Exchange: NASDAQ | Sector: Technology | Industry: Information Technology Services
Q2 2025
Published: Feb 6, 2025
Earnings Highlights
Revenue of $73.72M up 12.8% year-over-year
EPS of $0.07 increased by 58.1% from previous year
Gross margin of 41.7%
Net income of 4.97M
"During the second quarter, our total revenue increased 13% year over year to $73.7 million driven by 17% year-over-year transaction revenue growth and 14% year-over-year subscription revenue growth." - Ravi Venkatesan
Cantaloupe Inc reported a solid QQ2 2025, underscoring the company’s ongoing transition from a largely hardware-centric provider to a hybrid software-and-payments platform with strong recurring-revenue contributions. Revenue rose 13% year over year to $73.7 million, driven by a 17% increase in transaction revenue and a 14% rise in subscription revenue, resulting in a total combined revenue of $65.4 million for the quarter. Gross margin expanded to 41.7% from 37.2% a year ago, supported by higher transaction margins (234 basis points improvement in transaction gross margin to 25.6%) and robust subscription gross margins (approximately 89.7%). Adjusted EBITDA reached $10.7 million, up 26% year over year, reflecting leverage from higher volumes and ongoing cost discipline.
The company ended the quarter with $27.7 million in cash and cash equivalents and recently completed a refinancing that upsized the credit facility to $100 million ($40 million term loan, $30 million revolver, $30 million delayed-draw term loan). Management reaffirmed full-year 2025 guidance of revenue between $308 million and $322 million (up 15–20%), with adjusted EBITDA of $44–$52 million and operating cash flow of $24–$32 million, signaling confidence in the back-half ramp supported by higher-ticket transactions and the expansion of micro markets, Smart Store offerings, and seed software. Notable strategic initiatives include: international expansion (Europe and Latin America), continued GTM optimization across direct and indirect channels, introduction of the Smart Store 600/700 series, the micro-lending platform via Cantaloupe Capital with SunBox, and the Mastercard-driven Cantaloupe Advantage advertising program.
Key valuation and financial-position takeaways include a solid ARPU of $202 (up 12% YoY) with over 32,000 active customers and 1.3 million active devices, a working capital-light model reinforced by the upgraded credit facility, and an improving, but still cash-flow-sensitive, free cash flow profile. Investors should monitor the pace of equipment-revenue acceleration, international deployment execution, and the sustainability of gross and operating margins as the company scales higher-value deployments and associated capex into the second half of 2025.
Key Performance Indicators
Revenue
73.72M
QoQ: 4.07% | YoY:12.80%
Gross Profit
30.72M
41.67% margin
QoQ: 6.48% | YoY:26.34%
Operating Income
6.16M
QoQ: 50.06% | YoY:71.91%
Net Income
4.97M
QoQ: 39.25% | YoY:59.22%
EPS
0.07
QoQ: 51.45% | YoY:58.14%
Revenue Trend
Margin Analysis
Key Insights
QQ2 2025 revenue: $73.72 million, up 13% YoY. QoQ growth not disclosed for the quarter in the provided data.
Revenue and Growth
- QQ2 2025 revenue: $73.72 million, up 13% YoY. QoQ growth not disclosed for the quarter in the provided data.
- Combined transaction and subscription revenue: $65.4 million, up 16% YoY. Subscription revenue: $20.7 million, +14% YoY. Transaction revenue: $44.4 million, +17% YoY.
- ARPU (trailing twelve months with average devices): $202, +12% YoY.
Profitability and Margins
- Gross margin: 41.7% in QQ2 2025, vs. 37.2% in QQ2 2024.
- Subscription gross margin: 89.7% (vs. 89% prior year).
- Transaction gross margin: 25.6% (vs. 21.1% prior year).
- Equipment gross margin: 9.1% (up from 1.8% prior year).
- Operating expenses: $24.5 million in QQ2 2025, up from $20.7 million in QQ2 2024 due to acquisitions.
