Exchange: NASDAQ | Sector: Technology | Industry: Information Technology Services
Q1 2025
Published: Nov 7, 2024
Earnings Highlights
Revenue of $70.84M up 13% year-over-year
EPS of $0.04 increased by 90.3% from previous year
Gross margin of 40.7%
Net income of 3.57M
"Total revenue increased 13% year-over-year to $70.8 million, driven by 18% year-over-year transaction revenue growth and 12% year-over-year subscription revenue growth." - Ravi Venkatesan
Cantaloupe Inc (CTLP) Q1 2025 Results Analysis: Revenue Growth, Margin Expansion, and International Footprint Expansion in Focus
Executive Summary
Cantaloupe Inc (CTLP) reported a solid first quarter of fiscal year 2025, with total revenue of $70.8 million, up 13% year over year, driven by an 18% rise in transaction revenue and a 12% rise in subscription revenue. The quarter featured margin expansion, with total adjusted gross margin at 40.7% (up from 38.8% a year earlier) and a 14% year-over-year increase in adjusted EBITDA to $9.0 million. ARPU rose to $198, up 11% YoY, supported by higher average ticket sizes and stronger mix into higher-value offerings such as Seed analytics and micro markets. Management reiterated FY2025 guidance, signaling continued confidence in 15–20% revenue growth and healthy earnings progression, while noting near-term cash flow pressures tied to timing of transaction-processing payments and a recent acquisition-related cash outlay.
Strategically, Cantaloupe is accelerating international expansion (Europe, LATAM) and operational efficiencies, while advancing cross-sell initiatives (Vendmanager integration, Seed analytics, Cantaloupe One) and introducing new product lines (Suites for hospitality venues, Smart Stores) that mitigate theft and boost average ticket prices. Management highlighted notable customer wins across micro markets, the Cheq platform for sports/entertainment, and growing adoption of higher-ticket items in residential and non-traditional verticals. The combination of a robust top line, improved gross margins on core revenue, and a disciplined path to profitability underpins a constructive longer-term investment thesis, albeit with near-term cash-flow headwinds and execution risk in international markets.
Key takeaway for investors: CTLP is emerging as a multi-product, global self-service technology platform with a favorable margin trajectory and a clear set of growth catalysts (international expansion, elevated ARPU, cross-sell via Seed and One, and expanded verticals). The stock trades at elevated multiples relative to some peers, reflecting expectations for sustained growth and market leadership in unattended retail technology.
Key Performance Indicators
Revenue
70.84M
QoQ: -2.51% | YoY:13.01%
Gross Profit
28.85M
40.73% margin
QoQ: 6.46% | YoY:18.59%
Operating Income
4.11M
QoQ: 16.15% | YoY:49.07%
Net Income
3.57M
QoQ: 61.92% | YoY:77.98%
EPS
0.04
QoQ: 48.18% | YoY:90.25%
Revenue Trend
Margin Analysis
Key Insights
Revenue: $70.8 million, up 13% YoY; QoQ decline around 2.5% (per trailing metrics), reflecting seasonality.
Transaction revenue: $43.6 million, up 18% YoY; Subscription revenue: $20.2 million, up 12% YoY; Combined transaction/subscription revenue: $63.8 million, up 15.7% YoY.
Gross margin: Total 40.7%; Transaction/subscription gross margin 44% (up from 42.5% prior year); Equipment gross margin 11.4% (down from 12.2%).
Operating and profitability: Operating income $4.11 million; EBITDA $9.0 million (up 14% YoY); Net income attributable to common shares $3.57 million; Diluted EPS $0.044.
ARPU and unit economics: ARPU $198, up 11% YoY; Over 32,000 active customers and 1.23 million active devices (YoY increases of 9% and 3.2%, respectively).
Financial Highlights
Q1 2025 highlights and metrics:
- Revenue: $70.8 million, up 13% YoY; QoQ decline around 2.5% (per trailing metrics), reflecting seasonality.
- Transaction revenue: $43.6 million, up 18% YoY; Subscription revenue: $20.2 million, up 12% YoY; Combined transaction/subscription revenue: $63.8 million, up 15.7% YoY.
- Gross margin: Total 40.7%; Transaction/subscription gross margin 44% (up from 42.5% prior year); Equipment gross margin 11.4% (down from 12.2%).
- Operating and profitability: Operating income $4.11 million; EBITDA $9.0 million (up 14% YoY); Net income attributable to common shares $3.57 million; Diluted EPS $0.044.
