Cantaloupe(CTLP) - 2023 Q4 - Annual Report

Business Operations and Growth - Cantaloupe, Inc. processes over 1 billion transactions annually across more than 1 million active locations globally[16]. - The majority of revenue is derived from subscription and transaction fees, with transaction fees being the most significant driver of revenue[17]. - The Seed platform offers advanced analytics, route scheduling, and inventory management, enhancing operational efficiency for customers[31]. - Cantaloupe's G11 Cashless Kit supports faster processing and enhanced functionality for digital payments, operating on major networks with built-in NFC support[29]. - The Cantaloupe Go product line includes various self-checkout kiosks, integrating seamlessly with the Seed platform for comprehensive business management[26]. - Cantaloupe's services handle over $2 billion in annual transactions in the micro-payments space, utilizing Amazon Web Services for infrastructure[34]. - Key verticals served include food service, vending, and self-service kiosks, representing significant market potential for Cantaloupe[39]. - The vending and micro market industry grew by 12$14.5 billion in 2022, a 20% increase from $12.1 billion in 2021[41]. - The smart vending market is expected to reach a value of$15 billion by 2028, growing at a rate of 12% from 2022 to 2028[45]. - The company plans to expand into micro markets and self-checkout solutions, leveraging its Cantaloupe Go platform[49]. - The company aims to capitalize on cashless payment trends, with a focus on expanding cashless acceptance in international markets[48]. - The company experienced a headcount increase of approximately 20%, growing from 225 full-time employees in 2022 to 269 in 2023[68]. Financial Performance - The company recognized a net income of $0.6 million for fiscal year 2023, compared to net losses of$1.7 million and $8.7 million for fiscal years 2022 and 2021, respectively[87]. - Customer concentrations for the years ended June 30, 2023, 2022, and 2021 were 12$14.2 million, $(8.7) million, and$8.2 million for the fiscal years ended 2023, 2022, and 2021, respectively[119]. - Total revenues increased by $38.4 million to$243.6 million for the year ended June 30, 2023, driven by a $31.4 million increase in subscription and transaction fees and a$7.1 million increase in equipment sales[196]. - Subscription and transaction fees increased by $21.9 million or 20$81.2 million, a 26.5% increase from $64.2 million in the previous year[195]. - Total gross margin improved from 31.3$13.6 million to $80.5 million for the year ended June 30, 2023, driven by higher general and administrative expenses and sales and marketing costs[201]. - The company incurred$3.1 million in integration and acquisition expenses, reflecting ongoing efforts to expand its business[201]. - Adjusted EBITDA for the fiscal year ended June 30, 2023, was $17.8 million, compared to$9.9 million in 2022, reflecting a significant increase[213]. Legal and Compliance Risks - The company is subject to various legal, regulatory, and compliance risks that could adversely affect its business and financial condition[124]. - The company has significant ongoing litigation and investigations that may require substantial management time and incur additional legal expenses[136]. - The company has incurred significant expenses related to the 2019 Investigation, including audit, legal, and consulting fees, which could adversely affect its financial condition[130]. - The company has identified multiple material weaknesses in its internal control over financial reporting as of June 30, 2023, and is in the process of remediation[141]. - The company has settled the 2019 Investigation with the SEC but may still face future claims or inquiries that could impact its resources and reputation[132]. Market and Economic Conditions - 73% of small businesses believe new forms of digital payments are essential for growth, and 41% of consumers plan to shift to cashless payments within two years[20]. - 66% of consumers prefer self-service options due to speed and reduced stress, indicating a strong shift towards self-service models[21]. - The company is exposed to general economic conditions that could negatively impact consumer confidence and spending, affecting the number of active devices and transactions[81]. - Geopolitical conflicts, such as the Russia-Ukraine conflict, may adversely affect the company's operations and international expansion efforts[96]. Technology and Innovation - The company has established long-term agreements with payment processors and technology vendors to support its operations[58]. - The company is focused on enhancing its position as a leading provider of technology in the self-service industry through innovative solutions[47]. - The company has been granted 140 patents, with 49 still in force, and has pending patent applications[115]. - The newly launched Cantaloupe ONE Platform has seen significant customer interest and growth, providing a bundled subscription model for operators[171]. - The Seed Driver mobile app was updated and is now available on both Apple and Android platforms, enhancing efficiency for route drivers[171]. - The company migrated its cloud hosting services to Amazon Web Services (AWS) in July 2022, supporting a scalable infrastructure[166]. Financial Position and Capital Structure - As of June 30, 2023, the company reported a net working capital surplus of $41.7 million and cash and cash equivalents of$50.9 million[119]. - The company entered into an amended and restated credit agreement with JPMorgan Chase Bank, providing for a $15 million secured revolving credit facility and a$25 million secured term facility[120]. - The Amended JPMorgan Credit Facility has a four-year maturity and includes two financial covenants, one requiring a total leverage ratio of not more than 3.00 to 1.00[121]. - The company was in compliance with its financial covenants as of June 30, 2023[122]. - The company may require additional financing to sustain operations, particularly in response to unexpected non-operational events[119]. - The company’s preferred stock holders are entitled to a liquidation preference of approximately $22.1 million as of June 30, 2023, which could impact distributions to common stockholders in the event of a merger or asset sale[147]. - As of June 30, 2023, accumulated unpaid dividends on preferred stock amounted to approximately$18.3 million, with a liquidation preference of about $22.1 million[156]. Customer and Market Dynamics - As of June 30, 2023, the company had 28,584 Active Customers and 1.17 million Active Devices, compared to 23,991 Active Customers and 1.14 million Active Devices as of June 30, 2022[67]. - The number of Active Customers rose to 28,584, representing an increase of 4,593 customers or 19$7.3 million in subscription and transaction fees and $5.9 million in equipment sales for the year ended June 30, 2023[197][198]. - The company continues to monitor the impact of COVID-19, noting elevated component and supply chain costs during fiscal year 2023[167].