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Cantaloupe, Inc. Reports Third Quarter Fiscal Year 2021 Results

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Cantaloupe, Inc., (NASDAQ:CTLP) ("CTLP" or the "Company"), a digital payments and software services company that provides end-to-end technology solutions for the unattended retail market, today reported results for the fiscal year 2021 third quarter.

"We are pleased with our financial results for the third fiscal quarter, which improved sequentially as schools and other organizations across the country continue to re-open. During the quarter we also made great progress on our strategic initiatives by driving sustainable organic growth through deepening existing relationships and winning new customers," said Sean Feeney, chief executive officer, Cantaloupe, Inc. "One year into leading this incredible company, I am proud of the progress we’ve made at the Company. The successful rebrand to Cantaloupe has re-energized us as we emerge from the pandemic and set forth on a path to growth and future successes, as we help the world buy it and go."

Financial Highlights:

  • Revenue of $42.8 million, an increase of 11.7% versus second quarter 2021, and a decrease of 0.8% year over year

    • License and transaction fee revenue of $34.7 million, an increase of 4.4% versus second quarter 2021 and a decrease of 0.8% year-over-year and

    • Equipment revenue of $8.1 million, an increase of 59.2% over second quarter 2021 and a decrease of 0.8% year over year

  • Active Devices, defined as devices that have communicated or transacted with the Company in the last 12 months, totaled 1.08 million at the end of the third quarter of 2021 compared to 1.05 million at the end of the third quarter of 2020, an increase of approximately 30,000 Active Devices, or 3%

  • Active Customers, defined as customers that have at least one Active Device, totaled 18,763 at the end of the third quarter of 2021 compared to 16,808 at the end of the third quarter of 2020, an increase of 1,955 Active Customers, or 12%

  • Gross margin of 29.7% compared with 25.5% in the prior year period

  • Operating loss of $2.0 million for the quarter ended March 31, 2021 compared to operating loss of $10.2 million in the prior year period, driven primarily by a $6.5 million reduction in operating expenses

  • GAAP Net loss applicable to common shares of $2.2 million, or $0.03 per basic share compared to net loss applicable to common shares of $9.6 million, or $0.15 per basic share in the prior year period

  • Adjusted EBITDA1 of $2.2 million compared to $(3.9) million in the prior year period

  • Raised $55 million of aggregate gross proceeds from institutional accredited investors through a private placement transaction

  • Ended the quarter with $88.6 million in cash and cash equivalents compared to $31.7 million as of June 30, 2020

Operational Highlights:

  • Renewed Small Ticket Incentive Agreement with Visa U.S.A. Inc.

  • Experienced increased momentum in customers converting from 2G/3G to 4G LTE devices

  • Upgraded and expanded the ePort product family to accept EMV contact and contactless payments

  • Launched next generation of Seed Cashless+ tailored to small and medium businesses (SMBs) in the channel

  • Announced eCommerce integration for Office Coffee Service ("OCS") and Delivery Services

  • In April, USA Technologies, Inc. officially launched as Cantaloupe, Inc. (Nasdaq: CTLP), celebrating its rebranding under a new name and ticker

Fiscal Year 2021 Outlook:

For full fiscal year 2021, the Company is reiterating the following:

  • Revenue to be between $163 million and $171 million

  • GAAP Net loss applicable to common shares to be between $17 million and $21 million

  • Adjusted EBITDA2 to be between $1 million and $4 million

Webcast and Conference Call

Cantaloupe, Inc. will host a conference call and webcast at 4:30 p.m. Eastern Time today. To participate in the conference call, please dial +1 (866) 393-1608 approximately 10 minutes prior to the call. International callers should dial +1 (224) 357-2194. Please reference conference ID # 4396162. A live webcast of the conference call will be available at https://cantaloupeinc.gcs-web.com/events-and-presentations. Please access the website 15 minutes prior to the start of the call to download and install any necessary audio software.

A telephone replay of the conference call will be available from 7:30 p.m. Eastern Time on May 6, 2021 until 7:30 p.m. Eastern Time on May 9, 2021 and may be accessed by calling +1 (855) 859-2056 (domestic dial-in) or +1 (404) 537-3406 (international dial-in) and reference conference ID # 4396162.

An archived replay of the conference call will also be available in the investor relations section of the company's website.

About Cantaloupe, Inc.

