Cantaloupe Q2 2025 Earnings Report

Cantaloupe EPS Results

• Actual EPS: $0.07
• Consensus EPS: $0.06
• Beat/Miss: Beat by +$0.01
• One Year Ago EPS: $0.04

Cantaloupe Revenue Results

• Actual Revenue: N/A
• Expected Revenue: $75.41 million
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Cantaloupe Announcement Details

• Quarter: Q2 2025
• Date: 2/6/2025
• Time: After Market Closes
• Conference Call Date: Thursday, February 6, 2025
• Conference Call Time: 5:00PM ET

Cantaloupe (NASDAQ:CTLP), a digital payments and software services company, provides technology solutions for self-service commerce market. The company offers integrated solutions for payments processing, logistics, and back-office management. It also provides G11 cashless and pulse kits that are 4G LTE digital payment devices for payment and consumer engagement applications; G11 chip kit, a digital reader that accepts contact EMV and contactless EMV payment methods; Engage series comprising Engage and Engage Combo, which are digital touchscreen devices that offers networking, security, and interactivity payment methods; and card touchscreen card readers, including P66, P100, P100Pro, and P30. In addition, the company offers self-checkout kiosks,?smart store?concepts, and the Cantaloupe Go management platform comprising Go Mini, Go MiniX, Go Plus100, Go Plus200, Go Plus300, Go Max, Cooler Cafe, and Smart Market; Go Portal, a robust cloud-based platform; and Cheq products, which supports attended and unattended self-service kiosks for the stadium, entertainment, and festival sectors. Further, it provides integrated software services for payment or asset tracking devices in the field to connect into platform for advanced data management, analytics, route scheduling, and loyalty and reward programs; and a range of self-service hardware solutions for vending, micro-markets, amusement, arcade, commercial laundry, air/vacuum, car wash, and other applications. Additionally, the company offers professional, network infrastructure, card processing, and customer/consumer services. Cantaloupe, Inc. was formerly known as USA Technologies, Inc. The company was incorporated in 1992 and is headquartered in Malvern, Pennsylvania.

Cantaloupe Q2 2025 Earnings Call Transcript

Presentation

[Operator]

Hello. Thank you for standing by. Welcome to the Cantaloupe's Second Quarter Fiscal Year two thousand and seven Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session.

[Operator]

Also, please be reminded that this call is being recorded. I would now like to turn the conference over to your speaker for today, Magna Mera. You may now begin.

[Magna Mera, Investor Relations at Cantaloupe]

Thank you. Good afternoon, everyone. Welcome to the Cantaloupe's second quarter earnings conference call. With me on the call today is Ravi Venkatesan, Chief Executive Officer and Scott Stewart, Chief Financial Officer. Before we begin today's call, we would like to remind you that all statements included in this call, other than statements of historical facts, are forward looking in nature.

[Magna Mera, Investor Relations at Cantaloupe]

Actual results could differ materially from those contemplated by the forward looking statements because of certain factors, including, but not limited to, business, financial markets and economic conditions. A detailed discussion of the risks and uncertainties that could cause the actual results to differ materially from such forward looking statements is included in our filings with the SEC and in the press release issued earlier today. Listeners are cautioned to not place undue reliance on any such forward looking statements, which reflect management's views only as of the date they are made. Cantaloupe undertakes no obligation to update any forward looking statements, whether because of new information, future events or otherwise. This call will also include a discussion of certain non GAAP financial measures that we believe are useful for, among other things, evaluating Cantaloupe's operating results.

[Magna Mera, Investor Relations at Cantaloupe]

These non GAAP financial measures are supplemental to and not substitute for GAAP financial measures such as net income or loss. Details of these non GAAP financial measures, a presentation of the most directly comparable GAAP financial measures and a reconciliation between those non GAAP financial measures as well as the most comparable GAAP financial measures can be found in our press release issued this afternoon, which has been posted on the Investor Relations section of our website at www.cantaloupe.com. And with that, I would like to turn the call over to Ravi.

