872 | - During the six months ended December 31, 2023, stock-based compensation contributed **$3.043 million** to common stock, and net income was **$5.131 million**[187](index=187&type=chunk)[190](index=190&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operating activities decreased significantly, reflecting improved net income and working capital management Condensed Consolidated Statements of Cash Flows (Selected Data, in thousands) | Metric | Six months ended Dec 31, 2023 | Six months ended Dec 31, 2022 | | :-------------------------------------- | :---------------------------- | :---------------------------- | | Net income (loss) | $5,131 | $(9,147) | | Net cash used in operating activities | $(1,232) | $(16,094) | | Net cash used in investing activities | $(5,912) | $(45,349) | | Net cash (used in) provided by financing activities | $(310) | $21,461 | | Net decrease in cash and cash equivalents | $(7,449) | $(39,982) | | Cash and cash equivalents at end of period | $43,478 | $28,143 | - Cash paid for interest increased to **$1,931 thousand** for the six months ended December 31, 2023, from $920 thousand in the prior year[196](index=196&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed disclosures offering crucial context to the condensed consolidated financial statements [1. BUSINESS](index=12&type=section&id=1.%20BUSINESS) Cantaloupe provides end-to-end technology solutions for the self-service commerce industry globally - Cantaloupe, Inc offers a single platform for self-service commerce, encompassing integrated payments processing, software solutions for inventory management, pre-kitting, route logistics, warehouse, and back-office management[199](index=199&type=chunk) - The company's solutions are utilized by vending machines, micro-markets, smart retail, laundromats, metered parking terminals, amusement and entertainment venues, and IoT services in North America, Europe, Latin America, and Australia[199](index=199&type=chunk) [2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=12&type=section&id=2.%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This note outlines the basis of presentation, reclassifications, and recently issued accounting pronouncements [Basis of Presentation and Preparation](index=12&type=section&id=Basis%20of%20Presentation%20and%20Preparation) - The unaudited condensed consolidated financial statements are prepared in accordance with U.S. GAAP for interim financial information and Form 10-Q instructions, and should be read with the June 30, 2023 Annual Report on Form 10-K[201](index=201&type=chunk) - The Company operates as **one operating segment**, with financial information reviewed on a consolidated basis by the CEO[203](index=203&type=chunk) - Foreign subsidiary operations are translated using average exchange rates for results and end-of-period rates for balance sheet accounts, with translation adjustments in other comprehensive income (loss)[204](index=204&type=chunk) [Reclassification](index=12&type=section&id=Reclassification) - Beginning Q4 fiscal year 2023, Convertible Preferred Stock is presented on the Consolidated Statements of Shareholders' Equity, which was renamed accordingly, with prior period amounts reclassified for conformity[205](index=205&type=chunk) [Recently Issued Accounting Pronouncements](index=12&type=section&id=Recently%20Issued%20Accounting%20Pronouncements) - ASU 2023-09 (Income Taxes) expands income tax disclosure requirements, effective for fiscal years beginning after December 15, 2024 (Company's FY2026)[206](index=206&type=chunk)[208](index=208&type=chunk) - ASU 2023-07 (Segment Reporting) expands reportable segment disclosure requirements, effective for annual periods beginning after December 15, 2023 (Company's FY2025) and interim periods after December 15, 2024 (Company's FY2026)[209](index=209&type=chunk) [3. ACCOUNTS RECEIVABLE](index=13&type=section&id=3.%20ACCOUNTS%20RECEIVABLE) Accounts receivable, net, increased to **$40.2 million**, with a corresponding increase in the allowance for credit losses [Concentrations](index=13&type=section&id=Concentrations) - As of December 31, 2023, and June 30, 2023, **no single customer accounted for more than 10%** of the Company's net accounts receivable[212](index=212&type=chunk) [Allowance for credit losses](index=13&type=section&id=Allowance%20for%20credit%20losses) - The Company estimates its allowance for credit losses using an expected loss model, primarily based on an aging analysis of receivables and current conditions[213](index=213&type=chunk) Rollforward of Allowance for Credit Losses (in thousands) | Metric | Six months ended Dec 31, 2023 | Six months ended Dec 31, 2022 | | :-------------------------------------- | :---------------------------- | :---------------------------- | | Beginning balance of allowance (June 30) | $10,815 | $9,328 | | Provision for expected losses | $2,224 | $1,135 | | Write-offs | $(194) | $(341) | | Balance at December 31 | $12,845 | $10,122 | [4. FINANCE RECEIVABLES](index=14&type=section&id=4.%20FINANCE%20RECEIVABLES) Total finance receivables, net, decreased to **$17.9 million**, primarily consisting of sales-type leases Total Finance Receivables, Net (in thousands) | Metric | Dec 31, 2023 | Jun 30, 2023 | | :-------------------------------------- | :----------- | :----------- | | Current finance receivables, net | $6,221 | $6,668 | | Finance receivables due after one year, net | $11,707 | $13,307 | | Total finance receivables, net | $17,928 | $19,975 | | Allowance for uncollectible receivables | $2,257 | $2,098 | - The Company's finance receivables primarily consist of non-cancellable sixty-month sales-type leases for financed devices under its financing program and devices associated with the Seed platform[219](index=219&type=chunk) Rollforward of Allowance for Finance Receivables (in thousands) | Metric | Six months ended Dec 31, 2023 | Six months ended Dec 31, 2022 | | :-------------------------------------- | :---------------------------- | :---------------------------- | | Balance at June 30 | $2,098 | $760 | | Provision for expected losses | $159 | $392 | | Write-offs | — | $(288) | | Balance at December 31 | $2,257 | $864 | [5. LEASES](index=15&type=section&id=5.%20LEASES) Lease obligations increased significantly due to new and extended office leases, raising right-of-use assets and liabilities [Lessee Accounting](index=15&type=section&id=Lessee%20Accounting) Operating Lease Balance Sheet Information (in thousands) | Metric | Dec 31, 2023 | Jun 30, 2023 | | :-------------------------------------- | :----------- | :----------- | | Operating lease right-of-use assets | $8,443 | $2,575 | | Total lease liabilities | $9,843 | $3,770 | - Cash paid for operating lease liabilities was **$1,220 thousand** for the six months ended December 31, 2023, up from $1,064 thousand in the prior year[224](index=224&type=chunk) - New operating lease liabilities resulted in **$6,657 thousand** in lease assets obtained for the six months ended December 31, 2023, including a 73-month extension for the Atlanta office and a new 133-month lease for the Malvern office[224](index=224&type=chunk)[225](index=225&type=chunk) [Lessor Accounting](index=16&type=section&id=Lessor%20Accounting) Property and Equipment for Operating Lease Rental Program (in thousands) | Metric | Dec 31, 2023 | Jun 30, 2023 | | :-------------------------------------- | :----------- | :----------- | | Cost | $29,316 | $28,398 | | Accumulated depreciation | $(23,942) | $(23,221) | | Net | $5,374 | $5,177 | - Revenue from the device rental program increased to **$2.0 million** for the three months ended December 31, 2023 (from $1.9 million in 2022) and **$4.0 million** for the six months ended December 31, 2023 (from $3.7 million in 2022)[228](index=228&type=chunk)[229](index=229&type=chunk) [6. DEBT AND OTHER FINANCING ARRANGEMENTS](index=17&type=section&id=6.