CTLP - Earnings call 3 2023 | Cantaloupe, Inc.

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Operator

Good day, ladies and gentlemen. Thank you for standing by. Welcome to the Cantaloupe's Third Quarter Fiscal Year 2023 Earnings Conference Call. [Operator Instructions] Please note that today's conference may be recorded.

I will now hand the conference over to your speaker host, Dara Dierks of Investor Relations. ahead. go Please

Dara Dierks

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

not we begin of other from remind call, you like detailed press we limited factors, our in Actual results forward-looking and materially issued release could business, because of statements conditions. to such forward-looking financial contemplated historical statements markets Before by forward-looking would the included actual in results discussion in uncertainties filings differ earlier economic all today. nature. and with included to but cause to A including from is risks those the differ call, the today's materially certain of this than that facts, SEC the are statements in statements could that and

undue which they only any to forward-looking cautioned on or such of reliance statements, are Cantaloupe whether made. are of statements, forward-looking to as future no because undertakes not update Listeners otherwise. events information, obligation any views management's the place new reflect date

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

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

Ravi Venkatesan

thanks Thanks, joining us and Dara. Good for today. afternoon, everyone,

highlighting the our start to financial call wanted I results.

earnings quarterly the the deliver to proud in highest company. of the are We history

total a XX% revenue $XX.X quarter for revenue quarter. and million, driven was for grew by quarter revenue subscription record both year-on-year, Transaction year-on-year the XX% transaction up third Our the and XX% revenue. was for grew year-on-year. This subscription

ramp the We teens resulting continue year, for year-on-year to the revenue high expect growth Equipment revenue XX% in the full in throughout for quarter. third subscription year. to grew the

outlined year-on-year Adjusted EBITDA Day the from XXX% third for in our leverage the is an Analyst of December This of evidence as operating all-time of compared company. XXXX. quarter was our million, record for increase unlocking quarter at $XX.X XXXX. an the This is business, the to

quarter cash million Operating was generation $XX million, cash and for the which also flow demonstrates collection AR the business. our $XX of strong ability at of includes

cash leverage Analyst at We and generation as to expect the Day. flow positive quarters, our outlined future into continue operating

the third include, year-over-year. an quarter XX% additional customers, few X% of A X% end at by year-over-year we business increase of had the of quarter, sequentially. a total devices highlights grew active Active and XX,XXX

Seed We products our quarter, and also features. enhanced rolled micro Driver next-generation market the mobile with the X out during new XX-inch accessibility kiosk app

or integrating as Market very drive are and been to results, pleased progress subject Square The with growth. for the XXM with revenue this expertise leveraging Three we pipeline of quarter future a as matter on have channels respective integrated synergies in and full XXM X With teams sales former well healthy specific strengths our Cantaloupe business. are their and

Market Seed selling opportunities the the exceeded customers. customers synergies sales for has momentum examples expectations. XXM customer to combination kiosks so of Markets market space. a number and Cantaloupe with in In to Three our I'm addition, reception the We initial and pleased revenue very And to micro of already the Square software far have

service full-line in purchased They operator, This a XXM Some first with we've software them Kantine kiosks our office coffee and able example now a the full of mid-market customer have our great include implemented vending market quarter. relationship is on new cross-selling who examples of California, segment the initially Northern had ordered this back but and recent third Seed bring micro also been of quarter. a to to platform. a with strategy ago, we the Cantaloupe year whom no in

Both processing. cross-sell Cantaloupe's Another California, an in deployed agreement micro-market They coffee to example the third competitor these, operators ePort full-line and operation kiosks are located order who've a are for onto other all quarter a from onto hardware and of fully move office with well converting many operator existing their in with first the Break Seed Cantaloupe for in is with platform. was platform Take as our gone place vending along XXM Vending, who customers, of and their telemetry service as kiosks. Cantaloupe payment entire signed examples

micro market Seed A direction to a a micro Markets other growing example great our This implementation cross-selling excited market the of and and Seed operator particularly Markets about. win implementing currently to our They this Europe of Sweden. customers success across first Dryckservice, which in and large roll at-scale I'm Markets also demonstrates localize in business. out are major in existing represents with HGM Seed their platform XXM is internationally,

release to XXM rollout driven earlier this the strategy, quarter which win by SMB You market is our offering our by issued market Subscription and more and see in during continues was great today. press that spearheaded Cantaloupe acceptance. Platform-as-a-Service can that get details growth ONE, XX%, was about a

target Day, our to a segments. to we enterprise business mid-market the segment out Analyst At and small addition strategy in laid the

products originally segment. to recent with a vending easier this suite is payment of made Essentially Organic. As it Essentially for example One part company and readers. of Cantaloupe's called micro market this of Organic to card optimized switch this Seed strategy, cashless to implement ePort make we've the software acceptance the

transitioning Now entire are operation Seed Cantaloupe the platform. they their onto

payment transactions thought less XXXX well beverage for deepen trends than We industry. Micropayment self-service and continue The Trends as transactions. released throughout the micro Canada. locations, at the leadership for to self-service using studied methods, which consumers food even a and $XX machines results, We XXX,XXX in payment of recently Report, our Cantaloupe as sample vending which our are covered States smaller-ticket cashless United than that more active increasingly showed amusement

consumers. One $X.XX data which ticket cashless terms was purchases, of the to machines trends cashless in only contactless $X.XX and in supports gaming compared by we specifically was around the for cash average growth This play at size points the payments are payments more impressive seeing report amusement of continued for purchases.

