ctlp-20240930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☑			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2024


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE EXCHANGE ACT OF 1934

For the transition period from _________ to _________

Commission file number 001-33365

Cantaloupe, Inc.

_______________________________________________________________

(Exact name of registrant as specified in its charter)


Pennsylvania						23-2679963
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

101 Lindenwood Drive, Suite 405

Malvern,

Pennsylvania

19355

(Address of principal executive offices)

(Zip Code)

(610) 989-0340

_______________________________________________________________

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of Each Class	Trading Symbol	Name Of Each Exchange On Which Registered
Common Stock, no par value	CTLP	The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☑
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☑

As of November 4, 2024, there were 72,986,172 outstanding shares of Common Stock, no par value.

Cantaloupe, Inc.

TABLE OF CONTENTS


Part I - Financial Information

Item
	1.	Condensed Consolidated Financial Statements
		Condensed Consolidated Balance Sheets - September 3 0 , 2024 (unaudited) and June 30, 202 4	3
		Condensed Consolidated Statements of Operations - Three Months ended September 3 0 , 2024 and 2023 (unaudited)	4
		Condensed Consolidated Statements of Comprehensive Income - Three Months ended September 3 0 , 2024 and 2023 (unaudited)	5
		Condensed Consolidated Statements of Convertible Preferred Stock and Shareholders’ Equity - Three Months ended September 3 0 , 2024 and 2023 (unaudited)	6
		Condensed Consolidated Statements of Cash Flows - Three Months ended September 3 0 , 2024 and 2023 (unaudited)	7
		Notes to Condensed Consolidated Financial Statements (unaudited)	8
	2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
	3.	Quantitative and Qualitative Disclosures About Market Risk	29
	4.	Controls and Procedures	30

Part II - Other Information
Item
	1.	Legal Proceedings	31
	1A.	Risk Factors	31
	2.	Unregistered Sales of Equity Securities and Use of Proceeds	31
	3.	Defaults Upon Senior Securities	31
	4.	Mine Safety Disclosures	31
	5.	Other Information	31
	6.	Exhibits	32

		Signatures	33

Part I. Financial Information

Item 1. Condensed Consolidated Financial Statements

Cantaloupe, Inc.

Condensed Consolidated Balance Sheets


	September 30, 2024 (Unaudited)		June 30, 2024
($ in thousands, except share data)

Assets
Current assets:
Cash and cash equivalents	$	33,124	$	58,920
Accounts receivable, net	32,490		43,848
Finance receivables, net	6,104		6,391
Inventory	44,571		40,791
Prepaid expenses and other current assets	7,456		7,844
Total current assets	123,745		157,794

Non-current assets:
Finance receivables, net	8,873		10,036
Property and equipment, net	35,888		34,029
Operating lease right-of-use assets	8,276		7,986
Intangibles, net	26,762		24,626
Goodwill	102,708		94,903
Other assets	5,883		6,194
Total non-current assets	188,390		177,774

Total assets	$	312,135	$	335,568

Liabilities, convertible preferred stock, and shareholders’ equity
Current liabilities:
Accounts payable	$	52,612	$	78,895
Accrued expenses	21,743		24,008
Current obligations under long-term debt	1,362		1,266
Deferred revenue	1,471		1,726
Total current liabilities	77,188		105,895

Long-term liabilities:
Deferred income taxes	505		466
Long-term debt, less current portion	35,919		36,284
Other noncurrent liabilities	9,573		8,457
Total long-term liabilities	45,997		45,207

Total liabilities	123,185		151,102
Commitments and contingencies (Note 14)
Convertible preferred stock:
Series A convertible preferred stock, 900,000 shares authorized, 385,782 and 385,782 issued and outstanding, with liquidation preferences of $23,011 and $22,722 at September 30, 2024 and June 30, 2024, respectively	2,720		2,720
Shareholders’ equity:
Common stock, no par value, 640,000,000 shares authorized, 72,986,172 and 72,935,497 shares issued and outstanding at September 30, 2024 and June 30, 2024, respectively	—		—
Additional paid-in capital	483,052		482,329
Accumulated deficit	(296,887)		(300,459)
Accumulated other comprehensive income (loss)	65		(124)
Total shareholders’ equity	186,230		181,746

Total liabilities, convertible preferred stock, and shareholders’ equity	$	312,135	$	335,568

See accompanying notes to condensed consolidated financial statements.

