[Part I - Financial Information](index=3&type=section&id=Part%20I%20-%20Financial%20Information) This section presents the unaudited condensed consolidated financial statements, including balance sheets, statements of operations, shareholders' equity, and cash flows, with detailed notes on accounting policies, acquisitions, debt, and equity [Item 1. Condensed Consolidated Financial Statements](index=3&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements, including the balance sheets, statements of operations, statements of shareholders' equity, and statements of cash flows, along with detailed notes explaining significant accounting policies, recent acquisitions, debt arrangements, and equity activities [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section provides a snapshot of the company's financial position, detailing assets, liabilities, and shareholders' equity at specific points in time **Condensed Consolidated Balance Sheets (Unaudited) - Key Figures ($ in thousands):** | Item | December 31, 2021 | June 30, 2021 | Change | % Change | | :-------------------------------------- | :------------------ | :------------ | :----- | :------- | | Total Assets | $235,092 | $237,672 | $(2,580) | -1.09% | | Cash and cash equivalents | $76,309 | $88,136 | $(11,827) | -13.42% | | Inventory, net | $11,752 | $5,292 | $6,460 | 122.07% | | Goodwill | $66,656 | $63,945 | $2,711 | 4.24% | | Total Liabilities | $79,105 | $83,141 | $(4,036) | -4.85% | | Total Shareholders' Equity | $152,849 | $151,393 | $1,456 | 0.96% | - Total assets saw a slight decrease, primarily due to a reduction in cash and cash equivalents, while inventory significantly increased by **122.07%** and goodwill increased by **4.24%** due to the Yoke acquisition[7](index=7&type=chunk)[9](index=9&type=chunk) - Total liabilities decreased by **4.85%**, and total shareholders' equity experienced a modest increase of **0.96%**[7](index=7&type=chunk)[9](index=9&type=chunk) [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This section outlines the company's financial performance over specific periods, detailing revenues, expenses, and net loss **Condensed Consolidated Statements of Operations (Unaudited) - Key Figures ($ in thousands, except per share data):** | Item | 3 Months Ended Dec 31, 2021 | 3 Months Ended Dec 31, 2020 | % Change | 6 Months Ended Dec 31, 2021 | 6 Months Ended Dec 31, 2020 | % Change | | :----------------------------------- | :-------------------------- | :-------------------------- | :------- | :-------------------------- | :-------------------------- | :------- | | Total Revenues | $51,091 | $38,285 | 33.4% | $96,871 | $75,162 | 28.9% | | Subscription and transaction fees | $41,188 | $33,214 | 24.0% | $81,812 | $66,322 | 23.4% | | Equipment sales | $9,903 | $5,071 | 95.3% | $15,059 | $8,840 | 70.4% | | Gross Profit | $15,990 | $12,301 | 30.0% | $30,865 | $26,541 | 16.3% | | Operating Loss | $(320) | $(2,582) | 87.6% | $(1,459) | $(6,220) | 76.5% | | Net Loss | $(468) | $(2,902) | 83.9% | $(1,760) | $(9,515) | 81.5% | | Basic and Diluted Net Loss Per Share | $(0.01) | $(0.04) | 75.0% | $(0.03) | $(0.15) | 80.0% | - The company demonstrated strong revenue growth, with total revenues increasing by **33.4%** for the three months and **28.9%** for the six months ended December 31, 2021, compared to the prior year[14](index=14&type=chunk) - This growth was primarily driven by significant increases in both subscription and transaction fees and equipment sales, leading to substantial reductions in operating loss and net loss, improving by over **75%** for both periods[14](index=14&type=chunk) [Condensed Consolidated Statements of Shareholders' Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Shareholders'%20Equity) This section details changes in the company's equity accounts, including common stock, accumulated deficit, and total shareholders' equity **Condensed Consolidated Statements of Shareholders' Equity (Unaudited) - Key Figures ($ in thousands, except share data):** | Item | December 31, 2021 | June 30, 2021 | Change | | :----------------------------------- | :------------------ | :------------ | :----- | | Common Shares Outstanding | 70,987,498 | 71,258,047 | (270,549) | | Common Stock Amount | $465,990 | $462,775 | $3,215 | | Accumulated Deficit | $(313,141) | $(311,382) | $(1,759) | | Total Shareholders' Equity | $152,849 | $151,393 | $1,456 | - Total shareholders' equity increased by **$1.46 million** from June 30, 2021, to December 31, 2021, primarily due to stock-based compensation and exercises, partially offset by the net loss for the period[17](index=17&type=chunk) - The accumulated deficit increased by **$1.76 million**[17](index=17&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section summarizes the cash inflows and outflows from operating, investing, and financing activities over specific periods **Condensed Consolidated Statements of Cash Flows (Unaudited) - Key Figures ($ in thousands):** | Cash Flow Activity | 6 Months Ended Dec 31, 2021 | 6 Months Ended Dec 31, 2020 | Change | | :------------------------------------------ | :-------------------------- | :-------------------------- | :----- | | Net cash (used in) provided by operating activities | $(4,247) | $(654) | $(3,593) | | Net cash used in investing activities | $(7,259) | $(959) | $(6,300) | | Net cash used in financing activities | $(321) | $(1,938) | $1,617 | | Net (decrease) increase in cash and cash equivalents | $(11,827) | $(3,551) | $(8,276) | | Cash and cash equivalents at end of period | $76,309 | $28,162 | $48,147 | - Net cash used in operating activities increased significantly to **$4.25 million** for the six months ended December 31, 2021, primarily due to increased inventory and reduction in accounts payable[22](index=22&type=chunk) - Net cash used in investing activities also rose substantially to **$7.26 million**, driven by the Yoke acquisition and increased property and equipment purchases[22](index=22&type=chunk) - Conversely, net cash used in financing activities decreased to **$0.32 million** due to lower debt repayments compared to the prior year's refinancing activities[22](index=22&type=chunk) [Notes to Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures supporting the condensed consolidated financial statements, covering accounting policies, acquisitions, debt, and equity [1. BUSINESS](index=9&type=page&id=1.%20BUSINESS) Cantaloupe, Inc., formerly USA Technologies, Inc., is a digital payments and software services company providing end-to-end technology solutions for the unattended retail market - Company name changed from USA Technologies, Inc. to Cantaloupe, Inc., effective April 15, 2021, with common stock trading under 'CTLP' on NASDAQ[25](index=25&type=chunk) - Cantaloupe provides end-to-end technology solutions for the unattended retail market, including payments processing, inventory management, route logistics, and back-office management[26](index=26&type=chunk) - The COVID-19 pandemic continues to affect operations, but the company concluded no material impairments to goodwill, intangible assets, or long-lived assets as of December 31, 2021[27](index=27&type=chunk) [2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=9&type=page&id=2.%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This section outlines the basis of presentation for the unaudited interim financial statements, detailing changes in presentation, adoption of new accounting pronouncements, and evaluation of others - The company revised its operating expense presentation, disaggregating 'Selling, general, and administrative costs' into 'Sales and marketing,' 'Technology and product development,' and 'General and administrative costs' for increased transparency[33](index=33&type=chunk) - The revenue caption 'License and transaction fees' was revised to 'Subscription and transaction fees' to better describe the revenue stream and align with industry terminology[40](index=40&type=chunk) - Adopted ASC 326 (Credit Losses) on July 1, 2020, using a modified retrospective approach, shifting to an expected loss model for accounts and finance receivables[41](index=41&type=chunk) - Evaluating the impact of ASU 2020-04/2021-01 (Reference Rate Reform), ASU 2021-05 (Lessor Classification), and ASU 2020-06 (Debt and Equity Instruments) for future adoption[45](index=45&type=chunk)[48](index=48&type=chunk)[49](index=49&type=chunk) [3. LEASES](index=12&type=page&id=3.