Press release·03/02/2025 14:48:25

Overview of Cantaloupe, Inc.

Cantaloupe, Inc. (Nasdaq: CTLP) is a global technology company that provides self-service commerce solutions. The company offers a comprehensive suite of products including digital payment processing, self-checkout kiosks, mobile ordering, and cloud-based enterprise software. Cantaloupe handles over a billion transactions annually and serves customers across sectors like food & beverage, hospitality, entertainment, and more. The company is committed to driving innovation in digital payments and business optimization, with operations in the United States, United Kingdom, Mexico, Europe, Australia, and Canada.

Cantaloupe’s revenue comes from three main sources: subscription fees, transaction processing fees, and equipment sales. During the most recent quarter, subscription and transaction fees made up 88% of total revenue, while equipment sales accounted for the remaining 12%. The company’s customers obtain Cantaloupe’s point-of-sale devices through purchasing, leasing, or renting arrangements.

Key Developments

In the last quarter, Cantaloupe launched several new initiatives:

• The AdVantage program allows brands to advertise on the company’s point-of-sale touchscreen devices across North America.
• The Smart Store solution provides advanced self-service retail technology to address challenges like labor shortages and theft.
• Cantaloupe was selected by the San Jose Earthquakes soccer club to be the point-of-sale and premium management system for their stadium.

Quarterly Financial Results

For the three months ended December 31, 2024, Cantaloupe reported the following key metrics:

Metric	Q3 2024	Q3 2023	Change
Active Devices	1,269,000	1,226,000	+3.5%
Active Customers	32,909	30,027	+9.6%
Total Transactions	299.8 million	286.7 million	+4.6%
Total Transaction Volume	$843.1 million	$730.1 million	+15.5%
ARPU (Trailing 12 months)	$202.20	$181.91	+11.1%

Revenues for the quarter were $73.7 million, an increase of 12.8% compared to the same period in the prior year. This was driven by a $9.1 million increase in subscription and transaction fees, partially offset by a $0.7 million decrease in equipment sales.

The increase in transaction fees was due to higher average ticket sizes, increased processing volumes, and the acquisition of Cheq. Subscription revenue also grew 14.1% as the company continued to expand its recurring revenue base and added new customers.

Gross margin improved to 38.6% in Q3 2024, up from 34.6% in the prior year period. This was primarily due to the higher-margin subscription and transaction fee revenue streams making up a larger portion of the overall business.

Operating expenses increased 18.5% year-over-year, largely driven by investments in sales & marketing, technology development, and general & administrative functions. The company also incurred additional costs related to the acquisitions of Cheq and SB Software.

For the six-month period ended December 31, 2024, Cantaloupe reported the following:

Metric	YTD 2024	YTD 2023	Change
Revenues	$144.6 million	$128.0 million	+13.0%
Gross Profit	$55.6 million	$45.0 million	+23.4%
Gross Margin	38.4%	35.2%	+3.2 pts
Adjusted EBITDA	$19.6 million	$16.3 million	+20.2%

The year-to-date results show continued strong growth in revenue, profitability, and operational efficiency. Subscription and transaction fees increased 14.8% compared to the prior year period, while equipment sales declined 7.1%.

Analysis of Strengths and Weaknesses

Strengths:

• Diversified revenue streams: Cantaloupe generates a majority of its revenue from high-margin subscription and transaction fees, reducing reliance on lower-margin equipment sales.
• Expanding customer base: The company has grown its active devices by 3.5% and active customers by 9.6% year-over-year, demonstrating its ability to acquire new business.
• Improving operational efficiency: Gross margins have expanded by 4 percentage points, indicating the company is effectively managing its costs.
• Inorganic growth: The acquisitions of Cheq and SB Software have contributed to Cantaloupe’s revenue and customer growth.

Weaknesses:

• Rising operating expenses: While revenue and profitability are increasing, operating expenses have grown at a faster rate, putting pressure on the company’s bottom line.
• Reliance on acquisitions: A significant portion of Cantaloupe’s recent growth has come from M&A activity, which carries integration risks and may not be sustainable long-term.
• Exposure to macroeconomic conditions: As a provider of discretionary services, Cantaloupe’s business could be impacted by a potential economic downturn affecting consumer spending.

Outlook and Future Prospects

Cantaloupe appears well-positioned for continued growth in the self-service commerce market. The company’s diversified revenue streams, expanding customer base, and focus on innovation position it as a leader in the industry. However, the company will need to carefully manage its operating expenses to maintain profitability as it scales.

The recent acquisitions of Cheq and SB Software provide opportunities for Cantaloupe to cross-sell its solutions and expand its geographic reach. The launch of new initiatives like the AdVantage advertising program and Smart Store solutions also demonstrate the company’s ability to identify and capitalize on emerging market trends.

That said, Cantaloupe’s reliance on M&A and exposure to macroeconomic conditions could present risks going forward. The company will need to balance its inorganic growth strategy with organic initiatives to drive sustainable long-term expansion.

Overall, Cantaloupe appears to be executing well on its strategy and delivering strong financial results. However, investors should closely monitor the company’s ability to manage costs and integrate new acquisitions effectively as it continues to scale.