• Total Revenue: $70.8 million, a 13% increase year over year.
• Transaction Revenue Growth: 18% year over year.
• Subscription Revenue Growth: 12% year over year.
• Adjusted Gross Margin: 40.7%, up from 38.8% in the prior year.
• Adjusted EBITDA: $9 million, a 14% increase compared to the prior year.
• Net Income: $3.3 million, or 4 diluted earnings per share.
• Active Customers: Over 32,000, a 9% increase year over year.
• Active Devices: 1.23 million, a 3.2% increase year over year.
• Average Revenue Per Unit (ARPU): $198, up 11% from the prior year period.
• Equipment Revenue: $7 million, a decrease of 6.7% compared to Q1 FY24.
• Total Operating Expenses: $24.7 million, up from $21.6 million in Q1 FY24.
• Cash and Cash Equivalents: $33 million, down from $59 million at the end of FY24.

• Warning! GuruFocus has detected 7 Warning Signs with CTLP.

Release Date: November 07, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Cantaloupe Inc (NASDAQ:CTLP) reported a 13% year-over-year increase in total revenue for Q1, reaching $70.8 million.
• Transaction revenue grew by 18% year-over-year, while subscription revenue increased by 12%, indicating strong performance in both segments.
• The company successfully integrated SP software's V manager with its payment devices, enhancing cross-sales opportunities.
• Cantaloupe Inc (NASDAQ:CTLP) expanded its international footprint, adding new customers in the UK and Latin America.
• The launch of innovative products like smart stores and the premium suite management system has been well-received, contributing to growth in new verticals.

Negative Points

• Equipment revenue decreased by 6.7% compared to Q1 FY24, indicating challenges in this segment.
• Total operating expenses increased to $24.7 million from $21.6 million in the previous year, partly due to international expansion and acquisition-related costs.
• Cash and cash equivalents decreased significantly from $59 million to $33 million, largely due to acquisition costs and operational cash usage.
• The company faces challenges in scaling its international deployments, particularly in Latin America, where a cautious approach is being taken.
• The guidance for fiscal year '25 includes a relatively wide range for net income and adjusted EBITDA, reflecting uncertainties in achieving higher-end targets.

Q & A Highlights

Q: The gross margin profile for the subscription and transaction fee business came in better than expected. Do you think this level is likely to sustain or increase in the future? A: Scott Stewart, CFO: We anticipate the trend to continue. We've done a great job increasing our overall take rate, which has been improving over the past four quarters. While it might cap out soon, the overall margin on transaction processing should continue to improve due to higher average ticket sizes, as a portion of processing fees are fixed.

Q: Can you provide updates on the deployment progress with the key tier-one customer in Latin America and any potential large awards? A: Scott Stewart, CFO: We remain bullish about our expansion in Europe and Latin America. We are deploying with a large customer in Latin America and taking a cautious approach to measure results and generate metrics. This approach ensures we build on a solid foundation as we scale deployments.

Q: The guidance range for EBITDA and net income is relatively wide. Can you discuss the factors that could lead to the low or high end of this range? A: Scott Stewart, CFO: Revenue growth and increased margins are significant drivers. Tax expense will also impact net income as we improve profitability. Operating expenses are expected to remain steady or slightly decrease, influencing the range.

Q: What are the applications for smart stores, and where are these products being utilized? A: Ravi Venkatesan, CEO: Smart stores address retail theft by preventing it while reducing buying friction. They are deployed in fitness centers, corporate break rooms, universities, and hospitals. The technology locks by default, requiring a credit card tap to unlock, and uses AI to detect products taken, reducing theft rates significantly.

Q: Could you provide insights on the growth expectations for active devices? Should we expect low to mid-single-digit growth? A: Ravi Venkatesan, CEO: Yes, we anticipate low to mid-single-digit growth for active devices. However, we advise investors not to overly emphasize this metric as a predictor of business growth, given the diverse nature of our devices and their varying business impacts.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.