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CI

CANTALOUPE, INC. (CTLP)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 FY2024 revenue was $72.7M (+13.2% YoY) with diluted EPS of $0.03; Adjusted EBITDA was $7.5M, down 19.0% YoY due to prior-year one-time items that boosted Q4 FY2023 margins and EBITDA .
  • Subscription and transaction fees grew 15.4% YoY to $61.1M; Adjusted Gross Margin fell to 37.3% vs 40.1% in Q4 FY2023, with management noting last year benefited from ~$1.5M one-time rebate and cost items; excluding these, margins would have been relatively consistent .
  • FY2025 guidance introduced: revenue $308–$322M, Adjusted EBITDA $44–$52M, GAAP net income $22–$32M, operating cash flow $24–$32M; sub+transaction growth guided to 15–20% (vs prior “18%+” commentary) .
  • Strategic catalysts: SB Software acquisition enhances European cross-sell; Cheq “Suites” launch expands sports/venue offering; internal controls fully remediated, reducing risk profile .

What Went Well and What Went Wrong

What Went Well

  • Recurring revenue acceleration and ARPU expansion: Q4 sub+transaction fees +15.4% YoY to $61.1M; ARPU reached ~$194 on a trailing-12-month basis, up 11% YoY .
  • Operational leverage progress: FY2024 Adjusted Gross Margin 38.2% (vs 33.3% FY2023) and Adjusted EBITDA $34.0M (+90.9% YoY), reflecting COGS optimization and OpEx control; CEO: “we executed on our strategy to expand operating leverage” .
  • Strategic expansion: SB Software adds ~30k European software subscriptions for cross-sell; Cheq “Suites” launched; international wins in UK and Latin America highlight traction .
    • Quote: “This acquisition… allows us to now cross-sell our cashless payment acceptance devices and other software add-on” .

What Went Wrong

  • Q4 margin/EBITDA headwind vs prior year: Adjusted Gross Margin 37.3% vs 40.1% and Adjusted EBITDA $7.5M vs $9.2M in Q4 FY2023 due to prior-year one-time benefits; equipment margin normalized to 7% from 21% .
  • June transaction revenue softness: Management saw weaker consumer spending in June, but trends normalized in July/August; not seen as persistent .
  • Subscription growth below earlier aspirations; management recalibrated FY2025 sub revenue growth to ~15% (from initial 20% aspiration) and refined combined sub+transaction to 15–20% .

Financial Results

Summary Financials (Quarterly)

MetricQ2 2024Q3 2024Q4 2024
Revenue ($USD Millions)$65.4 $67.9 $72.7
Diluted EPS ($USD)$0.04 $0.06 $0.03
Adjusted EBITDA ($USD Millions)$8.5 $10.2 $7.5
Total Gross Margin (%)37.2% 39.6% 34.9%

Segment Revenue Breakdown

Segment ($USD Millions)Q2 2024Q3 2024Q4 2024
Subscription Fees$18.1 $19.2 $19.9
Transaction Fees$37.9 $40.0 $41.2
Equipment Sales$9.3 $8.7 $11.5
Total Revenue$65.4 $67.9 $72.7

KPIs

KPIQ2 2024Q3 2024Q4 2024
Total Dollar Volume of Transactions ($USD Millions)$730.1 $767.4 $815.7
Transaction Volume (Millions)286.7 283.3 290.4
Active Customers (period-end)30,027 30,670 31,466
Active Devices (period-end, Millions)1.23 1.22 1.22
ARPU ($USD, trailing 12 months)$181.91 $186.00 $193.64

Margins Detail (Q4 2024)

Margin (%)Q4 2024Q4 2023
Adjusted Gross Margin (Total)37.3% 40.1%
Sub+Transaction Adjusted Gross Margin43.0% 44.2%
Equipment Sales Gross Margin (GAAP)7.2% 20.8%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total Revenue ($USD Millions)FY2025N/A$308–$322 New
Sub+Transaction Revenue Growth (%)FY2025“18%+” (prelim) 15%–20% Refined
GAAP Net Income ($USD Millions)FY2025N/A$22–$32 New
Adjusted EBITDA ($USD Millions)FY2025N/A$44–$52 New
Operating Cash Flow ($USD Millions)FY2025N/A$24–$32 New

Management emphasized the refinement from “18%+” to a 15–20% range reflects improved visibility and international ramp calibration, while still supporting strong EBITDA growth .