- EBITDA: $10.7 million, up 26% YoY.
- Net income attributable to common shares: $4.97 million, or $0.0666 per diluted share.
Cash, Balance Sheet and Cash Flows
- Cash and cash equivalents: $27.7 million at QQ2 2025.
- Refinanced debt facilities: now $100 million total capacity ($40m term loan, $30m revolver, $30m delayed-draw).
- Operating cash flow: $0.522 million; free cash flow: -$3.768 million (capex of $4.29 million).
- Net debt: approximately $10.76 million; total debt: $38.44 million.
Outlook and Guidance
- 2025 revenue guidance reaffirmed: $308–$322 million (growth 15–20%).
- 2025 adjusted EBITDA guidance: $44–$52 million.
- 2025 total US GAAP net income guidance: $22–$32 million.
- 2025 operating cash flow guidance: $24–$32 million.
- Key growth drivers include micro markets, seed software expansion, Smart Store deployments (600/700), and the new financing and advertising initiatives (Cantaloupe Capital, Mastercard collaboration).
Strategic Highlights
- International expansion: Europe and Latin America to accelerate scaling.
- Product innovation: Smart Store 600/700, self-service and kiosk-based solutions, and a broader suite for SMBs.
- Financial strategy: strengthened balance sheet to support acquisitions and earlier-stage go-to-market investments.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
73.72M
12.80%
4.07%
Gross Profit
30.72M
26.34%
6.48%
Operating Income
6.16M
71.91%
50.06%
Net Income
4.97M
59.22%
39.25%
EPS
0.07
58.14%
51.45%
Key Financial Ratios
currentRatio
1.81
grossProfitMargin
41.7%
operatingProfitMargin
8.36%
netProfitMargin
6.75%
returnOnAssets
1.64%
returnOnEquity
2.58%
debtEquityRatio
0.2
operatingCashFlowPerShare
$0.01
freeCashFlowPerShare
$-0.05
priceToBookRatio
3.61
priceEarningsRatio
34.95
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Key management insights and themes from the QQ2 2025 earnings call:
- Revenue growth and mix: Ravi Venkatesan highlighted that Q2 total revenue rose 13% YoY to $73.7 million, driven by 17% YoY growth in transaction revenue and 14% YoY growth in subscription revenue, with adjusted gross margin at 41.7% (Ravi). Scott Stewart reinforced the 13% revenue gain and detailed the composition of revenue by segment (subscription $20.7m, up 14%; transaction $44.4m, up 17%) and the drivers behind transaction growth (shift from cash to cashless payments and higher average ticket sizes) (Scott).
- Margin expansion and mix shift: The team emphasized a widening mix toward higher-margin transaction processing and the solid gross margin expansion to 41.7%, with subscription gross margin near 89.7% and transaction gross margin at 25.6%, underpinned by cost management and higher ticket values (Scott). They also noted equipment gross margins improving to 9.1% from 1.8% YoY (Scott).
- Growth drivers and go-to-market: Management highlighted strength in micro markets and seed software, as well as new verticals and locations (universities, hospitals, auto dealerships). Commentary emphasized expanding the addressable market through Smart Store deployments and the broader “smart retail” category (Ravi).
- Product and strategic initiatives: The call outlined the launch of Smart Store 600/700 and the expansion into SMB via micro-lending (Cantaloupe Capital with SunBox), the Mastercard-driven Cantaloupe Advantage program, and international expansion plans (Ravi).
- Cash flow and liquidity: Scott noted the new $100 million credit facility and indicated that no draws had been made to date, with normalized operating cash flow activity expected to grow later in the year (Scott). The company also cited that cash balance decline in the prior period was due to timing of transaction-processing payments (Scott).
- Guidance reaffirmation and near-term visibility: The management reaffirmed 2025 targets, emphasizing back-half equipment sales as a key swing factor for top-line performance and potential upside to EBITDA given the margin trajectory (Scott). They reiterated a pathway to mid-point of the guidance and emphasized that the back half would drive the majority of revenue and earnings growth (Josh Nichols and Scott).
