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Cantaloupe, Inc. Reports Second Quarter of Fiscal Year 2023 Financial Results

Second Quarter Revenue of $61.3 Million, a 20% Year over Year Increase

Reiterates Fiscal Year 2023 Guidance

Cantaloupe, Inc. (Nasdaq: CTLP) (“Cantaloupe” or the “Company”), a digital payments and software services company that provides end-to-end technology solutions for self-service commerce, today reported results for the second quarter ended December 31, 2022.

“We saw strong financial results in Q2, with all-time high record revenue in transaction fees, subscription fees and total revenue, which demonstrates we are making progress on our strategic initiatives and working towards our vision to become the global market leader in providing technology that powers self-service commerce,” said Ravi Venkatesan, chief executive officer, Cantaloupe. “The acquisition of Three Square Market (“32M”) was also completed in the quarter. Integration is well underway and early customer interaction is validating our revenue synergy expectations.”

Second Quarter 2023 Key Financial Results:

  • Revenue of $61.3 million, an increase of 20% year over year.
    • Transaction fees of $32.4 million, an increase of 21% year over year
    • Subscription fees of $16.5 million, an increase of 15% year over year
    • Equipment sales of $12.4 million, an increase of 25% year over year
  • Total Dollar Volumes of Transactions were $649.4 million, an increase of 17% year over year
  • Gross margin of 30.1% compared with 31.3% in the prior year quarter
    • Subscription and transaction fees margins of 38.3% compared to 39.5% in the prior year quarter
    • Equipment sales margins of (2.3)% compared to (2.8)% in the prior year quarter
  • U.S. GAAP Net loss applicable to common shares of $573,000, or $(0.01) per share, compared to Net loss applicable to common shares of $468,000, or $(0.01) per share, in the prior year quarter
  • Adjusted EBITDA[1] of $3.9 million compared to $2.4 million in the prior year quarter

Second Quarter 2023 Business Highlights:

  • Completed the acquisition of Three Square Market, Inc., accelerating the Company’s micro market presence and international expansion
  • Active Customers totaled 26,335 at the end of the second quarter of 2023 compared to 21,315 at the end of the second quarter of 2022, an increase of 24%.
  • Active Devices totaled 1.15 million at the end of the second quarter of 2023 compared to 1.12 million at the end of the second quarter of 2022, an increase of 3%.
  • Completed the upgrade of the vast majority of non 4G/EMV devices, including most large enterprise clients, as the Company reached the 12/31/22 upgrade deadline.
  • Held our first investor day at Nasdaq where the Company articulated its renewed vision, strategy, and long-term financial outlook

Fiscal Year 2023 Outlook:

For the full fiscal year 2023, the Company reiterates the following:

  • Revenue to be between $240 million and $250 million
  • U.S. GAAP Net income to be between $(2) million and $3 million
  • Adjusted EBITDA1 to be between $12 million and $17 million
  • Total Operating Cash Flow to be between $10 million and $15 million

Webcast and Conference Call:

Cantaloupe will host a live webcast at 5:00 p.m. Eastern Time today which may be accessed in the Investor Relations section of the Company’s website at https://cantaloupeinc.gcs-web.com/events-and-presentations.

Please note that there is a new system to access the live call in order to ask questions. To join the live call, please register here. A dial in and unique PIN will be provided to join the conference call.

A replay of the conference call will also be available in the Investor Relations section of the Company’s website.

About Cantaloupe, Inc.

Cantaloupe, Inc. is a software and payments company that provides end-to-end technology solutions for self-service commerce. Cantaloupe is transforming the self-service commerce industry by offering one integrated solution for payments processing, logistics, and back-office management. The Company’s enterprise-wide platform is designed to increase consumer engagement and sales revenue through digital payments, digital advertising and customer loyalty programs, while providing retailers with control and visibility over their operations and inventory. As a result, customers ranging from vending machine companies, to operators of micro-markets, car charging stations, laundromats, metered parking terminals, kiosks, amusements and more, can run their businesses more proactively, predictably, and competitively. For more information, please visit our website at www.cantaloupe.com.

