GICS Sector : Technology
Cantaloupe, Inc., a digital payment and software services company, provides technology solutions for the unattended retail market.The company offers integrated solutions for payments processing, logistics, and back-office management.It also provides ePort, an integrated payment device that is deployed in self-service, unattended market applications, such as vending, amusement, arcade, commercial laundry, air/vacuum, car wash, and others, which facilitates digital payments; and integrated software services for payment devices in the field for the wireless transfer.
Cantaloupe reported a solid third quarter for fiscal year 2025, with revenue increasing 11% year-over-year to $75.4 million, driven by growth in both transaction and subscription revenue. Transaction and subscription revenue rose 10% to $65.2 million, while equipment revenue jumped 18% to $10.2 million. Gross margin improved to 41.6%, reflecting operational efficiency gains, and adjusted EBITDA surged 37% to $13.9 million. Net income for the quarter came in at $48.9 million, benefiting from a one-time tax benefit of $42.2 million related to the release of a valuation allowance. Scott Stewart, CFO, noted that "weather events impacted transaction revenue by approximately $2 million," but the company still delivered record cash from operations of $22.4 million.
Publication Date: May -10
The quarter saw strong adoption of Cantaloupe's micro market and seed software solutions, with notable customer wins including DC Vending, Peppy Foods, and partnerships with AVS and TPI. The Engage Pulse device, tailored for the amusement industry, is gaining traction, with customers reporting significant sales increases. Additionally, Cantaloupe Capital, launched in collaboration with Fundbox, has approved $300,000 in capital, supporting small and medium-sized businesses. Ravi Venkatesan, CEO, emphasized the company's focus on scaling operations in Europe and Latin America, with hints of upcoming updates in the latter region.
For fiscal year 2025, Cantaloupe maintained its revenue guidance of $302-$308 million, with transaction and subscription revenue expected to grow at the low end of the 15-20% range. GAAP net income is projected at $64-$70 million, and adjusted EBITDA is expected to reach $96 million. The company also highlighted its ability to generate strong cash flow, with free cash flow for the quarter at $18.6 million and projections of $15-$18 million for the next quarter. International revenue is expected to account for 3-4% of total revenue by the end of the fiscal year, underscoring the company's growing global presence.
Cantaloupe currently trades at a P/S ratio of 1.97 and an EV/EBITDA of 17.48, reflecting market expectations for continued growth. While the stock's valuation appears elevated, the company's ability to expand margins and deliver strong cash flow justifies its premium. Analysts expect revenue growth to slow slightly to 15.5% next year, but the company's strategic initiatives and international expansion plans position it well for sustained long-term growth. The combination of strong financial performance and operational momentum suggests Cantaloupe remains an attractive investment in the technology-driven payments and vending solutions space.
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Cantaloupe, Inc.'s 10% growth in Transaction Fees is driven by increasing adoption of cashless payments, expansion into new markets, and strategic partnerships. Additionally, the company's innovative payment solutions, such as mobile payments and contactless transactions, are contributing to the growth. Furthermore, the rising demand for digital payments and the shift away from traditional payment methods are also fueling the increase in Transaction Fees.
Cantaloupe, Inc.'s 12% growth in Subscription Fees is driven by increasing adoption of cashless payment systems, expansion into new markets, and strategic partnerships. Additionally, the company's innovative solutions, such as mobile payments and data analytics, are attracting new customers and increasing revenue per user.
Cantaloupe, Inc.'s equipment segment growth is driven by increasing adoption of cashless payment systems, rising demand for vending machine technology, and growing need for efficient inventory management solutions. Additionally, the company's strategic partnerships and expanding customer base contribute to its 9% growth rate.
A comprehensive retail management system designed to streamline operations, manage inventory, and enhance customer experience.
A hospitality management system that integrates with existing property management systems to provide seamless guest experiences.
A food service management system that streamlines kitchen operations, manages inventory, and optimizes menu engineering.
A business intelligence platform that provides data-driven insights to inform business decisions.
A digital engagement platform that enables businesses to create personalized customer experiences across multiple channels.
Cantaloupe, Inc. faces moderate threat from substitutes, as customers have limited alternatives for fresh cantaloupes.
Cantaloupe, Inc. has a diverse customer base, reducing the bargaining power of individual customers.
Cantaloupe, Inc. relies heavily on a few large suppliers for its cantaloupe supply, giving them significant bargaining power.
While there are some barriers to entry, new entrants can still enter the market with moderate effort, posing a moderate threat to Cantaloupe, Inc.
The cantaloupe market is highly competitive, with many established players, leading to a high intensity of rivalry.
| Value | |
|---|---|
| Debt Weight | 19.63% |
| Debt Cost | 7.31% |
| Equity Weight | 80.37% |
| Equity Cost | 11.47% |
| WACC | 10.65% |
| Leverage | 24.42% |
Value: 3.3
Growth: 8.7
Quality: 7.1
Yield: 0.0
Momentum: 7.0
Volatility: 5.0
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