Cantaloupe, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)


	Three months ended
	September 30,
($ in thousands, except share and per share data)	2024		2023
Revenues:
Subscription and transaction fees	$	63,792	$	55,135
Equipment sales	7,044		7,548
Total revenues	70,836		62,683

Costs of sales (exclusive of certain depreciation and amortization):
Cost of subscription and transaction fees	35,744		31,728
Cost of equipment sales	6,241		6,627
Total costs of sales	41,985		38,355

Operating expenses:
Sales and marketing	5,448		4,142
Technology and product development	4,499		4,168
General and administrative	11,928		10,438
Integration and acquisition expenses	197		78
Depreciation and amortization	2,672		2,747
Total operating expenses	24,744		21,573

Operating income	4,107		2,755

Other income (expense):
Interest income	447		517
Interest expense	(991)		(1,107)
Other income (expense), net	186		(77)
Total other expense, net	(358)		(667)

Income before income taxes	3,749		2,088
Provision for income taxes	(177)		(81)

Net income	3,572		2,007
Preferred dividends	(289)		(289)
Net income applicable to common shares	$	3,283	$	1,718

Net earnings per common share
Basic	$	0.04	$	0.02
Diluted	$	0.04	$	0.02

Weighted average number of common shares outstanding used to compute net earnings per share applicable to common shares
Basic	73,068,856		72,717,965
Diluted	73,921,186		74,305,512

See accompanying notes to condensed consolidated financial statements.

Cantaloupe, Inc.

Condensed Consolidated Statements of Comprehensive Income

(Unaudited)


	Three months ended September 30,

($ in thousands)	2024		2023
Net income	3,572		$	2,007

Foreign currency translation adjustments	189		—
Other comprehensive income	189		—
Total comprehensive income	$	3,761	$	2,007

See accompanying notes to condensed consolidated financial statements.

Cantaloupe, Inc.

Condensed Consolidated Statements of Convertible Preferred Stock and Shareholders’ Equity

(Unaudited)

Three Month Period Ended September 30, 2024


($ in thousands, except share data)	Convertible Preferred Stock			Common Stock			Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Income (Loss)		Total Shareholders' Equity
	Shares	Amount		Shares	Amount
Balance, June 30, 2024	385,782	$	2,720	72,935,497	$	—	$	482,329	$	(300,459)	$	(124)	$	181,746
Stock-based compensation	—	—		—	—		723		—		—		723
Vesting of restricted stock	—	—		50,675	—		—		—		—		—

Other comprehensive income	—	—		—	—		—		—		189		189
Net income	—	—		—	—		—		3,572		—		3,572
Balance, September 30, 2024	385,782	$	2,720	72,986,172	$	—	$	483,052	$	(296,887)	$	65	$	186,230

Three Month Period Ended September 30, 2023


($ in thousands, except share data)	Convertible Preferred Stock			Common Stock			Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Total Shareholders' Equity
	Shares	Amount		Shares	Amount
Balance, June 30, 2023	385,782	$	2,720	72,664,464	$	—	$	477,324	$	(312,452)	$	—	$	164,872
Stock-based compensation	—	—		—	—		1,934		—		—		1,934
Vesting of restricted stock	—	—		20,801	—		—		—		—		—
Exercise of stock options	—	—		10,000	—		74		—		—		74
Net income	—	—		—	—		—		2,007		—		2,007
Balance, September 30, 2023	385,782	$	2,720	72,695,265	$	—	$	479,332	$	(310,445)	$	—	$	168,887

See accompanying notes to condensed consolidated financial statements.

Cantaloupe, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)


	Three months ended
	September 30,
($ in thousands)	2024		2023
Cash flows from operating activities:
Net income	$	3,572	$	2,007
Adjustments to reconcile net income to net cash (used in) provided from operating activities:
Stock-based compensation	887		1,932
Amortization of debt issuance costs and discounts	30		32
Provision for expected losses	949		1,000
Provision for inventory reserve	83		—
Depreciation and amortization	3,192		3,089
Gain on foreign currency exchange rates	(211)		—
Non-cash lease expense	321		400
Deferred income taxes	24		43

Changes in operating assets and liabilities:
Accounts receivable	11,047		(7,784)
Finance receivables	1,081		1,122
Inventory	(3,863)		(344)
Prepaid expenses and other assets	219		171
Accounts payable and accrued expenses	(28,897)		5,152
Operating lease liabilities	(197)		(391)
Deferred revenue	(255)		274
Net cash (used in) provided by operating activities	(12,018)		6,703