Cantaloupe, Inc. is a software and payments company that provides end-to-end technology solutions for the unattended retail market. Cantaloupe is transforming the unattended retail community by offering one integrated solution for payments processing, logistics, and back-office management. The Company’s enterprise-wide platform is designed to increase consumer engagement and sales revenue through digital payments, digital advertising and customer loyalty programs, while providing retailers with control and visibility over their operations and inventory. As a result, customers ranging from vending machine companies, to operators of micro-markets, gas and car charging stations, laundromats, metered parking terminals, kiosks, amusements and more, can run their businesses more proactively, predictably, and competitively.

Discussion of Non-GAAP Financial Measures:

This press release contains discussion of adjusted EBITDA, a non-GAAP financial measure which is not required or defined under GAAP (Generally Accepted Accounting Principles). Generally, a non-GAAP financial measure is a numerical measure of a company's performance, financial position or cash flows that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with GAAP. Reconciliations between non-GAAP financial measures and the most comparable GAAP financial measures are set forth below on Page 7.

We use these non-GAAP financial measures for financial and operational decision-making purposes and as a means to evaluate period-to-period comparisons. We believe that these non-GAAP financial measures provide useful information about our operating results, enhance the overall understanding of past financial performance and future prospects and allow for greater transparency with respect to metrics used by our management in its financial and operational decision making. The presentation of this financial measure is not intended to be considered in isolation or as a substitute for the financial measures prepared and presented in accordance with GAAP, including our net income or net loss or net cash used in operating activities. Management recognizes that non-GAAP financial measures have limitations in that they do not reflect all of the items associated with our net income or net loss as determined in accordance with GAAP and are not a substitute for or a measure of our profitability or net earnings. Adjusted EBITDA is presented because we believe it is useful to investors as a measure of comparative operating performance. Additionally, we utilize Adjusted EBITDA as a metric in our executive officer and management incentive compensation plans.

We define Adjusted EBITDA as U.S. GAAP net loss before (i) interest income, (ii) interest expense on debt and reserves, (iii) income taxes, (iv) depreciation, (v) amortization, (vi) stock-based compensation expense, and (vii) non-recurring fees and charges that were incurred in connection with the 2019 Investigation and financial statement restatement activities as well as proxy solicitation costs (viii) changes in the fair value of the embedded derivative relating to the 2020 Antara Term Facility that was bifurcated and recognized at fair value.

We have excluded stock-based compensation, as it does not reflect our cash-based operations. We have excluded the professional fees incurred in connection with the non-recurring costs and expenses related to the 2019 Investigation, financial statement restatement activities, and proxy solicitation costs because we believe that they represent charges that are not related to our operations. Consistent with the exclusion of debt interest expense from EBITDA, the debt-related derivative gain recorded for the quarter ended March 31, 2020 was also excluded from adjusted EBITDA.

Forward-looking Statements:

All statements other than statements of historical fact included in this release, including without limitation Cantaloupe’s future prospects and performance, the business strategy and the plans and objectives of Cantaloupe's management for future operations, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. When used in this release, words such as "may," "could," "expect," "intend," "plan," "seek," "anticipate," "believe," "estimate," "guidance," "predict," "potential," "continue," "likely," "will," "would" and variations of these terms and similar expressions, or the negative of these terms or similar expressions, as they relate to Cantaloupe or its management, may identify forward-looking statements. Such forward-looking statements are based on the reasonable beliefs of Cantaloupe's management, as well as assumptions made by and information currently available to Cantaloupe's management. Actual results could differ materially from those contemplated by the forward-looking statements as a result of certain factors, including but not limited to the incurrence by Cantaloupe of any unanticipated or unusual non-operational expenses which would require us to divert our cash resources from achieving our business plan; the uncertainties associated with COVID-19, including its possible effects on Cantaloupe’s operations, financial condition and the demand for Cantaloupe’s products and services; the ability of Cantaloupe to predict or estimate its future quarterly or annual revenue and expenses given the developing and unpredictable market for its products; the ability of Cantaloupe to retain key customers from whom a significant portion of its revenues is derived; the ability of Cantaloupe to compete with its competitors to obtain market share; the ability of Cantaloupe to make available and successfully upgrade current customers to new standards and protocols; whether Cantaloupe's existing or anticipated customers purchase, rent or utilize ePort or Seed devices or our other products or services in the future at levels currently anticipated by Cantaloupe; disruptions to our systems, breaches in the security of transactions involving our products or services, or failure of our processing systems; or other risks discussed in Cantaloupe’s filings with the U.S. Securities and Exchange Commission, including but not limited to its Annual Report on Form 10-K for the year ended June 30, 2020 and its Quarterly Reports on Form 10-Q for the quarters ended September 30, 2020 and December 31, 2020. Readers are cautioned not to place undue reliance on these forward-looking statements. Any forward-looking statement made by us in this release speaks only as of the date of this release. Unless required by law, Cantaloupe does not undertake to release publicly any revisions to these forward-looking statements to reflect future events or circumstances or to reflect the occurrence of unanticipated events. If Cantaloupe updates one or more forward-looking statements, no inference should be drawn that Cantaloupe will make additional updates with respect to those or other forward-looking statements.