During the second quarter, our total revenue increased 13% year over year to $73.7 million driven by 17% year-over-year transaction revenue growth and 14% year-over-year subscription revenue growth.
— Ravi Venkatesan
The overall increase in transaction revenue was driven by the continued move from cash to cashless payments and the trend of higher average ticket sizes due to product mix shift.
— Scott Stewart
Forward Guidance
Assessment of management guidance and outlook:
- Revenue trajectory: Management reaffirmed 2025 revenue guidance of $308–$322 million, implying 15–20% growth, with transaction and subscription revenue growth also targeted at 15–20%. This implies the back half of the year remains the primary engine for top-line expansion, driven by higher-value deployments (Smart Store, micro markets) and a continued mix shift toward higher-ticket transactions.
- Profitability: Adjusted EBITDA target of $44–$52 million suggests sustained operating leverage, supported by better transaction margins and cost-control measures. The management commentary indicates that they are approaching, and potentially exceeding, the midpoint of the guide as the year progresses, with potential upside from higher-ticket categories and an accelerated equipment deployment cycle in Q4.
- Balance sheet and liquidity: The refinancing to a $100 million facility (with no draws yet) provides liquidity to support international expansion and potential acquisitions. The company expects OCF growth to accelerate and align with guidance, which should help de-lever over time if operating cash flow remains strong.
- Risks and monitoring: Key risk factors include the pace of equipment-store deployments (Smart Store), international market execution (Europe and LATAM), and potential delays in rebate or advertising monetization. Investors should monitor quarterly equipment revenue progression, unit economics (ARPU per device and per location), gross margin trajectory (especially on new hardware), and the rate of cash conversion as the company scales.
- Overall assessment: Given the 2H2025 ramp potential and a diversified product/market footprint, the QQ2 results reinforce a constructive, growth-oriented thesis for CTLP, with upside optionality from micro-lending, advertising monetization, and international expansion. Investors should watch the evolution of back-half equipment sales, international deals, and the monetization of the Mastercard partnership and Cantaloupe Advantage campaigns to gauge whether the company can sustain EBITDA expansion toward the upper end of the guide.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
CTLP Focus
41.67%
8.36%
2.58%
34.95%
ARBB
-55.60%
-2.01%
-24.80%
-2.57%
FORTY
24.90%
9.74%
2.93%
14.61%
CSPI
32.00%
-7.56%
-0.23%
-331.76%
CLVT
67.20%
-36.90%
-5.43%
-3.11%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Baseline view: CTLP is transitioning to a higher-value software-and-payments platform with meaningful margin expansion and a diversified growth engine. The QQ2 2025 results demonstrate solid topline improvement (13% YoY), a robust gross margin structure (41.7%), and a path to high-single-digit EBITDA expansion underpinned by operational leverage. The back-half 2025 ramp is pivotal, with equipment sales (Smart Store deployments) and international expansion being key catalysts. The reaffirmed guidance implies sustained momentum, though actual performance will depend on the pace of back-half deployments and monetization of new initiatives (Cantaloupe Capital lending, Mastercard advertising, and cross-sell of seed software). Valuation remains relatively rich (price-to-sales ~9.4x; enterprise value multiple ~70x in the reported metrics), suggesting the stock may be more sensitive to execution and growth clarity than to near-term profitability alone.
Catalysts to monitor:
- Realization of the back-half equipment sales and Smart Store deployments, particularly in Q4.
- Progress on international expansion milestones and the resulting contribution to recurring revenue.
- Successful monetization of Cantaloupe Capital lending, and the stability of the lending-related risk profile.
- Advertising monetization and the impact of Mastercard collaboration on revenue per device.
- Operating cash flow trajectory and FCF improvement as scale accelerates.
Overall, CTLP presents an above-average growth profile within unattended retail technology with multiple levers to sustain margin expansion and revenue growth into 2025 and beyond, supported by a strong management team and a clear international and product strategy.