%20LEASES) The company's lease arrangements primarily consist of operating leases for office space, warehouses, and equipment, with lease liabilities and assets reported on the balance sheet **Lease Balances ($ in thousands):** | Item | December 31, 2021 | June 30, 2021 | | :----------------------------------- | :------------------ | :------------ | | Operating lease assets | $2,949 | $3,049 | | Total lease liabilities | $4,619 | $4,811 | **Operating Lease Costs ($ in thousands):** | Period | 2021 | 2020 | | :----------------------------------- | :--- | :--- | | Three months ended December 31 | $443 | $535 | | Six months ended December 31 | $885 | $1,064 | - Maturities of lease liabilities total **$5.25 million**, with **$0.86 million** due in the remainder of fiscal year 2022[52](index=52&type=chunk) [4. REVENUE](index=13&type=page&id=4.%20REVENUE) Revenue is now disaggregated into 'Transaction fees' and 'Subscription fees' to provide greater transparency, with details on future performance obligations and contract liabilities - Revenue is disaggregated into 'Transaction fees' (percentage rate on volumes processed) and 'Subscription fees' (monthly service fees for cashless payments, rental programs, and Seed software services)[54](index=54&type=chunk) **Disaggregated Revenue ($ in thousands):** | Revenue Category | 3 Months Ended Dec 31, 2021 | 3 Months Ended Dec 31, 2020 | 6 Months Ended Dec 31, 2021 | 6 Months Ended Dec 31, 2020 | | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Transaction fees | $26,775 | $20,454 | $53,195 | $40,131 | | Subscription fees | $14,413 | $12,760 | $28,617 | $26,191 | | Equipment sales | $9,903 | $5,071 | $15,059 | $8,840 | | **Total Revenues** | **$51,091** | **$38,285** | **$96,871** | **$75,162** | - Total transaction price allocated to future performance obligations is **$36.30 million** as of December 31, 2021, with **$7.02 million** expected to be recognized in 2022[59](index=59&type=chunk) [5. ACQUISITION](index=15&type=page&id=5.%20ACQUISITION) In August 2021, Cantaloupe acquired certain assets and liabilities of Yoke Payments, a micro market payments company, to expand self-checkout offerings and integrate with existing platforms - Acquired Yoke Payments (Delicious Nutritious LLC) in August 2021 to extend self-checkout capabilities and integrate with Cantaloupe's inventory management and payment processing platforms[66](index=66&type=chunk)[67](index=67&type=chunk) **Yoke Acquisition Consideration and Allocation ($ in thousands):** | Item | Amount | | :-------------------------------------- | :----- | | Cash Consideration | $2,966 | | Contingent Consideration Arrangement | $1,000 | | **Total Consideration Transferred** | **$3,966** | | Identifiable Intangible Assets | $1,235 | | Goodwill | $2,710 | - Goodwill of **$2.71 million** recognized from the acquisition includes expected synergies and intangible assets not separately recognized, and is deductible for income tax purposes[72](index=72&type=chunk) [6. FINANCE RECEIVABLES](index=16&type=page&id=6.%20FINANCE%20RECEIVABLES) Finance receivables primarily consist of devices financed under the QuickStart program and Seed platform, mostly structured as 60-month sales-type leases, with credit risk monitored by customer transaction revenue to lease payment ratio - Finance receivables are mainly non-cancellable sixty-month sales-type leases for devices under the QuickStart program and Seed platform[74](index=74&type=chunk) **Total Finance Receivables, Net ($ in thousands):** | Date | Amount | | :------------------ | :----- | | December 31, 2021 | $19,153 | | June 30, 2021 | $19,599 | - Credit risk is assessed by categorizing customers into 'high ratio' (adequate transaction processing volumes) and 'low ratio' (insufficient volumes) based on their gross sales to required monthly lease obligations[77](index=77&type=chunk)[78](index=78&type=chunk) [7. LOSS PER SHARE CALCULATION](index=19&type=page&id=7.%20LOSS%20PER%20SHARE%20CALCULATION) The basic and diluted loss per share calculations are presented, showing a significant improvement in net loss per common share for both the three and six months ended December 31, 2021 **Net Loss Per Common Share ($):** | Period | 2021 | 2020 | | :----------------------------------- | :----- | :----- | | Three months ended December 31 | $(0.01) | $(0.04) | | Six months ended December 31 | $(0.03) | $(0.15) | - Approximately **4 million** anti-dilutive shares were excluded from the diluted loss per share calculation for the three and six months ended December 31, 2021[86](index=86&type=chunk) [8. GOODWILL AND INTANGIBLES](index=20&type=page&id=8.%20GOODWILL%20AND%20INTANGIBLES) This section details the company's intangible assets and goodwill, noting an increase due to the Yoke acquisition and no impairment charges recognized during the reported periods **Intangible Assets and Goodwill ($ in thousands):** | Item | December 31, 2021 (Net) | June 30, 2021 (Net) | | :-------------------------- | :---------------------- | :-------------------- | | Brand and tradenames | $723 | $800 | | Developed technology | $4,004 | $4,049 | | Customer relationships | $14,879 | $15,143 | | **Total Intangible Assets** | **$19,606** | **$19,992** | | Goodwill | $66,656 | $63,945 | - Goodwill increased by **$2.71 million** due to the Yoke acquisition[88](index=88&type=chunk)[90](index=90&type=chunk) - The company performs an annual goodwill impairment test on April 1 and recognized no impairment charges for the periods ended December 31, 2021 and 2020[88](index=88&type=chunk)[90](index=90&type=chunk) - Amortization expense for intangible assets was **$0.9 million** for the three months and **$1.6 million** for the six months ended December 31, 2021[88](index=88&type=chunk) [9. DEBT AND OTHER FINANCING ARRANGEMENTS](index=20&type=page&id=9.%20DEBT%20AND%20OTHER%20FINANCING%20ARRANGEMENTS) The company's debt primarily consists of the 2021 JPMorgan Credit Facility, including a secured revolving credit facility and a secured term facility, with details on interest expense, repayment terms, and financial covenants **Debt and Other Financing Arrangements ($ in thousands):** | Item | December 31, 2021 | June 30, 2021 | | :----------------------------------- | :------------------ | :------------ | | 2021 JPMorgan Credit Facility | $14,063 | $14,437 | | Total Debt, Net of Discounts | $13,972 | $14,319 | | Debt and other financing arrangements, noncurrent | $13,124 | $13,644 | **Total Interest Expense ($ in thousands):** | Period | 2021 | 2020 | | :----------------------------------- | :--- | :--- | | Three months ended December 31 | $475 | $596 | | Six months ended December 31 | $953 | $3,881 | - The 2021 JPMorgan Credit Facility includes a **$5 million** secured revolving credit facility and a **$15 million** secured term facility with a three-year maturity[96](index=96&type=chunk)[97](index=97&type=chunk) - The interest rate is LIBOR or Prime Rate plus an applicable spread[96](index=96&type=chunk)[97](index=97&type=chunk) - The company was in compliance with its financial covenants (adjusted quick ratio and total leverage ratio) as of December 31, 2021[99](index=99&type=chunk)[100](index=100&type=chunk) [10. ACCRUED EXPENSES](index=23&type=page&id=10.%20ACCRUED%20EXPENSES) Accrued expenses include various liabilities such as sales tax reserve, compensation, operating lease liabilities, professional fees, and a contingent consideration arrangement related to the Yoke acquisition **Accrued Expenses ($ in thousands):** | Item | December 31, 2021 | June 30, 2021 | | :------------------------------------------ | :------------------ | :------------ | | Sales tax reserve | $17,635 | $17,099 | | Accrued compensation and related sales commissions | $3,225 | $4,233 | | Operating lease liabilities, current | $1,465 | $1,166 | | Accrued professional fees | $2,839 | $1,739 | | Contingent consideration arrangement for the Yoke acquisition | $1,000 | $0 | | **Total Accrued Expenses** | **$28,721** | **$26,460** | [11. INCOME TAXES](index=23&type=page&id=11.