I'm booth about at This We in payment encourage this to are year, you in some latest to December. meet the would face-to-face excited made as well Show, We would the us event Day convenience largest in we few have industry self-service by NAMA the industry. the stop upcoming in Analyst acceptance a we'll services the about gives what opportunity as progress of unveiling days. as do leaders the our our with be last our of In doing we we our conclusion, showcasing innovations. quarter latest said excited technology Atlanta

With to that, Scott the Scott? the turn for review. financial over call I'll

Scott Stewart

Thanks, Ravi.

profitability delivered as generation. quarter we mentioned, As record record another growth strong and of well flow cash revenue as

year-over-year. $XX.X 'XX Our million, up revenue was XX% XQ

the contributions year-over-year. Cantaloupe revenue, million revenue, grew sizes. Our average subscription an combined XXM ONE quarter. subscription $XX revenue of and growth The in transaction of of a from XX% ticket increase acquisition, the transaction subscription includes increase transaction $XX.X This million during from driven of volumes, revenue million increase to $XX XX% higher XX%, and and including overall accelerating processing was by year-over-year

XG devices we While transaction where slower have who remain as install volumes XG of robust, volumes to sequential result discontinued. a been experienced service been lower customers certain has

'XX. FY compared in Our higher lines. from was XX% XX.X% last an to revenue equipment Equipment year. margin the to gross margin across to transaction increase was positive for the revenue all improved $X.X Subscription was XX% QX negative quarter Total versus in same QX in million, quarter a margins compared for prior margin XX.X% driven year. by XX.X% of year X and prior FY 'XX revenue X% revenue XX.X%

at Total FY in slightly 'XX. operating year-over-year to million were million $XX.X QX compared FY QX in $XX.X expenses up 'XX

share to of or Net common share the compared income $X.X for $X.X million prior per or income net million was to in quarter applicable third period. $X.XX $X.XX the per shares

the for million which $X.X $X.X Even million a EBITDA release benefit still year without We a would accrual. adjusted portion Adjusted this period. the record. a adjusted adjustment, sales had includes to in million compared quarter from prior record quarter the of a EBITDA, tax of EBITDA state third in $XX.X was our be

ended of $XX.X million by on notes third few generated net our with receivable. a $XX and and operations cash quarter. and million million million A income largely from sheet equivalents balance decrease in of quarter accounts cash liquidity $X.X $XX since last in driven cash and We the

expanding OpEx, in go-to-market growth profitable product on priorities and to Our development. focused and our offerings control improvements and are capital target our driving specifically micro allocation operational investing continue strategy international market to

Now turning guidance. to 'XX FY

are guidance the for is expected and of the $XXX We $XXX to million. our million between reiterating acquisition. impact includes fiscal which the XXM Total year, be revenue

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

we between upgrade to U.S. $X revenue the lower equipment loss to the a income GAAP hardware of With us, net cycle anticipate in sequentially fourth be behind Total be net quarter. million. to flow and and $XX million and EBITDA $X and to million. of be between $XX net $XX be between $XX is expected cash total income Adjusted operating million million million

as subscription see laid grow revenue sustainable a to flow in we Day. of directly our and I revenue, out cash This operating am contributes pleased as our Investor total generation. transaction and leverage to percentage

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

Operator

line [Operator from Instructions] Capital And coming the question Markets. Mike with first our Latimore of Northland

Mike Latimore

here. the results really on Congrats strong

subscription sustainable, sequential I level? and there? is the license the step-up what drove that new And guess On gross margin, this big

Scott Stewart

Yes. question. for Thank the Yes. you

it. of a overall, So components there's couple to

the remarks, revenue we said gross the up in is X lines. As all margin prepared across

fees, that that. push over our we've working XX%. we've take mid-teens grow been couple to to up transaction-based over We've of that quarters. several it that saying the had Historically, to is the the that of been the So very of able We've rate. calls Part end the to higher we've the past increased range. X% past overall hard in we've in been been

were quarter, up continue. about at that X.X%. to expect we at We this about X% So do

subscription that to And had carriers. expense related the the then increased growth on network margin, reduction -- some we've we've

rate a lower XG negotiated for devices. we've So

some expense have the as there. with So being XG savings to replaced starting see rolling XG, been off we're devices and

second higher The Three is that a with also gross Square Historically, they've Market. margin. to component had

increasing as well. So range. we've the said in layer them as some to margins always we've XX% been XX% to in, we start it's Historically, our

quarter, This XX% we've in been to XX% the range. more

Mike Latimore

it. Got

this of So -- to -- or in is is fair ballpark is this say level is sustainable? this it kind

Scott Stewart

for that's right now, and see what can putting XXXX be believe our Yes. fourth We'll we we out guidance as But quarter. sustainable.