Key Investment Factors
Growth Potential
Growth opportunities are anchored in: (1) accelerating micro markets and seed software adoption within existing customers and new verticals (universities, hospitals, auto dealerships, senior living, entertainment venues); (2) Smart Store expansion driving higher ARPU and transaction value per location; (3) international expansion in Europe and Latin America to broaden the recurring revenue base; (4) Cantaloupe Capital micro-lending with SunBox to unlock working capital for customers, enabling higher device and location deployment; (5) Mastercard-driven Cantaloupe Advantage digital advertising, expanding monetization at POS devices; (6) cross-sell opportunities from SP software, cross-sell wins, and Venn Manager expansion in UK/Ireland. The company guided to 15–20% revenue growth in 2025 and a mid-to-high range EBITDA trajectory, supported by a robust gross margin mix and cost discipline.
Profitability Risk
Primary risk factors include: (1) reliance on hardware-driven deployments and the cyclicity of equipment sales; (2) execution risk in rapid international expansion and the integration of acquisitions; (3) potential pressure on transaction margins if price take rates flatten or competitive dynamics intensify; (4) macroeconomic headwinds impacting discretionary capex by SMBs; (5) regulatory and cybersecurity risks in payments and unattended retail; (6) reliance on partner ecosystems (SunBox for lending, Mastercard for advertising) which could be disrupted or delayed.
Financial Position
CTLP maintains a solid liquidity position and an upgraded capital structure. Cash and cash equivalents stood at $27.7 million, and total debt stood at approximately $38.4 million with net debt around $10.8 million. The renewed $100 million credit facility provides substantial liquidity for growth initiatives and potential strategic investments. The company generated $0.52 million of operating cash flow in the quarter and reported negative free cash flow of $3.77 million, driven by capex ($4.29 million) related to Smart Store and device deployments. The balance sheet shows a robust gross margin profile (41.7%) and a healthy ARPU trajectory, with strong recurring revenue contribution from subscriptions and a higher-margin transaction stream. If the company can sustain operating cash flow growth while balancing capex needs, free cash flow could improve in subsequent quarters.
SWOT Analysis
Strengths
Strong revenue growth with a balanced mix of recurring subscription revenue (subscription gross margin ~89.7%) and higher-margin transaction revenue (transaction gross margin ~25.6%).
Margin expansion driven by cost discipline, higher take rates on processing, and higher average ticket sizes (ARPU $202, +12% YoY).
Diverse product portfolio (micro markets, seed software, Smart Store 600/700, telematics) and ongoing modernization (smart retail) enabling expansion into new locations (universities, hospitals, auto dealerships, senior living facilities).
Large and growing customer base (>32,000 active customers; 1.3 million devices) with international expansion potential (Europe, LATAM).
Modest free cash flow in QQ2 2025 with negative FCF due to capex and working-capital timing, indicating near-term cash-burn risk as deployment scales occur.
Equipment revenue declined YoY (8.6m, -7% YoY), reflecting ongoing hardware-centric revenue exposure that could temper growth if hardware cycles slow.
Dependence on new deployments and international execution poses execution risk and requires capital discipline to monetize gradually.
Opportunities
International expansion in Europe and Latin America to broaden the recurring revenue base.
Expansion of Smart Store footprint across additional verticals (e.g., retail, auto, healthcare) and increased penetration within existing markets.
Cantaloupe Capital micro-lending to unlock working capital for SMBs, enabling more devices and micro markets deployments.
Advertising revenue via Cantaloupe Advantage; Mastercard partnership extends brand reach and marketing opportunities.
Cross-sell opportunities across seed software, cashless devices, and telematics.
Threats
Macro uncertainty could impact SMB capex and deployment pace, affecting top-line growth.
Competition in unattended retail and cashless ecosystems could compress margins or slow market share gains.
Regulatory and cybersecurity risks in payments and data handling; dependence on external partners for lending and advertising monetization.