Cantaloupe, Inc. Q3 FY2025 earnings call

• Strong growth in micro markets and seed software with existing and new customers. • New wins include NBDN distributions, variety vendors, etc. • Enterprise win: DC vending replacing over 1,200 devices and moving to Cantaloupe seed. • Success in micro market business with Peppy Foods and Amazing Rays. • Engage Pulse device well received with positive response. • Cantaloupe University event with product previews. • Launch of Cantaloupe Capital platform. • Focus on scaling in Europe and Latin America.

During the third quarter, total revenue increased 11% year over year to $75.4 million. Transaction revenue grew 10% year-over-year to $44 million, subscription revenue grew 10% year-over-year to $21.2 million, and equipment revenue was $10.2 million, an increase of 18% compared to Q3 fiscal year 2024. Total adjusted gross margin was 41.6% compared to 39.6% in the same quarter last year. Adjusted EBITDA for Q3 was $13.9 million, a 37% increase compared to the prior year. Total cash from operating activities was $22.4 million.

• Total revenues to be between $302 million and $308 million (13 to 15% growth). • Transaction and subscription revenue growth at low end of prior 15 to 20% range. • US GAAP net income between $64 million and $70 million. • Adjusted EBITDA between $96 million. • Operating cash flow still expected to be between $24 million and $32 million.

• Business, financial markets, and economic conditions could cause actual results to differ from forward-looking statements. • One-time weather events impacted transaction revenue. • Delays in equipment purchases due to economic uncertainty.

Q: Could you quantify the weather impact on transaction revenue?

A: Approximately $2 million mostly in January and a little in February.

Q: What's the cadence of SmartStore product demand?

A: Already seeing ramp up in Q4, SmartStore is hottest selling product at NAMMA show.

Q: Any updates on Latin America?

A: Some exciting updates but premature to share yet.

Q: How does sales productivity vary between vending, micro markets, and smart stores?

A: Micro markets get 10x sales of vending machines, smart stores get twice that of micro markets, with smart stores expected to be 25-30% of new sales in next 12-18 months.

Q: How did storms impact transaction revenue?

A: Storms in January and February caused school and business closures leading to lower traffic.

Q: What's expected for international revenue as a percentage exiting 2025?

A: Anticipated to be 3% to 4% exiting Q4 2025 and climbing in FY 2026.

Q: What's expected for free cash flow?

A: This quarter's free cash flow was $18.6 million, anticipating similar range in Q4 with operating cash flow $16 to $22 million and free cash flow $15 to $18 million.