CTLP - Earnings call transcript Q4 2022

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Operator

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

Unidentified Company Representative

Bergeron, good Officer. Quarter and call Welcome the Ravi Officer; to afternoon Stewart, Board, Thank Financial Chief Conference afternoon, Call. Fourth Officer, Doug Executive Chief Earnings Sean Chief the of With Cantaloupe the is Scott Operating you, Venkatesan, Feeney, everyone. Chairman me this on

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

Sean Feeney

and thank joining today. you, Dara. for you Good us afternoon Thank

two transformation our working and strong we excited past been report results showing continued strategy. a am years, momentum QX the behind on XXXX fundamental for have For company and today of for FY to the I

on First, QX.

XX%. marks for and was fourth quarter where posted This Our finish last strong revenue and of up was an year revenue growth. XX% over total driven The $XX during in year’s subscription and million, growth we revenue the double-digit by to all it’s quarter. time quarterly high revenue the quarter the combined XX% equipment transaction fifth growth successive revenue

the also we by quarter, devices active customers and active X%. During grew XX% by

the for compared in million, the year. of quarter EBITDA adjusted Our same the was to quarter $X million prior $X

reserve prior million to a reminder, law benefited adjustment our a tax a year from state As $X.X sales to change. due

results. Now, annual a our from highlights few

revenue due winter last the to transactions a provided we months the record initial new year, during $XXX fiscal in on million, a despite a also delivering company full XX% in the COVID-XX. to we the resurgence For slowdown reported in increase September in guidance

million, driven Our management. initial disciplined delivering strong again last guidance. expense adjusted up EBITDA over $X.X was the was This and revenue million the XX% year, our $X.X by for growth on year’s

the sheet balance up throughout the growing for and that, inventory a we also I’d Doug? And our upgrade few our effectively and and hardware call words. EMV like with could Bergeron customer to meet our chain inventory cycle. supply demand our during We our aggressively XG over and base, the Doug strong We to of build particularly Chairman, and to large managed turn utilized ensure year. the

Doug Bergeron

we feel announcing Thanks, Sean. to replacing played on positioning the has at for and part Sean. at also like company’s appointed in succession, growth. year Sean this foundation team Board over the last ever that opportunity talent and retire us October leadership to the our Cantaloupe, Venkatesan more I’d CEO congratulate the the pivotal will Xst. and than profitability Sean fiscal results. growth on on years. and role of consistent Directors September. Sean we’ve at long-term the the end quarter two Ravi take delivering of as on of planned will role take strength are be Ravi a senior time our recruit been the the confident that will the of to able COO I a Today, the to Then

the his that the to to products, growth you as person is During of to other we have team if over Day, expand City in with and that, to He internationally right as into like developed York turn is a him, a our of investors but proving he members a call chance Ravi? him new COO, to many compelling person time Ravi. as XX. host for number Investor look will with as you’ll an I’d interacted not known of launched And to well in vision at our company adjacent which on Ravi yet Cantaloupe the New leadership markets. and December lead meet get

Ravi Venkatesan

market early preparation of by I us allow from under very on great to incredible stage. for an Cantaloupe’s and our company opportunity two and you, economy the humbled in that the at very last excited growth to position next am It’s excited space. Sean. I grateful to and you, been this thoughtful phase self-service the am secular lead Sean’s Doug, the received that this I still an years capitalize for mentoring development. over and am thank about The have this role tailwinds I and and capabilities leadership Thank Sean. turnaround is

We with partners strategy. on worked the growth the have external and our leadership term longer team Board,

at this we was Day take that mentioned hear products. strategic of You’ll reigniting plan in where which one multi-year year us through our of investors more detail. will last number XXth, December Investor led a Doug on more new innovation, to launching The

Combo a single name interactive unit screen. Engage launched interactive and reader to that full into a Just and devices a we telemetry touch Engage functionality card combined few; the with

launch coming quarters fiscal of already upon the over and build rich in roadmap that and We XX,XXX had the years. We have a features will these shipped devices interactive of capabilities capitalizing Seed in momentum year roll this year. to tool innovative XXXX customers Seed are and We of enhanced out across we the operations. accelerate that on an their see continued Sync,

was X,XXX acquisition Prestige, vending an machines able enterprise-wide a them operator to after example, large rapidly visibility. instant giving onboard For