%20DEBT%20AND%20OTHER%20FINANCING%20ARRANGEMENTS) Total outstanding debt remained stable at **$38.1 million**, while interest expense increased due to higher rates [JPMorgan Chase Bank Credit Agreement](index=17&type=section&id=JPMorgan%20Chase%20Bank%20Credit%20Agreement) Debt and Other Financing Arrangements (in thousands) | Metric | Dec 31, 2023 | Jun 30, 2023 | | :-------------------------------------- | :----------- | :----------- | | JPMorgan Credit Facility | $38,188 | $38,563 | | Total outstanding debt | $38,083 | $38,430 | | Debt and other financing arrangements, noncurrent | $37,010 | $37,548 | Interest Expense (in thousands) | Metric | Three months ended Dec 31, 2023 | Three months ended Dec 31, 2022 | Six months ended Dec 31, 2023 | Six months ended Dec 31, 2022 | | :-------------------------------------- | :------------------------------ | :------------------------------ | :---------------------------- | :---------------------------- | | JPMorgan Credit Facility | $899 | $313 | $1,824 | $591 | | Other interest expense | $103 | $205 | $285 | $404 | | Total interest expense | $1,002 | $518 | $2,109 | $995 | - The Amended JPMorgan Credit Facility, with a four-year maturity, has variable interest rates (base rate or SOFR plus margin) and a weighted-average interest rate of approximately **8.9%** as of December 31, 2023[157](index=157&type=chunk) - The Company was **in compliance with its financial covenants** for the Amended JPMorgan Credit Facility as of December 31, 2023[160](index=160&type=chunk) Expected Maturities of Outstanding Debt (in thousands) | Fiscal Year | Principal Amounts Payable | | :-------------------------------------- | :------------------------ | | 2024 | $573 | | 2025 | $1,333 | | 2026 | $36,323 | | Principal amounts payable | $38,229 | [7. ACCRUED EXPENSES](index=19&type=section&id=7.%20ACCRUED%20EXPENSES) Total accrued expenses increased slightly to **$27.0 million**, driven by a higher sales tax reserve Accrued Expenses (in thousands) | Metric | Dec 31, 2023 | Jun 30, 2023 | | :-------------------------------------- | :----------- | :----------- | | Sales tax reserve | $14,844 | $13,597 | | Accrued compensation and related sales commissions | $2,965 | $4,069 | | Accrued professional fees | $4,452 | $4,196 | | Other accrued expenses | $1,720 | $762 | | Total accrued expenses | $26,955 | $26,276 | [8. GOODWILL AND INTANGIBLES](index=19&type=section&id=8.%20GOODWILL%20AND%20INTANGIBLES) Net intangible assets decreased to **$25.4 million** due to amortization, while goodwill increased slightly to **$92.9 million** Intangible Asset Balances (in thousands) | Metric | Dec 31, 2023 (Net) | Jun 30, 2023 (Net) | | :-------------------------------------- | :----------------- | :----------------- | | Brand and tradenames | $542 | $747 | | Developed technology | $6,362 | $9,122 | | Customer relationships | $18,496 | $17,943 | | Total intangible assets | $25,400 | $27,812 | Goodwill (in thousands) | Metric | Dec 31, 2023 | Jun 30, 2023 | | :-------------------------------------- | :----------- | :----------- | | Goodwill | $92,903 | $92,005 | - Amortization expense related to intangible assets was **$1.4 million** for the three months and **$3.0 million** for the six months ended December 31, 2023[165](index=165&type=chunk) - **No goodwill impairment charges** were recognized during the three and six months ended December 31, 2023 and 2022[137](index=137&type=chunk) [9. ACQUISITIONS](index=20&type=section&id=9.%20ACQUISITIONS) This note details the acquisitions of Three Square Market (32M) and Yoke Payments [Three Square Market (32M)](index=20&type=section&id=Three%20Square%20Market) - On December 1, 2022, Cantaloupe acquired 32M, a leading provider of software and self-service kiosk-based POS and payment solutions for the micro market industry, expanding its presence and global footprint[138](index=138&type=chunk) 32M Acquisition Purchase Price Consideration (in thousands) | Metric | Amount | | :-------------------------------------- | :----- | | Closing cash consideration | $36,600 | | Stock consideration | $4,511 | | Fair value of total consideration transferred | $41,111 | 32M Acquisition Assets Acquired and Liabilities Assumed (in thousands) | Metric | Amount | | :-------------------------------------- | :----- | | Total identifiable assets acquired | $20,349 | | Total liabilities assumed | $(5,443) | | Total identifiable net assets | $14,906 | | Goodwill | $26,205 | | Fair value of total consideration transferred | $41,111 | - Identifiable intangible assets acquired included **$7.5 million** for developed technology, **$7.5 million** for customer relationships, and **$0.5 million** for trade names, amortized over 3-5 years[144](index=144&type=chunk) - Goodwill of **$26.2 million**, deductible for income tax purposes, includes expected synergies and non-separately recognized intangible assets[145](index=145&type=chunk) Unaudited Pro Forma Information (32M Acquisition, in thousands) | Metric | Three months ended Dec 31, 2022 | Six months ended Dec 31, 2022 | | :-------------------------------------- | :------------------------------ | :---------------------------- | | Revenues | $64,614 | $127,450 | | Net income (loss) | $1,241 | $(11,184) | [Yoke Payments](index=22&type=section&id=Yoke%20Payments) - In August 2021, Cantaloupe acquired Yoke Payments, a micro market payments company, extending its offering to provide self-checkout seamlessly integrated with its inventory management and payment processing platforms[151](index=151&type=chunk)[152](index=152&type=chunk) Yoke Acquisition Consideration and Recognized Amounts (in thousands) | Metric | Amount | | :-------------------------------------- | :----- | | Cash consideration | $2,966 | | Contingent consideration arrangement | $1,000 | | Fair value of total consideration transferred | $3,966 | | Total identifiable net assets | $1,256 | | Goodwill | $2,710 | - Identifiable intangible assets included **$0.9 million** for developed technology, **$0.3 million** for customer relationships, and **$0.1 million** for other intangibles[166](index=166&type=chunk) - Goodwill of **$2.7 million**, deductible for income tax purposes, includes expected synergies and non-separately recognized intangible assets[167](index=167&type=chunk) - Pro forma financial information for the Yoke acquisition is not presented due to its **immaterial impact** on the Company's Consolidated Financial Statements[168](index=168&type=chunk) [10. REVENUES](index=23&type=section&id=10.%20REVENUES) Total revenues increased, driven by growth in subscription and transaction fees, while equipment sales decreased Disaggregated Revenues (in thousands) | Revenue Type | Three months ended Dec 31, 2023 | Three months ended Dec 31, 2022 | Six months ended Dec 31, 2023 | Six months ended Dec 31, 2022 | | :-------------------------------------- | :------------------------------ | :------------------------------ | :---------------------------- | :---------------------------- | | Transaction fees | $37,892 | $32,392 | $74,922 | $63,687 | | Subscription fees | $18,137 | $16,540 | $36,242 | $32,320 | | Subscription and transaction fees | $56,029 | $48,932 | $111,164 | $96,007 | | Equipment sales | $9,330 | $12,398 | $16,878 | $23,105 | | Total revenues | $65,359 | $61,330 | $128,042 | $119,112 | [Contract Liabilities](index=23&type=section&id=Contract%20Liabilities) Contract Liability Balances (Deferred Revenue, in thousands) | Metric | Three months ended Dec 31, 2023 | Three months ended Dec 31, 2022 | Six months ended Dec 31, 2023 | Six months ended Dec 31, 2022 | | :-------------------------------------- | :------------------------------ | :------------------------------ | :---------------------------- | :---------------------------- | | Deferred revenue, beginning of period | $1,940 | $2,069 | $1,666 | $1,893 | | Deferred revenue, end of period | $1,788 | $1,970 | $1,788 | $1,970 | | Revenue recognized from beginning balance | $150 | $119 | $242 | $226 | - Changes in contract liability balances are primarily due to timing differences between performance obligation satisfaction and customer payment[2](index=2&type=chunk) [Future Performance Obligations](index=23&type=section&id=Future%20Performance%20Obligations) - The Company will recognize **$11.861 million** in future revenue from unsatisfied performance obligations as of December 31, 2023, primarily from Cantaloupe ONE rental program contracts (36-month terms)[4](index=4&type=chunk) Estimated Future Revenue from Unsatisfied Performance Obligations (in thousands) | Period | As of Dec 31, 2023 | | :-------------------------------------- | :----------------- | | Remainder of fiscal year 2024 | $2,923 | | 2025 | $5,703 | | 2026 | $3,235 | | Total | $11,861 | [Contract Costs](index=24&type=section&id=Contract%20Costs) - As of December 31, 2023, net capitalized costs to obtain contracts were **$0.6 million** (current assets) and **$2.8 million** (noncurrent assets), unchanged from June 30, 2023, with no impairment[5](index=5&type=chunk) - Amortization of capitalized contract costs was **$0.2 million** for the three months and **$0.5 million** for the six months ended December 31, 2023[6](index=6&type=chunk) [11. STOCK BASED COMPENSATION](index=24&type=section&id=11.