_____________________________________________

1 Adjusted earnings before income taxes, depreciation, and amortization ("Adjusted EBITDA") is a non-GAAP measurement. See Reconciliations of Non-GAAP Measures for a reconciliation of Adjusted EBITDA to net loss.
2 Adjusted earnings before income taxes, depreciation, and amortization ("Adjusted EBITDA") is a non-GAAP measurement. See Reconciliations of Non-GAAP Measures for a reconciliation of Adjusted EBITDA to net loss.

-- F-CTLP

Cantaloupe, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

($ in thousands, except share data)

March 31,
2021

June 30,
2020

Assets

Current assets:

Cash and cash equivalents

$

88,562

$

31,713

Accounts receivable, net

23,124

17,273

Finance receivables, net

7,050

7,468

Inventory, net

6,064

9,128

Prepaid expenses and other current assets

2,977

1,782

Total current assets

127,777

67,364

Non-current assets:

Finance receivables due after one year

11,123

11,213

Property and equipment, net

5,598

7,872

Operating lease right-of-use assets

4,570

5,603

Intangibles, net

20,747

23,033

Goodwill

63,945

63,945

Other assets

2,148

1,993

Total non-current assets

108,131

113,659

Total assets

$

235,908

$

181,023

Liabilities, convertible preferred stock and shareholders’ equity

Current liabilities:

Accounts payable

$

34,761

$

27,058

Accrued expenses

28,676

30,265

Current obligations under long-term debt

3,746

3,328

Deferred revenue

1,670

1,698

Total current liabilities

68,853

62,349

Long-term liabilities:

Deferred income taxes

153

137

Long-term debt, less current portion

13,798

12,435

Operating lease liabilities, non-current

3,947

4,749

Total long-term liabilities

17,898

17,321

Total liabilities

86,751

79,670

Commitments and contingencies (Note 13)

Convertible preferred stock:

Series A convertible preferred stock, 900,000 shares authorized, 445,063 issued and outstanding, with liquidation preferences of $21,446 and $20,779 at March 31, 2021 and June 30, 2020, respectively

3,138

3,138

Shareholders’ equity:

Preferred stock, no par value, 1,800,000 shares authorized

Common stock, no par value, 640,000,000 shares authorized, 71,081,313 and 65,196,882 shares issued and outstanding at March 31, 2021 and June 30, 2020, respectively

460,059

401,240

Accumulated deficit

(314,040

)

(303,025

)

Total shareholders’ equity

146,019

98,215

Total liabilities, convertible preferred stock and shareholders’ equity

$

235,908

$

181,023

Cantaloupe, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

Three months ended

Nine months ended

March 31,

March 31,

($ in thousands, except per share data)

2021

2020

2021

2020

Revenue:

License and transaction fees

$

34,686

$

34,961

$

101,008

$

105,324

Equipment sales

8,074

8,137

16,913

25,184

Total revenue

42,760

43,098

117,921

130,508

Cost of sales:

Cost of license and transaction fees

20,463

22,244

60,415

66,912

Cost of equipment sales

9,593

9,856

18,262

28,420

Total cost of sales

30,056

32,100

78,677

95,332

Gross profit

12,704

10,998

39,244

35,176

Operating expenses:

Selling, general and administrative

13,731

15,888

44,371

47,230

Investigation, proxy solicitation and restatement expenses

4,181

13,949

Depreciation and amortization

991

1,107

3,111

3,209

Total operating expenses

14,722

21,176

47,482

64,388

Operating loss

(2,018

)

(10,178

)

(8,238

)

(29,212

)

Other income (expense):

Interest income

302

411

978

988

Interest expense

(88

)

(683

)

(3,970

)

(1,981

)

Change in fair value of derivative

1,070

1,070

Total other income (expense), net

214

798

(2,992

)

77

Loss before income taxes

(1,804

)

(9,380

)

(11,230

)

(29,135

)

Provision for income taxes

(44

)

85

(133

)

(46

)

Net loss

(1,848

)

(9,295

)

(11,363

)

(29,181

)

Preferred dividends

(334

)

(334

)

