Earnings call transcript Q4 2023

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Operator

Thank you for standing by, and welcome to the Cantaloupe Fourth Quarter Fiscal Year 2023 Earnings Conference Call. At this time, all participants are in a listen-only-mode. After the speaker's presentation, there will be a question-and-answer session. [Operator Instructions] As a reminder, today's program is being recorded.

And now I'd like to introduce your host for today's program, Marissa Neuman, Investor Relations. ahead. go Please

Marissa Neuman

Financial afternoon, earnings Good are to Cantaloupe Stewart, the Venkatesan, Thank call. everyone. With quarter Chief Scott and conference Executive call me fourth Chief you. Officer; Welcome Officer. on Ravi today's

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

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

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

Ravi Venkatesan

Thanks, our It Good off us fiscal afternoon, today for year earnings Marissa. for been fourth a by call. for capped thanks quarter. has incredible and joining quarter XXXX fourth an everyone, strong and year Cantaloupe,

fourth XX% our $XX.X to revenue quarter, For the year-over-year million. increased

Importantly, transaction over Adjusted a for year's revenue corresponding year-over-year for grew QX. million, EBITDA revenue $X.X and fourfold XX% QX was XX% last grew subscription increase number.

full the revenue $XXX.X Transaction grew increased our fiscal a record year, revenue year-over-year. For for subscription grew revenue and million, company. XX% XX% XX% new the to

also improved in We margin XXXX. fiscal gross XX.X% to XX.X% to compared year

margins improved the quarter sequentially Importantly, year. each we of financial through gross

a equipment in devices, After payment X more a equipment our years XG smart delivered support driven positive for where higher-margin marketplace portfolio, our This needed we discounts X.X% fiscal following margin year in is of and improvement were coolers of was responsible the cycle product and 'XX. negative customers diversification telemetry margins, to equipment upgrade of competition includes the of and through it. also by market now which micro It incentivize result kiosks.

in the to We combination fiscal year subscription XX.X% also transaction XX.X% 'XX. in year our margins from revenue 'XX for improved and fiscal of

accelerated expenses, operating was which an XX% million, Day year. a Consequently, $XX.X at Investor last for to initiatives priority leverage, EBITDA our revenue year control December. increase fiscal highlighted accelerate and adjusted subscription the we Our from growth as last

with year ended we XX% 'XX. Finally, increase a fiscal active over year the fiscal over XX,XXX customers,

great from accomplishments, financial long-term these this create year to for addition growth and pleased accomplishments I'm platform also profitability. a In that with fiscal operational

the First, Three Square space our we acquisition fast-growing the in footprint with successfully Market. micro market of expanded

as offering, Platform a our ONE, Cantaloupe Service penetrate has us scale to enabled which SMB segment continue to the we Second, better.

process of has optimization platform. the enabled and global scale, we to expansion move Cloud AWS which Third, over Cantaloupe completed the business Services,

with as well our business key X-year Investor drivers to financial investors. increased showcase longer-term Lastly, We outlook the committed into our targets. inaugural were we provide where for our importantly, team Day of remain visibility but we leadership transparency able a to hosted and as

on focus as at will leverage we XXXX, expanding we Day operating For shared last our year. Investor

this optimizing and few I spend expenses. minutes operational will revenue, driving this. elaborating COGS through X-pronged to want subscription strategy, controlling We accomplish a a

by We'll drive on three subscription areas. revenue focusing

First, billion. accelerating growth in is The addressable micro market for space this markets. over total $X.X

of because We appeal are Break, of Square Software, solution, software. This appeal all grow customers. Northern our platform leader already micro the on and suite Seed gone a of includes, vendors of Three solutions. of our cashless new payments California have our on a the solutions positioned vacation Market, and solutions. side and been the complete software comprehensive for Kantine now a acquiring in who as Since comprehensive market kiosks, acquisition market to of This customers the and are our we've Take land including showcases

and front, their micro amusement. line. readers, card more. with On partnership and They to cooler with Cantaloupe AVS our QX, blue continue offer the added cafe to along go-to-market we vending the in cooler into now market indirect resellers payment as locks expand cool expanded channels we one of master In terminals kiosks our smart company

driver for SMBs. our is ONE second Cantaloupe of subscription platform The revenue further of penetration

rollout As QX, this, They were to deploy of able during sign our cashless remote Cantaloupe of to SAMs, example for seed in add-on. to an change used addition an expanding also ePort price customer existing ONE up their devices.