%20STOCK%20BASED%20COMPENSATION) Stock-based compensation expense totaled **$1.8 million** for the six months ended December 31, 2023 [Stock Options](index=24&type=section&id=Stock%20Options) - The Company uses a Black-Scholes valuation model for stock options with service conditions, basing expected volatility on historical data and using a simplified method for expected term[7](index=7&type=chunk) Stock Option Valuation Assumptions and Grants | Metric | Six months ended Dec 31, 2023 | Six months ended Dec 31, 2022 | | :-------------------------------------- | :---------------------------- | :---------------------------- | | Expected volatility (percent) | 61.3% - 69.7% | 74.6% - 77.6% | | Weighted average expected life (years) | 4.2 - 4.5 | 4.4 - 4.6 | | Risk-free interest rate (percent) | 4.2% - 4.3% | 2.7% - 4.1% | | Number of options granted | 125,000 | 1,620,000 | | Weighted average exercise price | $7.11 | $4.58 | | Weighted average grant date fair value | $4.34 | $2.87 | - Stock-based compensation related to stock options was **$0.7 million** for the three months and **$1.8 million** for the six months ended December 31, 2023[8](index=8&type=chunk) [Performance based awards](index=25&type=section&id=Performance%20based%20awards) - Stock options awarded to executives vest over three to four years, subject to achieving performance goals (stock price targets) set by the Board[10](index=10&type=chunk)[11](index=11&type=chunk) - Performance goals include stock price targets of **$10.50** (FY2021), **$13.50** (FY2022), **$16.50** (FY2023), and **$19.50** (FY2024) based on a 30-trading-day average closing price[11](index=11&type=chunk) - Compensation cost for these awards is estimated using a Monte Carlo simulation model, with a benefit of **$(0.2) million** for the three months and an expense of **$0.1 million** for the six months ended December 31, 2023[12](index=12&type=chunk) [Common Stock Awards](index=25&type=section&id=Common%20Stock%20Awards) - Total expense recognized for common stock awards was **$0.6 million** for the three months and **$1.1 million** for the six months ended December 31, 2023[13](index=13&type=chunk) [12. INCOME TAXES](index=25&type=section&id=12.%20INCOME%20TAXES) The Company recorded a minimal income tax provision and maintains a full valuation allowance against deferred tax assets - Income tax provision was **$0.1 million** for the three months and **$0.2 million** for the six months ended December 31, 2023, primarily for state income/franchise taxes and deferred taxes related to goodwill[14](index=14&type=chunk) - As of December 31, 2023, the Company had a total unrecognized income tax benefit of **$0.7 million**[14](index=14&type=chunk) - A full valuation allowance is recorded against deferred tax assets due to historical losses, but there's a **reasonable possibility of a partial release** within the next 12 months given current and anticipated future earnings[15](index=15&type=chunk) [13. EARNINGS (LOSS) PER SHARE CALCULATION](index=26&type=section&id=13.%20EARNINGS%20(LOSS)%20PER%20SHARE%20CALCULATION) The company reported positive basic and diluted earnings per share, a significant improvement from prior-year losses Earnings (Loss) Per Share Calculation (in thousands, except per share data) | Metric | Three months ended Dec 31, 2023 | Three months ended Dec 31, 2022 | Six months ended Dec 31, 2023 | Six months ended Dec 31, 2022 | | :-------------------------------------- | :------------------------------ | :------------------------------ | :---------------------------- | :---------------------------- | | Net income (loss) applicable to common shareholders | $3,124 | $(573) | $4,842 | $(9,481) | | Weighted average shares outstanding (Basic) | 72,743,162 | 71,629,939 | 72,730,563 | 71,418,845 | | Basic earnings (loss) per share | $0.04 | $(0.01) | $0.07 | $(0.13) | | Diluted earnings (loss) per share | $0.04 | $(0.01) | $0.07 | $(0.13) | - Potentially anti-dilutive shares excluded from diluted EPS calculation were approximately **1 million** for the three and six months ended December 31, 2023, compared to 5 million in the prior year[18](index=18&type=chunk) [14. SHAREHOLDERS' EQUITY AND PREFERRED STOCK](index=26&type=section&id=14.%20SHAREHOLDERS'%20EQUITY%20AND%20PREFERRED%20STOCK) The Company retired shares of Series A convertible preferred stock during the prior-year period - In the six months ended December 31, 2022, the Company retired **59,281 shares** of Series A convertible preferred stock for **$2.45 million**[20](index=20&type=chunk) - The repurchase was accounted for as a **$0.42 million** decrease to preferred stock and **$1.73 million** to common stock, with **$0.3 million** in excess of fair value recorded as an operating expense[20](index=20&type=chunk) [15. COMMITMENTS AND CONTINGENCIES](index=27&type=section&id=15.%20COMMITMENTS%20AND%20CONTINGENCIES) The Company is involved in ordinary course litigation and has commitments related to debt and operating leases [Outstanding Debt](index=27&type=section&id=Outstanding%20Debt) - The Company has debt and other financing arrangements, with additional information provided in Note 6 - Debt and other financing arrangements[26](index=26&type=chunk) [Purchase Commitments](index=27&type=section&id=Purchase%20Commitments) - As of December 31, 2023, the Company had **no material firm purchase commitments** over the next year[27](index=27&type=chunk) [Litigation](index=27&type=section&id=Litigation) - The Company is a party to litigation and other proceedings arising in the ordinary course of business, reserving for probable and estimable losses[21](index=21&type=chunk) [Leases](index=27&type=section&id=Leases) - The Company has entered into various operating lease obligations, with additional information provided in Note 5 - Leases[25](index=25&type=chunk) [16. RELATED PARTY TRANSACTIONS](index=27&type=section&id=16.%20RELATED%20PARTY%20TRANSACTIONS) The Company incurred expenses for services from a consulting firm affiliated with a Board member - A Board member serves as a strategic advisor to a consulting firm providing payments analytics and advisory services to the Company[28](index=28&type=chunk) - Total expense recognized for these services was **$0.1 million** for both the three and six months ended December 31, 2023 and 2022, included in Cost of subscription and transaction fees[28](index=28&type=chunk) [17. SUBSEQUENT EVENTS](index=27&type=section&id=17.