CTLP - Earnings call 2 2024 | Cantaloupe, Inc.

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Operator

Thank you for standing by, and welcome to Cantaloupe's Second Quarter Fiscal Year 2024 Earnings Conference Call. [Operator Instructions] I would now like to hand the call over to Dara Dierks, Investor Relations. Please go ahead.

Dara Dierks

Thank you. Good afternoon, everyone, and welcome to the Cantaloupe's Second Quarter Earnings Conference Call. call Stewart, Ravi Chief the Officer; Chief on Scott and Financial me today Venkatesan, is Executive With Officer.

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

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

Ravi Venkatesan

second XXXX of Dara. and us fiscal today Good our joining call. thank everyone, for for quarter Thanks, afternoon, year you

lower fiscal growth year by revenue expect increased at of revenue year-over-year million, revenue quarter in a and second XX% to XX% revenue and subscription domestically. 'XX, growth. 'XX. to be subscription to be revenue XX% revenue now for year delayed due total ramp to We slower-than-anticipated the and end subscription X% in the XX% the the During to international now year transaction fiscal driven the activations $XX.X year-over-year fiscal year-over-year range of transaction our expect range to for XX% We XX%

we We markets half and growth Our second backlog robust. in in this backlog decreasing remains and to continue shipped to increase of work devices as anticipate the time micro through revenue in subscription lines. activation invest

about revenue spoken before our to driver in on growth, of leverage this. and laser-focused a continued initiatives we drive continue subscription expansion be to We've key operating

continues as international in Latin Europe to backlog, pipeline to as we about In successes the our excited and and America. robust are we addition ever a build, are having

in the revenue. I margin made recent want lines last our compared quarter in gross to to Total increase margin same for of another leverage, This driver quarter is the was all on driven XX% margins. across gross expansion highlight by operating the of we've key higher in gross which XX.X% of margins quarters was year. progress

be report delighted gross drive this years to through fiscal plan incremental single-digit gross percentages or impact of free ago. EBITDA high a X processing the the previously 'XX. to for expect quarter, the transaction outlined a profitability. year our to a year drive revenue XX% revenue, 'XX. of to high transaction dollars guidance margins has flow, plus we we've end schedule expense EBITDA to ahead expansion our helping transaction by cash of SG&A our had associated additional realized -- margin the fiscal we adjusted the of I'm margin no revenue, Recall goal Transaction this positive at and from that largest streams, We that that about is reached as year up received just XX% now margins couple there with

are of the half our we with performance for pleased the in, All first year.

which across the addition, of and In week, for into addition some half of second solutions. of combined synergy entertainment for announced growth with a There restaurant investment the Last we customer new our combined base. long-term sports will acquisition will self-service positions the strategy the suite growing line, kicked tremendous CHEQ. and we CHEQ off fit growth This strategic news. comprehensive exciting with year the our sectors between a is create into vector business. our of and expansion product large The enable Cantaloupe rapidly nicely

are Cantaloupe to team welcome CHEQ to We the family. excited the

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space kiosks. ABS our build of also market Cantaloupe our devices companies, example, micro as and into to partnership they one For continues resellers expanded master purchasing the with additional Go in by purchase QX

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solutions on [ ] [ Vending RGs bringing Canny experience also ] micro and continue ] market coffee. European People We the to The [ growth customers as market, such for vending, local new our in

as the over So strategy you XX last go-to-market can our see, we are shift made to months results. showing the

remain also on focused of of goods sold. We the cost continued optimization

mentioned earlier, made in the As we've margins in optimization gross COGS, expanding through of processing. transaction significant especially progress

