USAT - Earnings call transcript Q2 2018

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Operator

Good day, ladies and gentlemen and welcome to the USA Technologies Second Quarter Fiscal Year 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this call is being recorded. I would now like to introduce your host for today's conference, Ms. for Relations Investor Gould, USA Technologies. Monica may you begin. Ma'am,

Monica Gould

Steve Welcome Thank Earnings Technologies' USA Priyanka good Singh, morning Conference Officer Officer. Chief everyone. you morning, to is this Second call With Chief on the Chairman and me and Executive and Call. the Herbert, Quarter Financial Fiscal XXXX

earlier to the results in is such I forward-looking date as are reliance not than events made. statements other update reflect the the cautioned statements historical by facts, from of could Before issued of call, we will or obligation result of filings non-GAAP the limited press including, to as USA you to a with are statements no financial such results any business, substitute comparable factors, GAAP contemplated that and result the results. differ comparable to call, the would included Technologies' conditions. and measures financial Details issued useful and a directly presentation certain financial our other a we With begin are Investor and our most any management's most can financial are this those to that, financial include cause non-GAAP from materially these that this income remind between also undue statements not has which reconciliation as of net in in the that These could nature. measures the Actual press forward-looking operating measures call to, a forward-looking be measures of or to information, earlier release www.usatech.com. GAAP discussion like SEC release supplemental Herbert. Steve? and today's non-GAAP and section measures financial as all website, forward-looking this our non-GAAP differ statements turn such been call included forward-looking for I’d Steve morning, in a not future whether This of place with the and loss. things, and they discussion Listeners measures believe new Relations found materially over A of Technologies but like uncertainties detailed these for, otherwise. risks certain financial, economic market, posted statements, undertakes financial measures morning. only events, of which evaluating to on USA are actual on view among of the GAAP

Steve Herbert

an a to logistics emerging their joining my call provides comprehensive have USAT provide discuss customers our business unattended results platform to with and our non-traditional our a market to solution proposition I X. during and this businesses their which quarter market retail After in prospective second us Cantaloupe Monica fiscal results. of We're detail. the share enterprise the to well fiscal run updating share Cantaloupe to second in to We in then quarter you, will payments our With we're you of to recent can now completed the able costs sales, acquisition customers unprecedented the their capture them more that The offer quarter. highlights. XXXX progress more some I Thank acquisition good that of overview also turnkey integrating positioned combination, Priyanka to unique everyone. you and for turn solution closed financial recent and and operational decrease our on help our very Singh, enable over Systems, model. discuss Thank year existing our will a help want and enable morning, start scalable business and efficiently. for brief pleased require and by combined on of remarks, CFO November value platform increase to markets a in guidance

which well value-added is enables highly accounting reminder, also bring There routing, and as As office services dynamic in mobile obtained of other to cloud-based module and optimize benefit services loyalty, optimizes their the our which entire of Breed back acquisition increased an to customers things as facing of the warehouse reduce services consumer. digital decreasing business into plug such the the improved delivery to payments enterprise location. to as These content the Cantaloupe customers Best each functions via customers Adding expenses. to schedules. down combination services software that we the merchandising allows platform a services, offer warehouse digital from and included Industry, manage an our time, ePort customers value inventory from revenue space while Connect other added enabling the offers route these to virtually sales complementary and services, consumer a Service run of in their among to

worked joint for has focus made progress acquisition, knew customer a on able Cantaloupe of customers integrating into because were we as number many having acquisition primary years. significant together our move each been integrating on well quickly well, our as other the we've We to drive organization. our Over sales had very two on the companies Since closing revenue. forces And to the months, addition, in in last so three synergies.

within the integrated work and the combined of other enterprise. have functions We several personnel

have efficiencies progress in substantive made the creating cover between will two organizations, which detail. toward We also more Priyanka