[Ravi Venkatesan, CEO, President & Director at Cantaloupe]

Thank you, Magna. Good afternoon, everyone, and thank you for joining us today for our second quarter fiscal year twenty twenty five call. I'll first start with a high level view of our Q2 performance. I'll then talk about our fiscal year twenty twenty five second half priorities before turning it over to Scott to dive deeper into the numbers and our outlook. Q2 financial highlights.

[Ravi Venkatesan, CEO, President & Director at Cantaloupe]

During the second quarter, our total revenue increased 13% year over year to $73,700,000 driven by 17% year over year transaction revenue growth and 14% year over year subscription revenue growth. Total adjusted gross margin for the quarter was 41.7% compared to 37.2% in the same quarter last year. Adjusted EBITDA for Q2 was $10,700,000 a 26% increase compared to prior year reflecting continued success with our strategy of expanding operating leverage. Now on to our Q2 operating highlights. We continue to see strong growth in micro markets and penetration of seed software with existing as well as new customers.

[Ravi Venkatesan, CEO, President & Director at Cantaloupe]

We gained momentum with customers going all in with us. An example is Premier Foodservice, who signed an agreement to replace all competitive micro markets with cantaloupe solution and in parallel signed up to go all in with Seed Software. New customer wins include EBS vending, who placed an order for several micro markets, including interestingly some kiosks to replace a full service restaurant at a furniture store located in the Southwest Region. This supports our hypothesis that kiosk based markets and our newest innovations like smart stores continue to provide more modern self-service solutions to an ever expanding set of location types. Our premier and self-service payment acceptance and telematics devices are continuing to lead the market in North America.

[Ravi Venkatesan, CEO, President & Director at Cantaloupe]

For example, Berkshire Foods recently replaced many competitive devices with our Engage and Engage combo units. Berkshire Foods continues to grow with our solutions, evidencing that one reliable trusted partner is key for a growing business to drive greater efficiencies. We're also seeing other verticals see cashless payment solutions such as automated retail and amusement. For example, Entertainment Solutions Group secured a large number of pulse devices for their amusement machines. Another example is Outdoor Vending Solutions, who acquired a significant number of our G11 serial devices to be placed at Lowe's distribution centers on Blue Rhino propane self-service machines.

[Ravi Venkatesan, CEO, President & Director at Cantaloupe]

On the indirect channel side, we worked with AVS to secure a large VIN in Q2 for our latest engaged pulse units that will be a game changer for the amusement sector, allowing customers to purchase multiple play credits in a single transaction through an interactive app that runs on the Engage device. To highlight some wins in sports and entertainment, in the enterprise space, we added the San Jose Earthquakes at PayPal Park to be the point of sale provider for all games and events at the stadium. This implementation not only includes our point of sale solutions, but also our newest suite management platform for their guest experience across the entire stadium. The implementation is already in progress and we will launch in the upcoming 2025 season. Our integration of SP software and cross sell wins are performing in line with expectations.

[Ravi Venkatesan, CEO, President & Director at Cantaloupe]

For example, we debited at the Vendex North event in November, our integrated solution for customers and showcased for the first time smart stores along with unveiling of the next generation of Vend Manager, a premier enterprise software solution that serves The UK and Ireland market. We secured Refresh Collective as a new VennManager customer and successfully implemented them on to that platform. In addition, we secured multiple Smart Store and cashless devices across a variety of UK customers. In Mexico, we secured a win with one of our large vending customers deploying micro markets for them. Our focus in Q2 was to deploy and maximize transactions from connections sold previously and we've executed very well on this objective, growing the transaction volumes across our cashless deployments in that region.

[Ravi Venkatesan, CEO, President & Director at Cantaloupe]

Moving on to the product side, we launched and deployed new models for our innovative SmartStore series, the Cantaloupe SmartStore 607. These advanced self-service retail solutions are designed to revolutionize the way food and beverage vendors, as well as broader retailers address key challenges including labor shortages, theft and shrinkage, while maintaining a seamless and inclusive consumer experience. This solution takes us into self-service commerce opportunities well beyond our traditional market niche. A perfect example of how we are leveraging this solution to extend into retailers is with our partners at GOLs, which is a parent company of U. S.

