Earnings call transcript Q2 2023

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day and thank you for standing by. And welcome to the Cantaloupe Second Quarter 2023 Earnings Conference Call. Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your speaker today, [Dara Dierks] (ph), Investor Relations. Please go ahead.

Unidentified Company Representative

afternoon, good and you everyone. Thank Cantaloupe Welcome Earnings Call. Quarter to the Conference Second this on Ravi Stewart, Financial me the afternoon and Chief With call Officer. Scott Officer; is Executive Venkatesan, Chief

today’s A this call, materially than remind forward-looking including, by begin Before views information, forward-looking management’s market Cantaloupe like facts and forward-looking of of from to other events but statements reliance I cause certain results issued discussion reflect press in in is statements in new such of all release included conditions. nature. the undertakes which to with not not Actual or on we obligation today. and included date any made. in to you to, call, forward-looking statements from our historical to because could no those are that statements, the risks are only Listeners update place any the statements would factors, differ otherwise. differ contemplated the earlier financial limited such business, economic that undue future they cautioned and statements detailed of of uncertainties results because the are actual materially filings as SEC forward-looking and events whether the could

Relations and financial of well measures be This results. which of of press issued our these these operating at reconciliation financial GAAP comparable These found we discussion will in substitute Investor measures for, posted call loss. net measures, Details also GAAP non-GAAP website measures section afternoon, financial GAAP directly things, a can include presentation are a income most for most of this been such evaluating financial our as measures, the the Cantaloupe's on as www.cantaloupe.com. between non-GAAP to, certain our has release as comparable that among and supplemental financial non-GAAP not a non-GAAP financial believe or measures other are measures, useful financial

the turn call to like would I that, Ravi. over with And to

Ravi Venkatesan

CEO financial results Dara. I'm afternoon the was business year quarter and second for thank us This the vision report we and leader, on are market Good fiscal you, progress of that you joining providing which become our to led from self-service XXXX. technology first made today. my a our and global Thank solid by strategic commerce. quarter as pleased to of lot initiatives, powers

self-service industry, held Square We us a December Three Cantaloupe's to NASDAQ, for successfully our the on We Cantaloupe's immediately footprint of well expanding in of Market Investor presents market products. closed positioning Day was first acquisition while the international accelerate technology high growth in at also suite full micro attended. which

session to During key our were analysts here our meet and Listen able team. this executive vision to strategy. and customers investors and

a opportunity ahead shared KPIs us. also see long-term the and financial we demonstrate company onetime outlook We the that for of

the on management focus scaling Our by and subscription margin this device high remote doing were software, revenue selling to be the program including continues seed growth. in subscriptions change. We accelerating price and successful Cantaloupe

eliminate subscription only Cantaloupe upfront market self-service capital in the enabled our a As to platform reminder, that the operators bundled ONE expenditures. is offering

We interest the business small our to capital continue light medium growing of offering. see from and strong this customers, nature given

by XX% in which transaction reported for a grew XX% in strong record total record which a XX% year-over-year. year's subscription record of We results and reported We over We a million, $XX.X also year-over-year revenue, quarter. financial reported revenue in second up revenue, QX. grew by last

pleased year, we we've strong revenue been While well. the with of growth acceleration the in in half half subscription the of as anticipated trends subscription fiscal revenue an the first second

for growth the the throughout ramp high-teens year, We in in the continue to expect subscription growth full-year. to resulting

was strong as year-over-year. Equipment well, revenue growth XX% up

due EMV XG are to there installations us, is delayed some behind and largely upgrade cycle the labor While shortages.

businesses, ONE our of compared through of year-over-year. by And small offering. many totaled to clients the year. quarter, the was compared the of driven grew with We and quarter year. XX% adjusted the our at second last second upgrade second X% end $X.X helped a cycle. added devices the Cantaloupe XX% their appeal Active up primarily the importantly, XX,XXX for the EBITDA medium We to year-over-year, increase prior of million, customers Active new in year-on-year are among quarter customers quarter quarter our the of pleased have X,XXX

business additional highlights Now to to move quarter. from a few this

sales, in pleased the finance. of integration Three early far we functions Market, progress the with marketing, as Square still we're are and While HR business such thus integrating

achieve saw and a posted who to they've wins acquisition portion replace and to market future competitor Square sales -- is vending including, is located committed an automatic early locations with their we Three we with priority We've Michigan. synergy the sales with to number agreement a Market of already the reached in opportunity units their of revenue Our Cantaloupe. have growing automatic