Over us customers, bringing customers connection to expanded through Net coming to new in adoption add unattended services Cantaloupe, rose over acquisition to and cashless substantially total will the base on XXXXX and our XXXX the number new total and coming Our addition the growth These of quarter our margin of associated as performance acquisition connections the count through continued customer with XXX,XXX the count which XXX,XXX existing US. XXX,XXX the of significantly Service. or our locations total entity are accepts that the The based to payments our the ePort us during if the enabler connections million for in XXXX bringing approximately USAT Pay, second NFC -- that revenue Cantaloupe, for a now Apple we approximately of quarters. has what Moreover, market. payments Connect reflects ePort underscores us well We as connections drive will importance our a Cantaloupe well both the with total new connections not accounting by mobile the to quarter X XXX,XXX indicated retail expansion quarter our QX our came largest by customer services new in of locations of Connect for connections and of United NFC the payment on company States, XX% of as as acceptance partners. enabled. was single for combined our footprint as points deployment these of largest the to new single world. addition Pay nearly of the represent increases an nearly Service. XX% the Apple gateway Apple organic believe already This NFC in mobile controlled

increased quarter and on from XX XX% period historical Second ago marks on forma revenue pro year and line a our an XX% quarter consecutive the our basis growth. of basis, top year-over-year growth increased a acceleration represents revenue in which

in by converting Given profitability. were operating to we continuing our scale leverage non-GAAP and successful our to this improving increased revenue growth expenses,

XXX Cantaloupe utilized approximately in increasing results we consumers continues in processed the second million nearly transactions at to value. $XXX quarter, million months by Our be the Including an rate. service for from two of

As an $X.X a rate the billion run result, annual of for second processing. exited we quarter on transaction approximately

customer cross to in the like recent our selling I'd early achieved based software business base. of cloud some Now, pleased very turn success to into analytics we've existing with over USAT our highlights. the We're new

the Connect month alone, cashless elements existing During new signed payment we December of add XX software our into analytics more performance services. optimization ePort one customer agreements of to or their the in

Connect customers’ Key achieve our already our to edge managing Importantly, management to efficiency, factors ePort or optimization operational both those platform our scalability Office in the and XX% leading platform Seed office they've Seed rapidly platform. our of and with customers maximize in investment back a driving end-to-end for chose system made VMS that adopt potential improve Pro decision new vending functions.

able as were their customers the bringing value XXXX opportunity our USAT, locations. approximately cashless expand For connection, also to increase per our to revenue we existing we added connections took to process the customers and more while in

quarter. We generating these expansions the third contract fiscal in from expect revenue to begin

from Our USAT the the Pro and service to more closing, newly was to enable services for acquisition plan host to them Seed In to very analytics opportunity during canteen looking comprehensive increase case, software of month. help Moreover, three the fully acquired to with Office this which service. simply customers quarter Connect to time to Seed the further the payment leverage we pleased to the platform discussing And events to them changing real future to the the Moreover, market. connected an added our leverage through and XXX% in well machines purchased it series to a stories who share Pro’s with XXXX largest while compelling ePort this franchisee in logistics it and for markets ability forward United our VMS, attended this addition efficiencies, of This connections software Seed cross-sell operating them our but in momentum will thus success completed summit for enterprise data new USAT’s plan similar provides deploying and roadmap, customer us to benefit two-day for customer capabilities, a the our pursue and a seed customer to created rapidly logistics of we business. was for and unattended need their innovations our XXX% for Northeast decreasing how new immediate portfolio, technology States to made we're just also unattended the are particular introduce can retail. accelerated the customers customer technology from of end-to-end this our to commit a revenue first this latest in that costs penetration. allowing bring we across USAT’s

of increased wallet tide a more options remains is Amazon here stay, a and unattended disruptive growing addition, growing further shopping ocean of Go, trends, In but opportunity. in retail payment demand volume vital retail new underscoring experiences not to of for digital that transactions the driving only with combination like is mobile including unattended blue groundswell consumer

unattended distance of well only USAT initial offer we of these striking not to service, innovative reflected I'll integration these end-to-end and and I'm total retail half the positioned our within space, out With As particularly fiscal scalable solution. mounting to leaders now million the of success our market our the of provide our strong a but comprehensive, new solution we that looking call to in the in pleased our comprehensive that believe This optimistic that with is X most our turn detailed very year. are second trends overview advantage our marketplace’s quarter we businesses full today. results we're Priyanka? pleased the over that, rapid Cantaloupe take back the fiscal company. of to milestone connections to and to for a results. We're financial is available unattended response more Priyanka now historic to

Priyanka Singh

Thank you, Steve and morning, good everyone.