Cash flows from investing activities:
Capital expenditures	(3,791)		(2,916)
Acquisition of business, net of cash acquired	(9,761)		—


Net cash used in investing activities	(13,552)		(2,916)

Cash flows from financing activities:


Repayment of long-term debt	(286)		(193)
Proceeds from exercise of common stock options	—		76
Payment of employee taxes related to stock-based compensation	(164)		—
Net cash used in financing activities	(450)		(117)

Effect of currency exchange rate changes on cash and cash equivalents	224		—

Net (decrease) increase in cash and cash equivalents	(25,796)		3,670
Cash and cash equivalents at beginning of year	58,920		50,927
Cash and cash equivalents at end of period	$	33,124	$	54,597

Supplemental disclosures of cash flow information:
Interest paid in cash	$	883	$	889
Income taxes paid in cash	$	251	$	13

See accompanying notes to condensed consolidated financial statements.

Cantaloupe, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

1. BUSINESS

Cantaloupe, Inc., is organized under the laws of the Commonwealth of Pennsylvania. We are a digital payments and software services company that provides end-to-end technology solutions for self-service commerce. We offer a single platform for self-service commerce which includes integrated payments processing and software solutions that handle inventory management, pre-kitting, route logistics, warehouse and back-office management. Our 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. Our customers range from vending machine companies to operators of micro-markets and smart retail, laundromats, metered parking terminals, amusement and entertainment venues, IoT services and more.

Cantaloupe, Inc. and its consolidated subsidiaries are referred to herein collectively as "Cantaloupe," the "Company," "we," "our" or "us," unless the context requires otherwise.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Preparation

The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation.

The condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America ("U.S. GAAP") for interim financial information and with the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements and therefore should be read in conjunction with the Company’s June 30, 2024 Annual Report on Form 10-K.

The Company has operations in the United States, Mexico and the United Kingdom. The functional currencies of our foreign wholly-owned subsidiaries are the local currencies. We translate the financial statements of these subsidiaries into U.S. dollars each reporting period for purposes of consolidation.

Use of Estimates

The preparation of the financial statements in conformity with U.S. GAAP requires management to make estimates, assumptions and judgments that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. The Company evaluates these estimates on an ongoing basis.

Estimates, judgments, and assumptions in these condensed consolidated financial statements include, but are not limited to, those related to revenue recognition, capitalization of internal-use software and cloud computing arrangements, fair value of acquired assets and liabilities including goodwill through purchase accounting, income taxes and sales tax reserves. See the Company's Annual Report, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations, section Critical Accounting Estimates.

Reclassification

Certain reclassifications have been made to prior year's reported amounts in order to conform to the current year presentation. These reclassifications did not impact our previously reported net income or stockholders’ equity.

Recent Accounting Pronouncements

ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures

In December 2023, the FASB issued ASU 2023-09, which expands income tax disclosure requirements to include additional information related to the rate reconciliation of effective tax rates to statutory rates as well as additional disaggregation of taxes

paid. The amendments in the ASU also remove disclosures related to certain unrecognized tax benefits and deferred taxes. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, which is the Company's fiscal year ended June 30, 2026. The amendments may be applied prospectively or retrospectively, and early adoption is permitted. We are currently assessing the impact of the requirements on our consolidated financial statements and disclosures.

ASU 2023-07 Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures

In November 2023, the FASB issued ASU 2023-07, which expands reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The amendments in the ASU require that a public entity disclose, on an annual and interim basis, significant segment expenses that are regularly provided to an entity's chief operating decision maker (“CODM”), a description of other segment items by reportable segment, and any additional measures of a segment's profit or loss used by the CODM when deciding how to allocate resources. Annual disclosures are required for fiscal years beginning after December 15, 2023, which is the Company's fiscal year ended June 30, 2025. Interim disclosures are required for periods within fiscal years beginning after December 15, 2024, which is the Company's fiscal year ended June 30, 2026. Retrospective application is required for all prior periods presented, and early adoption is permitted. We are currently assessing the impact of the requirements on our consolidated financial statements and disclosures.

No other new accounting pronouncements, issued or effective during the period ended September 30, 2024, have had or are expected to have a significant impact on the Company’s financial statements.