Vending to of of President chose because higher profitability the was Automatic that Three and a us feature-rich which see our (ph), provider Market Square their previous platform, to on fee structure our allows comparable stated. We More] Sales attractive [Adam markets.

the Three the my Market for kiosk Square been has team seamless and to we to my with Cantaloupe and both grow installing transition continuing future. look-forward in customers, Our

the been company about among also reception combined catalog existing The offerings. exceedingly customers positive has

from Madison a micro-market business Coffee Square. to Vending and For example, transitioning Three customer their Cantaloupe competitor is

scale a new based with Service, us. multiple Three and to Lastly, continuing markets Grid Square Market customer SGM their installed are footprint Sweden successfully

and New strategic of to continue of for areas customer signed-up all companies York fleet. vending for to Cantaloupe non devices EMV term Seed agreement We long change organic largest services our other the CC strong growth with business. area into the upgrade independent remote refreshment their also one and vending, a in long-time see also of price entered their in Metro

kiosk financial one to at city. largest in their expand the Additionally, they added the markets more micro XX of Yoke institutions services

half switched back to and to customer a Seed the Seed the Pro, of includes all had onto products York migrate Crickler like Seed competitor canteen devices who former vending, an signed core a machines cashless New has franchisee and move Cantaloupe in fully delivery. their markets of area XXXX This Cantaloupe office, our in agreement to and platform. State cashless

We upsells. continue for see strong to demand

As a you significant from now you Buffalo a to the release, onboard vending machines. will Rock, completed have Seed to X,XXX project seen manage might bottler we Pepsi recent

foods, fully Cantaloupe We price also the with bottler also Florence expanded their customer our adding and agreement support large change. to and as InReach both the solutions. hardware includes Seed branches. canteen Pee expanded across remote convenience our franchisee XX of Sodexo’s deployed Southeast, a is by Pepsi This Seed business Pepsi services software who Dee in a known rollout

Coca-Cola our devices EMV engage, In day we will November, upcoming ePort we products release two a and latest in Coke a large bottler discuss Cantaloupe XXXX. in calendar latest of XXX upgraded that of year innovations and lastly, we held our And summit non and hosted partners customers where their [indiscernible] the University to device. interactive some

received also innovations that customers to in-depth be to pipeline ePort We continues and businesses. resonate micro-market their of very with relevant conducted and Seed was our validated training. event our well The and highly

core North-America; remain move in we into Day. fiscal expansion, increased four Investor year, leading we at international Two, initiatives focused outlined we operate the share of within on One, verticals software. half our with in our market that the As we enterprise that second

price already Square Four, add-on our Three verticals per AI-powered more revenue are Market; connection services, entertainment, gaming Three, our through as extend smart well EV merchandising expansion and such into We positioned of the and for such adjacent as continued with change acquisition this retail. more; charging,

Compliance Corporate would valuable who like more Officer, end, legal also I needs towards addition our focused the leadership serve as team and experience Secretary. expansion executive on to new continuously continue expand and scale. already an been strengthening and Anna that to welcome of to are has as We reviewing Legal Anna our Counsel bringing international we to team Novoseletsky and General even as and focus excellent Chief regulatory officially will

With turn I'll QX it to review our Scott that, financial detail. for him in to Scott? results over

Scott Stewart

Thanks, Ravi.

revenue stated up million, year-over-year. was XX% XQ XXXX Ravi As $XX.X our

Market reminder, would XX% have quarter. Three Revenue Square had XX the been days growth a for Three Markets of our XQ we As excluding numbers. Square in

Our combined higher to ticket from sizes. transaction ONE which grew accelerating average subscription $XX.X driven growth XX% transaction million, by subscription revenue Cantaloupe was and

million, compared XXXX. QX Our to FY $XX.X an XX% equipment increase of was revenue

gross slightly to a due quarter XX.X%, XX.X% in QX from EMV improved to to driven the We card for year, last fees down upgrade margin X.X% equipment equipment in QX on the for move prior as quarter and Total margin same transaction cycles. and by was margin fees. and slightly past look margins shift the in in Gross we on negative to the X.X% processing forward year. mix XG lower gross positive associated negative driving from