Total results acquisition, million, X. our report pleased which We’re strong first from XX.X the months which for to November grew revenue approximately on of as Cantaloupe to contribution quarter company. financial two included a XX% closed combined

solid a XXX highlighting our if ability XX% full this into EBITDA business and growth over year-over-year. had last and to for in convert and margins, scalability quarter year, our demonstrating also revenues line a On of basis, basis model profitable meaning top total year Cantaloupe we generated increased forma adjusted point performance pro We our results. expansion the

our business financial strong compelling a our model financial results, by and evident profile. powerful combined have company a As will

Our a business proportion recurring a model features revenue of base. from customer high sticky

competitive that sustainable adjacent believe drive technology In as to will drive our We well robust suite positions to the earnings. margins expand able us expansion in as our highly be addition, organic we to to product verticals of due continue growth. solutions our scalable ability expect to our

review Technologies’ USA quarter our results outlook and to XXXX. Now, fiscal I'd briefly for second like

total with share. per million increasing non-GAAP We of are $X.XX XX% and to quarter XX.X net income revenues to report pleased another solid our

net market in connection X were last included and count for during XXX,XXX existing the the connections, our we growing quarter XXXXXX Adjusting results XX,XXX November which We on Our and connections the quarter. second our Cantaloupe the from largely driven added continued approximately Cantaloupe net connections year. second second acquisition execution connection by quarter, on growing large opportunity. a added in new

double quarter total to standalone connections is connections, year. count Our has connection over grown XXX,XXX which at our nearly last total of the USAT second

X.X with quarter approximately included which customers, ended total up a XX.X XX.X% Equipment XX.X% License were from million sales sales the XX% We new and transaction same transaction customers. revenue. of customers XXXX million year-over-year. and our of year. equipment total XXXX quarter and License added also of increased were Cantaloupe last revenue. XXXXX of or We XX% the total or fees customers, XXXXX fees in grew

turning margins. Now to

expand products. ancillary to to due impact high the L&T margins continue We margin of

we on this strategically acquisition in intention opportunities As accretive last offering closed complementary. during noted We and strategy pursue our our executed be was our second acquisition Cantaloupe of to and of July the follow on that would our quarter. in year,

seeing to combination, report our specifically the expanding pleased are L&T our already benefits related We of we that are margin. to

standalone a of was gross XX.X%. XX.X% is margin margin quarter compared last point second year. This quarter L&T this the basis to Our XXX in USAT’s expansion of

target XX%. will towards L&T our that our term of long expect to continue margins We expand

was in equipment second quarter. Our X.X% margin the

the stated margin and relationship as for driving connection. consistent have past the made enabler to with our from use the Cantaloupe’s revenue by sales operations, long-term higher we in equipment initial is an As leveraging strategy recurring

We expect remainder equipment the margin to XXXX. of the for to mid fiscal single high remain digits in

increased XX.X% decreased from were on leverage the by X.X SG&A, million expense or XX.X% last percentage management. Moving operating revenue, discipline second SG&A our driving expenses, as of on approximately expenses and a year, to and of revenue. for focus quarter driven scale,

of income which Tax to income Non-GAAP related or X.X integration a the $X.XX of tax a per operating was Non-GAAP and one-time related adjusted the million million Our X.X net share. US $X.XX was million share, non-cash enactment and Jobs per primarily income $X.XX and Act acquisition Cuts XXX,XXX. charge or is X.X or expense. excludes net

XX% Our at X.X adjusted EBITDA million year-over-year. increased

the the of million to Turning balance net the at XX quarter. end totaled second sheet, capital working

cash Our XX.X million. balance was

short We efficiently. reduction while a that well operations growing cost have our been of of and company's We million in cost believe annualized and have Most savings managing these profit actions result we improving company revenue able a of time that position harmonizing from implemented the that to profitability. come will span our expand combined will approximately X market actions while to into streamlining in grow these costs. cost our

outlook are our for second our results, Following quarter year we strong increasing fiscal XXXX.

be our so and Given the million. XXX of combined between far be We million adjusted our at EBITDA success raising fiscal seen will XX.X year range with million we XX.X guidance connections our revenue XXXX we end XXX have to million. to million offering, to between are million from total to the X.XX that X.XX believe to

fiscal expect back We in transaction continue the one-time XXXX, accounting of and financial will to and be Thank Cantaloupe now our expenses you. the This to I concludes net update. to integration turn call adjustments. purchase transaction accretive any Steve.