Bottling Peninsula cashless. was who Sam's were like under-deployed on customer Another

bundle with the was along team Pro rest to Seed of able their fleet on cashless Software. Our to

is of per connection. our third The revenue subscription revenue extending driver

management our modules by launch on We execute to customer to stack. continuing that service of will top customers do add-on meaningful our success this also their current purchase can strategy. driving teams revenue this against We'll leverage

in new kiosk, are the Go that exciting product Cantaloupe Easy. developed NAMA and May store debuted Cantaloupe platform. line at Go It product line and The concepts consumers conference go. we includes Cantaloupe was Seed Go the bite the Pick that self-checkout add-ons the smart self-service can and of examples management so Two

rapidly offerings, integrates and directly warehouse operational deliver savings processes this operators allowing capacity cost management Seed The an scale to optimizing and by time vending competitive quickly a solution Pick Seed Operators Unlike cloud-based grows. generate operator's disrupting solution Easy digital workers designed technology the plug-and-play list. to other pick their with Easy is software, to warehouse as solution current picking. without can solution deploy Pick warehouse

addition products to us per and solutions revenue In existing the these with customers, further enable segment. extending add-on penetrate to connection enterprise

roll To of highlight change a country with we products. In remote few QX, across vac agreement ServiceWorks, add-on signed CSC in their machines largest other entire providers of customer price with wins the the an to fleet. out air one

a their to deal is with United signed verticals. with strategy with our tank Cantaloupe stations equipment card outdoor solutions out vending in of the propane to This also great roll We example refill vertical-specific readers Rhino, Blue a States. across all adjacent outdoor leveraging success penetrate add-ons

the to bottlers business, these success available vending, coffee add-ons about committed bottler in and Software them of with BMS their on utilizing we've support largest the fiscal the Cantaloupe Finally, micro-market in Pepsi seen QX, are in provider to Seed and opportunity office have agreed their along XXXX. space current Through specific all with excited MidAmerica tremendous with Seed businesses. Pepsi replacing to one go and in for year year 'XX, fiscal

optimizing driving the to for year will focus sold. cost the goods fiscal subscription addition of In be second area 'XX revenue, of

while transaction for our terms environment. and We navigating We'll complex better to optimizing the cost continue chain also by payments. a manage negotiating will routing equipment do supply this of

ERP to controlling of our other expenses. FY initiatives, related focus IT AWS and area The will benefit year Fiscal for operational NetSuite, including migrations operating 'XX 'XX drive leverage force the to CRM, to cloud infrastructure, sales of is improvements. our maturing from the infrastructure final rollout

year fiscal positioned To year of of accomplished wrap excited I'm to what being more opportunities up, incredibly I'm team in about 'XX. the in proud front 'XX. has even address for fiscal our us well

now more well detail results outlook our fiscal in With QX that, review as 'XX. as year Scott our outline Scott? for will

Scott Stewart

Thanks, Ravi.

growth profitability. we strong As quarter revenue record of Ravi mentioned, another and delivered

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

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

$XX.X a 'XX. decrease being for This of driven sales, equipment primarily the XX% year compared cycle. revenue on to QX FY to due million, by was upgrade prior was equipment XG our record Our largest quarter

and from still would increase $XXX,XXX rebate The processing margin transaction this XX.X% gross prior have subscription significant and margins revenue the for compared year. to a Subscription were quarter same XX.X%, XX.X% the three by driven fourth in year. quarters. did related the Total prior quarter from prior to a year, Without transaction revenue margins was margin benefit benefit, in quarter lines. revenue across the XX.X% versus all XX.X% higher last been of

an both in becomes larger increasingly expansion revenue overall revenue, the gross operating of share our profit and margin terms we subscription margin. to of realize As expect