%20SUBSEQUENT%20EVENTS) The Company acquired Cheq Lifestyle Technology, Inc for **$4.8 million** in cash subsequent to the quarter end - On February 1, 2024, Cantaloupe acquired Cheq Lifestyle Technology, Inc, an innovative fan-facing POS and mobile-first ordering platform, for **$4.8 million** in cash[29](index=29&type=chunk) - A preliminary purchase price allocation for the Cheq acquisition is not yet available due to its close proximity to the filing date[29](index=29&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=28&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the Company's financial performance, operations, and liquidity [Forward-Looking Statements](index=28&type=section&id=Forward-Looking%20Statements) This section cautions that the report contains forward-looking statements subject to risks and uncertainties - Forward-looking statements in this Form 10-Q are subject to known and unknown risks, uncertainties, and other factors that could cause actual results to differ materially from those contemplated[32](index=32&type=chunk) - Key risk factors include general economic conditions (inflation, interest rates), competition, supply chain disruptions, ability to acquire and develop technology, international market risks, and internal control weaknesses[32](index=32&type=chunk)[34](index=34&type=chunk) - The Company undertakes no obligation to publicly revise any forward-looking statement unless required by law[34](index=34&type=chunk) [OVERVIEW OF THE COMPANY](index=29&type=section&id=OVERVIEW%20OF%20THE%20COMPANY) Cantaloupe is a global technology leader in self-service commerce, powering over a million active locations - Cantaloupe, Inc is a global technology leader powering self-service commerce with over a million active locations processing more than a billion transactions annually[35](index=35&type=chunk) - The company's vertically integrated solutions include micro-payments processing, enterprise cloud software, IoT technology, and kiosk/POS innovations, used in vending, micro markets, laundromats, parking, and entertainment venues across North America, Europe, Latin America, and Australia[35](index=35&type=chunk) - For the six months ended December 31, 2023, approximately **87% of revenues** were derived from subscription and transaction fees, with the remainder from equipment sales[36](index=36&type=chunk) [Key Developments during the Quarter](index=30&type=section&id=Key%20Developments%20during%20the%20Quarter) Key developments include growth in active customers and devices, a **6.6%** revenue increase, and strategic product launches - As of December 31, 2023, the Company had approximately **30,027 Active Customers** and **1.23 million Active Devices** on its service[39](index=39&type=chunk) - Revenues for the quarter were **$65.4 million**, a **6.6% increase** year-over-year, primarily due to higher transaction and subscription fees[39](index=39&type=chunk) - The Company showcased its solutions at Cantaloupe LIVE Mexico and NACS Show 2023, and launched Seed Analytics and Seed Intelligence, new premium analytics tools[39](index=39&type=chunk) [QUARTERLY RESULTS OF OPERATIONS](index=31&type=section&id=QUARTERLY%20RESULTS%20OF%20OPERATIONS) This section details financial performance, highlighting revenue growth, margin improvements, and operating expense changes [Selected Operating Metrics](index=31&type=section&id=Selected%20Operating%20Metrics) Operating metrics show strong growth in active devices, active customers, and total transaction dollar volume - The Company uses Active Devices, Active Customers, Total Number of Transactions, Total Dollar Volume, Average Revenue Per Unit (ARPU), and Adjusted EBITDA (non-GAAP) to evaluate business performance[43](index=43&type=chunk) - Active Devices are those that have communicated or transacted in the last twelve months[44](index=44&type=chunk) - Active Customers are defined as all customers with at least one active device[51](index=51&type=chunk) Selected Operating Metrics | Metric | Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | | :-------------------------------------- | :----------- | :----------- | :----------- | :----------- | :----------- | | Active Devices (thousands) | 1,226 | 1,192 | 1,168 | 1,150 | 1,150 | | Active Customers | 30,027 | 29,670 | 28,584 | 27,598 | 26,335 | | Total Number of Transactions (millions) | 286.7 | 283.6 | 278.6 | 267.8 | 273.7 | | Total Dollar Volume of Transactions (millions) | $730.1 | $724.8 | $703.5 | $653.6 | $649.4 | | Subscription and transaction fees - Trailing 12 months (thousands) | $215,380 | $208,283 | $200,223 | $192,147 | $183,045 | | Average revenue per unit (ARPU) | $181.91 | $178.78 | $173.39 | $167.52 | $160.46 | - Active Devices increased by **6.6% YoY** to 1.23 million, Active Customers increased by **14.0% YoY** to 30,027, and Total Dollar Volume of Transactions increased by **12.4% YoY** to $730.1 million for the quarter ended December 31, 2023[53](index=53&type=chunk) [FINANCIAL PERFORMANCE](index=32&type=section&id=FINANCIAL%20PERFORMANCE) Financial performance showed strong growth in revenues and gross profit, driven by increased subscription and transaction fees [Three Months Ended December 31, 2023 Compared to Three Months Ended December 31, 2022](index=34&type=section&id=Three%20Months%20Ended%20December%2031,%202023%20Compared%20to%20Three%20Months%20Ended%20December%2031,%202022) Three Months Ended December 31, 2023 vs 2022 (in thousands) | Metric | 2023 | 2022 | Change Amount | Percentage Change | | :-------------------------------------- | :--- | :--- | :------------ | :---------------- | | Subscription and transaction fees | $56,029 | $48,932 | $7,097 | 14.5% | | Equipment sales | $9,330 | $12,398 | $(3,068) | (24.7)% | | Total revenues | $65,359 | $61,330 | $4,029 | 6.6% | | Total costs of sales | $41,043 | $42,889 | $(1,846) | (4.3)% | | Total gross profit | $24,316 | $18,441 | $5,875 | 31.9% | | Total gross margin | 37.2% | 30.1% | | | - Increase in subscription and transaction fees was driven by a **12.4% increase** in total dollar volumes of transactions and a **14.0% increase** in Active Customers, with the 32M acquisition contributing **$3.3 million**[60](index=60&type=chunk) - Decrease in equipment sales was due to decreased shipments after the completion of the 3G to 4G network upgrade in the U.S. market, leading to improved equipment margin[61](index=61&type=chunk) Operating Expenses - Three Months Ended December 31, 2023 vs 2022 (in thousands) | Operating Expense Category | 2023 | 2022 | Change Amount | Percentage Change | | :-------------------------------------- | :--- | :--- | :------------ | :---------------- | | Sales and marketing | $4,367 | $3,210 | $1,157 | 36.0% | | Technology and product development | $3,030 | $5,299 | $(2,269) | (42.8)% | | General and administrative expenses | $10,505 | $6,559 | $3,946 | 60.2% | | Integration and acquisition expenses | $93 | $2,787 | $(2,694) | (96.7)% | | Depreciation and amortization | $2,736 | $1,350 | $1,386 | 102.7% | | Total operating expenses | $20,731 | $19,355 | $1,376 | 7.1% | - Sales and marketing expenses increased due to higher employee headcount. Technology and product development decreased due to lower expensed personnel costs and higher capitalized internal-use software costs[66](index=66&type=chunk)[67](index=67&type=chunk) - General and administrative expenses increased due to compensation, bad debt, and remediation work for internal control weaknesses. Integration and acquisition expenses decreased significantly as the 32M integration completed[68](index=68&type=chunk)[69](index=69&type=chunk) Other Income (Expense), Net - Three Months Ended December 31, 2023 vs 2022 (in thousands) | Metric | 2023 | 2022 | Change Amount | Percentage Change | | :-------------------------------------- | :--- | :--- | :------------ | :---------------- | | Interest income from leases | $493 | $878 | $(385) | (43.8)% | | Interest expense | $(1,002) | $(518) | $(484) | (93.4)% | | Total other (expense) income, net | $(380) | $383 | $(763) | 199.2% | - Interest expense increased due to additional borrowing of **$25 million** to fund a portion of the 32M acquisition[71](index=71&type=chunk) [Six Months Ended December 31, 2023 Compared to Six Months Ended December 31, 2022](index=36&type=section&id=Six%20Months%20Ended%20December%2031,%202023%20Compared%20to%20Six%20Months%20Ended%20December%2031,%202022) Six Months Ended December 31, 2023 vs 2022 (in thousands) | Metric | 2023 | 2022 | Change Amount | Percentage Change | | :-------------------------------------- | :--- | :--- | :------------ | :---------------- | | Subscription and transaction fees | $111,164 | $96,007 | $15,157 | 15.8% | | Equipment sales | $16,878 | $23,105 | $(6,227) | (27.0)% | | Total revenues | $128,042 | $119,112 | $8,930 | 7.5% | | Total costs of sales | $79,398 | $86,509 | $(7,111) | (8.2)% | | Total gross profit | $48,644 | $32,603 | $16,041 | 49.2% | | Total gross margin | 38.0% | 27.4% | | | - Subscription and transaction fees increased by **15.8%** due to a **13% increase** in total dollar volumes, a **17.6% increase** in transaction fees, and a **12.1% increase** in subscription fees, partly from the 32M acquisition[74](index=74&type=chunk) - Equipment sales decreased due to