%20INCOME%20TAXES) The company recorded income tax provisions for the three and six months ended December 31, 2021, primarily related to uncertain tax positions and state taxes **Provision for Income Taxes ($ in thousands):** | Period | 2021 | 2020 | | :----------------------------------- | :--- | :--- | | Three months ended December 31 | $102 | $49 | | Six months ended December 31 | $191 | $89 | - The company maintains a full valuation allowance against its deferred tax assets and had a total unrecognized income tax benefit of **$0.5 million** as of December 31, 2021[106](index=106&type=chunk) [12. EQUITY](index=24&type=page&id=12.%20EQUITY) This section details the company's equity compensation plans, including stock options and restricted stock units, outlining valuation methodologies, performance-based awards, and grants to consultants and executives **Stock Option Valuation Assumptions (Six Months Ended December 31):** | Assumption | 2021 | 2020 | | :----------------------------------- | :------------------ | :------------------ | | Expected volatility (percent) | 73.2% - 73.6% | 76.3% - 77.3% | | Weighted average expected life (years) | 4.5 | 4.5 | | Risk-free interest rate (percent) | 1.0% - 1.2% | 0.2% - 0.4% | | Number of options granted | 495,000 | 650,000 | | Weighted average grant date fair value | $5.72 | $4.69 | - Performance-based stock options for executives vest over three to four years, contingent on achieving specific stock price targets[111](index=111&type=chunk)[112](index=112&type=chunk)[113](index=113&type=chunk) - Compensation expense for these awards is estimated using a Monte Carlo simulation model[111](index=111&type=chunk)[112](index=112&type=chunk)[113](index=113&type=chunk) - Total expense recognized for common stock awards for the six months ended December 31, 2021, was **$0.8 million**, including grants of restricted stock units to consultants and executives[117](index=117&type=chunk) [13. COMMITMENTS AND CONTINGENCIES](index=25&type=page&id=13.%20COMMITMENTS%20AND%20CONTINGENCIES) The company is involved in ordinary course litigation, cooperating with a Department of Justice subpoena, and has various operating lease obligations and significant purchase commitments for inventory - The company is a party to litigation and is cooperating fully with a subpoena from the U.S. Department of Justice regarding activities in prior financial reporting periods[118](index=118&type=chunk)[119](index=119&type=chunk) - As of December 31, 2021, the company had firm commitments to purchase approximately **$23 million** in inventory over the next three years[121](index=121&type=chunk) [14. RELATED PARTY TRANSACTIONS](index=25&type=page&id=14.%20RELATED%20PARTY%20TRANSACTIONS) Related party transactions include payments to a consulting firm for payments analytics, where a Board member serves as a strategic advisor, and consulting agreements with a significant shareholder involving grants of restricted stock units - The company pays a success fee to a consulting firm for payments analytics, where a Board member is a strategic advisor, with **$0.8 million** expense recognized for the six months ended December 31, 2021[122](index=122&type=chunk) - Consulting agreements with Hudson Executive Capital LP, a greater than **10%** shareholder, resulted in grants of restricted stock units to consultants[115](index=115&type=chunk)[123](index=123&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=26&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 and condition, highlighting strong revenue growth, operational improvements, strategic investments, and a significant reduction in net loss [Forward-Looking Statements](index=26&type=section&id=Forward-Looking%20Statements) This section highlights that the report contains forward-looking statements subject to various risks and uncertainties that could cause actual results to differ materially - The report contains forward-looking statements subject to known and unknown risks, uncertainties, and other factors that could cause actual results to differ materially[126](index=126&type=chunk) - Key risk factors include general economic conditions (COVID-19, supply chain, inflation), compliance with financial covenants, ability to raise funds, competition, customer retention, product acceptance, intellectual property, system disruptions, internal control weaknesses, and ongoing investigations[126](index=126&type=chunk) [OVERVIEW OF THE COMPANY](index=27&type=section&id=OVERVIEW%20OF%20THE%20COMPANY) Cantaloupe, Inc. is a digital payments and software services company for the unattended retail market, offering comprehensive solutions for payments, inventory, logistics, and back-office management - Cantaloupe, Inc. (formerly USA Technologies, Inc.) is a digital payments and software services company for the unattended retail market, offering solutions for payments, inventory, logistics, and back-office management[129](index=129&type=chunk)[130](index=130&type=chunk) **Revenue Mix (Percentage of Total Revenues):** | Revenue Type | 3 Months Ended Dec 31, 2021 | 3 Months Ended Dec 31, 2020 | 6 Months Ended Dec 31, 2021 | 6 Months Ended Dec 31, 2020 | | :----------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Subscription and transaction fees | 81% | 87% | 84% | 88% | | Equipment sales | 19% | 13% | 16% | 12% | - Customers obtain POS electronic payment devices through direct purchase, financing via the QuickStart Program (60-month sales-type leases), or renting via the JumpStart Program (typically 36-month agreements)[131](index=131&type=chunk) [Second Quarter 2022 Highlights](index=28&type=section&id=Second%20Quarter%202022%20Highlights) This section summarizes key achievements and strategic initiatives during the second quarter of fiscal year 2022, including customer and device growth, new partnerships, and product rollouts - Achieved **21,315** Active Customers and **1.12 million** Active Devices on its service[133](index=133&type=chunk) - Partnered with HIVERY, a data-science company specializing in AI technology, to enhance merchandising for Seed customers using AI and Machine Learning[133](index=133&type=chunk) - Successfully rolled out ePort Engage devices, the next generation of digital touchscreen devices, and continued the promotional upgrade program for 2G and 3G devices to 4G LTE[133](index=133&type=chunk) [COVID-19 Update](index=28&type=section&id=COVID-19%20Update) This section provides an update on the ongoing impact of the COVID-19 pandemic on the company's business operations and financial performance - The COVID-19 pandemic, including new variants like Omicron, continues to affect business operations and financial performance, though no material impairments were concluded[134](index=134&type=chunk) - The company cannot reasonably estimate the longer-term repercussions of COVID-19 on its financial condition, results of operations, or cash flows due to potential uncertainty[135](index=135&type=chunk) [QUARTERLY RESULTS OF OPERATIONS](index=29&type=section&id=QUARTERLY%20RESULTS%20OF%20OPERATIONS) This section provides a detailed analysis of the company's financial performance for the quarter, including key operational metrics, revenues, gross profit, and operating expenses [Metrics](index=29&type=page&id=Metrics) This section presents key operational metrics, including active devices, active customers, and transaction volumes, highlighting growth trends **Key Operational Metrics:** | Metric | December 31, 2021 | December 31, 2020 | % Change YoY | | :----------------------------------- | :------------------ | :------------------ | :----------- | | Active Devices (thousands) | 1,123 | 1,083 | 3.7% | | Active Customers | 21,315 | 18,304 | 16.5% | | Total Number of Transactions (millions) | 261.7 | 211.8 | 23.6% | | Total Dollar Volume of Transactions (millions) | 555.3 | 422.6 | 31.4% | - Total Dollar Volumes for the quarter ended December 31, 2021, were **31% higher** compared to the average processing volumes for the quarter ended December 31, 2020[141](index=141&type=chunk) [Revenues and Gross Profit (Three Months Ended December 31, 2021 Compared to Three Months Ended December 31, 2020)](index=31&type=page&id=Revenues%20and%20Gross%20Profit%20(Three%20Months%20Ended%20December%2031,%202021%20Compared%20to%20Three%20Months%20Ended%20December%2031,%202020)) This section analyzes the company's revenues and gross profit for the three months ended December 31, 2021, compared to the same period in the prior year, highlighting growth drivers and margin