Equipment negative revenue a for QX year. from in 'XX margin a to X.X% positive XX.X% improved FY prior

equipment We been $XXX,XXX COGS related positive would the equipment to for a fourth benefit also our this margins Without had onetime revenue a of XX.X%. quarter. benefit, have

in negative the Total operating 'XX. applicable expenses per a net in share $X.X or loss period. quarter or fourth Net QX million to prior shares $X.XX $XX.X income share million to were of in per FY to common compared was $XX.X the compared for million 'XX million QX FY $X.X $X.XX

quarter on fourth to $X positive benefit combined an impact Adjusted in onetime The EBITDA rebate increase COGS in $X.X equipment $X.X mentioned, the prior and million period, compared XXX%. year processing transaction had was a million EBITDA. the million adjusted of previously

of $X.X in cash and ended operations. our cash cash from $XX.X fourth equivalents generated with We million quarter and million

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

XX% be expected be net million. XX%. today, and revenue million on $XX Now and of revenue see million, representing between million be subscription to $XXX million and turning of of million 'XX $XXX between million, to total million combination between $XX EBITDA XX% and be The total representing $XXX between the guidance. $XX growth Based $XX and to to $XXX what $XX transaction income U.S. $X we is cash Total be Adjusted million flow million. GAAP growth operating and FY to to between XX%. to and expect to following, we

adjusted capacity expect towards transaction and EBITDA make throughout year ramp-up we the early XXXX. 'XX be sales, investments of heavily marketing and as in weighted We in back half of benefit the from and more FY subscription to the implementation revenue

to With that, for the few I'll remarks. back Ravi? call a turn Ravi over now concluding

Ravi Venkatesan

Thanks, Scott.

year targets financial we guidance X-year against can outlined results year 'XX, you the December. we our continue for fiscal and fiscal in last see As 'XX to execute from

Operator? With back over call the turn that, the we'd session. operator like for Q&A to to the

Operator

first comes our for moment And question. B. One question Riley. our of from line the Josh Certainly. Nichols first from

question, Your please.

Josh Nichols

for question. with Thanks into Yeah. opportunity incorporate mentioned. margin, you with my fiscal coming the a XX% how for benefits about small of taking guidance this big that and onetime milestone couple even company that Clearly, the year? 'XX in should the for think we to the expansion How gross achieving a

Ravi Venkatesan

Hey, very for a hard equipment thanks our on more And past over the side. processing great gross transaction worked It's question. the have just the and on Josh, fees and the improving we the question. subscription then margin, months, side especially recently XX

XX%, be just look at that we'd we're we teens. those We the on did we going just we that's that quarter as south expecting mentioned roll was north this XXXX. what we the benefit Without transaction XX%. call. have into forward And onetime of as be in that, high margin So so of individually,

increase XX%. As to an been subscription seen we've at the you we've at over the two look Historically, XX% quarters. past fees,

Third we're this that. we XX%. quarter, to closer were above quarter, And

As be we expect we more the rolled to XX% to it in XX%. to XXXX,

and back it higher the of we scale our in first a in bit of just the Cantaloupe year international the ONE of think little I the [ph] continue sale as year be second expansion half and half will maybe then the

year without would the benefit had then we this this we on quarter, be equipment at the that sales, XX.X%. onetime And

be our could some to XX% what of We XX%. as we built forward. budgets going around little look could overseas. advantage we take we scale bit internationally, to mark lower situations some that's into people our we with deals good as a a that's sheet balance think And make of I have some

Josh Nichols

on elaborate to little here. the since just mentioned international expansion then a And that Thanks. you bit

the Is how capital You've conscious there relationships to going on being Where we are of line some partner for been growth balancing done? international to that? stand growth there. foster rollout? talked you And this you invest channel time about how going rollout? cost What's the on leveraging forward do company's a be versus a for

Ravi Venkatesan

Josh. Thanks,

at is continue markets, the development going in continue and already partners is we identified growth reasonable X Europe some We balance which are in for year the those to committed in And 'XX. as 'XX which reflected revenues and America stay guidance fiscal Phase empowered price. out growth, of partners well. of Latin profitability our markets chalk The to on and we a channel to us well, philosophy meaningful up fiscal and to have revenue from selected those very and enabled and coming expect in and start did year international

Josh Nichols

then last And Ravi. Thanks, for question me.

good really clearly vending beverage food and is quickly done growing job. The relative You've opportunity to markets micro a here. very traditional

micro do rate of the anything else expect seen a company's overall are than elaborate like in business, revenue just the And the that is see could you If to growth that bit, rates type that space. the we've of from markets percentage much growth - today? what given little you of higher what

Ravi Venkatesan

specific under it horizon, I is we don't more expect say X-year kind XX% when to to but XX% grow level Today, Yes. disclose long think overall to company's today. time in about XX% of long meaningful of breakouts, a term, revenues. a And be to I X the the the term, it well and

Now not mind, market like the so and smart in retail products coolers but space, just also keep micro associated smart on. and that's

we'll a So And kind level. micro of I that there that that are definition end some are those up space. bundled of put together, things at in think, all market broader

Josh Nichols

guys. I clarity. Thanks, the appreciate

Ravi Venkatesan

you. Thank

Operator

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

question, please. Your

Gary Prestopino

Ravi. How doing? Hi, Hi, you Scott. are

Ravi Venkatesan

Good.