(668

)

(668

)

Net loss applicable to common shares

$

(2,182

)

$

(9,629

)

$

(12,031

)

$

(29,849

)

Net loss per common share

Basic

$

(0.03

)

$

(0.15

)

$

(0.18

)

$

(0.48

)

Diluted

$

(0.03

)

$

(0.15

)

$

(0.18

)

$

(0.48

)

Weighted average number of common shares outstanding

Basic

67,112,511

64,096,778

65,617,458

62,591,947

Diluted

67,112,511

64,096,778

65,617,458

62,591,947

Cantaloupe, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

Nine months ended

March 31,

($ in thousands)

2021

2020

Cash flows from operating activities:

Net loss

$

(11,363

)

$

(29,181

)

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

Stock based compensation

6,366

2,453

Amortization of debt discount and issuance costs

2,696

1,040

Provision for expected losses

459

1,400

Provision for inventory reserve

768

(434

)

Depreciation and amortization included in operating expenses

3,111

3,209

Depreciation included in cost of sales for rental equipment

1,055

1,984

Change in fair value of derivative

(1,070

)

Property and equipment write-off

1,658

Other

1,192

1,501

Changes in operating assets and liabilities:

Accounts receivable

(5,204

)

2,088

Finance receivables

(252

)

(113

)

Inventory

2,297

2,204

Prepaid expenses and other assets

(1,343

)

(1,045

)

Accounts payable and accrued expenses

7,218

(500

)

Operating lease liabilities

(795

)

(1,102

)

Deferred revenue

(28

)

(60

)

Net cash provided by (used in) operating activities

7,835

(17,626

)

Cash flows from investing activities:

Purchase of property and equipment

(1,281

)

(1,711

)

Proceeds from sale of property and equipment

12

33

Net cash used in investing activities

(1,269

)

(1,678

)

Cash flows from financing activities:

Proceeds from long-term debt issuance by Antara, net of issuance costs paid to Antara

14,248

Payment of third-party debt issuance costs

(1,980

)

Proceeds from (repayments of) Revolving Credit Facility

(10,000

)

Proceeds from long-term debt issuance by JPMorgan Chase Bank, N.A., net of debt issuance costs

14,550

Repayment of long-term debt

(15,554

)

(2,413

)

Proceeds from equity issuance by Antara, net of issuance costs paid to Antara

17,879

Proceeds from private placement

55,008

Payment of equity issuance costs

(2,598

)

Proceeds from exercise of common stock options

77

Payment of Antara prepayment penalty and commitment termination fee

(1,200

)

Net cash used provided by financing activities

50,283

17,734

Net increase (decrease) in cash and cash equivalents

56,849

(1,570

)

Cash and cash equivalents at beginning of year

31,713

27,464

Cash and cash equivalents at end of period

$

88,562

$

25,894

Cantaloupe, Inc.

Reconciliation of U.S. GAAP Net Loss to Adjusted EBITDA

(Unaudited)

Three months ended March 31,

($ in thousands)

2021

2020

U.S. GAAP net loss

$

(1,848

)

$

(9,295

)

Less: interest income

(302

)

(411

)

Plus: interest expense

88

683

Plus: income tax provision

44

(85

)

Plus: depreciation expense included in cost of sales for rentals

2

593

Plus: depreciation and amortization expense in operating expenses

991

1,107

EBITDA

(1,025

)

(7,408

)

Plus: stock-based compensation (a)

3,216

421

Plus: investigation, proxy solicitation and restatement expenses (b)

4,181

Less: change in fair value of derivative (c)

(1,070

)

Adjustments to EBITDA

3,216

3,532

Adjusted EBITDA

$

2,191

$

(3,876

)

(a)

As an adjustment to EBITDA, we have excluded stock-based compensation, as it does not reflect our cash-based operations.

(b)

As an adjustment to EBITDA, we have excluded the professional fees incurred in connection with the non-recurring costs and expenses related to the 2019 Investigation, financial statement restatement activities, and proxy solicitation costs.

(c)

Consistent with the exclusion of debt interest expense from EBITDA, the debt-related derivative gain recorded for the quarter ended March 31, 2020 was also excluded from adjusted EBITDA.

View source version on businesswire.com: https://www.businesswire.com/news/home/20210506006173/en/

Contacts

Media and Investor Relations Contact:
Alicia V. Nieva-Woodgate
Cantaloupe, Inc.
+1 720.445.4220
anievawoodgate@cantaloupe.com

Investor Relations:
ICR, Inc.
cantaloupeIR@icrinc.com