changes **Revenues and Gross Profit ($ in thousands):** | Item | 3 Months Ended Dec 31, 2021 | 3 Months Ended Dec 31, 2020 | Percent Change | | :----------------------------------- | :-------------------------- | :-------------------------- | :------------- | | Total Revenues | $51,091 | $38,285 | 33.4% | | Subscription and transaction fees | $41,188 | $33,214 | 24.0% | | Equipment sales | $9,903 | $5,071 | 95.3% | | Total Costs of Sales | $35,101 | $25,984 | 35.1% | | Total Gross Profit | $15,990 | $12,301 | 30.0% | | Total Gross Margin | 31.3% | 32.1% | -0.8 pp | - Increase in subscription and transaction fees was driven by a **31% increase** in total dollar volumes, macroeconomic recovery, and growth in Seed services[152](index=152&type=chunk) - Equipment sales surged by **95.3%** due to increased shipments and customer focus on 4G device upgrades ahead of the 3G network discontinuation[153](index=153&type=chunk) [Operating Expenses (Three Months Ended December 31, 2021 Compared to Three Months Ended December 31, 2020)](index=32&type=page&id=Operating%20Expenses%20(Three%20Months%20Ended%20December%2031,%202021%20Compared%20to%20Three%20Months%20Ended%20December%2031,%202020)) This section details the changes in operating expenses for the three months ended December 31, 2021, compared to the prior year, including sales and marketing, technology, and general and administrative costs **Operating Expenses ($ in thousands):** | Category | 3 Months Ended Dec 31, 2021 | 3 Months Ended Dec 31, 2020 | Percent Change | | :----------------------------------- | :-------------------------- | :-------------------------- | :------------- | | Sales and marketing | $1,745 | $1,520 | 14.8% | | Technology and product development | $5,780 | $3,783 | 52.8% | | General and administrative expenses | $7,672 | $8,528 | (10.0)% | | Depreciation and amortization | $1,113 | $1,052 | 5.8% | | **Total Operating Expenses** | **$16,310** | **$14,883** | **9.6%** | - Technology and product development expenses increased by **$2.00 million** (**52.8%**) due to investments in innovative technologies and strengthening the network platform[159](index=159&type=chunk) - General and administrative expenses decreased by **$0.86 million** (**10.0%**), primarily from a **$0.6 million** reduction in professional fees[160](index=160&type=chunk) [Other Income (Expense), Net (Three Months Ended December 31, 2021 Compared to Three Months Ended December 31, 2020)](index=32&type=page&id=Other%20Income%20(Expense),%20Net%20(Three%20Months%20Ended%20December%2031,%202021%20Compared%20to%20Three%20Months%20Ended%20December%2031,%202020)) This section analyzes changes in other income and expense, net, for the three months ended December 31, 2021, compared to the prior year, focusing on interest income and expense **Other Income (Expense), Net ($ in thousands):** | Item | 3 Months Ended Dec 31, 2021 | 3 Months Ended Dec 31, 2020 | Percent Change | | :----------------------------------- | :-------------------------- | :-------------------------- | :------------- | | Interest income | $445 | $325 | 36.9% | | Interest expense | $(475) | $(596) | (20.3)% | | Total other income (expense), net | $(46) | $(271) | 83.0% | - Interest income increased due to a larger finance receivables amount, while interest expense decreased due to a lower interest rate on the 2021 JPMorgan Credit Facility[162](index=162&type=chunk) [Revenues and Gross Profit (Six Months Ended December 31, 2021 Compared to Six Months Ended December 31, 2020)](index=33&type=page&id=Revenues%20and%20Gross%20Profit%20(Six%20Months%20Ended%20December%2031,%202021%20Compared%20to%20Six%20Months%20Ended%20December%2031,%202020)) This section analyzes the company's revenues and gross profit for the six months ended December 31, 2021, compared to the same period in the prior year, highlighting growth drivers and margin changes **Revenues and Gross Profit ($ in thousands):** | Item | 6 Months Ended Dec 31, 2021 | 6 Months Ended Dec 31, 2020 | Percent Change | | :----------------------------------- | :-------------------------- | :-------------------------- | :------------- | | Total Revenues | $96,871 | $75,162 | 28.9% | | Subscription and transaction fees | $81,812 | $66,322 | 23.4% | | Equipment sales | $15,059 | $8,840 | 70.4% | | Total Costs of Sales | $66,006 | $48,621 | 35.8% | | Total Gross Profit | $30,865 | $26,541 | 16.3% | | Total Gross Margin | 31.9% | 35.3% | -3.4 pp | - Subscription and transaction fees increased by **23.4%**, driven by a **34% increase** in total dollar volumes, exceeding pre-pandemic levels, and growth in Seed services[165](index=165&type=chunk) - Total gross margin decreased from **35.3%** to **31.9%**, primarily due to a change in revenue mix with higher transaction fees and an out-of-period adjustment of **$0.8 million** reducing prior period equipment costs[168](index=168&type=chunk) [Operating Expenses (Six Months Ended December 31, 2021 Compared to Six Months Ended December 31, 2020)](index=34&type=page&id=Operating%20Expenses%20(Six%20Months%20Ended%20December%2031,%202021%20Compared%20to%20Six%20Months%20Ended%20December%2031,%202020)) This section details the changes in operating expenses for the six months ended December 31, 2021, compared to the prior year, including sales and marketing, technology, and general and administrative costs **Operating Expenses ($ in thousands):** | Category | 6 Months Ended Dec 31, 2021 | 6 Months Ended Dec 31, 2020 | Percent Change | | :----------------------------------- | :-------------------------- | :-------------------------- | :------------- | | Sales and marketing | $4,084 | $3,119 | 30.9% | | Technology and product development | $11,169 | $6,997 | 59.6% | | General and administrative expenses | $14,936 | $20,525 | (27.2)% | | Depreciation and amortization | $2,135 | $2,120 | 0.7% | | **Total Operating Expenses** | **$32,324** | **$32,761** | **(1.3)%** | - General and administrative expenses decreased by **$5.59 million**, driven by a **$2.9 million** reduction in professional fees and a **$1.8 million** change related to a prior year network incident (including **$0.7 million** insurance recovery)[173](index=173&type=chunk)[174](index=174&type=chunk) - Sales and marketing expenses increased by **$0.97 million** due to higher employee headcount to support business expansion[171](index=171&type=chunk) [Other Income (Expense), Net (Six Months Ended December 31, 2021 Compared to Six Months Ended December 31, 2020)](index=34&type=page&id=Other%20Income%20(Expense),%20Net%20(Six%20Months%20Ended%20December%2031,%202021%20Compared%20to%20Six%20Months%20Ended%20December%2031,%202020)) This section analyzes changes in other income and expense, net, for the six months ended December 31, 2021, compared to the prior year, focusing on interest income and expense **Other Income (Expense), Net ($ in thousands):** | Item | 6 Months Ended Dec 31, 2021 | 6 Months Ended Dec 31, 2020 | Percent Change | | :----------------------------------- | :-------------------------- | :-------------------------- | :------------- | | Interest income | $918 | $675 | 36.0% | | Interest expense | $(953) | $(3,881) | (75.4)% | | Total other income (expense), net | $(110) | $(3,206) | 96.6% | - The significant decrease in interest expense (**75.4%**) was primarily due to the recognition of **$2.6 million** in unamortized debt issuance costs and debt discount related to the repayment of the Antara Term Facility in the prior period[177](index=177&type=chunk) [Non-GAAP Financial Measures - Adjusted EBITDA](index=35&type=section&id=Non-GAAP%20Financial%20Measures%20-%20Adjusted%20EBITDA) This section defines and reconciles Adjusted EBITDA, a non-GAAP measure used for financial and operational decision-making, to U.S. GAAP net loss - Adjusted EBITDA is a non-GAAP measure used for financial and operational decision-making, defined as U.S. GAAP net loss before interest income/expense, income tax, depreciation, amortization, stock-based compensation, and certain other infrequent/unusual losses/gains[178](index=178&type=chunk)[179](index=179&type=chunk) **Adjusted EBITDA Reconciliation ($ in thousands):** | Item | 3 Months Ended Dec 31, 2021 | 3 Months Ended Dec 31, 2020 | 6 Months Ended Dec 31, 2021 | 6 Months Ended Dec 31, 2020 | | :----------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | U.S. GAAP