Gary Prestopino

questions modeling at a talking equipment due maybe here. right for that kind I Obviously, of And Is couple actually to to of you purposes, XX% you mix of the think guidance about XX% XXM equipment A In lot higher about long-term were XX% contributing your that than the in of gave margin. Day, Analyst a now. your you're - you and they're talking you're margin. lift to said what sold? that

Scott Stewart

the for It's bit thanks question. little Gary, Yes, a of both.

we of the upgrade we could that competitors. anywhere So more market. micro the got markets the January as the the size have lot this past more range. the our from depending in But we Square say, I Ravi seeing around $X,XXX to we Three on of seeing on increase are on And margins margins the increase year XX% sell price average a after $XX,XXX responsible higher we're pricing, of a in are remarks, It's do Markets, to XG did would also And - as out prepared cycle. mentioned well. from allowed us margins

Gary Prestopino

ONE has XX,XXX And about Okay. at QX. then stand? end where your the You Seed comment increased? Thank you much Cantaloupe How on were at that can of you.

Scott Stewart

Yes.

closer fourth tracking we're So we were The X,XXX. end overall, XX,XXX to as quarter. June in XX. per about now quarter We right around X,XXX came to

end of next we sales big up Cantaloupe the had into the are X,XXX as quarter, same ONE towards on around that think deals. the seeing traction roll might equipment have lightened quarter. I quarter this per But a for we we push that

Gary Prestopino

a here. Okay. more And just then couple

this a your of white As with it that you look that kind software million. And of right is your entire enterprise now the at at something your have of percentage was with point? across base X.XX looking I'm associated within those no What that's customer real at connection. connections, space

Ravi Venkatesan

add-ons activated Yes, bit it's is And range. still close of can software reason to XX% XX% a the is there and a range be deactivated. of to some the there little

little space that a there. yes, but a you're correct range. bit of that there's is white there, bit quite ebb is there of it So And flow and in

mind vary. software in segments keep that will to that applies different Now the

manage the doesn't example, a restocking For SEED that meter, apply Software and that vertical to lets it's if parking you warehouse all. your manage at

any number are vertical software. for - of addressable in anything So not market the that machines that of part

where within can we So whitespace that the you just and deploy places Seed when factor have you look what's at Software. have cashless to

Gary Prestopino

guess process talking have hey, back need volume a your because then, you're in other such we're whole of to transaction and and generating I you is mass about are in of that transactions then you to that. better And there taking they're it. a terms when routed, both better ability routing, processors now your x is That's amount how the And of of part getting are hit complex dollars. and go terms around what kind checks We of set say, Okay. that place. things terms fraud

are margins we Thank the and there number the a of So that. have on the processing improve you. improve on levers to hence, transaction COGS

Scott Stewart

and at trying overall as looking take increase gross well. also were to rate we Yes, that

if So lasting we're up above Last X% and gross overall that at quarter, on. take We quarter, fourth we too. continue of XXXX, see our rate X.XX%. we you was as quarter look this X%, got above

of the the So but house, area improving increasing overall also growth COGS it's another the focus, rate. not take just side of

Gary Prestopino

Okay, you. thank

Operator

Thank One of our our Blair. the line from Chris comes question. next from moment [Operator you. Kennedy And question Instructions] next for William

please. Your question,

Chris Kennedy

subscription Thanks Yes. at to the great You leverage for you about question talk and this Good targeted next previously the in quarter? Can afternoon. growth years. little of a bit see growth it's XX% slowed couple taking revenue the over least subscription revenue, business. the the

be your about great. in you And about the quarter, that? if could confidence talk that Just talk would

Scott Stewart

Sure.