[Ravi Venkatesan, CEO, President & Director at Cantaloupe]

Patriot. Josh Sandoz, Vice President of Military Operations at GOLs stated, the SmartStore 700 Duo has been a game changer for us, exceeding all expectations. We can stock a diverse range of retail products and reduce our labor costs while maintaining high standard of security. We're also able to create additional brand awareness with customized marketing wraps on each smart store. We've seen an incredibly positive response from our customers who appreciate the on demand access to products like caps, tapes, headlamps, batteries, flashlights, notepads, socks and more.

[Ravi Venkatesan, CEO, President & Director at Cantaloupe]

Because of its success, we plan to expand smart stores across all our U. S. Patriot locations. Within the first few months of launching this product, we sold several hundred smart stores with additional expanded store configurations where clients placed our trial or quad solutions in more public environments such as auto dealerships, colleges and universities, senior living facilities, residential complexes and more. As part of our strategy to develop and launch more add on products that serve in particular our SMB customers, we launched our micro lending services under the brand of catalog capital in partnership with Fundbox.

[Ravi Venkatesan, CEO, President & Director at Cantaloupe]

We're enabling customers to go through a quick online approval process to get access to funds that help them more easily expand their business and secure the devices and micro markets they need to deploy their next location at all competitive rates. We launched our Cantaloupe Advantage program, which allows brands to engage with consumers through digital advertising at our point of sale touchscreen devices. The program's first collaboration was in partnership with Mastercard aimed at supporting the Priceless Planet Coalition and its objective to plant 100,000,000 trees around the world. The campaign ran across a variety of cantaloupe card readers and micro market kiosks delivering over 1,000,000 impressions within the first ten weeks. Our fiscal year twenty twenty five second half priorities

[Ravi Venkatesan, CEO, President & Director at Cantaloupe]

will be

[Ravi Venkatesan, CEO, President & Director at Cantaloupe]

to continue expanding operational support internationally, specifically in Europe and Latin America to allow more rapid scaling. We will also continue to refine our go to market strategy across both direct and indirect channels to expand our customer base organically and through strategic acquisitions. I am pleased with our second quarter of fiscal year results and remain excited about the future of Cantaloupe as we execute on our vision to be the global technology

[Ravi Venkatesan, CEO, President & Director at Cantaloupe]

leader that powers self-service commerce. I want

[Ravi Venkatesan, CEO, President & Director at Cantaloupe]

to thank the entire Cantaloupe team for their continued focus on execution, which led to a solid quarter. With that, Scott will now review our Q2 results in more detail

[Ravi Venkatesan, CEO, President & Director at Cantaloupe]

as well as

[Ravi Venkatesan, CEO, President & Director at Cantaloupe]

our outlook for fiscal year twenty twenty five. Scott?

[Scott Stewart, Chief Financial Officer at Cantaloupe]

Thanks, Ravi. As Ravi mentioned, we delivered another strong quarter. Our Q2 twenty twenty five revenue was $73,700,000 up 13% compared to Q2 twenty twenty four. Our combined transaction subscription revenue grew 16% to $65,400,000 during the quarter. This includes $20,700,000 of subscription revenue, a year over year increase of fourteen percent and $44,400,000 of transaction revenue, an increase of 17% compared to Q2 twenty twenty four.

[Scott Stewart, Chief Financial Officer at Cantaloupe]

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. Subscription revenue growth was largely driven by our strength in micro markets, which continues to be our fastest growing segment. As of 12/31/2024, we had over 32,000 active customers and 1,300,000 active devices, an increase of 104% respectively compared to the prior year. The average revenue per unit or ARPU for Q2 twenty twenty five was $2.00 $2 up 12% from the prior year period. As a reminder, this is defined as our total subscription and transaction fees for the trailing twelve months divided by the average total active devices for the same period.