The shares compared to Net for acquisition applicable common in $XXX,XXX $X.X mainly of was $X.X increase Adjusted to as our were share was $X.X EBITDA the per loss XXXX $XXX,XXX integration of $X.XX quarter second-quarter or a part in the in to of the in million second second share, or in by $X.XX expenses the Square QX encouraged loss prior-period. XXXX. net $XX.X a $XX.X expenses compared million operating compared period. acquisition. Markets per FY driven the Three loss quarter prior million and year million million of of to Total was

the quarter. cash was end notes balance from on cash our down and balance few last cash This equivalents since million upon ended of million. liquidity split of the $XX.X with $XX.X cash million was million A Roughly first used million second-quarter We Three of capital million half quarter. and remaining of our and at the sheet Markets. $XX.X for of decrease $XX.X $XX.X million, expenditures. of Square The directly attributable $X.X between $X of acquisition the decrease, the activities to operating net was

made on third inventory we and activities decrease XXXX. large in fourth collect flow Going of generate AR as forward, are is during from and expected on This balances inventory operating the the focused our to in equipment upgrade quarter AR lowering positive purchases we cash and cycle.

guidance provided we turning the our fiscal reiterating our that acquisition. for the impact of guidance XXXX we Three are the Square Now Markets on This Investor guidance, to XX, December Day. XXXX at includes year

between to our to and revenue million million adjusted net be million. between $XXX between net and a be As of a EBITDA $X GAAP income and $XX total to reminder, of million, guidance for $X total be net million calls $XX US million loss $XXX and income

growth be of $XXX the to representing and We transaction XX% XX%. subscription between million to combination million, expect $XXX revenue of to

revenue the further, we XXs and XXs. growth high-teens to growth subscription be to be mid to the in revenue to transaction expand expect low To low in

and revenue growth XX% equipment XX%. to expect between We be

With over that, the operator to the I'll turn Operator? Q&A. call for

Operator

with Instructions] our And Blair. William Chris Kennedy first comes [Operator from question

Your open. is line

Chris Kennedy

whether afternoon, look we as macro-environment? Good into question. expectations customer talk for uncertain you base, your it's XXXX small your calendar enterprise Can between the businesses and or the about thanks taking mid-market with

Ravi Venkatesan

and and beverage start headwinds. in food a of in fact, It's as more-and-more question. resilient very the our our be is This one to demand side trends business, in for vending businesses And Ravi. micro unique businesses and the markets small macroeconomic Great. driving really good in that's interest and products services. in see We businesses particular, our of

in far environment. we actually not seeing a are a positive, be it So, the of so macroeconomic negative terms

Chris Kennedy

Great. Very helpful.

for lot. Just kind you a the on about follow-up year, expectations? ONE prospects of this can talk a Cantaloupe your quick in Thanks

Ravi Venkatesan

and model a a kind businesses. also capital color and the derisking large idea add obsolescence. it. Enterprises any put by you and little very it. But to equipment medium not well ask product has Scott having give to I'll Yeah, to purchase product absolutely ONE small to are love of received, prefer from The then themselves and particularly continue of been businesses, upfront depreciate that Cantaloupe bit where small they

Scott, why add financially So well. color don’t some as you

Scott Stewart

Yes.

growth we're the ONE are small but we Cantaloupe program, as great also with in seeing it overall, just well. So in not the businesses, mid-market seeing

in over Overall, growth to subscription we So drivers that put this quarter continuing our we're we and of focus of starting have and quarter. that the and past effort fourth that's one see a that for lot largest mid-market. third into revenue

Chris Kennedy

Right. Thank you.

Ravi Venkatesan

Thanks, Chris.

Operator

our for with Research. moment question Barrington question. And Gary from One you. next comes Prestopino Thank our next

Your open. line is

Gary Prestopino

Scott. couple A questions. Ravi, Hey. Good and of afternoon

the growth of the Scott, all, and absolute transaction transaction. of have you in do number number, the First transactions

Scott Stewart

sure. Yeah,

of transactions the look that X%. at number the dollar by XX%. volume total you transactions, year-over-year increased increased So When by of

a value So transactions little that. you give the is overall the of faster detail growing than transactions behind dollar themselves. I'll

it, price, Until was last our of a ticket but average by partially to an $X.XX. year, within the this see ticket large starting quarter average lot overall what at of So size we’re headphones inflation, machines driven growth look we're that's also more and their part is charging into prices seeing within instance, we're more move you're and high to vending airports seeing self-service have higher-ticket too kiosk that, the when at we higher commerce forward. items, you for or ticket $X.XX,

higher to to at value starting we're shift So see items. commerce ticket the self-service