net loss | $(468) | $(2,902) | $(1,760) | $(9,515) | | EBITDA | $1,031 | $(1,015) | $1,119 | $(3,046) | | Adjustments to EBITDA | $1,368 | $1,973 | $3,129 | $3,482 | | **Adjusted EBITDA** | **$2,399** | **$958** | **$4,248** | **$436** | - Adjusted EBITDA significantly increased to **$2.40 million** for the three months and **$4.25 million** for the six months ended December 31, 2021, reflecting improved operating performance[180](index=180&type=chunk) [LIQUIDITY AND CAPITAL RESOURCES](index=36&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) This section discusses the company's ability to generate and manage cash, detailing sources and uses of capital, and assessing its capacity to meet short-term and long-term obligations [Sources and Uses of Cash](index=36&type=page&id=Sources%20and%20Uses%20of%20Cash) This section outlines the primary sources of capital and potential liabilities, assessing the sufficiency of financial resources to fund operations - Primary capital sources include **$76.31 million** in cash and cash equivalents, cash from operating activities, and up to **$5 million** available on the 2021 JPMorgan Revolving Facility[182](index=182&type=chunk) - The company has estimated **$17.6 million** in potential sales tax and related interest and penalty liabilities as of December 31, 2021[183](index=183&type=chunk) - Management believes current financial resources are sufficient to fund operations for the next twelve months[183](index=183&type=chunk) [Cash Flows](index=37&type=page&id=Cash%20Flows) This section provides a detailed breakdown of cash flows from operating, investing, and financing activities for the six months ended December 31, 2021 - Net cash used in operating activities was **$4.25 million** for the six months ended December 31, 2021, primarily due to a net loss and **$10.1 million** utilized by working capital accounts (e.g., increased inventory, reduced accounts payable)[186](index=186&type=chunk) - Net cash used in investing activities was **$7.26 million**, driven by the **$2.97 million** Yoke acquisition and **$4.4 million** in property and equipment purchases[188](index=188&type=chunk) - Net cash used in financing activities was **$0.32 million**, mainly for **$0.4 million** in repayments on the 2021 JPMorgan Credit Facility[190](index=190&type=chunk) [CONTRACTUAL OBLIGATIONS](index=39&type=section&id=CONTRACTUAL%20OBLIGATIONS) This section states that there were no significant changes to contractual obligations during the reported period compared to the prior fiscal year - No significant changes to contractual obligations were reported during the six months ended December 31, 2021, compared to those disclosed in the Annual Report on Form 10-K for fiscal year ended June 30, 2021[193](index=193&type=chunk) [CRITICAL ACCOUNTING POLICIES](index=39&type=section&id=CRITICAL%20ACCOUNTING%20POLICIES) This section states that there were no significant changes to critical accounting policies during the reported period compared to the prior fiscal year - No significant changes to critical accounting policies were reported during the six months ended December 31, 2021, compared to those disclosed in the Annual Report on Form 10-K for fiscal year ended June 30, 2021[194](index=194&type=chunk) [Recent Accounting Pronouncements](index=39&type=section&id=Recent%20Accounting%20Pronouncements) This section directs readers to Note 2 for a description of recent accounting pronouncements and their potential impact - Refer to Note 2 - Summary of Significant Accounting Policies for a description of recent accounting pronouncements[195](index=195&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=39&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company's exposures to market risk have not materially changed since June 30, 2021, with further details available in the Annual Report on Form 10-K - The company's exposures to market risk have not changed materially since June 30, 2021[196](index=196&type=chunk) [Item 4. Controls and Procedures](index=40&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, evaluated the effectiveness of disclosure controls and procedures, concluding they were effective as of December 31, 2021, with no material changes in internal control over financial reporting - Disclosure controls and procedures were evaluated and deemed effective as of December 31, 2021[199](index=199&type=chunk) - No changes in internal control over financial reporting occurred during the fiscal quarter ended December 31, 2021, that materially affected or are reasonably likely to materially affect internal controls[200](index=200&type=chunk) [Part II - Other Information](index=41&type=section&id=Part%20II%20-%20Other%20Information) This section provides additional information not covered in Part I, including legal proceedings, risk factors, equity sales, defaults, mine safety, other disclosures, exhibits, and signatures [Item 1. Legal Proceedings](index=41&type=section&id=Item%201.%20Legal%20Proceedings) Information regarding legal proceedings is incorporated by reference from Note 13 – Commitments and Contingencies in Part I, Item 1 of this Quarterly Report - Information on legal proceedings is incorporated by reference to Note 13 – Commitments and Contingencies[202](index=202&type=chunk) [Item 1A. Risk Factors](index=41&type=section&id=Item%201A.%20Risk%20Factors) A discussion of the company's risk factors is incorporated by reference from the Annual Report on Form 10-K for the fiscal year ended June 30, 2021, and the Quarterly Report on Form 10-Q for the quarter ended September 30, 2021 - Risk factors are discussed in the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 2021, and its Quarterly Report on Form 10-Q for the quarter ended September 30, 2021[203](index=203&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) There were no unregistered sales of equity securities or use of proceeds to report for the period - Not Applicable (N/A)[205](index=205&type=chunk) [Item 3. Defaults Upon Senior Securities](index=41&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) There were no defaults on any senior securities, and the total liquidation preference for Series A Convertible Preferred Stock was $21.8 million as of December 31, 2021 - No defaults on any senior securities were reported[205](index=205&type=chunk) - The total liquidation preference, including accrued and unpaid dividends, on Series A Convertible Preferred Stock was **$21.8 million** as of December 31, 2021[205](index=205&type=chunk) [Item 4. Mine Safety Disclosures](index=41&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) There are no mine safety disclosures to report for the period - Not Applicable (N/A)[207](index=207&type=chunk) [Item 5. Other Information](index=41&type=section&id=Item%205.%20Other%20Information) There is no other information to report for the period - Not Applicable (N/A)[209](index=209&type=chunk) [Item 6. Exhibits](index=42&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Quarterly Report on Form 10-Q, including organizational documents, certifications, and XBRL financial information - Includes Amended and Restated Articles of Incorporation, Second Amended and Restated Bylaws, Certifications of CEO and CFO (pursuant to Rule 13a-14(a) and 18 USC Section 1350), and Inline Extensible Business Reporting Language (iXBRL) financial information[211](index=211&type=chunk) [Signatures](index=43&type=section&id=Signatures) The report is duly signed on behalf of Cantaloupe, Inc. by its Chief Executive Officer, Sean Feeney, and Chief Financial Officer, R. Wayne Jackson, on February 4, 2022 - The report was signed by Sean Feeney, Chief Executive Officer, and R. Wayne Jackson, Chief Financial Officer, on February 4, 2022[213](index=213&type=chunk)[214](index=214&type=chunk)

Cantaloupe, Inc. (NASDAQ:CTLP) Q2 2022 Earnings Conference Call February 3, 2022 4:30 PM ET Company Participants Sean Feeney - Chief Executive Officer Ravi Venkatesan - Chief Operating Officer Wayne Jackson - Chief Financial Officer Conference Call Participants Mike Latimore - Northland Capital Markets Cristopher Kennedy - William Blair & Company Operator Good day and thank you for standing by. Welcome to the Cantaloupe Second Quarter Fiscal Year 2022 Earnings Conference Call. At this time, all participants ...