fourth the the So devices we we last deactivation this and fees in to devices they did and A quarter. XG, of dark lot those. was a upgrade went in where went happened yes, XG and deactivated Chris, that compared overall, of Part to see some have slight quarter did quarter. cycle, in subscription that dip that XG our due

bit hit. So we took a a of little

been up transacting. devices those lot is and replaced What are seen and the we devices of new have now have a back

dip. just a So onetime as that we see

and are was XX% to revenue XXXX, in X XX% higher range. that the the out we guidance years on XX% think as we As that range. we We than to to into the as in our we to foresee subscription projecting well. to transaction XX% X grow the look provided go out little The revenue the we be somewhere bit subscription the transaction. a will And next subscription

Ravi Venkatesan

to had acquisition, that XXM the year had we in to XXM as to acquisition, when said in expect a mid - the be it for teens, we we doing to the be teens. low prior And high - said we the we reminder, Yes. did the would

in we're albeit of lower the terms side overall that on in year-on-year revenue range, So still the growth. subscription

Chris Kennedy

for Very update sheet you any Thank M&A you're you. the the Okay. helpful. seeing And Thank that Ravi, on talk just and what kind like clarification. about your in then environment, there out of market? balance

Ravi Venkatesan

Yes.

departments. Our cash good done great to months than across to is of was sheet as an us which areas The a for lot be products measurably better Scott's multiple as well could we both see with it position that companies other opportunity M&A and is acquire. ago, balance environment collaborating and work good X, X from be competitive, continues team with

have for of seeing bit side, still the be are with targets in dissonance a that comes though private market it us. to particularly little companies public acquisition even expectations significantly However, the we smaller tuck-in corrected down, markets could terms when of

would cases an been us. so So a sense for acquisition have have company made - there or where

a to about disciplined just were would makes a multiple aspiring multiple we pay or sense, did it otherwise, not continue pay valuation even target if we they be want perspective. the And what However, to. very that for synergies from to the we

Chris Kennedy

the taking for Thanks Great. questions.

Operator

the George moment And question our you. next our next of Sutton Thank Craig-Hallum. question. from comes One line from for

question, Your please.

George Sutton

responsible if And to out your the quarter. sense be would talked changing brand I'm that call any mention offense Post of in give to this list impressive go-to-market you going and pretty XG, offense, of ran you name wins cycle can else strategy of how us a for sort did terms this? salespeople, curious we there how anything going upgrade through just pricing, on of meant but you. has were that's about Thank you you more you

Ravi Venkatesan

upgrade defense support. you George, had and thank that required also us the be and cycle Yes, And to XG high incent question. on for yes, very much

that just So lose also wallets customers that that, got upgrade have through freed our didn't upgrade much our importantly, up in they more, More through don't instead they right? device. cycle customers' of so revenue of operationally which make do functionality, I because looking investing the appetite to and a better resilient, side. my of added and are device, that more how business zero adoption our has gives them they really more efficient, software now led at Having

the be And it equation. as happens and side our benefit also importantly, revenue more more, will stickier. will more make the And that of customers more it subscription

a So on amusement, and like offensive side, effect. we're again, cycle that et of verticals definitely a where, are with drag we the upgrade had the the offensive on on cetera, bit adjacent little

George Sutton

revenues Can me. And last are you and how Got into then us explain 'XX. mentioned guidance in you. And for what's meaningful 'XX? to just second internationally you you your Ravi, potential built meaningful? for defining

Ravi Venkatesan

years, that's will much I over more the year as than So that percentage. of share X%, for I broken of use. reluctant few contribution reasons, is first become call good it that. would meaningful a consider to what specific starts X% to meaningful it out. markets, we for kind it a level. from say barometer I the think other And meaningful course, a haven't competitive of But cresting will And I I'm what But

George Sutton

Got you. Perfect.

laid loan the when everybody comment, thought to I you're and for Just little Day particularly out away a your at those margins, expectations, Analyst expectations. Scott, you think you nuts

congratulations. So

Scott Stewart

comment. you. Thank that appreciate I George. you, Thank

Operator

Instructions] [Operator gentlemen, as and session you, participation you. for does as this program. conclude your the today's Thank in question-and-answer today's Thank And well ladies conference.

now Good disconnect. day. may You

Cantaloupe (CTLP) 6 Aug 232023 Q4 Earnings call transcript