Cantaloupe(US:CTLP)2022-11-08 02:23Financial Data and Key Metrics Changes - The company reported a record revenue of $57.8 million for Q1 2023, representing a 26% increase year-over-year [6][28] - Transaction revenue grew by 18% year-over-year, while subscription revenue increased by 11% year-over-year [7] - Adjusted EBITDA was negative $5.4 million, compared to positive $1.9 million in the same quarter of the prior year [11][35] - Gross margin for the quarter was 24.5%, down from 32.5% in the previous year, primarily due to negative gross margins on equipment revenue [29] Business Line Data and Key Metrics Changes - Equipment revenue saw a significant increase of 108% year-over-year, totaling $10.7 million [9][28] - Active customers increased by 21% year-over-year, totaling over 25,000 [9] - Active devices grew by 3% year-over-year, with expectations for acceleration in the next calendar year [10] Market Data and Key Metrics Changes - The company noted a strong demand for cashless payments, with cashless transactions increasing from 51% in January 2020 to 62% by October 2021 [23] - The company is experiencing a steady increase in contactless payments as consumer comfort with mobile and card payments grows [24] Company Strategy and Development Direction - The company is focused on expanding service offerings and software add-ons, particularly in core verticals like food and beverage and smart vending [12] - The Cantaloupe ONE platform is positioned as a bundled subscription model to reduce upfront capital expenditures for customers [14] - The company aims to leverage macroeconomic trends such as labor shortages and rising costs to fuel digital transformation and growth in software offerings [26] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the growth trajectory of subscription revenue, expecting it to ramp up throughout the year [8][43] - The company is navigating supply chain constraints and inflationary pressures, positioning itself as a key partner for customers seeking to integrate technology [13] - Management reiterated guidance for total revenue between $225 million and $235 million for the fiscal year, representing growth of 10% to 15% [36] Other Important Information - The company completed its migration to the AWS cloud platform, enhancing its ability to scale and replicate offerings across markets [21][57] - The company is maintaining higher than normal inventory levels to meet customer demand amid supply chain challenges [29] Q&A Session Summary Question: Can you talk about the acceleration of subscription revenue? - Management is excited about the acceleration of subscription revenue, driven by the Cantaloupe ONE offering and additional products like RPC [41][42] Question: What were the costs associated with the migration to AWS? - The overall cost was $1.4 million, with less than $1 million in cost of goods sold and about $400,000 to $500,000 in operating expenses [44] Question: Are you getting any traction in the Yoke Payments space? - Management reported exciting traction in the Yoke Payments space, which is expected to positively impact subscription revenue in the coming months [45][46] Question: Should we expect any negative surprises in equipment margins? - Management confirmed that equipment margins are expected to normalize after the upgrade cycle, with no anticipated negative surprises [47][49] Question: Is the business generating revenues at or above pre-pandemic levels? - Management confirmed that revenues are operating well above pre-pandemic levels, with potential for further increases as offices reopen [51][53] Question: Can you discuss the benefits of the AWS move? - The AWS move enhances the ability to replicate software in different geographies and provides a more scalable environment for growth [56][57] Question: How aggressively are you using Remote Price Change for customer acquisition? - Management is using Remote Price Change aggressively for both customer retention and acquisition, noting its value in the marketplace [58][59] Question: How does the hardware component relate to customer growth? - Management indicated that aggressive hardware strategies have helped retain customers, while Cantaloupe ONE is attracting new customers, particularly in the SMB segment [60][62]