[Scott Stewart, Chief Financial Officer at Cantaloupe]

Our equipment revenue was $8,600,000 a decrease of 7% compared to Q2 FY twenty twenty four. Total gross margin for the quarter was 41.7% compared to 37.2% in the same quarter last year, driven by continued expansion of our transaction margin. Subscription adjusted gross margin was 89.7% versus 89% in the prior year and transaction gross margin was 25.6% versus 21.1 in the prior year. This increase was driven by better cost management and improved transaction routing. Gross margin on equipment revenue for Q2 FY twenty twenty five increased to 9.1% from 1.8% in the prior year.

[Scott Stewart, Chief Financial Officer at Cantaloupe]

Total operating expenses in Q2 FY twenty twenty five increased to $24,500,000 compared to $20,700,000 in Q2 FY twenty twenty four. This increase is largely due to expenses incurred by the companies we acquired in the past twelve months, Chek and SVsoft. Net income applicable to common shares for the quarter was $5,000,000 or $0.07 diluted earnings per share compared to net income of $3,100,000 or $0.04 diluted earnings per share in the prior period. Adjusted EBITDA was 10,700,000 in the second quarter compared to $8,500,000 in the prior year period, an increase of 26%. We ended the second quarter with cash and cash equivalents of $27,700,000 dollars As we mentioned in our previous call, the decrease in our cash balance compared to our year ending balance as of 06/30/2024, is due to the timing of payments made to our customers for transaction processing.

[Scott Stewart, Chief Financial Officer at Cantaloupe]

This normalized in Q2 twenty twenty five and we had a slight growth in our operating cash balance for the quarter. We anticipate cash from operating activities to grow throughout the rest of the year in line with the guidance we provided. Continuing with the balance sheet, we have recently refinanced and upsized our credit facility. The new facility provides for $40,000,000 term loan, a $30,000,000 revolving credit facility and a $30,000,000 delayed draw term loan for a total of $100,000,000 The growth in profitability we have experienced over the past several years has allowed us to secure this facility with very competitive rates. This strengthens our balance sheet and provides flexibility for future uses of capital.

[Scott Stewart, Chief Financial Officer at Cantaloupe]

The proceeds from the $40,000,000 term loan were used to repay borrowings under our previous term loan and revolving credit facility. To date, the company has not borrowed against the new revolving credit facility or the delayed draw term loan. Now turning to our fiscal year twenty twenty five guidance. As we said on our last earnings call and based on what we see today, we are reaffirming the following: total revenue to be between $3.00 $8,000,000 and $322,000,000 representing growth of 15 to 20%. We expect transaction subscription revenue to also be in the range of 15% to 20%.

[Scott Stewart, Chief Financial Officer at Cantaloupe]

We expect total U. S. GAAP net income to be between $22,000,000 and $32,000,000 adjusted EBITDA to be between $44,000,000 and $52,000,000 and total operating cash flow is expected to be between $24,000,000 and $32,000,000 With that, we would now like to turn the call back over to the operator for the Q and A session. Operator?

[Operator]

Thank The first question that we have today will be coming from the line of Chris Kennedy

[Operator]

of William Blair.

[Operator]

Your line is open.

[Cristopher Kennedy, Research Analyst - Financial Services & Technology at William Blair]

Good afternoon. Thanks for taking the question and appreciate all the new detail in the supplement. Can you just talk about the average revenue per unit and how that's evolved? And it's got to be driven kind of by your business mix going from traditional vending to micro markets, smart stores, what have you and how your average ticket price has gone up. Can you just talk about the evolution of your business, please?

[Scott Stewart, Chief Financial Officer at Cantaloupe]

Yes, sure, Chris. Happy to do so. And thanks for the question. So overall, we have seen a lot more growth related to the transaction processing. It is due to the fact that we are processing that our average ticket size has gone up significantly over the past couple of years.

[Scott Stewart, Chief Financial Officer at Cantaloupe]

When we laid out at Investor Day back in December of twenty twenty two, we listed out if a customer was to buy every product that we offer at our list price, it would get up to $400 per unit. That still holds true. It's shifted a little bit more and probably could go up a little bit higher based off of the transaction processing. And then with some of the new software that we've released like our PickEZ product and our Seed Analytics.