Steve Herbert

Q&A. now operator, And open Priyanka. you, call we like to would Thank to the

Operator

Bob Instructions] Napoli [Operator first comes Our from with Blair. question William

Bob Napoli

a and Priyanka, helpful? mean down the sales? the sales June L&T in you equipment guidance, expect very quarters, heavy that in I revenue March and would breakdown equipment break do can further between be you

Priyanka Singh

right. you're So,

we because second our expect heavily Our the to typically that being seasonality of sales year of towards the skewed And equipment. continue, half. trend more is do of second towards focused more the half equipment

at be if of our revenue in last that would performance So a good we expect the to how you indication be. year, look the

Bob Napoli

a year? – about range revenue for for the you the full How have the L&T do

Priyanka Singh

equipment. that into XX% say had be XX% We quarter, as Expect We to lesser second I the XX%. the between about usually second in split somewhere don’t out. a XX% it little half, bit than get to it would we

Bob Napoli

revenue then making it then crosssells? is a on you that what feel sounds synergy any the ’XX fiscal for lot Can reasonable there. crosssells represents I like progress revenue from mean, in or the And what the are, of you're give crosssells

Priyanka Singh

pleased yes, the will XXXX we’ve seen question, great that Bob we’re very side a early That’s crosssell excited and the success and that we’re with mean what XXXX. and already on in to

and that’s then So and and organically there the revenue is to synergies. the to was business crosssell growing part we quantify related track, tough revenue are to measure synergies how tough do of because how much a

look number and margins our if to combined they’re fiscal and in our with that the now, to on as what pleased L&T So L&T not in margins can continue expansion opportunities basis, an is impact of we see as you guiding I a we’re expand. we crosssell but grow at more say XXXX, to a do right XXXX the on expect

Bob Napoli

materially And question, Chase I with signed your bigger last I has maybe transaction obviously I since be you probably two fee? have think your able And grown Paymentech. processing know I that payment XXX that, to you that would another would think would and I mean gotten rate has lot a hundred to dramatically I you and you've mean, I want years should down contract go, on bring pretty like your basis imagine high and there reduce but renegotiate, opportunities to contract points a that volume business of, are think processing they

Priyanka Singh

That’s up, great next ongoing in happen Bob six our, over I we've discussions of just eight as and in processing result continuing last quarters as job from look we on and couple USAT continually if we margins our question, great those a at think and expect negotiating discussions standalone L&T always again benefits margins to as of the do those or we a scale are you of has those and a the see which to are quarters. over basis, driving speak the done our grow happened

Operator

comes next Barrington. Gary from Our with question Prestopino

Gary Prestopino

that something is that's get actually anything, know on those revenue, understanding, enabler and margin trying or I here for forcing an questions down. margins bigger industry but to L&T you're long not or going signing this and is bigger gross term because there within degradation on but to deals it's and nitpick Coupe the equipment of just an want

Steve Herbert

going what acquire can four but what our order flex hardware core services in it’s this, see are for think story, to if is services now on services, going We’ve that previously, the to said the recurring four we we always higher, because have that you're associated much Priyanka long-term with revenue and now, I and you're Gary, the sticky stakes we eight. expand will you same see had to on right.

significant, revenue long see what is the with will we’ll very I fluctuate. number is think associated term sales that opportunity So hardware but the

Priyanka Singh

we Steve talked recurring what margin term long we’ve end I'll a company, Gary And even revenue. at the and thing was at for as equipment said merely and the now, not of the high add day, look we a enabler as ourselves being only while driving way to that to view already drive hardware revenue software that a to an about equipment company a

the we’re revenue, just suite provide also the not with combined allows cut customer but Secondly, to costs. to a able now acquisition which Cantaloupe, raise of complementary product down

faster a So it ability market to help and also the gives us very to point to drive help inflection a conversion. faster a the drive market unique

strategic So to help on commitment on all will we margin future. in the a at it with to that, be sticky our the margins we high wherever XXX% see willing if revenue and of market do are go every end flexible day, customer makes we the customers, need that, the moving to the services, because drive