We international we the quarter. use use is a year-over-year about increased as this OpEx use opportunity our In tailwinds, investments expenses with operational growth. which priority the the decreased on Cantaloupe, expansion cash, of decrease of a disciplined by driven Square also also a of continue long-term expect increased related touchless slightly to expenses by X which Market secular inclusion credit of OpEx excited the in industry increased QX, year revenue. and and being to options, and drive finish driven percentage cards payment remain was including of in Lastly, for

prospects CAGR While forecast Berg machines XX.X that in XXXX, the number core that augurs about to units at excited of grow worldwide million adjacent market reach of for and growth we verticals, vending XX.X% are the our the forecasts business. of a micro growth a vending Insight will connected well by

buy more more expensive confirms increased Research addition, items items from Consumer In buy machine. willingness vending and to

help shortages labor reliability and platform. to derived a processing as deliver drive Seed reduction industry continues cost to from an operators, a continues solution be reductions. to ] ] for higher revenue As increased technology [ of the and cloud [ proven drive customers Seed

strong have could expansion adjusted expenses, strategic I margins our not of the priorities, summary, abilities to be that execute discipline In gross in operational and led with especially to proud more EBITDA. on of growth team's

as new operation. revenue tools a innovation running of customers additional consumer modes as We proud to for increase that our of engagement more new efficient product well through our features, enables payment, are business

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

Scott Stewart

another strong Ravi quarter. As we mentioned, delivered

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

$XX.X revenue and a markets. processing quarter. higher $XX increased an subscription million driven micro transaction was $XX.X Our XX% of of year-over-year. subscription increase of revenue, by transaction/subscription revenue million grew ticket volumes, combined for transaction XX% in increase average again to This and XX%, year-over-year overall revenue during growth of sizes revenue, increase million the The includes

new subscription earnings unit we the our in for noticed the same this the was 'XX XQ of [ points Management products higher the months, features, and to of release, is XX% defined per for average from as have through metric sold divided as our active may ], transaction or total ARPU a ticket ARPU. items are $XXX providing This well new metric, not for trailing operating year period. as average our XX impact you being As fees devices measure by revenue The uses and period. sale. prior up total

revenue million, due equipment device Our equipment in that was cycle compared $X.X we to to 'XX. an revenue XG But the year was of year-over-year. of active see from XX% prior primarily QX upgrade a overall did down, now benefiting X% us. behind increase growth was is This FY decrease

margin rate, lines. margin Subscription and XX.X% XX.X% our by reduced the for quarter share improved was to an costs XX.X% This year. driven gross compared versus all by subscription higher and revenue. processing was margins transaction overall year, representing driven larger revenue take in XX.X% the revenue Total of last was a across in quarter processing prior increase same revenue X

in X.X% from replace positive X.X% several Equipment prior was is competitor 'XX a margin sequential quarter we able to QX revenue XX%. decrease from The a immediate year. of down were devices. opportunistic negative for by driven FY deals the prior to improved This

the $X.XX in in $X.X or increase prior second a compared $X.X shares EBITDA $XX.X was expenses operating million period. of Adjusted was FY to quarter per prior loss million in FY million compared to $X.X 'XX. or compared year XXX%. quarter $X.XX to applicable million common for share QX the the in million to net of Net Total the per were an second QX million income share $XX.X period, $X.X 'XX for

equivalents cash of the ended million. second quarter $XX.X with and We cash

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

turning our guidance. 'XX FY Now to

We total continue to million. million between expect $XXX and $XXX revenue

to and $XXX transaction expect revenue $XXX to between continue million. be We million subscription

delayed activations lower As range to ramp international Ravi the due a on end being mentioned in of we and earlier, slower-than-anticipated this revenue anticipate domestically.