[Ravi Venkatesan, CEO, President & Director at Cantaloupe]

And Chris, could you add to that? We've also had sales strategies be very intentional about what are the locations we are deploying our solutions into and are those locations where we can maximize revenue not just for our customers, but consequently for us. So part of it has been to make sure we are not going after marginal customers and lower potential revenue locations.

[Cristopher Kennedy, Research Analyst - Financial Services & Technology at William Blair]

Understood. Thank you. And then any update on your international strategy? And can you just remind us what your business mix is U. S.

[Cristopher Kennedy, Research Analyst - Financial Services & Technology at William Blair]

Versus international? Thanks for taking the questions.

[Ravi Venkatesan, CEO, President & Director at Cantaloupe]

Yes. We continue to track well on the international side. But in the case of Latin America, in particular, we did a little bit of take a couple of steps back to be able to leap forward. We had sold some fairly nice deals and we wanted to make sure that those deployments were very robust and working as well as they possibly could and that we were maximizing the number of transactions that came through from all those locations. So that's been a tweak.

[Ravi Venkatesan, CEO, President & Director at Cantaloupe]

Now we have kind of passed that stage. We are again in the mode of expanding the footprint. And in both Latin America and EMEA, we've also had some nice wins in the last quarter in micro markets as well, which as you know has been kind of an appealing new segment of our business. Other than that, in terms of mix, it's really largely stayed the same. We think it will accelerate further as we execute on our second half priorities.

[Ravi Venkatesan, CEO, President & Director at Cantaloupe]

But as of now, we are tracking to kind of the same mix, which is it's under 5%.

[Cristopher Kennedy, Research Analyst - Financial Services & Technology at William Blair]

Got it. Thank you.

[Operator]

Thank you. One moment for the next question. And our next question will be coming from the line of Gary Prestino of Barrington. Your line is open.

[Gary Prestopino, Vice President & Senior Research Analyst at Barrington Research Associates]

Hi. Good afternoon, Robbie and Scott.

[Gary Prestopino, Vice President & Senior Research Analyst at Barrington Research Associates]

A couple of questions here. First of all, on this new lending, microlending that you're doing through Cantelo Capital, Are you you're originating whatever loan you are, I would assume it's for equipment or whatever. Are you holding that paper or do you sell that to your partner that I couldn't write the name down there? Could you explain how this works?

[Ravi Venkatesan, CEO, President & Director at Cantaloupe]

Yes. We don't hold any other paper and we don't even underwrite the loans. The way this is done is through, as you rightly pointed out, through a partner. The nuance there is we are able to offer customers who are really used to coming to seed software in particular as kind of their ERP and their go to system. A very convenient way to go through a few questions, point and click and then get approved for a loan and from a partner that they trust, which is us.

[Ravi Venkatesan, CEO, President & Director at Cantaloupe]

So it's sort of us being the gateway to this process adds a lot of comfort to our customers and also makes it easier because of our knowledge of their business and their knowledge of our brand and reputation.

[Gary Prestopino, Vice President & Senior Research Analyst at Barrington Research Associates]

Okay. Were you finding that at times some of your smaller clients, particularly maybe as you're going more upstream on the equipment side, they were capital constrained and this would help them to grow their business.

[Ravi Venkatesan, CEO, President & Director at Cantaloupe]

You hit the nail on the head. Yes, you hit the nail on the head. That is exactly why we did this. In fact, it was this initiative has been on our roadmap for almost a couple of years. We've just been working really hard to find the right partner, the right solution, the right user experience, which matters a heck of a lot, especially when you get to that small and medium business segment.

[Ravi Venkatesan, CEO, President & Director at Cantaloupe]

And yes, the aim was to free up capital constraints so that our customers can buy more micro markets, more cashless payment devices and subscribe to more seed software. That's ultimately our goal.

[Gary Prestopino, Vice President & Senior Research Analyst at Barrington Research Associates]

Okay. And you're not on

[Gary Prestopino, Vice President & Senior Research Analyst at Barrington Research Associates]

the hook for anything then. I just want to make sure I'm clear on that.

[Ravi Venkatesan, CEO, President & Director at Cantaloupe]

That is correct.