3. ACCOUNTS RECEIVABLE

Accounts receivable includes amounts due to the Company for sales of equipment and subscription fees, settlement receivables for amounts due from third-party payment processors, receivables from contract manufacturers and unbilled amounts due from customers, net of the allowance for credit losses. Accounts receivable, net of the allowance for uncollectible accounts were $32.5 million as of September 30, 2024 and $43.8 million as of June 30, 2024.

Allowance for credit losses

The following table represents a rollforward of the allowance for credit losses for the three months ended September 30, 2024 and 2023:


	Three months ended September 30,
($ in thousands)	2024		2023
Balance, beginning of quarter	$	13,442	$	10,815
Provision for expected losses	558		958
Write-offs	(354)		(60)
Balance, end of quarter	$	13,646	$	11,713

4. FINANCE RECEIVABLES

The Company's finance receivables consist of devices under its financing program and devices contractually associated with the Seed platform. Predominately all of the Company’s finance receivables agreements are classified as non-cancellable sixty-month sales-type leases.

The Company collects lease payments from customers primarily as part of the flow of funds from our transaction processing services. Balances are considered past due if customers do not have sufficient transaction revenue to cover the monthly lease payment by the end of the monthly billing period.

At September 30, 2024, the gross lease receivable by current payment performance on a contractual basis and year of origination consisted of the following:


	Leases by Origination
($ in thousands)		Up to 1 Year Ago		Between 1 and 2 Years Ago		Between 2 and 3 Years Ago		Between 3 and 4 Years Ago		Between 4 and 5 Years Ago		More than 5 Years Ago		Total

Current		$	2,066	$	3,050	$	6,029	$	1,571	$	562	$	157	$	13,435
30 days and under		31		52		160		76		44		27		390
31 - 60 days		11		23		119		67		47		27		294
61 - 90 days		6		18		102		47		79		32		284
Greater than 90 days		9		122		1,040		235		279		1,214		2,899
Total finance receivables		$	2,123	$	3,265	$	7,450	$	1,996	$	1,011	$	1,457	$	17,302

At June 30, 2024, the gross lease receivable by current payment performance on a contractual basis and year of origination consisted of the following:


	Leases by Origination
($ in thousands)		Up to 1 Year Ago		Between 1 and 2 Years Ago		Between 2 and 3 Years Ago		Between 3 and 4 Years Ago		Between 4 and 5 Years Ago		More than 5 Years Ago		Total

Current		$	2,199	$	5,135	$	4,668	$	1,961	$	456	$	324	$	14,743
30 days and under		13		67		80		85		56		42		343
31 - 60 days		8		64		58		49		47		38		264
61 - 90 days		8		62		48		32		36		38		224
Greater than 90 days		35		387		625		208		297		1,235		2,787
Total finance receivables		$	2,263	$	5,715	$	5,479	$	2,335	$	892	$	1,677	$	18,361

The following table represents a rollforward of the allowance for finance receivables for the three months ended September 30, 2024 and 2023:


	Three months ended September 30,
($ in thousands)	2024		2023

Balance at June 30	$	1,934	$	2,098
Provision for expected losses	391		51

Balance at September 30	2,325		2,149

There were no write-offs of finance receivables for the three months ended September 30, 2024 and 2023.

Cash to be collected on our performing finance receivables due for each of the fiscal years is as follows:


($ in thousands)	Amount
Remainder of 2025	$	5,480
2026	6,003
2027	4,043
2028	2,051
2029	770
Thereafter	85
Total amounts to be collected	18,432
Less: interest	(1,130)
Less: allowance for uncollectible receivables	(2,325)
Total finance receivables	$	14,977

5. LEASES

Lessee Accounting

We have operating leases which are primarily real estate leases used for corporate functions, product development, sales, and other purposes. The following table provides supplemental balance sheet information related to the Company's operating leases:


($ in thousands)	Balance Sheet Classification	September 30, 2024		June 30, 2024
Assets:	Operating lease right-of-use assets	$	8,276	$	7,986

Liabilities:
Current	Accrued expenses	$	1,432	$	1,320
Long-term	Other noncurrent liabilities	8,759		8,457
Total lease liabilities		$	10,191	$	9,777

Supplemental cash flow information and non-cash activity related to our leases are as follows:


($ in thousands)	Three months ended September 30,
	2024		2023
Supplemental cash flow information:
Cash paid for amounts included in the measurement of operating lease liabilities	$	485	$	604