lower shipments after the completion of the 3G to 4G network upgrade[75](index=75&type=chunk) - Subscription and transaction costs increased due to higher processing volumes and a **$2.7 million** contribution from the 32M acquisition[77](index=77&type=chunk) Operating Expenses - Six Months Ended December 31, 2023 vs 2022 (in thousands) | Operating Expense Category | 2023 | 2022 | Change Amount | Percentage Change | | :-------------------------------------- | :--- | :--- | :------------ | :---------------- | | Sales and marketing | $8,509 | $5,735 | $2,774 | 48.4% | | Technology and product development | $7,198 | $12,164 | $(4,966) | (40.8)% | | General and administrative expenses | $20,943 | $18,137 | $2,806 | 15.5% | | Integration and acquisition expenses | $171 | $2,787 | $(2,616) | (93.9)% | | Depreciation and amortization | $5,483 | $2,666 | $2,817 | 105.7% | | Total operating expenses | $42,304 | $42,036 | $268 | 0.6% | - Sales and marketing expenses increased due to higher headcount. Technology and product development decreased due to lower expensed personnel costs and higher capitalized internal-use software[84](index=84&type=chunk)[85](index=85&type=chunk) - General and administrative expenses increased due to personnel compensation. Integration and acquisition expenses decreased significantly post-32M acquisition[80](index=80&type=chunk)[86](index=86&type=chunk) - Depreciation and amortization increased due to the 32M acquisition and growing internal-use software[87](index=87&type=chunk) Other Income (Expense), Net - Six Months Ended December 31, 2023 vs 2022 (in thousands) | Metric | 2023 | 2022 | Change Amount | Percentage Change | | :-------------------------------------- | :--- | :--- | :------------ | :---------------- | | Interest income | $1,010 | $1,445 | $(435) | (30.1)% | | Interest expense | $(2,109) | $(995) | $(1,114) | 112.0% | | Total other income (expense) | $(1,047) | $353 | $(1,400) | (396.6)% | - Other income (expense), net, decreased by **$1.4 million**, primarily due to a **$1.1 million** increase in interest expense from higher outstanding debt, partially offset by a **$0.4 million** decrease in interest income[90](index=90&type=chunk) [Non-GAAP Financial Measures](index=39&type=section&id=Non-GAAP%20Financial%20Measures) The Company uses non-GAAP measures like Adjusted EBITDA to provide greater transparency into core operating performance [Adjusted EBITDA (Non-GAAP)](index=39&type=section&id=Adjusted%20EBITDA%20(Non-GAAP)) - Adjusted EBITDA is defined as U.S. GAAP net income (loss) before interest income/expense, income tax, depreciation, amortization, stock-based compensation, investigation/restatement expenses, integration/acquisition expenses, and non-recurring severance[95](index=95&type=chunk) Adjusted EBITDA (Non-GAAP) Reconciliation (in thousands) | Metric | Three months ended Dec 31, 2023 | Three months ended Dec 31, 2022 | Six months ended Dec 31, 2023 | Six months ended Dec 31, 2022 | | :-------------------------------------- | :------------------------------ | :------------------------------ | :---------------------------- | :---------------------------- | | U.S. GAAP net income (loss) | $3,124 | $(573) | $5,131 | $(9,147) | | EBITDA | $6,830 | $771 | $12,597 | $(6,310) | | Adjustments to EBITDA | $1,657 | $3,097 | $3,711 | $4,811 | | Adjusted EBITDA (non-GAAP) | $8,487 | $3,868 | $16,308 | $(1,499) | - Adjusted EBITDA increased significantly to **$8.487 million** for the three months and **$16.308 million** for the six months ended December 31, 2023, from $3.868 million and $(1.499) million in the prior year periods, respectively[96](index=96&type=chunk) [LIQUIDITY AND CAPITAL RESOURCES](index=40&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) Liquidity is supported by **$43.5 million** in cash and expected cash from operations, deemed sufficient for the next twelve months [Sources and Uses of Cash](index=40&type=section&id=Sources%20and%20Uses%20of%20Cash) - Primary capital sources are cash and cash equivalents (**$43.5 million** as of December 31, 2023) and expected cash from operating activities[98](index=98&type=chunk) - The Company believes current financial resources are **sufficient to fund its twelve-month operating budget**[100](index=100&type=chunk) - Focus areas to increase cash flow include prioritizing accounts receivable collection, utilizing existing inventory, improving operational efficiencies, and growing business domestically and internationally[100](index=100&type=chunk) - The Company has recorded **$14.8 million** in potential sales tax and related interest/penalty liabilities as of December 31, 2023[99](index=99&type=chunk) [Cash Flows](index=41&type=section&id=Cash%20Flows) - Net cash used in operating activities decreased significantly to **$1.2 million** for the six months ended December 31, 2023, from $16.1 million in the prior year, driven by improved net income and reduced working capital utilization[103](index=103&type=chunk)[104](index=104&type=chunk) - Net cash used in investing activities decreased to **$5.9 million** for the six months ended December 31, 2023, from $45.3 million in the prior year, primarily due to the absence of the 32M acquisition[106](index=106&type=chunk)[107](index=107&type=chunk) - Net cash used in financing activities was **$0.3 million** for the six months ended December 31, 2023, compared to $21.5 million provided in the prior year, reflecting debt repayments versus prior year's borrowing for the 32M acquisition[108](index=108&type=chunk) [CRITICAL ACCOUNTING ESTIMATES](index=43&type=section&id=CRITICAL%20ACCOUNTING%20ESTIMATES) There have been no material changes to the Company's critical accounting estimates from the prior fiscal year end - **No material changes** to critical accounting estimates were reported from the Annual Report on Form 10-K for the fiscal year ended June 30, 2023[114](index=114&type=chunk) [CONTRACTUAL OBLIGATIONS](index=43&type=section&id=CONTRACTUAL%20OBLIGATIONS) There were no significant changes to the Company's contractual obligations during the period - **No significant changes** to contractual obligations were reported from the Annual Report on Form 10-K for the fiscal year ended June 30, 2023[113](index=113&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=43&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The Company is exposed to market risk from interest rate changes on its **$38.2 million** outstanding debt - As of December 31, 2023, the Company has **$38.2 million** in total outstanding borrowings, and a 100 basis point increase in SOFR Rate would result in a **$0.4 million** change in annual interest expense[115](index=115&type=chunk) - Market risks related to changes in interest rates on cash investments (money market funds) and fluctuations of foreign currencies are **not material**[116](index=116&type=chunk) [Item 4. Controls and Procedures](index=43&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls were not effective due to material weaknesses in internal control over financial reporting [(a) Disclosure Controls and Procedures](index=43&type=section&id=(a)%20Disclosure%20Controls%20and%20Procedures) - Management concluded that the Company's disclosure controls and procedures were **not effective** as of December 31, 2023, due to material weaknesses in internal control over financial reporting[118](index=118&type=chunk) [(b) Changes in Internal Control over Financial Reporting](index=43&type=section&id=(b)%20Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) - No material changes in internal control over financial reporting occurred during the fiscal quarter ended December 31, 2023, other than **ongoing remediation activities** for previously identified material weaknesses[119](index=119&type=chunk) - The Company hired a public accounting firm and began implementing control enhancements in Q2 FY2024, with remediation efforts ongoing until controls are fully implemented and tested[120](index=120&type=chunk)[122](index=122&type=chunk) Part II - Other Information [Item 1. Legal Proceedings](index=46&type=section&id=Item%201.