Discussion of Non-GAAP Financial Measures:

This press release contains discussion of Adjusted EBITDA, a non-GAAP financial measure which is not required or defined under U.S. GAAP (Generally Accepted Accounting Principles). Generally, a non-GAAP financial measure is a numerical measure of a company's performance, financial position or cash flows that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with GAAP. Reconciliations between non-GAAP financial measures and the most comparable GAAP financial measures are set forth below. However, we do not provide forward-looking guidance for certain financial measures on a GAAP basis because we are unable to predict certain items contained in the U.S. measures without unreasonable efforts.

We use Adjusted EBITDA for financial and operational decision-making purposes and as a means to evaluate period-to-period comparisons. We believe that this non-GAAP financial measure provides useful information about our operating results, enhances the overall understanding of past financial performance and future prospects and allows for greater transparency with respect to metrics used by our management in its financial and operational decision making. The presentation of this financial measure is not intended to be considered in isolation or as a substitute for the financial measures prepared and presented in accordance with GAAP, including our net income or net loss or net cash used in operating activities. Management recognizes that non-GAAP financial measures have limitations in that they do not reflect all of the items associated with our net income or net loss as determined in accordance with GAAP, and are not a substitute for or a measure of our profitability or net earnings. Adjusted EBITDA is presented because we believe it is useful to investors as a measure of comparative operating performance. Additionally, we utilize Adjusted EBITDA as a metric in our executive officer and management incentive compensation plans.

We define Adjusted EBITDA as U.S. GAAP net loss before (i) interest income (ii) interest expense on debt and reserves (iii) income tax provision (iv) depreciation (v) amortization (vi) stock-based compensation expense, (vii) fees and charges that were incurred in connection with the 2019 Investigation and financial statement restatement activities as well as proxy solicitation costs that are not indicative of our core operations, and (viii) certain other significant, infrequent or unusual losses and gains that are not indicative of our core operations such as acquisition and integration expenses.

Forward-looking Statements:

All statements other than statements of historical fact included in this release, including without limitation Cantaloupe’s future prospects and performance, the business strategy and the plans and objectives of Cantaloupe's management for future operations, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. When used in this release, words such as “may,” “could,” “expect,” “intend,” “plan,” “seek,” “anticipate,” “believe,” “estimate,” “guidance,” “predict,” “potential,” “continue,” “likely,” “will,” “would” and variations of these terms and similar expressions, or the negative of these terms or similar expressions, as they relate to Cantaloupe or its management, may identify forward-looking statements. Such forward-looking statements are based on the reasonable beliefs of Cantaloupe's management, as well as assumptions made by and information currently available to Cantaloupe's management. Actual results could differ materially from those contemplated by the forward-looking statements as a result of certain factors, including but not limited to