Cantaloupe, Inc. (NASDAQ:CTLP) Q1 2022 Earnings Conference Call November 4, 2021 4:30 PM ET Company Participants Alicia Nieva-Woodgate – Vice President of Corporate Communications and Investor Relations Sean Feeney – Chief Executive Officer Wayne Jackson – Chief Financial Officer Ravi Venkatesan – Chief Technology Officer Conference Call Participants Chris Kennedy – William Blair Mike Latimore – Northland Capital Gary Prestopino – Barrington Research George Sutton – Craig-Hallum Operator Ladies and gentleme ...

[Part I - Financial Information](index=3&type=section&id=Part%20I%20-%20Financial%20Information) This part presents the company's unaudited financial statements, management's discussion and analysis, and market risk disclosures [Condensed Consolidated Financial Statements](index=3&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements) The company reports a 24.1% revenue increase to $45.8 million and a significantly reduced net loss of $1.3 million [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets stood at $236.9 million, with a notable increase in inventory and a decrease in cash and cash equivalents Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | Sep 30, 2021 (Unaudited) | Jun 30, 2021 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $82,511 | $88,136 | | Accounts receivable, net | $24,184 | $27,470 | | Inventory, net | $9,537 | $5,292 | | Goodwill | $66,194 | $63,945 | | **Total Assets** | **$236,941** | **$237,672** | | **Liabilities & Equity** | | | | Total current liabilities | $64,742 | $65,673 | | Total liabilities | $81,939 | $83,141 | | Total shareholders' equity | $151,864 | $151,393 | [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Revenue grew 24.1% year-over-year to $45.8 million, driving a substantial reduction in operating and net losses Three Months Ended September 30, (in thousands, except per share data) | Metric | 2021 | 2020 | | :--- | :--- | :--- | | Total Revenues | $45,780 | $36,877 | | Gross Profit | $14,876 | $14,240 | | Operating Loss | $(1,138) | $(3,638) | | Net Loss | $(1,291) | $(6,613) | | Net Loss per Common Share (Basic & Diluted) | $(0.02) | $(0.11) | - Subscription and transaction fees, the primary revenue source, **grew 22.7% to $40.6 million** from $33.1 million in the prior year quarter[14](index=14&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) The company experienced net cash usage of $0.9 million from operations, a significant shift from the prior year's cash generation Cash Flow Summary (in thousands) | Activity | Three Months Ended Sep 30, 2021 | Three Months Ended Sep 30, 2020 | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | $(874) | $5,178 | | Net cash used in investing activities | $(4,541) | $(475) | | Net cash used in financing activities | $(210) | $(1,726) | | **Net (decrease) increase in cash** | **$(5,625)** | **$2,977** | | Cash and cash equivalents at end of period | $82,511 | $34,690 | [Notes to Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Key disclosures include the Yoke Payments acquisition, revenue disaggregation, and significant inventory purchase commitments - In August 2021, the company acquired Yoke Payments for **$3 million in cash at closing and $1 million in deferred cash**, resulting in $2.2 million of goodwill[60](index=60&type=chunk)[62](index=62&type=chunk)[64](index=64&type=chunk) - Beginning in Q1 FY2022, the company **disaggregated operating expenses** into 'Sales and marketing', 'Technology and product development', and 'General and administrative' for increased transparency[31](index=31&type=chunk)[38](index=38&type=chunk) Disaggregated Revenue (in thousands) | Revenue Stream | Three Months Ended Sep 30, 2021 | Three Months Ended Sep 30, 2020 | | :--- | :--- | :--- | | Transaction fees | $26,421 | $19,677 | | Subscription fees | $14,204 | $13,431 | | **Total Subscription & Transaction** | **$40,625** | **$33,108** | | Equipment sales | $5,155 | $3,769 | | **Total Revenues** | **$45,780** | **$36,877** | - As of September 30, 2021, the company had firm purchase commitments for inventory of approximately **$27 million** over the next three years[110](index=110&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=25&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Revenue growth of 24.1% was driven by higher transaction volumes and equipment sales, leading to positive Adjusted EBITDA of $1.9 million [Quarterly Results of Operations](index=28&type=section&id=Quarterly%20Results%20of%20Operations) Revenue growth was driven by economic recovery and 3G to 4G upgrades, though gross margin declined due to revenue mix changes Key Operating Metrics | Metric | Sep 30, 2021 | Sep 30, 2020 | % Change | | :--- | :--- | :--- | :--- | | Active Devices (thousands) | 1,115 | 1,083 | 3% | | Active Customers | 20,738 | 17,760 | 17% | | Total Dollar Volume (millions) | $553.4 | $406.3 | 36% | - The increase in subscription and transaction fees was primarily driven by **processing volumes exceeding pre-pandemic levels** as businesses and schools re-opened[132](index=132&type=chunk) - General and administrative expenses **decreased by $4.7 million**, mainly due to a $2.3 million reduction in professional fees and a $1.8 million net change related to a prior-year network incident[140](index=140&type=chunk)[141](index=141&type=chunk) Reconciliation of Net Loss to Adjusted EBITDA (in thousands) | Line Item | Three Months Ended Sep 30, 2021 | Three Months Ended Sep 30, 2020 | | :--- | :--- | :--- | | U.S. GAAP net loss | $(1,291) | $(6,613) | | Adjustments (Interest, Taxes, D&A, etc.) | $1,380 | $4,582 | | EBITDA | $89 | $(2,031) | | Stock-based compensation | $1,762 | $1,509 | | **Adjusted EBITDA** | **$1,851** | **$(522)** | [Liquidity and Capital Resources](index=33&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains sufficient liquidity with $82.5 million in cash, despite cash usage from operations and investing activities - Primary sources of capital are **cash on hand ($82.5 million)**, cash from operations, and a $5 million available revolving credit facility[151](index=151&type=chunk) - The change from cash provided by operations to cash used was driven by working capital changes, including a **planned inventory increase** for 4G device upgrades and payment of accrued bonuses[159](index=159&type=chunk)[160](index=160&type=chunk) - Cash used in investing activities increased to **$4.5 million from $0.5 million YoY**, mainly due to the $2.9 million cash payment for the Yoke acquisition[162](index=162&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=35&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's market risk exposures have not materially changed since the previous fiscal year-end - There have been **no material changes** in the company's market risk exposures since June 30, 2021[167](index=167&type=chunk) [Controls and Procedures](index=37&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective, with no material changes to internal controls - Based on an evaluation, the CEO and CFO concluded that the company's **disclosure controls and procedures were effective** as of September 30, 2021[170](index=170&type=chunk) - There were **no changes in internal control over financial reporting** during the quarter that have materially affected, or are reasonably likely to materially affect, these controls[171](index=171&type=chunk) [Part II - Other Information](index=38&type=section&id=Part%20II%20-%20Other%20Information) This part covers legal proceedings, key risk factors, and information regarding senior securities [Legal Proceedings](index=38&type=section&id=Item%201.%20Legal%20Proceedings) The company is cooperating with a Department of Justice subpoena related to prior financial reporting periods - The company is responding to a subpoena from the U.S. Department of Justice related to activities in prior financial periods and is **cooperating fully**[108](index=108&type=chunk) [Risk Factors](index=38&type=section&id=Item%201A.%20Risk%20Factors) The ongoing COVID-19 pandemic presents significant business uncertainty, particularly regarding supply chain disruptions - The **COVID-19 pandemic continues to pose a significant risk**, with potential impacts on business operations, financial results, and supply chains[174](index=174&type=chunk)[177](index=177&type=chunk) - The company has experienced and may continue to experience **delays in securing hardware components** due to supply chain disruptions, which could adversely impact financial results[176](index=176&type=chunk) [Defaults Upon Senior Securities](index=38&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reports no defaults on senior securities, with a preferred stock liquidation preference of $21.8 million - There were **no defaults on senior securities**, with the liquidation preference for Series A Convertible Preferred Stock at **$21.8 million** as of September 30, 2021[181](index=181&type=chunk)

