CTLP - Earnings call transcript Q2 2022

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Operator

Good day and thank you for standing by. Welcome to the Cantaloupe Second Quarter Fiscal Year 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation there will be a question-and-answer session. [Operator Instructions] Please be advised that today’s conference is being recorded. now [Dara hand Dierks] would to conference I today, speaker [ph], Instructions] like the to over [Operator Investor Relations. ahead. go Please

Unidentified Company Representative

Thank Sean Officer; Feeney, and Welcome everyone. Executive Officer; Earnings me good Jackson, Chief Cantaloupe Chief the and Operating Venkatesan, on is Quarter With Conference Chief to today call Wayne Ravi Second Call. you, the afternoon, Financial Officer.

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

Sean Feeney

for joining afternoon and today. us thank you Good

revenue are year. quarter pleased results are to to deliver confirm the record report and for we strong report We on track a

with in and Second rebound the we year-over-year third driven revenue quarter quarter growth that double-digit to growth way QX. top-line revenue growth Transaction almost XX% year’s a This subscription year-over-year increase quarter. grew and quarter, in the XX% third customers. posted top-line the grew few in volumes, revenue in equivalent the from XX% A to transaction active a other the highlights total growth for another record revenue XX% in led continued doubling Equipment second dollar XX% prior fees grew compared quarters fees all by quarter a the subscription last to row double-digit periods. record consecutive revenue categories. include year-over-year, compared and year-over-year. with In XX% was

of As products our services. our understand value evidenced our results, proposition by the customers and

organizations revenue scale to of vending And our Cantaloupe customer largest the notable software a customer services service Revenue new the addition believe acquired We which agreement. and experience USA, To comes like customers their ePorts operator continue as us years their as We optimize opportunity quarter operators and GXX-S their globally. converting company. continue will purchased as to to services few in Beverage, continue to their continued I’d building just quarter. are Pepsi to new to a and purchased scaling customer purchased us X,XXXs Jeff acquired Continental base connections. momentum, national be first of focused to brought in XX and sales expansion veteran, recurring extending build of engage latest ways we of recently businesses Dumbrell, during performance well was a win Larsen this to Admiral technology seeing and devices on during from of Cafe QX. on several A over our bottler, Refreshing to devices examples the its customer [ph] in the of high providing payment Chief represents enhancing [cashless] independent Jeff quarter. expand theme with from share sales Vending, and payments Seed our X,XXX Officer. existing the businesses. a we

will During United expertise. benefit international and of Pacific, VeriFone, Asia confident from the he momentum, industry revenue and Middle his vast time of will served positive he at Cantaloupe where believe Executive his And Vice I continue than outside as States. Africa President East, doubled during tenure. Europe, our I’m his particularly more

building continue across support. and improving service progress on and delivery to self capabilities, service We make experience the customer

customer XX improving the deactivation, transfers the service callbacks. times tasks, past we’ve hold months, customer doubled services and problem resolution Over We’ve automated and including times. minimizing team, certain device

on that our relationships these and am focus strengthens are I improving customers, service, increase I’m seeing visiting which feedback hearing to they results customer leads out sales. from As

I functionality, the to revenue and continue whose develop modes to Ravi? release. initiatives to Chief Operating Ravi enable payment, a new customers new was increase running of over exciting engagement in like today’s also business through earnings consumer to efficient tools promotion Venkatesan, Officer to for We call well announced as new additional turn our as to operation. would more

Ravi Venkatesan

This interactive high has quarter. is To this received a for experiences needs, we very of by which demand are retail XX,XXX purchase focused unattended exhibiting our space generation and next simple been shipped well customers. all are our over these the touchscreen devices on. Consumers Sean. digital including commerce, Thanks, seamless fast, Engage address areas we in ePort during that device,

our make ePort to student by campuses This their community purchases We to also usage ID that vending drive same-store capability our machine. gives and our launched students virtual card engagement benefits and the Card Apple is universities sales them. at and up driving customers product with at a wallet the Campus use helping from enabled for

markets own more own to XX% recently Our it are a Yoke be app that recent and better the release purchases portal. significant and were well at This Yoke and Micro those of than found the as X Version retail survey, crypto consumers touchless continue to on willing between linked Customers consumer who that segment kiosks industry. and simplifying Micro We to along point experiences to sales the product it the of Yoke Market cryptocurrency, one-third serving engagement includes now have mobile and the reward greater programs. XX unattended upgrades which of the both the loyalty Yoke checkout Yoke promotions use operator more pay consumer flexibility further fastest trend the and commerce. markets we of A sale, of wallet. XX ages the for businesses and if as to is with consumers to with tools more of drive as ensure the to deals, growing consumer completed continue shift expect our enhancements process. management will the a