general economic, market or business conditions unrelated to our operating performance, including the impact of the ongoing COVID-19 pandemic; potential mutations of COVID-19 and the efficacy of vaccines and treatment developments and their deployment; failure to comply with the financial covenants in the Amended JPMorgan Credit Facility; our ability to raise funds in the future through sales of securities or debt financing in order to sustain operations in the normal course of business or if an unexpected or unusual event were to occur; our ability to compete with our competitors and increase market share; disruptions in or inefficiencies to our supply chain and/or operations including the impacts of the COVID-19 pandemic; the risks related to the availability of, and cost inflation in, supply chain inputs, including labor, raw materials, packaging and transportation; whether our current or future customers purchase, lease, rent or utilize ePort devices, Seed’s software solutions or our other products in the future at levels currently anticipated; whether our customers continue to utilize the Company’s transaction processing and related services, as our customer agreements are generally cancellable by the customer on thirty to sixty days’ notice; our ability to satisfy our trade obligations included in accounts payable and accrued expenses; the incurrence by us of any unanticipated or unusual non-operating expenses, which may require us to divert our cash resources from achieving our business plan; our ability to predict or estimate our future quarterly or annual revenue and expenses given the developing and unpredictable market for our products; our ability to integrate acquired companies into our current products and services structure; our ability to retain key customers from whom a significant portion of our revenue is derived; the ability of a key customer to reduce or delay purchasing products from us; our ability to obtain widespread commercial acceptance of our products and service offerings; whether any patents issued to us will provide any competitive advantages or adequate protection for our products, or would be challenged, invalidated or circumvented by others; our ability to operate without infringing the intellectual property rights of others; the ability of our products and services to avoid disruptions to our systems or unauthorized hacking or credit card fraud; geopolitical conflicts, such as the ongoing conflict between Russia and Ukraine; whether we are able to fully remediate our material weaknesses in our internal controls over financial reporting or continue to experience material weaknesses in our internal controls over financial reporting in the future, and are not able to accurately or timely report our financial condition or results of operations; the ability to remain in compliance with the continued listing standards of the Nasdaq Global Select Market and continue to remain as a member of the US Small-Cap Russell 2000®; whether our suppliers would increase their prices, reduce their output or change their terms of sale; risks associated with the currently pending investigation, potential litigation or possible regulatory action arising from the 2019 Investigation and its findings, from the failure to timely file our periodic reports with the Securities and Exchange Commission, from the restatement of the affected financial statements, from allegations related to the registration statement for the follow-on public offering, or from potential litigation or other claims arising from these events;

or other risks discussed in Cantaloupe’s filings with the U.S. Securities and Exchange Commission, including but not limited to its Annual Report on Form 10-K for the year ended June 30, 2022. Readers are cautioned not to place undue reliance on these forward-looking statements. Any forward-looking statement made by us in this release speaks only as of the date of this release. Unless required by law, Cantaloupe does not undertake to release publicly any revisions to these forward-looking statements to reflect future events or circumstances or to reflect the occurrence of unanticipated events. If Cantaloupe updates one or more forward-looking statements, no inference should be drawn that Cantaloupe will make additional updates with respect to those or other forward-looking statements.

-F--CTLP

Cantaloupe, Inc.

Condensed Consolidated Balance Sheets

($ in thousands, except share data)

 

December 31, 2022 (Unaudited)

 

June 30,

2022

 

 

 

 

 

Assets

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

28,143

 

 

$

68,125

 

Accounts receivable, net

 

 

45,721

 

 

 

37,695

 

Finance receivables, net

 

 

7,757

 

 

 

6,721

 

Inventory, net

 

 

26,895

 

 

 

19,754

 

Prepaid expenses and other current assets

 

 

3,471

 

 

 

4,285

 

Total current assets

 

 

111,987

 

 

 

136,580

 

 

 

 

 

 

Non-current assets:

 

 

 

 

Finance receivables due after one year, net

 

 

14,520

 

 

 

14,727

 

Property and equipment, net

 

 

20,535

 

 

 

12,784

 

Operating lease right-of-use assets

 

 

1,778

 

 

 

2,370

 

Intangibles, net

 

 

29,535

 

 

 

17,947

 

Goodwill

 

 

92,241

 

 

 

66,656

 

Other assets

 

 

4,815

 

 

 

4,568

 

Total non-current assets

 

 

163,424

 

 

 

119,052

 

 

 

 

 

 

Total assets

 

$

275,411

 

 

$

255,632

 

 

 

 

 

 

Liabilities, convertible preferred stock and shareholders’ equity

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable

 

$

48,575

 

 

$

48,440

 

Accrued expenses

 

 

29,474

 

 

 

28,154

 

Current obligations under long-term debt

 

 

1,192

 

 

 

692

 

Deferred revenue

 

 

1,970

 

 

 

1,893

 

Total current liabilities

 

 

81,211

 

 

 

79,179

 

 

 

 

 

 

Long-term liabilities:

 

 

 

 