Financial Performance - The company incurred net losses of $8.7 million, $40.6 million, and $29.9 million for fiscal years 2021, 2020, and 2019 respectively, indicating a history of losses since inception [106]. - The company reported net cash provided by operating activities of $8.2 million for fiscal year 2021, compared to $(14.1) million in 2020 and $(28.2) million in 2019 [147]. - The company may require additional financing to sustain operations, which could adversely affect its business if not available [146]. - The company has faced significant expenses related to legal proceedings and investigations, which could continue to affect its financial condition [168]. - Any increase in chargebacks not paid by customers could materially affect the company's financial condition and cash flows [139]. Revenue and Customer Base - The company derived approximately 83% of its revenue from recurring license and transaction fees related to its ePort Connect service for the fiscal year ended June 30, 2021 [204]. - As of June 30, 2021, the company had 19,834 Active Customers and 1.09 million Active Devices connected to its service, compared to 17,249 Active Customers and 1.08 million Active Devices as of June 30, 2020, representing a growth in Active Customers of approximately 15.1% [78]. - The company maintains relationships with nearly 20,000 customers, governed by service agreements that include activation fees, monthly service fees, and transaction processing fees [67]. - Customer concentrations for the years ended June 30, 2021, 2020, and 2019 were 16%, 16%, and 17% respectively from a single customer, highlighting dependency on a limited number of large customers [120]. Market Trends and Growth - The U.S. Convenience Services Industry, which includes vending machines, micro markets, and other services, had total annual revenues of approximately $16 billion in 2020, down from $27 billion in 2019, reflecting a 40% reduction due to the pandemic [48]. - The Convenience Services Industry is expected to be 64% larger in 2022 compared to 2020, with operators anticipating a full recovery to pre-pandemic levels by 2022-2023 [48]. - A consumer survey indicated that 82% of respondents are interested in purchasing non-traditional items through vending machines, with significant increases in interest for clothing and health and beauty products [27]. - The global kiosk market is projected to grow from $22.7 billion in 2021 to $51.1 billion in 2028, at a compound annual growth rate (CAGR) of 12.3% [50]. - The number of micro market locations served increased by 42% in 2020, indicating significant growth despite the pandemic [54]. Innovation and Technology - The company’s ePort G10-S device supports faster processing and enhanced functionality, including built-in NFC for contactless payments [31]. - The Seed Cloud platform provides advanced operational analytics and dynamic route scheduling, enhancing inventory management and accounting [37]. - The company’s integrated software services include Seed Live, which offers an intuitive portal for tracking digital and cash sales, and maintenance monitoring [36]. - The company aims to leverage its Seed platform to introduce turn-key solutions in adjacent markets, including the kiosk market, enhancing operational efficiency and reducing costs through dynamic route scheduling capabilities [63]. - The company is focused on continuous innovation, investing in new products and services to drive further adoption of its solutions in the unattended POS payments market [60]. Strategic Initiatives - The company completed the acquisition of Delicious Nutritious LLC (Yoke Payments) in August 2021, enhancing its micro market payment solutions and integrating Yoke's POS platform with its inventory management and payment processing systems [59]. - The company plans to expand its presence in international markets, starting with Latin America, the Caribbean, and Asia, to capitalize on electronic payment opportunities outside the U.S. and Canada [64]. - The company announced a strategic partnership with Castles Technology to introduce a next-generation cashless device solution [206]. Financial Position and Capital - As of June 30, 2021, the company had a net working capital surplus of $65.6 million and cash and cash equivalents of $88.1 million [147]. - The company entered into a credit agreement for a $5 million secured revolving credit facility and a $15 million secured term facility, with financial covenants requiring an adjusted quick ratio of at least 3.00 to 1.00 beginning April 1, 2021 [149]. - The company received loan proceeds of approximately $3.1 million from the Paycheck Protection Program, which were fully forgiven in June 2021 [213][214]. Risks and Challenges - The company has experienced significant volatility and economic disruption due to the COVID-19 pandemic, impacting electronic payment transaction volumes [108]. - The company may face increased operating costs due to rising interchange fees set by card associations and debit networks, which could adversely affect profitability [122]. - The company relies on key management personnel, and their loss could dramatically affect business prospects and operational continuity [126]. - The company is dependent on third-party suppliers for critical services, and termination of these relationships could adversely affect business operations [133]. - The company faces risks related to cybersecurity breaches, which could compromise data and adversely impact reputation and financial results [130]. Corporate Governance - The company has 132 patents granted, with 54 still in force as of June 30, 2021, indicating a strong commitment to protecting its intellectual property and technological advancements [75]. - The company has limited liability for directors, which may restrict shareholders' rights to recover against directors for breaches of fiduciary duty [172]. - The company’s internal controls over financial reporting were effective as of June 30, 2021, with no material weaknesses identified [170]. Stock Market and Trading - The company was added to the US Small-Cap Russell 2000 Index in June 2021, which may influence its stock performance [194]. - The company’s common stock began trading on the NASDAQ Global Select Market under the ticker symbol "CTLP" on April 19, 2021 [202]. - The company may face risks related to maintaining an active trading market for its common stock on the Nasdaq Global Select Market [174]. - The company’s stock price and trading volume could decline if analysts downgrade the stock or if operating results do not meet expectations [176].

