Cantaloupe(CTLP) - 2025 Q4 - Annual Report

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