Cantaloupe(CTLP) - 2025 Q2 - Quarterly Report

Part I Condensed Consolidated Financial Statements Total assets decreased to $303.0 million by December 31, 2024, while net income for the six months increased to $8.5 million, with $11.5 million net cash used in operations Condensed Consolidated Balance Sheets Total assets decreased to $303.0 million by December 31, 2024, driven by lower cash and receivables, while total liabilities decreased and equity increased Condensed Consolidated Balance Sheet Highlights ($ in thousands) | Account | Dec 31, 2024 (Unaudited) | June 30, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $27,679 | $58,920 | | Total current assets | $117,009 | $157,794 | | Goodwill | $102,292 | $94,903 | | Total assets | $303,045 | $335,568 | | Liabilities & Equity | | | | Accounts payable | $41,081 | $78,895 | | Total current liabilities | $64,813 | $105,895 | | Total liabilities | $110,185 | $151,102 | | Total shareholders' equity | $190,140 | $181,746 | Condensed Consolidated Statements of Operations Total revenues for the quarter grew 12.8% to $73.7 million, with net income increasing to $5.0 million, and six-month revenues reaching $144.6 million Statement of Operations Highlights ($ in thousands, except per share data) | Metric | Q2 2024 (3 months) | Q2 2023 (3 months) | 6 Months 2024 | 6 Months 2023 | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $73,722 | $65,359 | $144,558 | $128,042 | | Subscription & transaction fees | $65,086 | $56,029 | $128,877 | $111,164 | | Operating Income | $6,163 | $3,585 | $10,270 | $6,340 | | Net Income | $4,974 | $3,124 | $8,546 | $5,131 | | Diluted EPS | $0.07 | $0.04 | $0.11 | $0.07 | Condensed Consolidated Statements of Cash Flows Net cash used in operating activities was $11.5 million for the six months, with investing activities using $17.8 million, leading to a $31.2 million decrease in cash Cash Flow Summary - Six Months Ended Dec 31 ($ in thousands) | Cash Flow Activity | 2024 | 2023 | | :--- | :--- | :--- | | Net cash used in operating activities | $(11,496) | $(1,232) | | Net cash used in investing activities | $(17,842) | $(5,912) | | Net cash used in financing activities | $(926) | $(310) | | Net decrease in cash | $(31,241) | $(7,449) | - The significant increase in cash used in operating activities was mainly driven by a $40.9 million use of cash for accounts payable and accrued expenses, partially offset by a $13.3 million cash inflow from accounts receivable collections[22][153] - Investing activities included $9.8 million for the acquisition of SB Software and $8.1 million for capital expenditures[22][156] Notes to Condensed Consolidated Financial Statements Notes detail the company's digital payments business, recent acquisitions of SB Software for $11.4 million and Cheq for $4.7 million, and a new $100 million credit facility post-quarter end - The company is a digital payments and software services company providing end-to-end technology solutions for self-service commerce, including vending, micro-markets, and smart retail[24] - On September 5, 2024, the Company acquired SB Software for a purchase price of approximately $11.4 million, resulting in $7.8 million of goodwill[58][61][64] - On February 1, 2024, the Company acquired Cheq for an aggregate purchase price of $4.7 million, resulting in $2.0 million of goodwill[59][66][68] - Subsequent to the quarter end, on January 31, 2025, the company entered into a new credit facility totaling $100 million, which was used to repay the prior facility's outstanding balance of $37.3 million[90][91] Management's Discussion and Analysis of Financial Condition and Results of Operations Management reported a 12.8% revenue increase to $73.7 million for the quarter, with gross margin improving to 38.6%, and Adjusted EBITDA reaching $10.7 million Results of Operations Quarterly revenue grew 12.8% to $73.7 million, with gross margin expanding to 38.6%, while six-month revenue reached $144.6 million with increased operating expenses Revenue and Gross Profit Comparison (Three Months Ended Dec 31) | ($ in thousands) | 2024 | 2023 | % Change | | :--- | :--- | :--- | :--- | | Total Revenues | $73,722 | $65,359 | 12.8% | | Transaction fees | $44,392 | $37,892 | 17.2% | | Subscription fees | $20,694 | $18,137 | 14.1% | | Total Gross Profit | $28,472 | $22,643 | 25.7% | | Total Gross Margin | 38.6% | 