Cantaloupe(CTLP) - 2025 Q3 - Quarterly Report

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