Deferred income taxes

 

 

217

 

 

 

186

 

Long-term debt, less current portion

 

 

38,082

 

 

 

13,930

 

Operating lease liabilities, non-current

 

 

1,808

 

 

 

2,366

 

Total long-term liabilities

 

 

40,107

 

 

 

16,482

 

 

 

 

 

 

Total liabilities

 

 

121,318

 

 

 

95,661

 

Commitments and contingencies

 

 

 

 

Convertible preferred stock:

 

 

 

 

Series A convertible preferred stock, 900,000 shares authorized, 385,782 and 445,063 issued and outstanding, with liquidation preferences of $19,457 and $22,115 at December 31, 2022 and June 30, 2022, respectively

 

 

2,720

 

 

 

3,138

 

Shareholders’ equity:

 

 

 

 

Preferred stock, no par value, 1,800,000 shares authorized

 

 

 

 

 

 

Common stock, no par value, 640,000,000 shares authorized, 72,462,969 and 71,188,053 shares issued and outstanding at December 31, 2022 and June 30, 2022, respectively

 

 

473,605

 

 

 

469,918

 

Accumulated deficit

 

 

(322,232

)

 

 

(313,085

)

Total shareholders’ equity

 

 

151,373

 

 

 

156,833

 

Total liabilities, convertible preferred stock and shareholders’ equity

 

$

275,411

 

 

$

255,632

 

Cantaloupe, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

 

 

Three months ended

 

Six months ended

 

 

December 31,

 

December 31,

($ in thousands, except per share data)

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Revenues:

 

 

 

 

 

 

 

 

Subscription and transaction fees

 

$

48,932

 

 

$

41,188

 

 

$

96,007

 

 

$

81,812

 

Equipment sales

 

 

12,398

 

 

 

9,903

 

 

 

23,105

 

 

 

15,059

 

Total revenues

 

 

61,330

 

 

 

51,091

 

 

 

119,112

 

 

 

96,871

 

 

 

 

 

 

 

 

 

 

Costs of sales:

 

 

 

 

 

 

 

 

Cost of subscription and transaction fees

 

 

30,202

 

 

 

24,919

 

 

 

60,572

 

 

 

50,944

 

Cost of equipment sales

 

 

12,687

 

 

 

10,182

 

 

 

25,937

 

 

 

15,062

 

Total costs of sales

 

 

42,889

 

 

 

35,101

 

 

 

86,509

 

 

 

66,006

 

 

 

 

 

 

 

 

 

 

Gross profit

 

 

18,441

 

 

 

15,990

 

 

 

32,603

 

 

 

30,865

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

Sales and marketing

 

 

3,210

 

 

 

1,745

 

 

 

5,735

 

 

 

4,084

 

Technology and product development

 

 

5,299

 

 

 

5,780

 

 

 

12,164

 

 

 

11,169

 

General and administrative

 

 

6,559

 

 

 

7,672

 

 

 

18,137

 

 

 

14,936

 

Investigation, proxy solicitation and restatement expenses

 

 

150

 

 

 

 

 

 

547

 

 

 

 

Integration and acquisition expenses

 

 

2,787

 

 

 

 

 

 

2,787

 

 

 

 

Depreciation and amortization

 

 

1,350

 

 

 

1,113

 

 

 

2,666

 

 

 

2,135

 

Total operating expenses

 

 

19,355

 

 

 

16,310

 

 

 

42,036

 

 

 

32,324

 

 

 

 

 

 

 

 

 

 

Operating loss

 

 

(914

)

 

 

(320

)

 

 

(9,433

)

 

 

(1,459

)

 

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

 

Interest income

 

 

878

 

 

 

445

 

 

 

1,445

 

 

 

918

 

Interest expense

 

 

(518

)

 

 

(475

)

 

 

(995

)

 

 

(953

)

Other income (expense)

 

 

23

 

 

 

(16

)

 

 

(97

)

 

 

(75

)

Total other income (expense), net

 