34.6% | +4.0% | Revenue and Gross Profit Comparison (Six Months Ended Dec 31) | ($ in thousands) | 2024 | 2023 | % Change | | :--- | :--- | :--- | :--- | | Total Revenues | $144,558 | $128,042 | 12.9% | | Transaction fees | $87,995 | $74,922 | 17.4% | | Subscription fees | $40,882 | $36,242 | 12.8% | | Total Gross Profit | $55,576 | $45,028 | 23.4% | | Total Gross Margin | 38.4% | 35.2% | +3.2% | - Operating expenses for the six months ended Dec 31, 2024 increased by 16.5% to $49.3 million, driven by higher spending in Sales & Marketing (+27.3%), Technology & Product Development (+25.4%), and General & Administrative (+10.6%) to support growth and recent acquisitions[132] Key Metrics Key operating metrics showed growth, with Active Devices reaching 1.27 million and Total Dollar Volume of Transactions increasing 15.5% to $843.1 million Key Operating Metrics (as of Dec 31) | Metric | 2024 | 2023 | % Change | | :--- | :--- | :--- | :--- | | Active Devices (thousands) | 1,269 | 1,226 | 3.5% | | Active Customers | 32,909 | 30,027 | 9.6% | | Total Dollar Volume of Transactions (millions, for the quarter) | $843.1 | $730.1 | 15.5% | | Average revenue per unit (ARPU, TTM) | $202.20 | $181.91 | 11.2% | Non-GAAP Financial Measures Non-GAAP Total Adjusted Gross Margin improved to 41.7%, and Adjusted EBITDA for the quarter increased to $10.7 million, reaching $19.6 million for the six-month period Adjusted EBITDA Reconciliation ($ in thousands) | | Q2 2024 (3 months) | Q2 2023 (3 months) | 6 Months 2024 | 6 Months 2023 | | :--- | :--- | :--- | :--- | :--- | | Net income | $4,974 | $3,124 | $8,546 | $5,131 | | Adjustments | $5,694 | $5,363 | $11,069 | $11,177 | | Adjusted EBITDA | $10,668 | $8,487 | $19,615 | $16,308 | - Total Adjusted Gross Profit (non-GAAP) for the three months ended Dec 31, 2024 was $30.7 million (41.7% margin), compared to $24.3 million (37.2% margin) in the prior year period[143] Liquidity and Capital Resources The company held $27.7 million in cash as of December 31, 2024, with operations using $11.5 million in cash, supplemented by a new $100 million credit facility - The company's primary sources of capital are cash on hand ($27.7 million as of Dec 31, 2024) and cash expected from operating activities[150] - Net cash used in operating activities for the six months ended Dec 31, 2024 was $11.5 million, largely due to a $40.9 million cash outflow for accounts payable and accrued expenses[153] - In January 2025, the company amended its debt agreement, securing a new $100 million credit facility which increases its borrowing capacity and defers certain repayments[160][91] Quantitative and Qualitative Disclosures About Market Risk The company faces market risk from $37.1 million in variable-rate debt, where a 100-basis-point SOFR increase would raise annual interest expense by $0.4 million - The company has $37.1 million in total outstanding borrowings subject to variable interest rates[164] - A 100 basis point increase in the SOFR Rate would change annual interest expense by $0.4 million[164] Controls and Procedures Management concluded that disclosure controls and procedures were effective as of December 31, 2024, with no material changes to internal control over financial reporting - Management concluded that the company's disclosure controls and procedures were effective as of December 31, 2024[168] - No material changes to internal control over financial reporting occurred during the fiscal quarter ended December 31, 2024[169] Part II Legal Proceedings Legal proceedings information is incorporated by reference, with no expected material impact on the company's financial condition - The company is not party to any litigation expected to have a material impact on its financial condition[88][170] Risk Factors No material changes have occurred to the risk factors previously disclosed in the company's Annual Report on Form 10-K - For a discussion of risk factors, refer to the Company's Annual Report for the fiscal year ended June 30, 2024[171] Exhibits The report includes key exhibits such as CEO/CFO certifications, Inline XBRL financial data, and the Second Amended and Restated Credit Agreement - Key exhibits filed include CEO/CFO certifications and financial data formatted in Inline XBRL[174] - The Second Amended and Restated Credit Agreement, dated January 31, 2025, is incorporated by reference[174]