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CI

CANTALOUPE, INC. (CTLP)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 FY2025 revenue rose 13.0% YoY to $70.8M, with Subscription & Transaction fees up 15.7% YoY; diluted EPS was $0.04 and Adjusted EBITDA $9.0M, reflecting ongoing margin expansion and profitable growth .
  • Total Adjusted Gross Margin improved to 40.7% (vs. 38.8% LY); subscription/transaction adjusted margin increased to 44.0%, aided by higher take rates and average ticket size, while equipment margin was 11.4% .
  • Management reiterated FY2025 guidance (Revenue $308–$322M; GAAP net income $22–$32M; Adjusted EBITDA $44–$52M; Operating cash flow $24–$32M), keeping the outlook intact after a “strong start” .
  • Operative catalysts: accelerating micro markets and Smart Stores adoption (addressing retail “shrink”), ARPU up 11% YoY to ~$198, and international scaling (UK/EMEA and Latin America) with SB Software integration and cross-sell opportunities .

What Went Well and What Went Wrong

What Went Well

  • Revenue reaccelerated with Subscription & Transaction fees up 15.7% YoY; Adjusted EBITDA rose 14.5% YoY to $9.0M, and Adjusted Gross Margin expanded to 40.7% . CEO: “strong start to the year marked by reacceleration in revenue growth with continued profitability” .
  • Transaction margin drivers are durable: higher average ticket size and improved take rate; CFO expects transaction margins to “continue to improve throughout the year” .
  • Product momentum: micro markets, Smart Stores (“shrink” reduction), and Cheq Suites; early wins across residential, fitness centers, venues; ARPU up to ~$198 and expected to continue rising with analytics and platform attach .

What Went Wrong

  • Cash used in operating activities of $(12.0)M due to timing of payments to customers and cash paid for SB Software acquisition; management expects normalization next quarter .
  • Equipment revenue declined 6.7% YoY to $7.0M and equipment margins remain structurally lower vs core processing/software (11.4%) .
  • International deployments in Latin America deliberately “throttled” to ensure measured scaling; subscription growth guided to mid-teens rather than prior 20% aspiration .

Financial Results

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD Millions)$67.897 $72.657 $70.836
YoY Revenue Growth (%)12.5% 13.2% 13.0%
Diluted EPS ($USD)$0.06 $0.03 $0.04
Net Income Applicable to Common ($USD Millions)$4.367 $2.206 $3.283
Operating Income ($USD Millions)$4.292 $3.536 $4.107
Adjusted EBITDA ($USD Millions)$10.186 $7.466 $8.952
MarginsQ3 2024Q4 2024Q1 2025
Total Gross Margin % (GAAP)39.6% 34.9% 38.3%
Adjusted Gross Margin %N/A37.3% 40.7%
Subscription & Transaction Adjusted GM %44.4% 43.0% 44.0%
Equipment Sales Gross Margin %7.2% 7.2% 11.4%
Revenue Breakdown ($USD Millions)Q3 2024Q4 2024Q1 2025
Transaction Fees$40.0 $41.2 $43.6
Subscription Fees$19.2 $19.9 $20.2
Equipment Sales$8.690 $11.531 $7.044
Total Revenue$67.897 $72.657 $70.836
KPIsQ3 2024Q4 2024Q1 2025
Dollar Volumes ($USD Millions)$767.4 $815.7 $826.7
Transaction Volume (Millions)283.3 290.4 293.7
Active Customers30,670 31,466 32,338
Active Devices (Millions)1.22 1.22 1.23
ARPU ($USD)$186.00 $193.64 $198.31