Financial Data and Key Metrics Changes - The company reported revenue of $49 million for Q4 FY 2021, representing a 14.6% sequential increase and a 50.2% increase year-over-year [10][28] - License and transaction revenue totaled $38.2 million for Q4, a 37.3% year-over-year increase and a sequential increase of 10.2% [28] - Equipment sales for Q4 were $10.8 million, a 124.5% year-over-year increase and a 33.6% sequential increase [28] - Total gross margin for the quarter was 30.2%, down from 34% in the prior year [31] - Net income applicable to common shareholders for Q4 was $2.7 million or $0.04 per share, compared to a loss of $11.4 million or $0.18 per share in the prior year [34] Business Line Data and Key Metrics Changes - Active devices totaled 1.1 million as of June 30, 2021, a 1.4% year-over-year increase [29] - Active customers increased to 19,800, a 15% year-over-year increase [29] - Processing dollar volumes were above pre-pandemic levels, with transaction volumes for the quarter at 242 million and dollar volume at $515 million [30][44] Market Data and Key Metrics Changes - The company noted that the Delta variant impacted the return to office environments, which is a key area for recovery [40][41] - There is optimism among operators regarding recovery, particularly in schools and colleges, while office environments lag behind [41] Company Strategy and Development Direction - The company is focused on growth initiatives in sales, service, and technology, with plans to expand into adjacent markets [13][14] - A strategic partnership with Castles Technology was created to introduce next-generation interactive devices [12] - The acquisition of Yoke Payments aims to enhance the company's position in the unattended retail industry [15][16] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the recovery of transaction volumes and the overall business environment, despite challenges posed by the pandemic [40][41] - The company expects revenue for FY 2022 to be between $200 million and $210 million, with a projected top-line growth of 20% to 26% [36][38] Other Important Information - The company reduced operating expenses by 29% in Q4 compared to the prior year [11][33] - Adjusted EBITDA for Q4 was $5 million, a significant increase from a negative $2.1 million in the prior year [35] Q&A Session Summary Question: Are there any verticals or regions that are not back to normal yet? - Management noted that office environments are lagging in recovery due to the Delta variant, while schools and colleges have returned to normal [40][41] Question: Are customers relighting machines now? - Management indicated that relighting is occurring, particularly outside of office environments, and noted an increase in M&A activity in the segment [42][43] Question: What were the transaction volumes for the quarter? - Transaction volumes for the quarter were reported at 242 million, with a dollar volume of $515 million [44] Question: Can you summarize the timing and expected impact of new opportunities? - The campus card launch is expected this fall, with impacts anticipated in the third quarter, while crypto and engagement features will launch in fall and winter [46][47] Question: What is the ROI being offered to potential customers? - Management highlighted that the Seed platform is critical for operators to navigate labor shortages and COVID challenges, providing both cost efficiency and increased revenue [48][49] Question: Can you provide details on the acquisition of Yoke? - The acquisition involved a small upfront cash payment of $3 million, with additional payments contingent on performance [50][52] Question: What is the status of the international strategy? - Progress is being made in Latin America and Japan, although the pace has been slower than expected due to the pandemic [53][54] Question: How big is the point-of-sale market for micro markets? - The micro market segment is expected to grow significantly, with estimates of 15% to 30% growth over the next year [56][58]

NASDAQ: USAT Investor Presentation May 2021 Disclaimer 1 Information contained in this presentation concerning the Company's industry and the markets in which it operates, including the Company's general expectations and market position, market opportunity and market size, is based on information from the Company's management's estimates and research, as well as from industry and general publications and research, surveys and studies conducted by third parties. Management estimates are derived from industry ...

Cantaloupe, Inc. (NASDAQ:CTLP) Q3 2021 Earnings Conference Call May 6, 2021 4:30 PM ET Company Participants Alicia Nieva-Woodgate - Vice President of Corporate Communications & Investor Relations Sean Feeney - Chief Executive Officer Anant Agrawal - Chief Revenue Officer Wayne Jackson - Chief Financial Officer Conference Call Participants George Sutton - Craig-Hallum Mike Latimore - Northland Capital Markets Cris Kennedy - William Blair. Operator Ladies and gentlemen, thank you for standing by and welcome t ...

Customer and Device Metrics - As of March 31, 2021, Cantaloupe, Inc. had 18,763 active customers and 1.1 million active devices on its service[141]. - Active Devices increased to 1.085 million as of March 31, 2021, representing a 3% increase from 1.054 million in the same quarter last year[166]. - Active Customers rose to 18,763, an increase of 12% from 16,808 in the same quarter last year[166]. Revenue and Profitability - For the three months ended March 31, 2021, approximately 81% of revenue was derived from recurring license and transaction fees related to the ePort Connect service[139]. - Total revenue for the three months ended March 31, 2021, decreased by $0.3 million to $42.76 million, a decline of 0.8% compared to the same period in 2020[169]. - Gross profit increased by 15.5% to $12.704 million for the three months ended March 31, 2021, compared to $10.998 million in the same period last year[169]. - Total gross profit increased by 11.6% to $39.2 million for the nine months ended March 31, 2021, compared to $35.2 million in the same period in 2020[179]. - License and transaction fees revenue was $101.0 million, down 4.1% from $105.3 million in the prior year[179]. Operating Expenses - Operating expenses decreased by 30.5% to $14.722 million for the three months ended March 31, 2021, down from $21.176 million in the prior year[169]. - Total operating expenses decreased by $16.9 million to $47.5 million for the nine months ended March 31, 2021, a reduction of 26.3% compared to $64.4 million in the same period in 2020[182]. - Selling, general and administrative expenses decreased by approximately $2.9 million to $44.4 million, primarily due to a $4.3 million decrease in legal contingency reserves[185]. Net Loss and Adjusted EBITDA - Net loss for the three months ended March 31, 2021, was $1.848 million, an improvement of 80.1% compared to a net loss of $9.295 million in the same period in 2020[169]. - Adjusted EBITDA for the three months ended March 31, 2021, was $2.191 million, a significant improvement from an adjusted EBITDA of $(3.876) million in the same period last year, reflecting a 156.5% increase[169]. - U.S. GAAP net loss for the nine months ended March 31, 2021, was $11,363,000, a decrease from a loss of $29,181,000 in the same period the previous year[193]. - Adjusted EBITDA for the nine months ended March 31, 2021, was $2,627,000, compared to an adjusted EBITDA loss of $7,617,000 for the same period in the prior year[193]. Cash Flow and Financing - Cash provided by operating activities was $7.8 million for the nine months ended March 31, 2021, compared to cash used of $17.6 million in the same period the previous year[195]. - Cash provided by financing activities was $50.3 million for the nine months ended March 31, 2021, significantly up from $17.7 million in the same period the prior year[197]. - The Company raised $52.4 million through a private placement of 5,730,000 shares of common stock at $9.60 per share, closing on March 4, 2021[199]. - As of March 31, 2021, the Company had cash and cash equivalents of $88.6 million and up to $5 million available to be drawn on the 2021 JPMorgan Revolving Facility[198]. - The Company received approximately $3.1 million in loan proceeds under the Paycheck Protection Program, with an application for loan forgiveness filed as of March 31, 2021[202]. Operational Changes and Measures - Cantaloupe upgraded and expanded its ePort product family to accept EMV contact and contactless payments[141]. - Cantaloupe's liquidity conservation measures included a 20% salary reduction for the senior leadership team and a temporary furlough of approximately 10% of its employee base[144]. - The average daily processing volume decreased approximately 40% in mid-March 2020 due to COVID-19, but began to recover by mid-April 2020[143]. - The Company implemented efficiencies in working capital aimed at increasing cash balances[198]. - The Company recorded potential sales tax and related interest and penalty liabilities of $20.6 million as of March 31, 2021[201]. - The Company entered into the 2021 JPMorgan Credit Agreement, which includes a $5 million secured revolving credit facility and a $15 million secured term facility[207].

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended December 31, 2020 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE EXCHANGE ACT OF 1934 For the transition period from _________ to _________ Commission file number 001-33365 USA Technologies, Inc. _______________________________________________________________ (Exact name of ...