We that to on of retailers in has risk within upfront upfront the is deepen where purchases. are our first subscription This SMB proof our enables allowed to its the of business, platform, bundled pleased their to greater eliminate future the with reduce us reception capital hardware new model ONE expenditures kind purchase new Cantaloupe hardware a capital market consideration with a reach obsolescence zero decisions. and

merchandize react provides Our the customers in to pricing Remote at the increases demand, and the launched ability Price NAMA on to supply dynamically. Change solution Industry April manage Conference

and capitalize Continental launches our at and weeks Services it innovative of campus to three summary, One improvements our our the platform that opportunities enabling would change it on partners of now clients, to product days. flexible take self-service Cantaloupe in college noted are incredible economy. results In largest more prices, the three takes the the to

and Moving range U.S. recent services has software secure Ventures, including to dividends. transaction we from quarter, payment to they our expand we’ve processing been cloud well EMV the enterprise-level with most Pepsi Seed as that Services, bolster In to Cantaloupe the position Sodexo’s as sales, XG resources in and our our expanded additional we’ve our the our platform. relationships shown purchase Bottling systems, added InReach Continental products compliant which leadership services, of able

upon suite cloud to our more of Seed their software selling helps strategy, rely areas business With solutions relationships for critical Our meaningful full who Seed operations. Lead create with customers of us managing

Seed Price who have add-ons organic gone for new Remote vending win all Cantaloupe, with Change. including HIVERY essentially and Another in recent is customer

seeing are also win positive We momentum with backs.

left For to enrolled and competitive example, had Allison Within who months, long twelve ONE for subscription platform Industries on service. returned they bundled Seed time a customer, their was a connections our Cantaloupe Seed solution. Cantaloupe’s X,XXX to of

we’ve Jeff of our addition channels to the Dumbrell CRO, growth. our expanded accelerate as With distribution

the connected For was devices. Seed of with we’ve Group, ordered renewed Wittern contract Cantaloupe our thousands reseller example, recently a our

we year, side the our to business, new Services during long-term invested Web migrated migration and Beyond the an and service In payments as both sales Amazon improving cloud. replication we stability operating and to our to leverage in network in focus This well easier internal teams, international reliability gives and continue of products driving best-in-class and systems. the July, path to adding we further our markets. our IOT and platforms as on G&A our

completed to also will In conversion future deliver addition, our we’ve which cost FICO, savings.

and Sachs of founder of extensive experience Technology companies technology that Logistics, September CPO XX. as startup. team at We graduated Indian will Gaurav and and other am driving he of Officer join it where a for I’ll in continue degree responsible its transformation. the as a our last Georgia Gaurav for on to Technology leadership financials in serving Institute to and from happy the Singal to Goldman a with Gaurav Cantaloupe from Delhi the President scaling now our at and innovation. Singal from of has Chief and Cantaloupe experiences Computer XPO announce review strengthen University Scott new former comprehensive Executive CIO a I outlook. Vice Technology technology President the Corporation a His Masters to a Vice was over Scott? Lottery the digital Chicago. turn Science Chemical mile the in Illinois, Engineering the joins include, at

Scott Stewart

Thanks, Ravi.

was During fourth $XX.X driven as million an and XXXX fees another XX% $XX.X of revenue and million. the million, simply quarterly Sean FY QX year-over-year, we sales revenue $XX of subscription of transaction increase quarter, achieved equipment record. by mentioned,

operating expense XX.X% which million Total Recall of Our XXXX transaction Net from in income quarter, quarter grew change. record quarter consecutive compared Total loss This mid-teens. compared year’s one-time million, state platform. a in grew share our transaction to prior to fourth in Subscription $X applicable while margin X.X% FY high year-over-year, subscription million common to in from on the XX.X%, QX $XX.X in prior compared the million $X to in share, million to to the marks is year. to revenue of negative compared quarter per fiscal the $XX.X tax the OpEx period. margin a to XXXX, combined $X.XX negative million, fifth was was the was to XX%, for revenue $X.X revenue benefited X.X% fourth EBITDA in on of transaction year revenue transaction fourth quarter our in of and margins prior same equipment million now flat in equipment law and compared or sales or in revenue $X.X per revenue for $X.X prior pro margin gross revenue was quarter period. due the shares continued was fourth gross fourth $X.XX XX.X%, reduction transactions also was XXXX. value a Adjusted improve the reported prior net mix. for quarterly We've our due dollar in of and XXXX that the XX% slightly total period. quarter down QX the