- ARPU and unit economics: ARPU $198, up 11% YoY; Over 32,000 active customers and 1.23 million active devices (YoY increases of 9% and 3.2%, respectively).
- Cash flow and liquidity: Net cash provided by operating activities negative at $(12.0) million; Free cash flow negative $(15.8) million; Cash and cash equivalents at period end $33.1 million. Ended quarter with total debt of $48.3 million and net debt of $(15.2) million.
- Guidance: FY2025 revenue guidance of $308–$322 million (15–20% growth); Adjusted EBITDA guidance $44–$52 million; Net income (GAAP) guidance $22–$32 million; Operating cash flow guidance $24–$32 million.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
70.84M
13.01%
-2.51%
Gross Profit
28.85M
18.59%
6.46%
Operating Income
4.11M
49.07%
16.15%
Net Income
3.57M
77.98%
61.92%
EPS
0.04
90.25%
48.18%
Key Financial Ratios
currentRatio
1.6
grossProfitMargin
40.7%
operatingProfitMargin
5.8%
netProfitMargin
5.04%
returnOnAssets
1.14%
returnOnEquity
1.89%
debtEquityRatio
0.26
operatingCashFlowPerShare
$-0.16
freeCashFlowPerShare
$-0.22
priceToBookRatio
2.86
priceEarningsRatio
37.84
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Key management themes from the Q1 earnings call:
- Growth and strategy: Management emphasized accelerating international expansion (Europe and LATAM) and scaling operational efficiency as core FY2025 priorities, aiming to be the global technology leader powering self-service commerce. The team highlighted continued cross-sell momentum through Seed analytics and the Vendmanager integration, plus new wins such as JW Vending and Vending Sense, as evidence of a widening addressable market.
- Margin and pricing discipline: The executives noted that higher take rates and ticket sizes are driving gross margins higher, with transaction gross margin at 44% for the subscription/transaction mix and ongoing expectations of margin improvement through the year as ticket sizes grow.
- Product and vertical expansion: The quarter featured product innovations (Suites for hospitality, Seed platform refresh) and a push into Smart Stores to combat shrink, with early deployments in fitness centers, corporate breakrooms, universities, and healthcare facilities. The team highlighted that Smart Stores reduce shrink and improve consumer experience.
- International execution risk and liquidity: While endorsing the long-term international growth thesis, management acknowledged throttling in LATAM to avoid overextension, and cautioned that near-term OCF will be affected by timing of vendor payments and the SB Software acquisition-related cash outlay, with normalization expected next quarter and beyond.
Total revenue increased 13% year-over-year to $70.8 million, driven by 18% year-over-year transaction revenue growth and 12% year-over-year subscription revenue growth.
— Ravi Venkatesan
It's not just about snacks, it's about the experience.
— Stacy Davick
Forward Guidance
Outlook and assessment:
- Revenue trajectory: FY2025 guidance calls for $308–$322 million in revenue, representing 15–20% growth, consistent with a favorable mix shift toward higher-margin, multi-product offerings (Seed analytics, Cantaloupe One) and ongoing international expansion.
- Profitability: U.S. GAAP net income anticipated to be $22–$32 million and Adjusted EBITDA of $44–$52 million, signaling continued margin expansion from stronger take rates and higher ticket sizes, offset by higher operating expenses and one-time acquisition-related costs.
- Cash flow and working capital: OCF projected at $24–$32 million; management cautions that near-term cash flow can be volatile due to timing of payments for transaction processing and integration costs from acquisitions, but expects normalization and growth later in the year.
- Monitoring factors for investors: (1) execution in international markets (LATAM and Europe) and the pace of new customer deployments; (2) the trajectory of ARPU and attach rates for Seed Analytics and One; (3) evolution of product mix toward higher-ticket items (e.g., fresh/healthy food, non-food items, and smart-store deployments); (4) impact of peer competition and macro conditions on transaction volumes; (5) integration progress and contribution from SB Vendmanager integration and other cross-sell initiatives.
Overall, the business appears to be positioned for continued revenue growth and margin expansion, with a balanced risk set tied to international execution and near-term cash-flow dynamics.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
CTLP Focus
40.73%
5.80%
1.89%
37.84%
ARBB
-55.60%
-2.02%
-24.80%
-1.83%
FORTY
23.50%
8.96%
2.72%
18.51%
CSPI
29.10%
-2.26%
0.92%
83.69%
CLVT
65.10%
-3.50%
-2.07%
-6.52%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
CTLP presents a growth-oriented investment thesis grounded in a diversified, multi-product platform targeting the unattended retail and self-service market. The QQ1 2025 results show resilient top-line growth (YoY revenue +13%), improving gross margins, and meaningful ARPU uplift, supported by a broadening mix toward higher-margin, value-added services (Seed Analytics, One) and continued international expansion. The company reiterated FY2025 guidance for 15–20% revenue growth and expects Adjusted EBITDA in the $44–$52 million range, with OCF turning positive as processing payments normalize. Near-term liquidity remains a consideration given negative OCF in Q1 and acquisition-related cash outlays, but management expects cash flow to improve and to align with guidance over the course of the year.