In as in which addition, of equipment ramp presence the second half revenue will expect higher-than-anticipated throughout our the we 'XX, FY ramps. international year

$XX and $X We to U.S. continue net to expect million total income million. be GAAP between

previously $XX our provided higher We million. expect EBITDA at end and adjusted total between to cash guidance $XX to $XX operating be million and the between and flow be million $XX of of million

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

Operator

comes Cris from line [Operator Blair. Instructions] question William of the Our first Kennedy of

Cristopher Kennedy

So Investor thoughts it's been over subscription Day growth for Investor on Day, the and at about business talked year the X you give a end the achieving you next your over updated years. since Can think, goal? I your plus XX% that just at

Ravi Venkatesan

for Yes, the asking question. Cris, thanks

is right we outlined. the on we are lines. continue challenge goals problem. We a not the trajectory to activation for demand it's The face and long-term that delayed faced good news is The time

ways the line more tackle an We micro have issue, and a of and to in challenge. we sold continuing various significant that challenge is markets, and are and backlog shipped time activation devices to of installation invest

the believe revenue to a subscription sustainable for growth our that acknowledging XX%, long-term number the much is growth we a lower right target at So now, that we revenue we as expect that And normalizes, than the fact subscription still are ramp. rate that number.

Cristopher Kennedy

it. Got

taking the And the about moving you it on Okay. bit real seems puts in this Can of the but think, about half then needle, takes and like little back it's than with for international, talk international the and it's a time, long year, a very you strategy longer seem guys just it business? been confident expected. I quickly a

Ravi Venkatesan

you. Thank

acceptance, solution, pilots, all as various feed So cashless through the software, now payment we've micro market of are out the we as gone events, launch doing several as scale the now on stages telemetry, well business, including of starting kiosks. And international mentioned, to I aspects doing proving those.

it's I'm Europe and while both reception years products would our America. shooting than question longer and have in answering great ago, now, X we and taken seeing a strength, So I perhaps liked, are maybe position right from this solutions to Latin of

us ramp year. what confidence the in that's gives the back half the So fiscal this in of

Operator

George comes Hallum. Sutton the from of line question next Our of Craig

George Sutton

a Ravi, of the piece on that. just European follow-up

walk you're would mentioned just start for of pilot take? frame you You through those And out? these in would when the to roll a then deals many we pilot see a time phase typically deals. Can that

Ravi Venkatesan

it's of months. typically, George. that. And of even them all too the for points can much almost information the majority Thanks earlier about X competitive for America. with started about these the juicy best And to the some disclose way Yes. run excited a all question, quarter, Europe them are where pilots than the very chose specific a specific at We actually ramp. It's describe Latin pilots customers but various X were reasons we and in and I to it, and I'm last not

George Sutton

And disclose, program. talked Not but you trade-up want much sure just you about how curious to how trade-up program works. specifically that

Ravi Venkatesan

consumer if particular, ago, to a incentive be incentives an and who may anything a it's latest program to us, Like sounds, opportunity something offers and the it as older. equipment provide kind for up for customer starts It's an X else, markets, greatest stuck perspective micro in operators with of from years X, we it you and as -- are that with up dated trade that. experience some trade-up and looking our set

Scott Stewart

just to that want And helps with be too, little that to bit, it the a all Seed. add to customers in also they

have don't is trade Seed machines Square to using X Seed get So been they've and and have for but them X Market their vending on way the kiosks. kiosks Market a Markets they if Square out

George Sutton

Understand.

a of distribution you new Lastly, CHEQ. works about vector of how this you Ravi, rest growth. the as Can with you just see that capability? -- mentioned your There's with talk a

Ravi Venkatesan

They live possible commerce, leading scanning are to on There are even various stadium. the we and well powers in want solution. have has incredible commerce. technology mobile that that set various self-service by it we CHEQ mission that app locations, into point locations various be that the that devices simply consumers the an at app technology CHEQ, as a QR sale and kiosks of much to cashier-assisted want embedded codes at our to as as put phone. also Look, and and teams Absolutely. space, handheld commerce to as at look apps capabilities various apps are distributed self-service When that's league order provider allow from their the move is an of built of we events works stadiums