in million and previously equivalents the sheet inventory $X.X chain competitors’ to to a in The our million. year, $XX mentioned, prior is time benefited made inventory issues customers. to to effort conscious service gave to our competitive the affecting year ability Relating when with our liquidity, advantage us on a hand adjustment by a from sales $XX sequential fourth to and we were the increase due supply million. cash reserve. customers. increase quarter This decrease safeguarding our Earlier a balance at tax we our cash ended of As

representing Based revenue EBITDA to U.S. $XXX to between and million; $XX to $XX total XX%; be total be million operating $X to million see XX% GAAP we million guidance. $XXX transaction million combination $XXX Now XXXX XX% and of of and $X turning and between million. The net be following: growth cash representing adjusted million total between flow revenue of on subscription to XX%. today, between to we expect between what will to be million; $XX million the $XX income total $XXX and million growth be and

We With as expect turn and equipment sequentially to expect we revenue operator conclude but the first call revenue Q&A. Conversely, year EMV upgrade year. and the will transaction to subscription I half Operator? be the we that, relatively to skewed cycles. XG the the of ramp over flat Question-and-Answer year-over-year, throughout the to for now Session fiscal

Operator

question from Kennedy Instructions] come will from the Blair. William of Thank you. Our first [Operator Cris line

Your open. is line

Cris Kennedy

Hey, Can afternoon, you about, for you long-term you remember on, generating on thank confidence can business thoughts were long-term call question. I you at good and updated you first the give your XX% least the talk just taking XX% talked growing at objectives? least Doug, operating margins. and in in the about those

Doug Bergeron

am get software to If the I operating traction upside Equipment we razor in on, razor be that new diligently we I to see and in the more a that. Rome now Chairman a model. wasn’t we mean, blade in the get recurring fact transaction I as geography growing are but mid-teens. but I built That’s and out that’ll leverage. Yeah, the of safely said which to pointed should flat. working the growth the be see, business CEO, positioned day, to is and lot great Ravi as be

You it software what the not I talent, have and structure only I have for the we continue need the out that is upgrade innovation, sell top invest stack think We’ll and know looks But cetera in those get growth. that them. we margin on systems order in product business new established territory to, of like. the there and sales stack positioned transaction and don’t et great to marketing great and to

year. We year. are last year positioned than next more This for profitability, more profitability this than year was

time. you depending up So, why long to the over on want profitability go I pull up to reason I continue mean, shouldn’t see curve, how no

Cris Kennedy

position? you of role. just, you the Thank Great. lot just enter congrats you Ravi, your if Can new then, you. could about new the And as a on guys. priorities talk kind key Thanks

Ravi Venkatesan

Thank question. as and you, and plan on last the and say over priorities I strategic we Sean year mentioned, external much other The Chris, a with longer and the partners would very good been robust have term with a I worked Board established outlook.

in a going are to and discipline case which execution to the of start there to value that So executing the priorities be matches the sure make is the that on lot up to unlock. strategy

Cris Kennedy

you. Thank Okay.

Operator

moment for One you. Thank our next question.

will question of Mike Capital. come Our Northland the next Lattimore line from from

open. is line Your

Mike Lattimore

All and for Thanks Sean roles. congratulations Ravi your new right. and

is Just of several, I business top kind the I say? guess, driver the be the maybe subscription Ravi are on know maybe three two main subscription would the this let’s year? here, what what you there growth see of or but

Ravi Venkatesan

razor little subscription pleasure blade the Mike the from great hear out, a to question, of bit growth and Look, Doug as Again, always it’s it’s a you. and pointed model. razor

terms connections growth out software naturally in top So of the of subscription that. our we more we get there, that layer on drives that

the Price in with merchandizing artificial have we intelligence-based pipeline. a those range products and In number add-ons the Change Remote of addition, we’ve of the the diversified also product,

on is, those growth So, different we per of more connection. more see subscription of on the is is driven are second top add-ons putting each layer continued levels. two as One connection, now by revenue you’ll and increased what connection growth because is, we

Sean Feeney

I a And that then, then Mike, bit. little to Ravi, add would add I would to that,

lot We’ve Cantaloupe of a and see result seen going are through also our to of that’s far year. So good program, we ONE thus the continue as expecting to expect well. we growth really out a

Mike Lattimore

and I gross how migrated you think have think I And good. imagine. your now. year? that this should then, guess, gross customers we transaction to But should about margin Pfizer you margin all I Very subscription Okay. help said