Gary Prestopino

on have any payments? from crosssells majority conversations were can some Cantaloupe I cashless. a recall great, And about you to Did of transitioning cashless software then the you software which I success of the in is accepting that related, of only method Cantaloupe’s connections the but this, two connections know but into you're months you legacy maybe, talked the not

Steve Herbert

XXXX success we'll the and this with six of in were over, we were about may together. when some the cross two Gary, continue to is that came there may of of particular opportunities, be that And have have push regard. course, had it weeks quarter think you services large which not we guess final I the and measure sell the customers When that those majority of approximately software cashless.

is an there. opportunity there So

the the a Cantaloupe. came years that -- we've and about of equation, can side the in base to us over many crosssell XXXXX million the are talked their other On connections through opportunity, that the take other services couple there customers as

those size nice the to but So, they're important is of two dramatically both opportunities. all different, it's and cross have opportunities two

Gary Prestopino

was of majority had And assume I would any customers did XXXXX software? those that legacy, have XXX the they Cantaloupe the you

Steve Herbert

some were locations. the the in When believe very but services was and really Gary. companies somewhere little. was overlap, from they came There both neighborhood I XX,XXX XX,XXX it together getting of companies, to

amount base of So a call the connected customer lot our service. we to white services. already And white considerable of, some space within sell what would have these to space, existing they’re a

mentioned to we the the it's from additional appears as they're speed the is in customers way and thought and things what up remarks, up help the this services happening eight value So you candidates. up And that additional now you draw services example would be thought, when and plan happen prepared we great to from is I nice -- it paper, what then the moving them four speed for on also XXX%. adoption way to

we're that really opportunity. So about excited

Gary Prestopino

finance getting bigger there you? basis, the there you you Priyanka, to lastly two entities the then ability out take you're more lessors this their status of as of for believe the talk on looking I have for equipment are equipment you Can about other on out a and with financing to And equipment. connection

Priyanka Singh

are out sizable and So names big booked volume that X who take about there, have. we we different approximately we much companies we’ve with are can what than now more currently pretty at

to are volume. the manage set well able pretty So up to be we

Gary Prestopino

got and last you've from what was when an increase So remember now X it that's I discussed.

Operator

next George question Sutton with Craig-Hallum. comes from [Operator Our Instructions]

George Sutton

at fly have have wall been the the on was Steve, not. a technology but summit, I would loved I to

set relative to sort lot there capabilities. any customers starting that seeing. could that of this talk that So for the walk a I ROIs analytical wondered wouldn't doesn't about, make of if pushbacks sense of track to of of everyone through just a you're those Thanks. full you to kind you're have discussions us It

Steve Herbert

response country see to here to combination a numbers basis, the companies. with in somewhere connections in our this in have a ROI right front our service. just XXX two customers. of bring they really numbers value customers some and We quite customers specific that not see specific XXX them the us get want onto data be the and of These the of and terrific. so of them the invite are very put have been their we sure services top These probably of and of tremendous we wasn’t front clearly to between it. of -- combination days the the these us a last that broadcast didn't and were as all, is -- very XXXX from and much front to private. just I'm customers. and room was around subjective for Priyanka ROI this sort with of They their customers top the face-to-face and We’ll best them opportunity a of of I They breed is a on are don't put meeting they’d better and the these in our and First

So I'm in -- directly, past. to to been able the able a be but to what superior that is would answer to I'm get it not sorry not they have ROI

George Sutton

it like still seems a it your would alone, upfront push Is this, ROIs of come you've cashless you’ve And for a satisfied why logistic let back, of getting? pushback? Is dollars from offerings of customers, are you arguments? those because just of some just sort What knowing, talk it a that having Cantaloupe. mean I sense the about new pushbacks piece

