Cantaloupe(CTLP) - 2022 Q1 - Quarterly Report

Part I - Financial Information This part presents the company's unaudited financial statements, management's discussion and analysis, and market risk disclosures Condensed Consolidated Financial Statements 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 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 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] Condensed Consolidated Statements of Cash Flows 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 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][62][64] - 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][38] 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] Management's Discussion and Analysis of Financial Condition and Results of Operations 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 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] - 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][141] 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 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] - 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][160] - 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] Quantitative and Qualitative Disclosures About Market Risk 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] Controls and Procedures 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] - 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] Part II - Other Information This part covers legal proceedings, key risk factors, and information regarding senior securities Legal Proceedings 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] Risk Factors 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][177] - 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] Defaults Upon Senior Securities 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]