Earnings Call Themes & Trends

TopicQ2 2024 (Prior-2)Q3 2024 (Prior-1)Q4 2024 (Current)Trend
International expansion (Europe/LatAm)Robust pipeline; seed analytics launches; CHEQ acquisition; devices sold across LatAm/Europe 1,500+ devices across 30+ customers in Europe; ~4,000 devices in Mexico under Cantaloupe ONE; recalibrated ramp SB Software acquired to enhance UK/Europe; Decorum UK upgrade; continued traction in UK/LatAm Improving momentum
Micromarkets & Smart CoolersMargin expansion; micro markets secular tailwinds Micro markets strong growth; product upgrades; attach rates for Seed add-ons Micromarkets growing 25–30%; Smart Stores launched to address retail theft Accelerating
Take rate & transaction marginsProcessing margin expansion; equipment margins improving vs prior negative Take rate increased QoQ; transaction margin improved (21%→23%) Margins relatively stable; some room for transaction margin expansion Stable to slight expansion
Installation/activation timelinesElevated; not yet normalized Sustained around ~12 weeks; limited near-term improvement Back to ~6-week typical timeframe via installers/tech improvements Improving
Internal controls remediationOngoing remediation Remediation efforts continued Material weaknesses remediated (business process and IT) Resolved
Macro/consumer spendingNot highlightedQ4 outlook implied acceleration; activation stabilization June softness in transaction revenue tied to weaker consumer spend; improved in July/August Transient softness, normalized
New products/verticalsSeed Analytics/Intelligence; CHEQ POS; Mexico events Cheq integrations; venue wins; warehouse digitalization (Pick Easy) Cheq “Suites” launched; stadium/venue deals (Detroit City FC, baseball clubs) Expanding footprint

Management Commentary

  • “It’s been a strong year for Cantaloupe capped off by a solid fourth quarter… driving recurring revenue growth while also optimizing cost of sales and controlling operational expenses” .
  • “We’re excited about… FY ’25 outlook of 15% to 20% top line growth and ~40% adjusted EBITDA growth at the midpoint” .
  • On SB Software: “Primarily a software business… allows us to now cross-sell our cashless payment acceptance devices and other software add-on” .
  • On margins: “Gross margins… pretty much in line… Transaction margin increased to 21% in FY ’24; equipment margin aspirational goal 10%–15% in 2025” .
  • On activation timelines: “Implement… between sold and installed… in a 6-week timeframe… initiatives have paid off” .

Q&A Highlights

  • Guidance details: Combined sub+transaction growth refined to 15–20% for FY2025 (vs prior “18%+”) with subscription ~15% and transaction ~18%+ .
  • SB Software financial impact: Not material (<1% of FY2025 revenue/EBITDA), strategic for cross-sell and European reach .
  • June consumer spending weakness: Temporary; July/August returned to trend; no continued weakness into FY2025 .
  • Micromarkets growth: Management cited 25–30% growth pace, driving higher ticket sizes and transaction mix .
  • Margins outlook: Subscription fee margin to remain ~88%–90%; transaction margin has “room for expansion”; equipment margin targeted 10–15% in 2025 .

Estimates Context

  • S&P Global consensus estimates for Q4 FY2024 (revenue, EPS, EBITDA, target price) were unavailable due to data access limits at the time of retrieval; as a result, beats/misses vs consensus cannot be shown in this report. Values retrieved from S&P Global were unavailable at the time of analysis.
  • Management indicated FY2024 revenue “came in slightly below our guidance at $268.6 million,” while Adjusted EBITDA was strong at $34.0M, offering context for internal expectations vs reported results .

Key Takeaways for Investors

  • Recurring revenue growth and ARPU expansion remain durable tailwinds; sub+transaction fees +15.4% YoY and ARPU ~$194 TTM highlight pricing/mix strength in micromarkets and higher-ticket categories .
  • Q4 margin/EBITDA declines vs prior year were driven by last year’s one-time items; excluding these, margins were “relatively consistent,” reducing risk of structural deterioration .
  • FY2025 guide implies double-digit top-line growth and continued EBITDA scaling; watch for execution in international and equipment margin normalization to the 10–15% target .
  • Strategic expansion (SB Software, Cheq Suites) broadens TAM and cross-sell in Europe and sports/venues; near-term financial impact small, but positioning attractive .
  • Operational risk reduced: activation timelines improved to ~6 weeks; internal control material weaknesses remediated, supporting cleaner execution and lower governance risk .
  • Monitor transaction volumes and consumer spending trends: June weakness viewed as transitory; normalized by July/August per management .
  • With estimates unavailable, focus near-term trading on guidance cadence, micromarket momentum, and any incremental disclosures on take rate/margins; medium-term thesis rests on recurring revenue growth, international scaling, and margin discipline .