Non-cash activity:
Right-of-use assets obtained in exchange for new lease obligations	$	290	$	1,788

Maturities of lease liabilities by fiscal year for our leases as of September 30, 2024 are as follows:


($ in thousands)	Operating Leases
Remainder of 2025	$	1,345
2026	2,405
2027	1,958
2028	1,456
2029	1,491
Thereafter	5,720
Total lease payments	14,375
Less: Imputed interest	(4,184)
Present value of lease liabilities	$	10,191

Lessor Accounting

Property and equipment used for the operating lease rental program consisted of the following:


($ in thousands)	September 30, 2024		June 30, 2024
Cost	$	32,777	$	32,513
Accumulated depreciation	(25,229)		(24,742)
Net	$	7,548	$	7,771

For the three months ended September 30, 2024 and 2023, the Company recognized $2.3 million and $2.0 million of revenue from its device rental program, respectively, which is included in the Subscription and Transaction fees on its Condensed Consolidated Statements of Operations.

The Company’s net investment in sales-type leases (carrying value of lease receivables) and the future minimum amounts to be collected on these lease receivables as of September 30, 2024 are disclosed within Note 4 - Finance Receivables.

6. DEBT AND OTHER FINANCING ARRANGEMENTS

The Company's debt and other financing arrangements as of September 30, 2024 and June 30, 2024 consisted of the following:


	As of September 30,		As of June 30,
($ in thousands)	2024		2024

JPMorgan Credit Facility*	$	37,344	$	37,625
Other obligations	29		34
Less: unamortized issuance costs and debt discount	(92)		(109)
Total	37,281		37,550
Less: debt and other financing arrangements, current	(1,362)		(1,266)
Debt and other financing arrangements, noncurrent	$	35,919	$	36,284

* See discussion below on amendment to the JPMorgan Credit Facility.

JPMorgan Chase Bank Credit Facility

On March 17, 2022, the Company entered into an amended and restated credit agreement with JPMorgan Chase Bank, N.A. which provides for a $15 million secured revolving credit facility (the “Amended Revolving Facility”) and a $25 million secured term facility (the “Amended Secured Term Facility” and together with the Amended Revolving Facility, the “Amended JPMorgan Credit Facility”), and fully replaced our previous 2021 JPMorgan credit facility.

On December 1, 2022, the Company entered into an amendment (the “2022 Amendment”) the Amended and Restated Credit Agreement, dated as of March 17, 2022, which, among other things, amended the definition of the Company’s EBITDA under the Credit Agreement. On December 1, 2022, the Company borrowed an additional $25 million under the Amended JPMorgan Credit Facility, including $15 million from the revolving credit facility and $10 million from the term facility. No issuance costs were capitalized in connection with this amendment.

The Amended JPMorgan Credit Facility matures on March 16, 2026. Interest on the Amended JPMorgan Credit Facility will be based, at the Company’s option, on a base rate or SOFR plus an applicable margin tied to the Company’s total leverage ratio and having ranges of between 2.50% and 3.00% for base rate loans and between 3.50% and 4.00% for SOFR loans. Subject to the occurrence of a material acquisition and the Company’s total leverage ratio exceeding 3.00 to 1.00, the interest rate on the loans may increase by 0.25%. In an event of default, the interest rate may be increased by 2.00%. The Amended JPMorgan Credit Facility will also carry a commitment fee of 0.50% per annum on the unused portion. As of September 30, 2024, the weighted-average interest rate for the Amended JPMorgan Credit Facility is approximately 8.9%.

The Amended JPMorgan Credit Facility includes customary representations, warranties and covenants, and acceleration, indemnity and events of default provisions, including, among other things, two financial covenants. One financial covenant requires the Company to maintain, at all times, a total leverage ratio of not more than 3.00 to 1.00 on the last day of any fiscal quarter. The other financial covenant is conditional on a material acquisition occurring: if a material acquisition occurs, the Company is required to maintain a total leverage ratio not greater than 4.00 to 1.00 for the next four fiscal quarters following the material acquisition.

The Company was in compliance with its financial covenants for the Amended JPMorgan Credit Facility as of September 30, 2024.

The expected maturities for each fiscal year associated with the Company’s outstanding debt and other financing arrangements as of September 30, 2024, were as follows:


($ in thousands)			Amount

SEC Form 10-Q filed by Cantaloupe Inc.