%20Legal%20Proceedings) Information regarding legal proceedings is incorporated by reference from Note 15 in Part I, Item 1 - Legal proceedings information is incorporated by reference to Note 15 – Commitments and Contingencies[124](index=124&type=chunk) [Item 1A. Risk Factors](index=46&type=section&id=Item%201A.%20Risk%20Factors) A discussion of risk factors is incorporated by reference from the Company's Annual Report on Form 10-K - Risk factors are discussed in the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 2023[125](index=125&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=46&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) There were no unregistered sales of equity securities or use of proceeds to report for the period - No unregistered sales of equity securities or use of proceeds to report[126](index=126&type=chunk) [Item 3. Defaults Upon Senior Securities](index=46&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) There were no defaults on any senior securities during the period - **No defaults** on any senior securities were reported[126](index=126&type=chunk) - Total liquidation preference for Series A Convertible Preferred Stock was **$22.4 million** as of December 31, 2023, with an annual cumulative dividend of $1.50 per share[126](index=126&type=chunk) [Item 4. Mine Safety Disclosures](index=46&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) There are no mine safety disclosures to report for the period - No mine safety disclosures to report[127](index=127&type=chunk) [Item 5. Other Information](index=46&type=section&id=Item%205.%20Other%20Information) No directors or executive officers adopted, modified, or terminated any Rule 10b5-1 trading plans - No directors or executive officers adopted, modified, or terminated any Rule 10b5-1 trading plans during the fiscal quarter ended December 31, 2023[127](index=127&type=chunk) [Item 6. Exhibits](index=46&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including certifications and iXBRL data - Exhibits include Amended and Restated Articles of Incorporation, Second Amended and Restated Bylaws, Certifications of CEO and CFO (Rule 13a-14(a) and 18 USC Section 1350), and financial information formatted in iXBRL[129](index=129&type=chunk)[130](index=130&type=chunk)[131](index=131&type=chunk) [Signatures](index=48&type=section&id=Signatures) The report is duly signed by the Chief Financial Officer and Chief Executive Officer - The report was signed on February 8, 2024, by Scott Stewart (Chief Financial Officer) and Ravi Venkatesan (Chief Executive Officer)[133](index=133&type=chunk)[134](index=134&type=chunk)[135](index=135&type=chunk)

In its upcoming report, Cantaloupe (CTLP) is predicted by Wall Street analysts to post quarterly earnings of $0.02 per share, reflecting an increase of 300% compared to the same period last year. Revenues are forecasted to be $66.92 million, representing a year-over-year increase of 9.1%.The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. This represents how the covering analysts, as a whole, have reassessed their initial estimates during this timeframe.Before a company ...

aquaArts studio/E+ via Getty Images Seeking Alpha analysts have been cautious about investing in Cantaloupe (NASDAQ:CTLP) because of its high P/E ratio. And I was initially skeptical when, after recommending Asbury Automotive (ABG) to readers in November in part because David Abrams owns such a large stake, one of my readers recommended I look into Cantaloupe, another one of Abrams' holdings. But after looking closely at recent operating performance, I have found that analyst estimates are unreasonably low. ...

Cantaloupe has acquired Cheq Lifestyle Technology (CHEQ) to expand into the sports, entertainment and restaurant sectors with a suite of self-service commerce solutions.“There is tremendous synergy between both of our product lines and solutions that will grow our footprint across our combined customer base,” Cantaloupe CEO Ravi Venkatesan said in a Thursday (Feb. 1) press release.CHEQ powers payments for numerous professional sports teams, entertainment venues and festival operators, according to the relea ...

Cantaloupe, Inc. (NASDAQ:CTLP) Q1 2024 Results Conference Call November 9, 2023 5:00 PM ET Company Participants Dara Dierks - IR Ravi Venkatesan - CEO Scott Stewart - CFO Conference Call Participants Josh Nichols - B. Riley Gary Prestopino - Barrington Research Operator Ladies and gentlemen, thank you for standing by. Welcome to the Cantaloupe First Quarter Fiscal Year 2024 Earnings Conference Call. At this time, all participants are in a listen-only-mode. After the speaker's presentation, there will be a q ...

[Part I - Financial Information](index=3&type=section&id=Part%20I%20-%20Financial%20Information) [Condensed Consolidated Financial Statements](index=3&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for Q1 FY2024, showing a significant turnaround to profitability, increased assets, and positive operating cash flow [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of September 30, 2023, total assets were $300.7 million, an increase from $289.6 million at June 30, 2023, driven by increases in cash and cash equivalents and accounts receivable Condensed Consolidated Balance Sheet Highlights ($ in thousands) | Account | Sep 30, 2023 (Unaudited) | Jun 30, 2023 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $54,597 | $50,927 | | Accounts receivable, net | $36,998 | $30,162 | | Total current assets | $133,991 | $123,383 | | Total assets | $300,695 | $289,612 | | **Liabilities & Equity** | | | | Accounts payable | $59,591 | $52,869 | | Total current liabilities | $87,339 | $81,693 | | Total liabilities | $129,088 | $122,020 | | Total shareholders' equity | $168,887 | $164,872 | [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) The company achieved a net income of $2.0 million for Q1 FY2024, a significant turnaround from a prior-year loss, driven by 8.5% revenue growth and improved gross profit Statement of Operations Summary ($ in thousands, except per share data) | Metric | Q1 FY2024 (ended Sep 30, 2023) | Q1 FY2023 (ended Sep 30, 2022) | | :--- | :--- | :--- | | Total revenues | $62,683 | $57,782 | | Gross profit | $24,328 | $14,162 | | Operating income (loss) | $2,755 | $(8,518) | | Net income (loss) | $2,007 | $(8,574) | | Diluted EPS | $0.02 | $(0.13) | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) The company generated $6.7 million in cash from operating activities for Q1 FY2024, a significant improvement from the prior year, leading to a $3.7 million increase in cash and cash equivalents Cash Flow Summary ($ in thousands) | Cash Flow Activity | Three months ended Sep 30, 2023 | Three months ended Sep 30, 2022 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $6,703 | $(9,032) | | Net cash used in investing activities | $(2,916) | $(4,956) | | Net cash used in financing activities | $(117) | $(3,344) | | **Net increase (decrease) in cash** | **$3,670** | **$(17,332)** | | **Cash and cash equivalents at end of period** | **$54,597** | **$50,793** | [Notes to Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20(unaudited)) These notes detail accounting policies, financial statement items, and business operations, including the 32M acquisition and revenue disaggregation, confirming the company operates as a single segment - The company is a digital payments and software services company providing end-to-end technology solutions for self-service commerce, operating as one operating segment[19](index=19&type=chunk)[23](index=23&type=chunk) - The acquisition of Three Square Market (32M) in December 2022 for **$41.1 million** expanded the company's presence in the micro market industry and global markets, resulting in **$25.7 million** of goodwill and **$14.9 million** of intangible assets[57](index=57&type=chunk)[61](index=61&type=chunk)[63](index=63&type=chunk) Disaggregated Revenue for Three Months Ended Sep 30 ($ in thousands) | Revenue Source | 2023 | 2022 | | :--- | :--- | :--- | | Transaction fees | $37,030 | $31,295 | | Subscription fees | $18,105 | $15,780 | | **Total Subscription & transaction fees** | **$55,135** | **$47,075** | | Equipment sales | $7,548 | $10,707 | | **Total revenues** | **$62,683** | **$57,782** | [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=21&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q1 