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total RevenueFY2025$308M–$322M $308M–$322M Maintained
Subscription & Transaction Revenue GrowthFY202515%–20% 15%–20% Maintained
GAAP Net Income Applicable to CommonFY2025$22M–$32M $22M–$32M Maintained
Adjusted EBITDAFY2025$44M–$52M $44M–$52M Maintained
Operating Cash FlowFY2025$24M–$32M $24M–$32M Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024)Q4 2024Q1 2025Trend
Micro markets momentumGrowth; margins up; equipment margins lower; ARPU $186 Strong adoption; residential penetration; micro markets excel, +37% vs vending Driver of revenue growth; Pepi Foods replacements; attach of analytics/remote price change Improving
Smart Stores / “shrink”Early mentions via smart coolers; focus on cashless Smart Stores to combat retail theft; partnerships (AIR Automation) Clear use-case for theft reduction; AI identifies products; multi-vertical wins Improving
International expansion (UK/EMEA, LAC)Devices sold in LATAM/Europe; building channels SB Software acquired; implementation timelines normalized; bullish outlook UK/EMEA and LAC customer adds; measured LAC scaling; cross-sell Vendmanager Improving
Margins (take rate, ticket size)Gross margin 39.6%; subscription/transaction margin 44.4% Adjusted GM 37.3%; transaction margin improvement focus; equipment 7% Transaction margins to improve; take rate capped near-term, ticket size drives gains Stable to improving
ARPU trajectory$186; add-on modules drive upside $194; expected to continue rising with add-ons/ad mgmt $198; management expects continued growth; potential higher with analytics/Cantaloupe One Improving
Implementation cyclesN/ABack to ~6 weeks from elevated levels; added installers; plug-and-play activation Continuing measured deployments in LAC; cautious scaling Improving domestically; measured internationally

Management Commentary

  • Ravi Venkatesan: “It’s been a strong start to the year marked by reacceleration in revenue growth with continued profitability” .
  • On product-market fit: “Smart Stores… because of retail theft going out of control, we’ve seen tremendous demand… AI and smart technology detects exactly what products are taken… theft is virtually nonexistent” .
  • Scott Stewart: “We did a great job in increasing our overall take rate… overall margin on transaction processing… will continue to improve… as average ticket size gets bigger” .

Q&A Highlights

  • Margins sustainability: CFO expects transaction margin improvement driven by average ticket and take rate; subscription margins stable (88–90%) and equipment margins targeted 10–15% in FY2025 .
  • Guidance drivers: Revenue growth and margins drive EBITDA; taxes now a larger factor for net income; OpEx expected to be steady to slightly down through the year .
  • International scaling: LAC deployments throttled to ensure performance metrics; prospects for additional large wins remain; Europe expansion aided by SB Software cross-sell .
  • ARPU upside: ARPU framework rising with add-ons and platform penetration; management expects continued growth in FY2025 .
  • Mix shift to higher ticket: Micro markets and non-food items (cosmetics, electronics) lifting average ticket ~10% YoY; trend expected to continue .

Estimates Context

  • Wall Street consensus (S&P Global) for Q1 FY2025 EPS and revenue was unavailable at time of retrieval due to SPGI daily limit; comparisons vs consensus cannot be determined. Values retrieved from S&P Global were unavailable (system limit).
  • Qualitatively, one analyst noted subscription/transaction gross margin “came in better than… expected,” suggesting potential upward revisions to margin assumptions as average ticket size and take rates improve .

Key Takeaways for Investors

  • Core engine healthy: Subscription & Transaction revenue up 15.7% YoY; Adjusted Gross Margin 40.7% and Adjusted EBITDA $9.0M support profitable growth trajectory .
  • Margin drivers look durable: Take-rate gains have largely capped, but higher average ticket sizes should sustain slight margin increases through the year per CFO commentary .
  • Product cycle and TAM expansion: Micro markets and Smart Stores address new verticals and retail shrink; watch adoption pace and attach rates for Seed Analytics and remote price changes to drive ARPU .
  • International is an incremental lever: SB Software integration enables UK/EU cross-sell; measured LAC scaling continues; monitor deployment velocity as implementation cycles normalize .
  • Cash flow timing is a near-term watch item: Operating cash usage driven by payment timing; management expects normalization and growth through FY2025 within reiterated guidance .
  • Equipment remains a headwind: Revenue down 6.7% YoY; margin 11.4%—expect continued focus on achieving 10–15% target without diluting core processing/software economics .
  • Trading implications: Guidance reaffirmation and sustained margin commentary are supportive; upside catalysts include ARPU expansion, Smart Stores wins, and international cross-sell execution; risks include equipment margin variability and cash flow timing .