[Gary Prestopino, Vice President & Senior Research Analyst at Barrington Research Associates]

Okay. And then just from some of your narrative, Ravi, it strikes me is that really the growth here is being driven by micro markets in a big way. If you could just segment it out, is it micro markets, smart stores and then seed software? I mean, just could you maybe lay out what are some of the key growth drivers where you're having a lot of success with your product lines?

[Ravi Venkatesan, CEO, President & Director at Cantaloupe]

So we've got as you've seen healthy growth in both components of our recurring revenue, the transaction payment processing as well as the subscription revenue. On the subscription revenue, the growth is largely driven by an expanded footprint of micro markets, the new SmartStore product, but also newer locations and in what I would call a mix shift in the locations where our products are placed. So as I mentioned earlier, when we go from potato chips to cobb salads, then the location becomes more valuable and what we earn from that location becomes more valuable. The similar factors apply to the transaction payment processing because again, as we deploy smart stores and more marketplaces, the revenue that's generated on transactions per location is significantly higher and that mix keeps improving, the ARPU keeps improving. So that's a growth driver in itself.

[Ravi Venkatesan, CEO, President & Director at Cantaloupe]

We are also seeing now, particularly with SmartStore, that the location types that we addressed historically, which were corporate break rooms, in some cases certain other locations have drastically expanded. Now we are in universities, we are in hospitals, we are in car dealerships, we are in assisted living centers, we are in all kinds of new locations, which is exciting to me and bodes really well for the future of Campbell.

[Gary Prestopino, Vice President & Senior Research Analyst at Barrington Research Associates]

Okay, great. Thank you so much for answering those questions.

[Operator]

Thank you. One moment for the next question. And the next question will be coming from the line of Mike Latimore of North Capital I'm sorry, Northland Capital. Please go ahead.

[Mike Latimore, Managing Director & Senior Research Analyst at Northland Capital Markets]

All right, Brett. Yes. Thanks a lot. Yes, great job on the margins and EBITDA growth again here. On the subscription and transaction gross margin continues to improve.

[Mike Latimore, Managing Director & Senior Research Analyst at Northland Capital Markets]

Is this kind of a sustainable level?

[Scott Stewart, Chief Financial Officer at Cantaloupe]

Hey, Mike. Yes, thanks for the question. So we feel absolutely it's a sustainable level. We continue to see increases, especially as it relates to the transaction gross margin. When you look at what makes that up, we've seen over the past eighteen months an increase in our take rate.

[Scott Stewart, Chief Financial Officer at Cantaloupe]

When you look at it sequentially, it's pretty even with where it was last quarter. I think we've kind of tapped out on increasing the take rate, but we continue to get benefits from the cost reduction measures that we've taken and a lot of the routing and cost savings that we've done there, we continue to benefit from. And then as the average ticket price is a little bit higher because there is a fixed fee component to our pricing, that will also help increase the margins.

[Mike Latimore, Managing Director & Senior Research Analyst at Northland Capital Markets]

Got it again. Okay, excellent. And then on subscription growth, the subscription growth rate improved a little bit quarter. It sounds like micro markets is a good driver of that. I would imagine micro markets and then further enhanced by smart stores will continue to benefit subscription.

[Mike Latimore, Managing Director & Senior Research Analyst at Northland Capital Markets]

I mean, should we think about subscription growth rate kind of improving from here?

[Scott Stewart, Chief Financial Officer at Cantaloupe]

Yes. So we did see good acceleration in this quarter. Last quarter, we were at 11.5% year over year growth. This quarter, we're at 14.1. The guide that we gave for this year was 15% plus and we're still in line with that guide that we provided.

[Scott Stewart, Chief Financial Officer at Cantaloupe]

Great. And then And then And

[Mike Latimore, Managing Director & Senior Research Analyst at Northland Capital Markets]

then I guess just maybe similar, but transaction dollar volume growth, I think, was 15.5% that also improved from the first quarter. Is that tied to micro markets as well?

[Scott Stewart, Chief Financial Officer at Cantaloupe]

Micro markets and smart stores, that's correct mostly.