FY2024 financial results, highlighting 8.5% revenue growth, improved profitability, strong operational metrics, and a positive Adjusted EBITDA of $7.8 million [Quarterly Results of Operations](index=24&type=section&id=QUARTERLY%20RESULTS%20OF%20OPERATIONS) The company's key performance indicators showed positive trends as of September 30, 2023, with growth in Active Devices, Active Customers, and Total Dollar Volume of Transactions Key Operating Metrics (as of Sep 30, 2023) | Metric | Sep 30, 2023 | Sep 30, 2022 | % Change | | :--- | :--- | :--- | :--- | | Active Devices (thousands) | 1,192 | 1,151 | +3.6% | | Active Customers | 29,670 | 25,019 | +18.6% | | Total Dollar Volume of Transactions (millions) | $724.8 | $639.5 | +13.3% | [Revenues and Gross Profit Analysis](index=29&type=section&id=Revenues%20and%20Gross%20Profit) Total revenues increased by **8.5%** to **$62.7 million**, driven by subscription and transaction fees, while gross profit surged by **71.8%** to **$24.3 million**, significantly improving gross margin Revenue and Gross Profit Breakdown ($ in thousands) | Category | Q1 FY2024 | Q1 FY2023 | % Change | | :--- | :--- | :--- | :--- | | **Revenues** | | | | | Subscription and transaction fees | $55,135 | $47,075 | +17.1% | | Equipment sales | $7,548 | $10,707 | -29.5% | | **Total Revenues** | **$62,683** | **$57,782** | **+8.5%** | | **Gross Profit** | | | | | Subscription and transaction fees | $23,407 | $16,705 | +40.1% | | Equipment sales | $921 | $(2,543) | +136.2% | | **Total Gross Profit** | **$24,328** | **$14,162** | **+71.8%** | - The increase in subscription and transaction fees was driven by a **13.3%** increase in transaction dollar volumes and an **18.6%** increase in Active Customers, with the 32M acquisition contributing **$3.4 million**[120](index=120&type=chunk) - Equipment sales decreased as the 3G to 4G network upgrade cycle has been completed, but equipment margin improved as strategic discounts for this transition ended[121](index=121&type=chunk) [Operating Expenses Analysis](index=30&type=section&id=Operating%20Expenses) Total operating expenses decreased by **4.9%** to **$21.6 million**, primarily due to reductions in technology and product development and general and administrative expenses Operating Expenses Breakdown ($ in thousands) | Category | Q1 FY2024 | Q1 FY2023 | % Change | | :--- | :--- | :--- | :--- | | Sales and marketing | $4,142 | $2,525 | +64.0% | | Technology and product development | $4,168 | $6,865 | -39.3% | | General and administrative expenses | $10,438 | $11,578 | -9.8% | | Depreciation and amortization | $2,747 | $1,315 | +108.9% | | **Total operating expenses** | **$21,573** | **$22,680** | **-4.9%** | [Non-GAAP Financial Measures - Adjusted EBITDA](index=32&type=section&id=Non-GAAP%20Financial%20Measures%20-%20Adjusted%20EBITDA) The company reported a positive Adjusted EBITDA of **$7.8 million** for the quarter, a significant turnaround from a **$5.4 million** loss in the prior year Reconciliation of Net Income (Loss) to Adjusted EBITDA ($ in thousands) | Line Item | Three months ended Sep 30, 2023 | Three months ended Sep 30, 2022 | | :--- | :--- | :--- | | U.S. GAAP net income (loss) | $2,007 | $(8,574) | | EBITDA | $5,767 | $(7,081) | | Adjustments to EBITDA | $2,054 | $1,715 | | **Adjusted EBITDA** | **$7,821** | **$(5,366)** | [Liquidity and Capital Resources](index=33&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) As of September 30, 2023, the company had **$54.6 million** in cash and cash equivalents, with operations providing **$6.7 million** in cash during the quarter - Primary sources of capital are cash on hand of **$54.6 million** and expected cash from operating activities[138](index=138&type=chunk) - Net cash provided by operating activities was **$6.7 million** for the quarter, compared to **$9.0 million** used in the prior-year quarter, driven by net income and non-cash charges[143](index=143&type=chunk)[144](index=144&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=32&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is interest rate exposure on **$38.4 million** in variable-rate debt, where a 100 basis point SOFR increase would raise annual interest expense by **$0.4 million** - The company has **$38.4 million** in outstanding borrowings with variable interest rates based on SOFR[150](index=150&type=chunk) - A hypothetical **100 basis point (1%)** increase in the SOFR Rate would change annual interest expense by approximately **$0.4 million**[150](index=150&type=chunk) [Controls and Procedures](index=32&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were not effective as of September 30, 2023, due to previously identified material weaknesses, with remediation efforts ongoing - Management concluded that disclosure controls and procedures were not effective as of September 30, 2023[153](index=153&type=chunk) - The ineffectiveness is a result of material weaknesses previously identified in the 2023 Form 10-K, and remediation efforts are in progress[153](index=153&type=chunk)[155](index=155&type=chunk) [Part II - Other Information](index=33&type=section&id=Part%20II%20-%20Other%20Information) [Legal Proceedings](index=33&type=section&id=Item%201.%20Legal%20Proceedings) Information regarding legal proceedings is incorporated by reference from Note 15 – Commitments and Contingencies - Information regarding legal proceedings is incorporated by reference from Note 15 – Commitments and Contingencies[156](index=156&type=chunk) [Risk Factors](index=33&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 2023 - The report refers to the 'Risk Factors' section of the Annual Report on Form 10-K for the fiscal year ended June 30, 2023 for a discussion of the company's risk factors[157](index=157&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=33&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered sales of equity securities or use of proceeds were reported for the quarter, as this item is marked as not applicable - No unregistered sales of equity securities or use of proceeds were reported for the quarter[158](index=158&type=chunk) [Defaults Upon Senior Securities](index=33&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults on any senior securities, with the total liquidation preference on its Series A Convertible Preferred Stock at **$22.4 million** - There were no defaults on any senior securities during the period[158](index=158&type=chunk) - The total liquidation preference on the Series A Convertible Preferred Stock was **$22.4 million** as of September 30, 2023[158](index=158&type=chunk) [Other Information](index=33&type=section&id=Item%205.%20Other%20Information) No director or executive officer adopted, modified, or terminated any Rule 10b5-1 trading plan or other non-Rule 10b5-1 trading arrangements during the quarter - No director or executive officer adopted, modified, or terminated a Rule 10b5-1 trading plan during the fiscal quarter[159](index=159&type=chunk) [Exhibits](index=33&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including CEO and CFO certifications and financial data formatted in iXBRL - The report includes required CEO and CFO certifications and financial statements formatted in iXBRL as exhibits[160](index=160&type=chunk)