 

383

 

 

 

(46

)

 

 

353

 

 

 

(110

)

 

 

 

 

 

 

 

 

 

Loss before income taxes

 

 

(531

)

 

 

(366

)

 

 

(9,080

)

 

 

(1,569

)

Provision for income taxes

 

 

(42

)

 

 

(102

)

 

 

(67

)

 

 

(191

)

 

 

 

 

 

 

 

 

 

Net loss

 

 

(573

)

 

 

(468

)

 

 

(9,147

)

 

 

(1,760

)

Preferred dividends

 

 

 

 

 

 

 

 

(334

)

 

 

(334

)

Net loss applicable to common shares

 

$

(573

)

 

$

(468

)

 

$

(9,481

)

 

$

(2,094

)

 

 

 

 

 

 

 

 

 

Net loss per common share

 

 

 

 

 

 

 

 

Basic and diluted

 

$

(0.01

)

 

$

(0.01

)

 

$

(0.13

)

 

$

(0.03

)

 

 

 

 

 

 

 

 

 

Weighted average number of common shares outstanding used to compute net loss per share applicable to common shares

 

 

 

 

 

 

 

 

Basic and diluted

 

 

71,629,939

 

 

 

70,969,246

 

 

 

71,418,845

 

 

 

71,072,587

 

Cantaloupe, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

 

 

Six months ended

 

 

December 31,

($ in thousands)

 

 

2022

 

 

 

2021

 

Cash flows from operating activities:

 

 

 

 

Net loss

 

$

(9,147

)

 

$

(1,760

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

Stock based compensation

 

 

1,477

 

 

 

3,129

 

Amortization of debt issuance costs and discounts

 

 

59

 

 

 

68

 

Provision for expected losses

 

 

1,527

 

 

 

1,313

 

Provision for inventory reserve

 

 

135

 

 

 

342

 

Depreciation and amortization included in operating expenses

 

 

2,666

 

 

 

2,135

 

Depreciation included in costs of sales for rental equipment

 

 

554

 

 

 

518

 

Other

 

 

979

 

 

 

112

 

Changes in operating assets and liabilities:

 

 

 

 

Accounts receivable

 

 

(6,737

)

 

 

1,378

 

Finance receivables

 

 

(1,221

)

 

 

245

 

Inventory

 

 

(5,411

)

 

 

(6,802

)

Prepaid expenses and other assets

 

 

755

 

 

 

(160

)

Accounts payable and accrued expenses

 

 

(1,057

)

 

 

(4,555

)

Operating lease liabilities

 

 

(750

)

 

 

(192

)

Deferred revenue

 

 

77

 

 

 

(18

)

Net cash used in operating activities

 

 

(16,094

)

 

 

(4,247

)

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

Acquisition of business, net of cash acquired

 

 

(35,913

)

 

 

(2,900

)

Purchase of property and equipment

 

 

(9,436

)

 

 

(4,359

)

Net cash used in investing activities

 

 

(45,349

)

 

 

(7,259

)

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

Proceeds from long-term debt

 

 

25,000

 

 

 

 

Repayment of long-term debt

 

 

(388

)

 

 

(407

)

Contingent consideration paid for acquisition

 

 

(1,000

)

 

 

 

Proceeds from exercise of common stock options

 

 

 

 

 

86

 

Repurchase of Series A Convertible Preferred Stock

 

 

(2,151

)

 

 

 

Net cash provided by (used in) financing activities

 

 

21,461

 

 

 

(321

)

 

 

 

 

 

Net decrease in cash and cash equivalents

 

 

(39,982

)

 

 

(11,827

)

Cash and cash equivalents at beginning of year

 

 

68,125

 

 

 

88,136

 

Cash and cash equivalents at end of period

 

$

28,143

 

 

$

76,309

 

 

 

 

 

 

Supplemental disclosures of cash flow information:

 

 

 

 

Interest paid in cash

 

$

920

 

 

$

376

 

Common stock issued in business combination

 

$

3,942

 

 

$

 

 

 

 

 

 

Cantaloupe, Inc.