So live enable and commerce. in events other capabilities some that challenges a of it's these out frictionless words, more pretty the that long and self-service the comprehensive suite of cut face lines

very So into the The provide live these events same market convenience it we are micro and to and companies that the about serve as we nicely. the it, best space services the in companies part fits vending was stadium. that acquisition dug

currently optimizing services dynamically to they go is the from benefit their scheduling and around deliver that and warehouse However, out food products. Seed don't and providing value products optimizing field workflow, proposition beverage

as doing well sales cetera. et As they now data, real-time have smart merchandising data, because real-time inventory

these with So we've brings relationships with. to same what has powerful and capabilities a of table Seed deep to in tech solution, have and in the companies been things, CHEQ can exact already it's terms large what of terms the and very that into selling pitch and we

Operator

from Riley. Our Griffin comes next line of B. [ question ] of Boss the

Unknown Analyst

purchase only color or Just is there real that margins, nominal? we're found profile a a to point. the the I jump relatively while years there I on that out Is back considering -- give can price mean, want few relatively was any quick know ago, on you CHEQ it's nascent to more business, but revenue

Ravi Venkatesan

the the of Sure. I'll revenue. let margin and profile breakup Scott jump with in

Scott Stewart

sure. Yes,

profile they're revenue transaction revenue. the overall, predominantly So is

going and the a into able realm business it's will do X processing say now, of transaction margin profile. the lots from of to we're we hard for to discounts little some years, with margin only but that in Overall, them being volume we transaction improve synergies worth right know is going them bringing really receive talking of have profile, be really that profile. get based. margin there's the They revenue be revenue. to the I their do the XX% that our think, So subscription type about, not help get But it's to

Unknown Analyst

see Is -- fair curious can color Appreciate flow cash cadence I'm the me, the you No, sort in more just Yes. -- it on And next cash to it. on the front-loaded half back Or flow terms cash weighted going just of give year you in of of it the more coming guide. then half? saw XQ? is to year? of the expecting if are in sort in Sure. last you similar operating something this enough. evenly for as back be operating flow

Scott Stewart

will our a lot over during operating but fourth card that second in credit had probably the It evenly Yes. quarter a mechanics of processing. weighted just and quarter, our decrease was be third We quarter. cash of the

at holidays -- increased end of had the always on this of receivable. bit a that the our got Sunday. X week year volume. first accounts During processing the happened a in transaction We decrease the They also end of January. to of there's because days revenue a the year, out then the little And in paid

the And see that temporary. very operating that build up in cash then -- to is third So cash decrease start quarter. you'll

Operator

the Northland line Latimore question next Capital. comes from of Our of Michael

Unknown Analyst

for to rest behalf of give hardware on year? the grow [indiscernible] on you is Could of revenue? expect some it Latimore. the sequentially Do color Mike This higher you the

Scott Stewart

we Yes, do.

be more it fourth in of weighted even we has ramp. our So third to heavily to in expect quarter. with international the the a quarter lot and And that grow do sequentially

Unknown Analyst

think Latin who in bigger pipeline, contributor? And bigger is international Or All it is a of you a right. do contributor? Europe America, terms is the

Ravi Venkatesan

is a many But near a as the interesting got past, the will Latin very number mentioned market small of of very term, I've the market. America an very It's be number and barbell you've Europe small players. players in large contributor. where In then bigger

in of connected move a get then that very to we in any to So it will progress, those on and board, numbers large lumpy as large players devices. come manner is one of

So near be bigger. term, Europe definitely will

in of medium kind evenly we'll based. term, think I see growth both

Operator

Sir? the turn to like Venkatesan now conference Ravi would I to for you. closing back remarks. Thank

Ravi Venkatesan

margin and and operator. In on ahead December executing and summary, or year our in delivering to leverage continue arriving to build schedule, remain we schedule those and that the that you, and afternoon. at year for almost in committed this XXXX we forward ahead We profiles Thank to of thanks trajectory. I'm Thank look us getting a expected and strengths. joining are we this business journey we'll expansion you. excited about on 'XX, Investor upon our Again, consolidate and plan in operating of on fiscal there outlined goals transaction reach very anticipated to that revenue Day

Operator

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

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Cantaloupe (CTLP) 8 Feb 242024 Q2 Earnings call transcript