use our growing, work with [ph]. popularity we ownership solutions through on enable of and to cryptocurrency partnership the PAC With their

also are our card We to EMV-compliant devices, the touchless enables partnering to which and networks payments. transition customers secure with more

markets serve As in devices today. we have the reminder, a we the most EMV-enabled

targeted Customer ago, this provide announced of are Cantaloupe’s partnership store recommendations, merchandising top-line power boost are high, optimization, capability, market react is and customers intelligence for warehouse device. launched all additional sales price highlights customers with in to calendar critical services in in operate new interest the invest product and remote sales. to space developing also rollout with mobile powerful inflationary enabled customers first tight demand this will increase our this manage which and easily we a HIVERY, product to labor take expect market and to of app, in and full our enabling execute We all operational of of same new purchases, added This in and due for the drive lack especially of levels quarter, algorithms transfers, We the final we continue labor initiatives to using year. customers will to pilot to to change a customers product that and real tablet artificial efficiencies. a way effectively. enable proprietary handful customers the staff from cost improve light conditions. HIVERY’s to A weeks consumers half our few to tight This shop via particularly and today’s time or solutions availability. warehouse labor product more our A empower inventory additional

program. We now would interest turn Sean. a have and I like of to this already back to are the over seeing lot call customers multiple piloting

Sean Feeney

Thanks, Ravi.

the drive recently our outside front, of the on United unattended update program forward unattended Partners an penetration International to in providing program We international to retailers quarters. States. aimed market On unveiled we retailers this with the and look coming

projects. We’ve to X gone continue the within large also work improving on We operations live company. on

First, to implemented sales project Also, quote platform. our our X contributed gone QX we configure systems live strong onto have our consolidating and NetSuite, price ERP has X performance.

to systems invest to provide internal leverage. in continue We operating future

executive team to our earnings some way transform Scott in announced has the Officer and to our Wayne Ravi’s release, of reporting may promotion our our you and Jackson Wayne X. partnered As for in addition from tomorrow, Chief Scott systems. seen Financial to to finance effective to updated operations we financial February have decided changes have Cantaloupe, making retire promotion. Stewart

like been his his at joined Capital, several to greater X to I to the Hudson that, detail. transition Capital, have of would to with months, the myself call role Harris May as financials over Ian look like and XXXX. Executive Founder a successful to I work for will would Bergeron, engagement continue and the has resource Board With Analyst of strategic contributions Directors. Directors Braunstein through and and I Ian over Doug our forward Partner Scott a other the initiatives. to like on go since in and continued our board shareholder, X and Board to me next the many of Also, Over turn in Senior our to valuable will and Doug over last Wayne is this our Wayne? to company to Ian Co-Managing years Executive Chairman. in board thank on I would representatives Hudson both welcome Wayne and which the the largest

Wayne Jackson

afternoon, everyone. good Sean, Thanks,

revenue devices for as well demand During increases industry the transaction in of as migrates continued trend as XG attributable growth to year-over-year fully quarter, technology. our we strong second to volumes,

revenues. transaction and last quarter, reminder, disclosing a a breakout subscription As began we of

the by our XXXX detail also manage in of is the our disaggregating administrative network to expenses. to XXXX year. provide revenue we the processing general end QX of business. we closer transparency, second customers XG FY additional to XG the selling, year-over-year We how fees presentation – revenue Due operating levels new as statement revised off for in equipment and year-over-year, to volumes. expenses driven The $XX.X and by million, starting by a grew exceeding primarily XG the XXXX. volumes was increase in fees presentation sales the XX% year, in to of of subscription income and XX% more total intended to approximately of driven XX% fees on million, of and held dollar upgrade calendar Subscription XX% devices year-over-year. transaction delivery XX% company quarter, to increase $X.X subscription this, compared discontinuation and million. equipment until XXXX support expect Transaction increased increased a the record. revenue increase The the continue fees many was with second increase we’re for in currently in last and transaction which year-over-year, QX Equipment of $XX.X quarter XX% is reflects pre-pandemic devices

million. or year-over-year. margins to to was Adjusted X.X with XX% year and As Total or to equipment negative second in higher million utilize our customers. totaled gross transaction change period. reflects customers from to company’s prior compared in to the during $XX.X ended Subscription QX million the our $X.XX loss XX% shareholders primarily for total The second million totaled second in we in of objective operating $X.X million was was XX%. quarter quarter new XX, mix second QX operating of XXXX. technologies million QX general down a the from XXXX Net in and sales. margin of share versus to margin of XX% the of expenses fees Total margin second $X.X $X.XX to customers of liquidity, by $XX.X a innovative and decreasing sales increase $X.X million, quarter prior in for due Active the the devices in sheet hardware in year expenses year prior historically X% quarter. and footprint the XXXX, transaction change as FY these acquire offset an compared year and our revenue on and customers. increased quarter increase revenue reduce strongest XX,XXX applicable per prior reminder, The a year-over-year X% share, fiscal FY gross balance EBITDA margin $X the quarter, December second margin for savings are XX% compared the quarters. to quarter administrative quarter’s to in loss Active an X% cash to period. and Relating prior with cash million was in per in negative expand the $XX.X the the common year. was gross QX Equipment revenue expenses existing to the invest equivalents improved