Mike Latimore

you're demand many Okay. Great. mentioned typical there? Can you added you ONE. Maybe seats look like? were Cantaloupe What's a the how little then of or pipeline more number per on seeing provide customer? And the color seats

Scott Stewart

Sure.

quarter. So added X,XXX seats overall, we've this about another

great SMB don't know you We The customers that? this add are generally traction. are I who anything the program. of seeing advantage mid-market side house. have customers on taking picking Ravi, some the We up, also to do to of are if have this

Ravi Venkatesan

monthly thing shift, space, say No. and buy you a I paradigm have right, devices, into that. the pay cloud is them Cantaloupe as a just this and ONE a to So The from we for paradigm would any then computing Mike, in where shift, you market right? and where only services pay install brought it's fee, they is, are paradigm behavior shifting a

the from done trend. care they infrastructure it's a it, the being enterprises on who's license-based medium when to depreciating balance assets sheet. cloud-based, The that picking up whether on businesses their behind faster same prem-based it simplicity to but with subscription because when and then model and the software lag the moved and tend benefits depreciating eventually small about to assets And adopt of Everybody less large to outweigh from tend when get subscription-based balance it's moved sheet. of being the or benefits

So here. that's exactly what we seeing are

Operator

George line our next from question the with of Craig-Hallum. Sutton And coming

George Sutton

in now timing and starting the Ravi, more more you first that talk see of about scale. at a go-to-market sort you're international to pursue bit aggressively? little Europe that plans nice of could curious, I'm to win a Very bit if

Ravi Venkatesan

we right that a George, the in a this And fiscal at about and to see that last we'll not the meaningful international that the markets, always -- ramp X-year journey. I of journey, 'XX. X-year thanks I It's we'll stated see Yes. and revenues place. question. were though had then that material from fiscal that we it's we said fall are quarter, said for Look, -- I've lot pieces are of some midpoint year year, through or

right in are Europe. track our markets, those our Latin with America and had of we continue in now And order. we that have on make both we progress laid So both and out to wins, trajectory great first first that

of "Hey, will to beyond more real fiscal start and we kind customers, that we are we real So the, through installations through. got we've year coming are revenues 'XX. ramping reiterate aggressively phase piloting real up it it," I now still

George Sutton

you. Got

feedback? you challenging you're to you're challenging. good real kind making dovetails referring it I to of feedback in You mentioned from and you're of getting particularly because bringing you're customer kind with now more what feedback. same you referring bringing hearing is Three think with had And been to opportunity. We're Market about the who competitors -- of you're Square Square compete and saying are of Can Three the that when Seed the customer the things together, talking -- that

Ravi Venkatesan

part is it. That one of

part for it one hey, got makes simplicity, software are true. the the to you So And now The throat are micro want we've and that's differentiated devices customers markets, they it other highly choke, when the looking of and mentioning the is product the right? of where combination part this it formidable. is,

we through craving of that. Doesn't you underestimated and and What's and do hey, had not train much or footprint X X you there's by tremendous on people how go to matter And benefit now and office are that, technology coffee it's to and screens is a and Seed. have true, saying, we and everything whether manage with doing software, people how just you workflow different markets proposition the manage, vending. or one have micro simplify solutions have different of much value to things frankly, their have customers their train not power their and in on also portals to

Operator

Barrington Prestopino [Operator from with Gary question the our Instructions] Research. coming next And line of

Gary Prestopino

was about, Could that that mentioned this to is to competitive up Ravi, market maybe on you you you I margin in else talk sales, just don't much if sustainable is is? fact And less there that going that it know forward? but your it did equipment and that the besides was a margin anything there where script, get --

Ravi Venkatesan

So no every So Gary, to market. first competition much fight not single deal, every fight of is mean less has and competitive day all, hard there gone we win I day really we every right? away.

clarify wanted just So to I that.

more So discounting industry which of mature What I would the sustainable. we kind of bit particularly responsible little a are not right? say as is of behaviors seeing we get are a competition, way that seeing we out was in cycle, the incented upgrade