Steve Herbert

-- out got from in logistics terms are perspective piece we're through premium and have -- and the the in of barrier we've deployment percentage of way. the moving barrier many upfront, so the Start way we've of money What to of taken be XXs that our the we of Quick successfully customers to a our services, our that program. certainly and the services the It's taking so out

strengths to the the One was that from of Cantaloupe table -- a additional team deployment perspective. horsepower of the brought

in get were that about company, XXX%, route If data the all days, early deployments connecting -- machines of the because you history all to the were their their were to trucks. they deployments of think

them early So major days for deployment a a was the very from undertaking.

to of XXX% So a help of customers they take tuned to go to best finely our that. best And the those and take teams we're after people able to have team and two processes the combine penetration.

way really a the piece, which this it's time objection of simply in winded So, the is progress now to logistics a I terms saying, bump the speed really lone it's lone, it it's speed to get it done. substantive, and now, of we've made bump be well, is know long an a against used

our our really able things supercharge to was deployment the companies It we’re of Now, with two efforts customers. together. the one nice bringing

George Sutton

sense is for range that know million business your we as $X impact raise think I one thing the $X dollar us in just of of And complicated in Priyanka, stronger. versus and million your guidance talking it's a revenues but being somewhat crosssell what about of about crosssell, core can you give

Priyanka Singh

the the see see a of but L&T per ’XX. guidance you’ll amount of fiscal say crosssell it’s in in is month, some mean, there million bigger just is so core I'd you’ll don’t, crosssell, Most strength growth X of I bigger because impact within the there revenues in that of fiscal factor range the the ’XX, business. for the you

Operator

Our next from with Latimore Northland Capital Markets. Mike question comes

Mike Latimore

the of how opportunities? in kind quarter, you terms new XX guess many in versus greenfield replacing legacy cross the that of I technologies XX, sold customers of are that

Steve Herbert

want be clear -- good you question. clarify morning the replacing this Just mean to say could on that? you way. you When by do legacy, Mike,

Mike Latimore

Sure.

might of they are greenfield? to been Cantaloupe Just other that VMS competitor all vendors or of your one in have customers, kind you’re placing

Steve Herbert

XX, to prepared many competitor’s the that from can the a how moving they customer, What in the is to I mentioned of are be don't I actually say penetration, one who remarks customer using away went largest know, the I XXX% happened largest solution. the

I one about example, don't know give I the XX. So can other you

Mike Latimore

And that quickly these they sense live. they how deployed, you fully of to sort and kind then XX running, go a want just of get of are mentioned, of up

Steve Herbert

excuse into the move those of capabilities some the services routing terms turn to leverage them, sort in it amount Well, a them training they to flip switch able of as ensure they have such that effectively. the can the can matter deliver But were to able necessary forth. and the dynamic new of most help we to to little software fully do fairly fact the hand-holding phrase, that to so quickly. There's is is and use being of software, on just we that that

Mike Latimore

it? a connection it when terms about? And to in think of then think you’re you what about kind XX% of just fees per network add range uplift, a to XX%, software Is able should analytics to if we the

Priyanka Singh

between I’d a somewhere raise say Mike. it’s to XX% good XX% to be number begin a with would about

Mike Latimore

connections a then cashless And of only we in we about or software think guidance, being of those or connections either terms them logistics about the should being percent logistics. of think kind cashless should plus

Steve Herbert

been those we're to compelling it what run I software, connections, of of it'll terms percentage mix. retail plug for it’s their set but a I an logistics have compelling. very customers, it's know and but large offer business new of in business modules in Mike, start someone we've anticipate It's would a finish, software announced to perceive be, be but be unattended forward, from going think selling, and because a to able being to and literally they as have with We of a very solution both don't would will that high majority that as a cashless capability.

So, anticipate, the I core if might services, might for of think I take, logistics. but they'll eight, a eight all they take not some take of they cashless and would are there instance, not

Mike Latimore

much given quarter this revenue? did Cantaloupe And just how early, the you last question, have may to contribute but December

Priyanka Singh

number. combined about a XX% was for Revenue

Operator

follow-up from question Bob William Blair. And Napoli we a have with

Bob Napoli

signed customer of of Obviously, is to was? Cantaloupe, a canteen you of like the another What canteen. using one today large throughout the expand a I’m opportunity very franchise that Is So sorry solution yours. is canteen franchisee and canteen?