Valuation is elevated relative to some peers, reflecting market expectations for sustained multi-year growth in a high-potential segment. CTLP’s debt and liquidity metrics remain reasonable, and its margin trajectory is favorable versus many technology peers with negative or low margins. The key investment decision hinges on execution of international expansion, realization of cross-sell synergies, and the ability to maintain or improve ARPU as higher-ticket, non-traditional items gain share.
Recommendation: Favorable as a growth-oriented play with earnings upside potential if 2025 guidance is achieved and international deployments scale smoothly; monitor international execution, working capital dynamics, and the pace of higher-ticket mix adoption for validation of the longer-term thesis.
Key Investment Factors
Growth Potential
Catalysts include (a) international expansion into Europe and LATAM driving incremental revenue, (b) higher ARPU from mix shift toward higher-ticket items and additional Seed Analytics / Cantaloupe One services, (c) cross-sell acceleration from Vendmanager integration and ongoing SB Software cross-sell opportunities, (d) expansion of micro markets and Smart Stores into new verticals (residential, fitness centers, universities, healthcare, car dealerships) with shrink-reduction benefits and stickier customer relationships.
Profitability Risk
Key risks include (a) execution risk in scaling international markets and potential delays in customer deployments, (b) customer concentration or churn in a competitive unattended retail software space, (c) currency and macroeconomic variability affecting transaction volumes, (d) integration risk and potential dilution from acquisitions, (e) near-term negative operating cash flow due to timing of payments and large upfront investments, (f) elevated current valuation multiples relative to some peers.
Financial Position
Strengths include a solid gross margin trajectory (40.7% total; 44% for subscription/transaction), growing ARPU (198 in Q1 2025, +11% YoY), a large installed base (32k+ customers, 1.23M devices), and a healthy balance sheet with modest leverage (debt to capitalization ~0.20; debt ratio ~0.155). Cash position at quarter end was $33.1M with net debt of $15.2M. The negative operating cash flow in Q1 is a temporary cash-flow headwind driven by timing of customer payments and acquisition-related spend, which management expects to normalize and improve through the year as processing payments settle and operating efficiencies scale.
SWOT Analysis
Strengths
Comprehensive end-to-end platform spanning payments, software, and unattended retail devices (Seed, Seed Analytics, Vendmanager integration, Cheq for venues).
Strong YoY improvement in gross margins (40.7% overall; 44% for subscription/transaction) and rising ARPU ($198, +11% YoY).
Large and expanding installed base (32,000+ active customers; 1.23M active devices) supporting scalable revenue growth.
Active progress on international expansion (Europe, LATAM) with multiple new customers and cross-border deployments.
Cross-sell opportunities from strategic acquisitions and integrations (SB Software Vendmanager, Seed Analytics, Cantaloupe One).
Shrinking theft risk and expanded high-value product mix via Smart Stores and micro markets.
Weaknesses
Near-term negative operating cash flow (OCF) due to timing of transaction-processing payments and acquisition-related spend; Q1 OCF was $(12.0) million.
Higher near-term OpEx tied to international expansion and non-recurring costs from auditor changes and acquisitions.
Revenue mix still includes a substantial portion of lower-ticket transactions; although shifting, the mix impact on unit economics remains a consideration.
International execution risk and throttling in LATAM to manage deployment pace could temper near-term growth upside.
Opportunities
Expanded verticals (residential, fitness centers, car dealerships, healthcare, universities) enabled by Smart Stores and micro markets.
Higher attach rates for analytics and remote price-change offerings within Seed and Seed Analytics platforms.
Continued adoption of Cantaloupe One to monetize data and enable bookings of premium services.
Sustained cross-sell momentum post Vendmanager integration and ongoing acquisitions.
Threats
Competitive landscape in unattended payments and retail tech; potential pricing pressure on processing fees and service revenue.
Macro headwinds could affect consumer spend in unattended channels and the pace of new deployments.
Regulatory changes, currency volatility, and integration risk associated with acquisitions could impact profitability and timing.