So that. good all we to from players, responsible and contributed end to has of We're are extent a competition more seeing that margin. that seeing the industry

the card devices fully device, you do Engage a say some more, about and that one. having we've also with lot I'll telemetry just now went readers from to think that's So we can device so of wonderful, innovations if thin the only small screen But beautiful, that interactive right? a could launched, having do that that

our be price capability have in yet further combination software, The used remote change our now it platform second another that's devices on and incentive and competitors. from this our the when with to differentiates is

which XX say allow maintain those that from So over more our of, last competitors responsible I cycle, we command past under it's further pressure premium the us competition. our that a hey, competitors, on the and front. and differentiated And products we've would while are there's hence, months, to severe to are combination margins upgrade

Gary Prestopino

mentioned just since and I And a over has I the didn't that. to upgrade think competitive the you said become bit should mean thing. effective pricing better. maybe the something And little Okay. have I belittle was

quarter, doing legacy you're mean see that growth transaction And what market, the you'll least item given that's continue at wondering, business ago, the markets you're mimic then that really would case. higher-ticket really definitely transaction like the years in It kind volumes I'm actual of micro we expect counts? not this going looks processed. dollar transaction dollars I more the should higher versus the growth here to And into because volume much just

Ravi Venkatesan

take view honestly, the And prospects making by and is used at because versus That's the and active the charging not right. about historical absolutely self-service you're business growth the versus progress airbag. market, that different laundry vending the everything our think you of location could micro characteristics the of very amusement the device right? to versus the growth transactions. case and one space business if in from self-service be EV that anymore looking I a is has tell very it You homogenous, location Yes, business versus

and go can on and on. I So on

and active they you as of the key relevant stands as from time, they kind us as business. They'll being to will don't the even deemphasize well over see because used from even away as to. key anymore maybe represent not metrics and it transactions for secondary perhaps and So devices metrics metrics get as go business currently

Scott Stewart

Initially, And Gary, as it's markets. sequential more couple it had add $X as to but bit. it a average are buying oh, really X more focus Seed quarters us ticket yes, little inflation, to changing, to of of and Ravi because micro sell a the we I'll the $XX we're on candy helps way, really wrote salads days. by size on just growth. bar. that good analysis and that We've off see factor form doing a mentioned, that's And for a opposed lot salad's People now

manage inventory that very an can system that So beneficial. having is

Gary Prestopino

for what not public quarter? give make are just lastly, that to just the was stat Scott, out Can then you anymore? that you going you're giving And or Right. organic the growth

Scott Stewart

that we're No, giving not stat.

Operator

the William from Chris coming is Blair. Kennedy The last line question final with

Cristopher Kennedy

key is quarters? of you how the that continued the subscription much that of see acquisition? last to the related over revenues. And to drivers talk of great the recent Can acceleration about It's several

Ravi Venkatesan

I work related recent a contributor portion think the a acquisition, big as of also but Cantaloupe And has ONE a in lot differentiating good to been we've is offering. our done well.

Sometimes people Jeff and I of done target and lot that you features times, our market a particular how nice segment. as into to how of And needs a look as of differentiation team the needs mid-market think product and of customized it's it's small the our addressing sold CRO, it's also leadership, medium businesses But a the our industry. how a and well leadership of really at job with Dumbrell's as segments Scott's build now has product. it's bundled the

Scott Stewart

Yes. that bit, And just add to to little a Chris.

You customer our see a -- count more lot grow, customer of that that the SMB our growth continues lot on. higher to on to we a where side, margins have

Cristopher Kennedy

And you broad business, mix versus just Understood. markets a it. other Got then verticals? provide your can micro versus current of vending

Ravi Venkatesan

cetera, So we the in say it tends What in market, haven't would micro to be range I that be XX% and is vending, beverage, broken our all that coffee, manner. more XX%, et which it the the to office tend is of verticals food range. and other out business, XX% combines -- XX% to in then

Scott Stewart

just Chris, then, too. that, to more little And add I'll a

with guidance. in when earlier, that acquisition, we question look bit million were organic answer $XX out a range. whether the Gary's And at the Overall, help this we we're you $XX to laid said providing So million too, they I XXM will about revenues think what their were. little

we're around to on. That starting But their great. which heavily idea number That's that's focused where business they much It's to So stand. you how about represent. is we grow, XX%. that of gives as what an is

Operator

call I'm Venkatesan turn questions the time. at showing over to to Ravi for like closing now this And any further remarks. I would Mr. back no

Ravi Venkatesan

the really call. future the has very that results had. together In best is we success I'm the very bright, your and the team on. deliver forward company through bullish our tough Operator? trajectory Thank looking and are this the pulled you to to interest success. is for proud building are And environment in ever upon that earnings a conclusion, that we about has business engagement

Operator

our participation. that conclude gentlemen, for for you conference does today. and Ladies Thank your

disconnect. now may You

Cantaloupe (CTLP) 4 May 232023 Q3 Earnings call transcript