between We fiscal representing guidance issued in be growth to XX%. previously remain our $XXX XXXX XX% and continue of revenue expect million, our year to Turning $XXX to year-over-year million guidance. and confident to

subscription as on and and from subscription expect revenues as grow customers. to We existing based volumes, and transaction transaction revenue increased continue to new dollar incremental well

the second Net $XX.X and quarter. be applicable million. loss $X to to range And grow between While is expected to will common to weighted the more shares half million adjusted we million million. expect it fourth equipment be to expect XXXX, and of revenue $X in between EBITDA $X.X we

to continued and year. now challenges negative the the we supply operations expect build and breakeven $X the for be flow Given from cash our between whenever need to possible, levels million chain inventory

been with team greatly Finally, Sean since in accomplished I current have enjoyed has the the team leadership leadership and been working place. as much has

I Operator? several well Cantaloupe over I months, to operator the out person the over the will for the the now is prepared right for success turn As transition know to in next drive Q&A. help Scott is I and future. call continued

Operator

from [Operator the you. Mike Thank Our first Instructions] from come of question line Capital. will Northland Latimore

You may begin.

Mike Latimore

Great. next best on there. nice Thanks, of working here. Wayne, with you, results Sean. luck in And your Congratulations the very venture nice

Wayne Jackson

Mike. you, Thank

Mike Latimore

gross is the the Is So, I guess, good it sequentially. think number of to margin, a solid on subscription for that transaction and rest seemed about up very kind the of year?

Wayne Jackson

– subscription for going Hi, we level reason are the Mike, at the this is yes, fully the see expect to is about answer And grow. Wayne. we’re we revenue is to to It see volumes that to is continue transaction and yes. the continue

Mike Latimore

that but the said? – similar And it. what you forward? gross should Is margin Got be going

Wayne Jackson

about asking Yes, fiscal year. you’re rest the this Yes. of

Mike Latimore

maybe CRO, of you of other kind your would emphasis what here? touched would top little areas new area International Yeah, is okay. focus what the but a X think it of Great. And I on – sounds like bit, big a be

Sean Feeney

said, do places have on very had VeriFone absolutely a distinguished Well, Jeff to Jeff recently we’re relationships has there is network Boost as and at strong Mike, most Payments. we’re several to looking and expand career that that. an excited and area to a board. Jeff and long into, other International I

Yoke we’ll and the people is development And that selling on in more our we we’re X.X in there’s And here then hiring those driven for areas. now big price Secondly, last huge remote by area think opportunity it second there. begin adjacent a half the Micro or is and and Seed with markets a growth subscription charging change expanding driving Market, launching basis. business

Mike Latimore

for just into base, more into if then Okay, a – does view up-sell cross-sell, little opportunity you provide kind current And just could look the great. the to how any feed your of that? pipeline

Sean Feeney

their to focus I’m devices But pipeline. on looks that. never the And from think operators XG. upgrading seeing the to XG I we’re turning happy is, do what from with good pipeline

the the another of of will out upgrade But, to beginning see we’re push now are kind to I coming COVID EMV beginning issuers course, back. compliance, do Of hold which be people card believe, cycle.

which customers Secondly, devices our to that of to we they many acquired and we’ve installed in XG to Seed competitor adding have the operators they M&A. M&A and base, to is from see And software, more are activity. – their we’re what those XG doing many doing see well is, begun EMV larger converting are customers And as as more from happy in upgrading the to that them the ePort. cases, to there

Mike Latimore

very much. great. Thanks Yeah,

Sean Feeney

Thanks, Mike.

Operator

come line from And Blair. our question from of Cris will Kennedy William next

begin. may You

Cristopher Kennedy

for thanks question. Hey, taking guys, the

can fees, think we we it Thank of you on a X% sequentially growth growing line the Should that should talk On How at the sequential you. item? just look year-over-year? basis subscription about that? about or

Wayne Jackson

It This Hi, certainly has Wayne. sequentially. is been Cris. growing

far, on but is goal, think a I question touched the of more. longer good for this to Sean our that’s term, remainder estimate. So year as But fiscal the last grow faster,

Cristopher Kennedy

you longer And term growing your can term? Okay. dive goals that I for guess, then into just line item? that longer

Sean Feeney

is this Cris, Sure, Sean.