Ravi Venkatesan

right? versus can beverage, is and of within expensive in more a as And the even there food soda, shift well. a [indiscernible] products it's drinks So

Gary Prestopino

that then, any And looks on was transaction know impact. like I great. there the were and Okay, down. over XXX fees you margins subscription It mentioned basis-points.

but did card a of there acquisition the that margins it there, mix was was contribution. some in You even also terms mention impact in month impacted an only though the from revenue

Scott Stewart

there being impact a at on our the No, days you -- impact revenue look acquisition very, really When wasn't. line-item, XX of the little we very largest overall, it. for revenue transaction has the

Gary Prestopino

Okay, transactions. so the

Scott Stewart

brands. is cards. fairly ahead. just go say, to sorry, complex of I was just of pricing you the at mix going the card mean, overall it when look I'm is it the it, is the just truly mix but I the

Gary Prestopino

credit it's more -- debit the debit on So mix. versus

Scott Stewart

lot complex than a that. gets it more So

versus versus bank. Discover. American different depending can’t could issuing it be So pricing Express credit the be debit, There's on it

lot into So of it. go factors

Gary Prestopino

then to maybe Okay, sales legacy force integrate that's leasing with up acquisition forces sales XX. into you're you doing go the your the micro-market? the what could And in for to

Ravi Venkatesan

an one minor is It's from Jeff salespeople and approach the playbook sales done first model that our Dumbrell, Chief using we've this his specializations. outstanding the area Revenue Officer so and the had integrated the a and the of days. VeriFone Yeah, job where have major that we has

the if around do you bring in when other cross-train and of works salesperson a they him market on way Markets from other person then and and in Three additional Seed bring micro lead products expert the an you're Square we've core also. markets deeper world will, and with products they but if the the with micro an and now So they can then the the and also other sales it selling needed in sale, that's sort selling them specialization

is a micro-market the have person expertise gaining Square bring now sales and sales for on core former Cantaloupe a the might deliver but So expertise expertise deeper that in customer. with the the solution would Three deep in salesperson software side, site to right

which more is and in this this selling telemeters So sense pushed a into readers us software. widgets, was, solutions model more versus the has sophisticated selling -- certain card a elementary and,

very been this So Jeff sales sophisticated that sale has a has the well. more and force led transformation of

Gary Prestopino

is like sequentially devices that is, -- then for it it what are last that would question the And have correct? And if I they account just looks flat? active the were flat,

Ravi Venkatesan

as up is so overall out months Yeah, when been quarter-over that but sure that. as churn Lot quarter we’re have sequentially. a that over the flat we cycle, we X%, don't you it is effort look past our do that finishing of upgrade has EMV any the rounding putting lot making out six of we're and XG sequentially, we're

we sales. and As the quarter new a quarter, of look third into to going lot now fourth is focus

Gary Prestopino

Thank much. you very

Operator

Sutton is Thank Craig-Hallum. with your you. our George next question. One question moment And for next from

open. is line Your

James Rush

Rush Markets James and for you're Success early-on. the seeing Square the. on with is this quarter on on Three guys, Hey George. Congrats

of XX micro industry there of imply of micro-market sort you vending. vending device sort markets, sort so about could you markets, kind per sales on some what between device can to annual XX that of translates data micro your of for times how that the machine. a unit times market a see topic of out into micro guess basis do And talk vending Could I like [indiscernible] economics and per versus on

Ravi Venkatesan

you're it numbers a go a it's where and in see right, of two model. micro-market to are on of money, in XX a go machine a cases factors. vending location right and sense, we lot actually James, times I are does type And driven then operators think those by different the replace the absolutely there or

sales micro-market For you times a for the is product, benefits four a benefit software And if the the per for us transactional than transactions. better to to which will. of approximately location the direct equivalent vending also five side when Seed the processing revenue it the the times comes are, increased we priced product on see left those economics see we us where big in attract

see we line is when on So, transaction deployed. those, benefit market the of and the item a micro both a subscription

Scott, anything to add there?

Scott Stewart

Well.

much people I see go higher-ticket [indiscernible]. to because lot think micro covered and Overall, again, [indiscernible] markets, back you a opposed pretty to it. are you as prices more the buying

Ravi Venkatesan

a That's ticket really good are as point, better sizes well.