Business Operations and Growth - Cantaloupe, Inc. processes over 1 billion transactions annually across more than 1 million active locations globally[16]. - The majority of revenue is derived from subscription and transaction fees, with transaction fees being the most significant driver of revenue[17]. - The Seed platform offers advanced analytics, route scheduling, and inventory management, enhancing operational efficiency for customers[31]. - Cantaloupe's G11 Cashless Kit supports faster processing and enhanced functionality for digital payments, operating on major networks with built-in NFC support[29]. - The Cantaloupe Go product line includes various self-checkout kiosks, integrating seamlessly with the Seed platform for comprehensive business management[26]. - Cantaloupe's services handle over $2 billion in annual transactions in the micro-payments space, utilizing Amazon Web Services for infrastructure[34]. - Key verticals served include food service, vending, and self-service kiosks, representing significant market potential for Cantaloupe[39]. - The vending and micro market industry grew by 12% in total revenue in 2022, reaching almost 89% of the 2019 benchmark revenue high[40]. - Global sales of interactive kiosks reached an estimated $14.5 billion in 2022, a 20% increase from $12.1 billion in 2021[41]. - The smart vending market is expected to reach a value of $15 billion by 2028, growing at a rate of 12% from 2022 to 2028[45]. - The company plans to expand into micro markets and self-checkout solutions, leveraging its Cantaloupe Go platform[49]. - The company aims to capitalize on cashless payment trends, with a focus on expanding cashless acceptance in international markets[48]. - The company experienced a headcount increase of approximately 20%, growing from 225 full-time employees in 2022 to 269 in 2023[68]. Financial Performance - The company recognized a net income of $0.6 million for fiscal year 2023, compared to net losses of $1.7 million and $8.7 million for fiscal years 2022 and 2021, respectively[87]. - Customer concentrations for the years ended June 30, 2023, 2022, and 2021 were 12%, 14%, and 16% of total revenue from a single customer, indicating a significant reliance on key customers[93]. - The company has a history of losses since inception, and continuous profitability in the foreseeable future is not assured, which may lead to a decline in stock price if future losses occur[87]. - The company experienced net cash provided by operating activities of $14.2 million, $(8.7) million, and $8.2 million for the fiscal years ended 2023, 2022, and 2021, respectively[119]. - Total revenues increased by $38.4 million to $243.6 million for the year ended June 30, 2023, driven by a $31.4 million increase in subscription and transaction fees and a $7.1 million increase in equipment sales[196]. - Subscription and transaction fees increased by $21.9 million or 20%, attributed to increased processing volumes and a 16% rise in total dollar volumes[197]. - The company’s gross profit for the year ended June 30, 2023 was $81.2 million, a 26.5% increase from $64.2 million in the previous year[195]. - Total gross margin improved from 31.3% in 2022 to 33.3% in 2023, primarily due to higher margin revenue from subscription fees[200]. - Operating expenses increased by $13.6 million to $80.5 million for the year ended June 30, 2023, driven by higher general and administrative expenses and sales and marketing costs[201]. - The company incurred $3.1 million in integration and acquisition expenses, reflecting ongoing efforts to expand its business[201]. - Adjusted EBITDA for the fiscal year ended June 30, 2023, was $17.8 million, compared to $9.9 million in 2022, reflecting a significant increase[213]. Legal and Compliance Risks - The company is subject to various legal, regulatory, and compliance risks that could adversely affect its business and financial condition[124]. - The company has significant ongoing litigation and investigations that may require substantial management time and incur additional legal expenses[136]. - The company has incurred significant expenses related to the 2019 Investigation, including audit, legal, and consulting fees, which could adversely affect its financial condition[130]. - The company has identified multiple material weaknesses in its internal control over financial reporting as of June 30, 2023, and is in the process of remediation[141]. - The company has settled the 2019 Investigation with the SEC but may still face future claims or inquiries that could impact its resources and reputation[132]. Market and Economic Conditions - 73% of small businesses believe new forms of digital payments are essential for growth, and 41% of consumers plan to shift to cashless payments within two years[20]. - 66% of consumers prefer self-service options due to speed and reduced stress, indicating a strong shift towards self-service models[21]. - The company is exposed to general economic conditions that could negatively impact consumer confidence and spending, affecting the number of active devices and transactions[81]. - Geopolitical conflicts, such as the Russia-Ukraine conflict, may adversely affect the company's operations and international expansion efforts[96]. Technology and Innovation - The company has established long-term agreements with payment processors and technology vendors to support its operations[58]. - The company is focused on enhancing its position as a leading provider of technology in the self-service industry through innovative solutions[47]. - The company has been granted 140 patents, with 49 still in force, and has pending patent applications[115]. - The newly launched Cantaloupe ONE Platform has seen significant customer interest and growth, providing a bundled subscription model for operators[171]. - The Seed Driver mobile app was updated and is now available on both Apple and Android platforms, enhancing efficiency for route drivers[171]. - The company migrated its cloud hosting services to Amazon Web Services (AWS) in July 2022, supporting a scalable infrastructure[166]. Financial Position and Capital Structure - As of June 30, 2023, the company reported a net working capital surplus of $41.7 million and cash and cash equivalents of $50.9 million[119]. - The company entered into an amended and restated credit agreement with JPMorgan Chase Bank, providing for a $15 million secured revolving credit facility and a $25 million secured term facility[120]. - The Amended JPMorgan Credit Facility has a four-year maturity and includes two financial covenants, one requiring a total leverage ratio of not more than 3.00 to 1.00[121]. - The company was in compliance with its financial covenants as of June 30, 2023[122]. - The company may require additional financing to sustain operations, particularly in response to unexpected non-operational events[119]. - The company’s preferred stock holders are entitled to a liquidation preference of approximately $22.1 million as of June 30, 2023, which could impact distributions to common stockholders in the event of a merger or asset sale[147]. - As of June 30, 2023, accumulated unpaid dividends on preferred stock amounted to approximately $18.3 million, with a liquidation preference of about $22.1 million[156]. Customer and Market Dynamics - As of June 30, 2023, the company had 28,584 Active Customers and 1.17 million Active Devices, compared to 23,991 Active Customers and 1.14 million Active Devices as of June 30, 2022[67]. - The number of Active Customers rose to 28,584, representing an increase of 4,593 customers or 19% compared to 23,991 in the prior year[193]. - The company successfully closed the acquisition of Three Square Market in December 2022, accelerating its micro market business[166]. - The 32M acquisition contributed $7.3 million in subscription and transaction fees and $5.9 million in equipment sales for the year ended June 30, 2023[197][198]. - The company continues to monitor the impact of COVID-19, noting elevated component and supply chain costs during fiscal year 2023[167].

Cantaloupe, Inc. (NASDAQ:CTLP) Q4 2023 Earnings Conference Call August 6, 2023 5:00 PM ET Company Participants Marissa Neuman - Investor Relations Ravi Venkatesan - Chief Executive Officer Scott Stewart - Chief Financial Officer Conference Call Participants Josh Nichols - B. Riley Gary Prestopino - Barrington Research Chris Kennedy - William Blair George Sutton - Craig-Hallum Operator Thank you for standing by, and welcome to the Cantaloupe Fourth Quarter Fiscal Year 2023 Earnings Conference Call. At this t ...

Accounts receivable primarily include amounts due to the Company for sales of equipment and subscription fees, settlement receivables for amounts due from third-party payment processors and receivables from contract manufacturers, net of the allowance for credit losses. Accounts receivable, net of the allowance for uncollectible accounts were $29.2 million as of March 31, 2023 and $37.7 million as of June 30, 2022. Accounts receivable from one contract manufacturer represented 16% of accounts receivable as ...