are We XX% penetration focused that. can as we’re believe And XX% the the question Mike’s about, that of we to continue of industry I’ve that we on to believe expand penetrated. talked to Seed, absolutely we

a room more believe and seen So we’ve And rising, seen per that We about product. monthly go to device very we’ll inflationary to very be add customers good and plenty a going with what we’ve month. is prices seller, calling RPC got there. is And more per of that. subscription and we’ve the us good

the and interest we’ll have which several adding be Ravi And kind subscription. and has year. product that give us mission launch now call, the additional add additional a device lot gotten every customers that widespread month which to with in I’ve per an XX is module, piloting – as of months HIVERY fee we in can of then, an of Third, per are as half a to XX will to this every we basically we’ve said we’re in

you a additional classic if add revenue subscription month think of that per per on basis. add want model, modules to So software additional we a

XX%. starting said, I Wayne FY But that sequential that the move that right. our of will can for to grow. to continue next will as look So, what probably as – And next to goal July XX grow that the get over there I about subscription is we goal. my XX And, couple I towards XXXX, expect and expect to think into we kind would an of quarters would I is it continue aspirational move what That’s months. growth in

Cristopher Kennedy

helpful. to you. whatever efforts little Thank charging, whether Very it’s vending more you. Thank just And can it a diversify go core bit markets then you beyond or the is? your of EV into market, micro

Sean Feeney

It’s term are part that many with seeing of vending great And course, said. in for a machines in redeploying as Sure. Jeff’s near is is, question. focus opportunity is biggest we’re big operators then other adding and markets. what markets And a micro micro I The of locations. us the one they

markets subscription that this showing a but that fee. them And week market replacement, micro our lift believe to we very at So is a of product. customers not necessarily micro I one large our was

focused charging we electronic spaces, are market. the adjacent the On vehicle in very

of and lot interest a fragmented back post-pandemic it’s As are interest. in you know, that we’re there. a market, lot on of pretty that amusement, also come seeing focused and Today, there players

unattended very and with adjacent Cellomatics We that and washes devices, markets car well that stores, an software And both through with payment we unattended and Yoke [ph] and it and opportunity our increases get partnerships areas. believe the of also there’s grocery, other convenience of our significantly And we then at continue are in we areas platform, going when other taking the TAM, we think primarily works world. the like there’s international, working laundry, partners there. looking payment in and

Cristopher Kennedy

Thanks helpful. lot. remind of then vending you current a just Very And mixes just versus one, the one last connections what non-vending? can us

Sean Feeney

given I of But north is a total that. that whether of say probably number connections. like don’t our we’ve I know XX% vending would

Cristopher Kennedy

you. Thank

Operator

Sutton George next Thank [Operator from Craig you. of will come Hallum. Instructions] line from Our question

You may begin.

Unidentified Analyst

think Thanks I is provide what more program? a you’re this on processing, International But And sort distribution? little out taking for the for guys, there? types you to is countries can make start you of you then Could sense you looking question. target called kind for or find mean, most on Hey, give as it a my most James geo? LATAM often of you George. specifics any which Sort of – attractive? of which on detail Partnership partners you

Sean Feeney

Sure.

let last the take that. of me So part

because software, want America, after gives Development of we of we’re program. enter Latin way Jeff, is see a partner leveraging opportunity be our can is is expand current add [Fiserv then very can successful And be potential with And it a that and that [ph], or us program in catalyst] basically into we or is, Both areas Executive us it a and And some think resell International VeriFone our America; the payment Partners kind program. resellers there. that’s that very may definitely who partnership is, partners, in the First successfully Business we we U.S. it. can that. label who where our we once products can provide modeled current of what market the in we Mexico think in cases, many Fernando, we’re who our to in there some for executed local software, partnership think Latin and white in things to find to to add situations market, structure our providers we’ll operators capability whether need lead we

just the it the So of provides easily for others team it Cantaloupe to but of and has U.S. than structure a part our the on take areas many competitors world people become and to flavors,

Unidentified Analyst

Perfect. Thanks guys.

Operator

further remarks. I’ll closing I’m any for the to in [Operator turn Instructions] over queue. it Feeney not Sean showing questions And any

Sean Feeney

the in COO; just the here moving one board Officer. into and CFO on you to to at Chief Jeff that partner. He’s becoming as And we’ve you I’d excited significant progress more Ravi a been operator. great Dumbrell we’re and Thanks, add time about Wayne. been thank Great. Cantaloupe role; Revenue with can made see, is like the coming Scott future together, we’ve

had to And quarter. So year. strong we is very what strong said, a on our we’re we way as a believe I

So for soon. and to interest your we forward talking to thank you look you

Operator

today’s concludes you for participating. conference Thank call. this And

Everyone You may great have day. now disconnect. a

Cantaloupe (CTLP) 4 Feb 222022 Q2 Earnings call transcript