[Mike Latimore, Managing Director & Senior Research Analyst at Northland Capital Markets]

Okay.

[Scott Stewart, Chief Financial Officer at Cantaloupe]

And we've got our operators are really pushing to sell more fresh foods and with that, that has a higher ticket price.

[Ravi Venkatesan, CEO, President & Director at Cantaloupe]

And I should Mike, just to make sure we don't over index on the micro markets in the smart stores, there is a new category which we call internally smart retail or smart vending, if you will. And there is a phenomenon of selling more headphones and electronics and cosmetics and pharmaceuticals, etcetera, out of smarter, newer generation vending machines. And that also contributes to higher ticket sizes and higher transaction values as well as volumes.

[Mike Latimore, Managing Director & Senior Research Analyst at Northland Capital Markets]

Okay.

[Mike Latimore, Managing Director & Senior Research Analyst at Northland Capital Markets]

Makes sense. Thank you.

[Scott Stewart, Chief Financial Officer at Cantaloupe]

Thank you.

[Operator]

And our next question will be coming from the line of George Sutton of Craig Hallum. Your line is open.

[George Sutton, Senior Research Analyst at Craig-Hallum Capital Group LLC]

Thank you. Just a clarification on the microlending program, given that you have Cantaloupe ONE, I'm just curious, is there a certain customer scenario where you would look to do one versus the other? Does this suggest any changes in Cantaloupe one?

[Ravi Venkatesan, CEO, President & Director at Cantaloupe]

Thanks, George. That's a really good question and clarification. These are aimed at very different use cases. So Cantaloupe one is primarily aimed at somebody using 100% of our solution and finding a way to scale that without sort of stretching their balance sheet is the best way I can put it. The micro lending product that we have launched goes well beyond that.

[Ravi Venkatesan, CEO, President & Director at Cantaloupe]

So our customers can use that to fund working capital. They can use that to fund new equipment purchases. And so they can use it for several things that go beyond just our cashless payment devices, our micro markets, etcetera. And so in that sense, it's a broader canvas, if you will.

[George Sutton, Senior Research Analyst at Craig-Hallum Capital Group LLC]

Understand. Okay. That's very helpful. And you had mentioned Vendex, I believe Vendex North. So can you just give us a sense of the feedback you got from both partners and customers with the new product that you showed them?

[Ravi Venkatesan, CEO, President & Director at Cantaloupe]

Well, exceedingly positive. It's a rare scenario of a product where the demand is far ahead of where we anticipated. And so we are almost working to ensure that the pace of scaling is the right pace of scaling. But the feedback in North America has been great and now with Vendex in Europe has been phenomenal as well.

[George Sutton, Senior Research Analyst at Craig-Hallum Capital Group LLC]

And then just

[Ravi Venkatesan, CEO, President & Director at Cantaloupe]

And the real driver is it solves for sorry, the real driver is it solves for theft. The challenge historically with vending machines has been that they've been perceived as old, especially the coil based vending machines. And even though now the modern form factors are better received, The historical challenge with micro markets has been theft. So they do very well in high trust locations like corporate break rooms, but they do poorly in low trust locations like a transit station, etcetera, where there's more tendency to have theft. And now with retail theft clicking up more and more, the SmartStore has been very well received as a kind of solution that solves for all these constraints.

[George Sutton, Senior Research Analyst at Craig-Hallum Capital Group LLC]

Got you. Just one other thing relative to your cantaloupe advertising that you the program that you launched and you mentioned the million impressions. Can you give us a sense of what is the economic benefit to you from that? How do you charge for that?

[Ravi Venkatesan, CEO, President & Director at Cantaloupe]

Yes. So we charge on a there are two or three different models. So there are marketplaces where we can list our screens and there it's the formulas are based on per impression, it's highly automated and a fairly standard business model. And we share revenue streams with our customers as well who operate those locations. There is another model where it's bespoke campaigns and bespoke advertising that's either from an interested party who wants to reach those audiences or a manufacturer of products that are sold out of those locations of machines.