James Rush

or through adding budget Yeah, that of guess, how gone bunch the even operators trigger at and to new of that ready makes we've a of to pace capital of a order methodically describe cycle the add sense. next And rest you quarters sitting the I few upgrade you there spoken deploy of devices new with the devices to then, in and through funded now would for would like appetite expect sort our just year. operators sort new you've pull the operators pretty the devices,

Ravi Venkatesan

actually a say have going see because upgrade we're and some budgets even starvation XG think -- almost all to cycle. there would been been The I of paced. is EMV has and there a more I is with higher demand the consumed their

are and XX%, have However, into seeing XX% fast the go yes, out operators cautious is -- based lagging factor locations of to people come also offices, how of be macroeconomic in they on but we is sort out still back the terms there not of come there rolling aggressively. three locations five new new making work come hesitate very operators locations rolling they've week remote some back still that days which week, and days back and is in a and a have factor environment

a we're think more new see of pace gentler to rollouts. and I a even going So

James Rush

could. you. guess, just that, to then And I Got one I if follow-up

still to of be what the And levels? percentage if that to are are so, below today office trend, sort of that may devices? could some return your there the like active pandemic you locations speak on of Sort pre guess, I

Ravi Venkatesan

before, about part Yes, we is, in say, for I a is that in pandemic so are I'd back, there -- is, terms pre not work seeing the second pre One crossed come to may days dimensions depressed it come most what that that, people the as come just not haven't are that right, for locations back, XX% than seeing they more bucket. in to volumes the that the how because the of less question products question. there mix of or buying have we're pandemic back many but levels, they then because part be five two have ticket up maybe -- are And shifted. so premium from and have have in it's product and more said, gone comparison. office, simply locations but prices pandemic to post sizes has actually

So other hence there have that already. factors the location are per and pandemic have pre sales levels compensated exceeded

James Rush

Makes sense. guys. Thanks

Operator

you. comes from Thank And Lattimore Northland with next Markets. our question Instructions] Mike [Operator Capital

line Your is open.

Mike Lattimore

EBITDA. Thanks on strong congrats very Yeah, results Super. much. strong there, the

a mentioned when new price of seeing a quarter. price remote the you change? the and out there logos Is sizable wins, the couple you're of prevalent interest is wins kind it customer change I remote You in believe in part upsells how guess went this I point. through just at

Ravi Venkatesan

very in -- cases like are operator software that. and holding to things that thing that back us running an if is I and some that anything, there are It's it accelerating machines running think upgrades that's their the has only on exciting from the

from strong infrastructure up take and within have they to out, before a product strong it see plug-and-play we but this of very sometimes their components roll upgrade to software Sometimes it's ramp-up they and it. continue

Mike Lattimore

I something to ONE, or many ballpark important then give can this active like are adds, or new some customer contributor guess, you using of again. us on it ONE point the an Cantaloupe like sounds Cantaloupe at that? number And of devices customers was that how Great.

Ravi Venkatesan

Sure.

seeing seats quarter. ONE we've rate So right we're about been X,XXX of and XX,XXX adding on a now approximately them at Cantaloupe per

Mike Lattimore

expense other areas last in just one Three of kind operating expenses. we Square then layer quarter. some more March when I for of just two mean, operating And expense. are of Okay. can on months think you the that kind Market there or Should you trim about

Scott Stewart

a operating expense. lot when overall at quarter of events. say look I you first so one-time the would we Yes, had

indicator So run-rate good it's of not it. the a for

little And tax we decrease we The savings. have well of second always a to we year sales cost-savings made indicator, is million quarter as was it. which reserve, but then true-up better our help in third-quarter around bit an last in some the $X also

it the We around year. to expect this same be

Mike Lattimore

Thanks helpful. a That's it. Got lot.

Ravi Venkatesan

Thanks, Mike.

Operator

now like Ravi for the to would Venkatesan turn to I closing back And remarks. conference

Ravi Venkatesan

Thank you, operator.

growth in in acquisition this pathway So getting Three for solid part clear quarter cycles, to Square interest was traction December Thank early executing EMEA EMV in we about look-forward Day profitability. in of past improved of Latin-America and strategy you earnings that revenue summary, unlocking a call. also completing for and and the as upgrade significant Investor Market articulated us this and to and the a XG strong excited our the your I'm attending on and with value.

Operator

This Thank call. disconnect. today's you may conference now concludes for participating, you

Cantaloupe (CTLP) 7 Feb 232023 Q2 Earnings call transcript