Scott Stewart

the mentioned third we gross for Yes, we so, first revenue. are in overall, transaction on the and mid-teens that quarter on the margin

from that had the to continue. that We’ve to worked measures. Overall, some expect We we saving other on also savings seeing are we migration Pfizer. cost

get additional So some that just you contracts of renegotiating incentives. our some

the to within little just said maintain to to more year. go that then as we that We improve on as mid-teens subscription that’s expect maybe remain, are well. the XX% we even And side, in software anticipate the margins. we XX% the So we through the what bit a

Ravi Venkatesan

the drops the add on expand on hand, with And to gross a no as the bottom side, other that are on one would that transaction directly continuing hand There associated is I to margin, reminder the G&A we that margin it. line. incremental

So, as it’s pretty revenue business. and attractive us margin for a

Mike Lattimore

makes Great. Yeah. That sense.

Scott Stewart

you. Thank Great.

Operator

from next Our Prestopino Thank Gary comes you. question Barrington. [Operator Instructions] from

open. is line Your

Gary Prestopino

everyone. afternoon, questions here. Couple Hey Doug. Good of

it will be, still equipment selling you like given Will have at back dramatic are equipment to you As it looks the upgrade, half year point? at upgrade XG a but the the year, you this as that last is the margin of not going said as out as flattish. be little this negative think this over come of sales I be to a

Ravi Venkatesan

Gary, margins as no that there. breakeven to having be negative imperative up think sell should we as will upgrade, longer or we get back margin back will and them the come

as go adjacent do markets, strategically the where bit get recurring into Now, may to subsidize always there deals of we revenue the international bigger into side we where that. margin that we a geographies back new and on opportunities are little

Gary Prestopino

the ONE on device remember that Is will your own with balance Okay. if you actually sheet. And platform, Thanks. correct? the correctly, I then, Cantaloupe

are a third are You not it not party. this you selling selling selling and this then – okay, device to

but you there? for it out don’t guys on is to So, me about you you much put number, have basis are to cost how give how and much costing exact a an devices these

Ravi Venkatesan

cetera. to chain of the But those competitive around disclose as we’ve well don’t with situation, mean, piece there the both for the based supply situation competitive situation. respect together of as is kind numbers reasons. et numbers it But sensitivity we lot I a you’d those had Gary, margins on

Gary Prestopino

trying just what a capital as on get am this be is Just going couple you … a other basis idea an to I And your of grow to Okay. outlay product?

Sean Feeney

to Gary, on real And sorry in know. Cantaloupe let – We Gary, jump do program. ONE better you just just the margins quick make a just lot

be want very I So on to that. clear

the equipment So, were the with X.X%, there our year on for lot positive margins on are around negative ONE, side. more but Cantaloupe the

Gary Prestopino

me then, they your look margins, XX% customer up that’s year-over-year. were And ask let Better lastly, like counts great. Okay. you,

active Your were up X%. devices only

of did you QX? a So, back half I smaller out new year customers? of the there? not are in devices do Or Or bunch sign bunch you of just signing a that the have guess, whole active customers

Ravi Venkatesan

pace. the No, what we we is that XD should and cycle, Gary, that of navigate and that is side as good a keeping as spite to equipment, moderate of starting we active it add-on if the replace that EMV in of on is, is revenue significant devices, the story happens you device customers the The as existing skew start out getting towards cycle, will there much active tell devices numbers, And layering right? are more we be you in upgrade upgrade of active strategy our doesn’t active increase the the the as well the more growth year-over-year successful. news there growth that see

able per connection. revenue more we to So derive are

Gary Prestopino

Thank you so much.

Sean Feeney

our at And the also out find Gary, as higher well. you’ll markets SMB sales then, margins are to that

Gary Prestopino

you Thank much. Okay. so

Operator

thank next term we not meet for about of operator. weeks Investor I growth his to Sean further quarter excited closing you back our Venkatesan questions Thank Thank lead Ravi speaking to like just for November. December showing say will our where detail. of in would I over turn to Q&A many to you. forward Have And reporting and hope at great remarks. call End few strategy in contribution am the look you We longer queue. once the many then first to in I’d of again our and more and goals results you, Day opportunity review a Cantaloupe. like evening. I on how XXth to any the over to I the am

Operator

you conference Thank concludes participating. today's call. This for

You may have day. Everyone great now disconnect. a

Cantaloupe (CTLP) 9 Sep 222022 Q4 Earnings call transcript