Reconciliation of U.S. GAAP Net Loss to Adjusted EBITDA

(Unaudited)

 

 

Three months ended December 31,

($ in thousands)

 

 

2022

 

 

 

2021

 

U.S. GAAP net loss

 

$

(573

)

 

$

(468

)

Less: interest income

 

 

(878

)

 

 

(445

)

Plus: interest expense

 

 

518

 

 

 

475

 

Plus: income tax provision

 

 

42

 

 

 

102

 

Plus: depreciation expense included in costs of sales for rentals

 

 

312

 

 

 

254

 

Plus: depreciation and amortization expense in operating expenses

 

 

1,350

 

 

 

1,113

 

EBITDA

 

 

771

 

 

 

1,031

 

Plus: stock-based compensation (a)

 

 

160

 

 

 

1,368

 

Plus: investigation, proxy solicitation and restatement expenses(b)

 

 

150

 

 

 

 

Plus: integration and acquisition expenses(c)

 

 

2,787

 

 

 

 

Adjustments to EBITDA

 

 

3,097

 

 

 

1,368

 

Adjusted EBITDA

 

$

3,868

 

 

$

2,399

 

 

 

 

 

 

(a) As an adjustment to EBITDA, we have excluded stock-based compensation, as it does not reflect our cash-based operations.

(b) As an adjustment to EBITDA, we have excluded the fees incurred in connection with the costs and expenses related to the 2019 Investigation, financial statement restatement activities, and proxy solicitation costs because we believe that they represent charges that are not related to our core operations.

(c) As an adjustment to EBITDA, we have excluded expenses incurred in connection with business acquisitions and corresponding integrations as they do not represent recurring costs or charges related to our core operations.

 

 

Six months ended December 31,

($ in thousands)

 

 

2022

 

 

 

2021

 

U.S. GAAP net loss

 

$

(9,147

)

 

$

(1,760

)

Less: interest income

 

 

(1,445

)

 

 

(918

)

Plus: interest expense

 

 

995

 

 

 

953

 

Plus: income tax provision

 

 

67

 

 

 

191

 

Plus: depreciation expense included in costs of sales for rentals

 

 

554

 

 

 

518

 

Plus: depreciation and amortization expense in operating expenses

 

 

2,666

 

 

 

2,135

 

EBITDA

 

 

(6,310

)

 

 

1,119

 

Plus: stock-based compensation (a)

 

 

1,477

 

 

 

3,129

 

Plus: investigation, proxy solicitation and restatement expenses(b)

 

 

547

 

 

 

 

Plus: integration and acquisition expenses(c)

 

 

2,787

 

 

 

 

Adjustments to EBITDA

 

 

4,811

 

 

 

3,129

 

Adjusted EBITDA

 

$

(1,499

)

 

$

4,248

 

 

 

 

 

 

(a) As an adjustment to EBITDA, we have excluded stock-based compensation, as it does not reflect our cash-based operations.

(b) As an adjustment to EBITDA, we have excluded the fees incurred in connection with the costs and expenses related to the 2019 Investigation, financial statement restatement activities, and proxy solicitation costs because we believe that they represent charges that are not related to our core operations.

(c) As an adjustment to EBITDA, we have excluded expenses incurred in connection with business acquisitions and corresponding integrations as they do not represent recurring costs or charges related to our core operations.

1 Adjusted earnings before income taxes, depreciation, and amortization, stock-based compensation expense, and certain other significant infrequent or unusual losses and gains that are not indicative of our core operations (“Adjusted EBITDA”) is a non-GAAP financial measure which is not required by or defined under GAAP. We use this non-GAAP financial measure for financial and operational decision-making purposes and as a means to evaluate period-to-period comparisons. See Reconciliations of Non-GAAP Measures for a reconciliation U.S. GAAP net income to Adjusted EBITDA.

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