[Ravi Venkatesan, CEO, President & Director at Cantaloupe]

And there it's more custom pricing and more custom deals because the impressions are relatively more valuable to them. And it tends to be based on the number of people walking through a location that will actually castorize on it. And so it's ultimately boils down to impressions, but those are the broad two models. There is a marketplace based model and there is a custom we go sell the publisher of the advertising on it model. In both cases, we use this as a way to increase the revenue our customers derive from their existing platform.

[Scott Stewart, Chief Financial Officer at Cantaloupe]

Got you. Perfect. Okay. Thanks guys.

[Cristopher Kennedy, Research Analyst - Financial Services & Technology at William Blair]

Thank you.

[Operator]

Thank you. One moment for the next question. And our next question will be coming from the line of Josh Nichols of B. Riley. Your line is open.

[Josh Nichols, Research Analyst at B Riley Financial]

Yes. Thanks for taking my question and good to see

[Josh Nichols, Research Analyst at B Riley Financial]

the acceleration in subscription and transaction fee growth quarter over quarter. I'm just kind of curious if you could provide a little bit more color. I know you reaffirmed the guidance, but there's a relatively wide range, at least on the top line between like the low and the high end. Is that driven mostly by like what's going to happen in terms of equipment sales for the back half of the year? And what's kind of the delta between those two, if you could elaborate a little bit, please?

[Scott Stewart, Chief Financial Officer at Cantaloupe]

Yes, sure. So that is right. It is mostly driven by the larger equipment sales in the back half of the year. With the smart stores that we launched, we're selling the entire store itself. So it's not a $250 point of sale device, it's $12,000 to $15,000 smart store.

[Scott Stewart, Chief Financial Officer at Cantaloupe]

And as those ramp up, we're expecting the equipment revenue to ramp up in the back half of the year, especially as we get to the fourth quarter. But with that in mind, still keeping the transaction and subscription revenue growing somewhere between 15% to 20%.

[Josh Nichols, Research Analyst at B Riley Financial]

Got it. That makes sense. And then you've continually come up above expectations in terms of the profitability when you look at like the EBITDA trend over the last few quarters, it's been up significantly. I know you reaffirmed $44,000,000 to $52,000,000 but given the margin profile that you guys are seeing, it seems like it'd be hard pressed for those margins to come in like near the lower end of the range. I'm just trying to think about how to think about the EBITDA guidance for the remainder of the year given the profitability profile, which has improved pretty significantly over the last few quarters.

[Scott Stewart, Chief Financial Officer at Cantaloupe]

Yes. And as we've gone through the year, we're tracking right to the midpoint of our guidance and that's what we're expecting towards the end of the year as well. So we have seen the increase in the margins that could be a benefit to us as we get to the end of the year. But everything that we see right now, we're still going towards the midpoint of the guidance. Appreciate it.

[Scott Stewart, Chief Financial Officer at Cantaloupe]

Thank you.

[Operator]

Thank you. This does conclude the Q and A session. I would like to go ahead and turn the call over to Ravi for closing remarks. Please go ahead.

[Ravi Venkatesan, CEO, President & Director at Cantaloupe]

Thank you, operator. Again, I continue to be very excited about the future of Camelot both in terms of new products that we've launched and the adoption rates that we are seeing as well as continuing to penetrate the market with our best in class seed software as well as cashless payment devices and telematics solutions. We appreciate the engagement and interest of our investors. And with that, we'll conclude this call. Thank you.

[Operator]

Thank you so much for joining today's conference call. You may all disconnect.

Participants

Executives

• Magna Mera, Investor Relations
• Ravi Venkatesan, CEO, President & Director
• Scott Stewart, Chief Financial Officer

Analysts

• Cristopher Kennedy, Research Analyst - Financial Services & Technology at William Blair
• Gary Prestopino, Vice President & Senior Research Analyst at Barrington Research Associates
• Mike Latimore, Managing Director & Senior Research Analyst at Northland Capital Markets
• George Sutton, Senior Research Analyst at Craig-Hallum Capital Group LLC
• Josh Nichols, Research Analyst at B Riley Financial