Steve Herbert

location at I the owned Well, the moved that a least large in exclusively, internal to they're believe majority, One the They actually, the I Bob, to large, they've using, over XX% two piece are software probably say are corporately are our to but XX% Cantaloupe organization. of of over sides range solution. the and years. canteen capabilities developed a some want don't There have thanks cashless for using the also XXX% and they question. actually to

on franchisees, share some and have and that's feedback and customers the that So very, opportunity canteen there that heavily we like a were going the really corporate customers of we those gathering prospects, to to customer now have and side, very of good. significant a terrific business think to right take by key the us with to I do position we for a the the strong have -- this is was There solution but franchisees very also and of crosssell. attended whole be

Bob Napoli

XX,XXX of Cantaloupe, in to I confused, overlap XX,XXX is little wouldn’t locations. XXX% then bit an that guess if almost using the the more corporate a be of

Steve Herbert

I'm not following you.

Bob Napoli

misheard, XX,XXX thought but said I USAT, that to XX,XXX was I maybe Cantaloupe that only I represented locations? thought you in

Steve Herbert

Right.

Bob Napoli

XX,XXX Doesn't if alone. I corporate the got it? XX,XXX mean, more to using, is And Cantaloupe that's than be to

Steve Herbert

a under actually license. was Yeah. That

locations suite into don't it's So kind the dig XX,XXX have on using of now. we SaaS different of it were with services. model and the essentially We our sort probably overlap, and a that to time full refer when system But to our that was device that arrangement. of

So it's different. a little bit

Bob Napoli

just still SG&A hand low the we or the of possible? the Do of SG&A long the on maybe any range next get. target like years your to high going that or margins is XX% to range is on get way full when even from And two down to the But that's this actually think L&T XX acquisition gets looks on Priyanka, into a before of is. this. it range your processing benefit target quarter your end XX end XX get the costs you'll over other what you probably above term

Priyanka Singh

me even combined quarter the let for recognizing capital you are with would that raise where in in our the basically a and first L&T So, be, two we of parts, to tackle where Bob. we’re pleased margins exactly company said and XX% we’re with XX%. Thank we question as

XXXX right see through raise if success, very the response could we position that and we raise fiscal guidance. it to in as in we a second continue range stick As to that crosssell now from and the but XX% our get want navigate we’ll the half to then we given, we be into see we XX% with the great to as have well

we L&T years of side. in to the get the decrease on the that given the have a an annualized cost actions will into now seen that’s the fiscal we've as see guidance synergies, of as percentage and XXXX. SG&A, on that the On over steady that a So that X we SG&A the basis, benefit revenue with of cross, million reduction start taken, we’ve the we

yield but there as benefit in that’s well. element So some be roll into will the we'll see that second the will half the year obviously of up full entire fiscal,

Bob Napoli

you're you on year question, just for tax last years few net income, the next if that that rate next would adjusted would be? and reform, tax tax adjusted what the at that rate or looking And use

Priyanka Singh

that that big this got or rate charge of charge. see of one-time So, part We’ve tax is the quarter, million million our this of you obviously one-time X can extremely a X that the pertains year, unusual. to approximately

fiscal expenses, year, down the the will think usual couple permanent see, M&A as of this I should get that XX% with our we differences the the there next it to get the part. into we of permanent range come as some to differences is of we most of For but out XX% years,

Operator

Herbert, Mr. time, over the CEO to I'm remarks. questions. Steve and further like showing for turn I’d closing call At this to back no Chairman

Steve Herbert

describe ongoing you team, really time talk the Cantaloupe interest addition, thanks and team, Technologies I compliment you us today with all I'd in Thank USA thank operator taking for to much, your the The the other any integration but fast fact to we're can other way it hit perfect, start. we than hope they know the results, and don't flying. off agree not difficult the I ground that all like can I to a certainly by to like do team, it's for and support. looks be And everyone sometimes very the to and it of want the to companies also with

want all terrific certainly quarter a day. that to thank So to progress much. forward you very hope you I updating regard. fellow employees Thank next of on you have our and We again our in really look

Operator

Ladies in the participation This does today’s your and conclude conference. gentleman, thank program. you for

a You may now disconnect. day. great have Everyone,

Cantaloupe (CTLP) 8 Feb 182018 Q2 Earnings call transcript