Cantaloupe, Inc.

Ladies and gentlemen, thank you for standing by. Welcome to Cantaloupe first quarter fiscal year 2024 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would like now to turn the conference over to Dara Dirks, Investor Relations. Please go ahead.

Thank you, Michelle. Good afternoon, everyone. Welcome to the Cantaloupe First Quarter Earnings Conference Call. With me on today's call are Ravi Venkatesan and Chief Executive Officer and Scott Stewart, Chief Financial Officer. Before we begin today's call, we would like to remind you that all statements, including in this call, other than statements of historical facts, are forward-looking in nature. 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 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 cantaloupes operating results. 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.cancelove.com. With that, I would like to turn the call over to Ravi.

Thanks, Dara. Good afternoon, everyone, and thank you for joining us today for our first quarter fiscal year 2024 call. During this quarter, our revenue increased 8% year over year to $62.7 million. Importantly, transaction revenue grew 18% and subscription revenue grew 15% year over year. Adjusted EBITDA for Q1 was $7.8 million, a 246% increase over last year's first quarter. As covered in our last call, in fiscal year 24, we are focused on expanding operating leverage using a three-pronged strategy, driving subscription revenue, optimizing cost of goods sold, and controlling operational expenses. We are driving subscription revenue through the following initiatives. First, by accelerating growth in micro markets. We continue to see strong demand in the micro market segment for cantaloupes offerings. Two notable wins, include pb foods a full-line vending micro market and office coffee provider based in florence south carolina and pyramid foods a full-line vending and micro market operator based in rogersville missouri our traction in the small business segment continues to accelerate with the adoption of micro markets in q1 we saw several small business operators purchase full micro-market setups from us, including kiosks, coolers, cabinetry, and fixtures. ABC Vending, an operator out of Illinois, purchased new markets with Cantaloupe and also took advantage of our upgrade program. We're excited about the momentum and continued interest from our growing base of small business customers. We're also seeing opportunities with new location types for our micro-market portfolios. For example, Anytime Fitness in Long Beach, California is adding micro-markets as a new amenity for its gym members. Secondly, we are driving subscription revenue through the penetration of seed software. We've seen continued adoption of our seed software, in particular, the markets edition. Seed markets is becoming the industry standard for combined management of vending micro-markets and office coffee within one platform for ease of routing, warehouse management, and driver efficiencies. New seed deployments include VVS Canteen, Treasure Valley Vending, and Palace Vending, who went all in with Cantaloupe software in Q1. Thirdly, adding new products is also helping us drive subscription revenue. We are seeing traction with our newest product, Smart Coolers, which we recently showcased at this year's NACS show in Atlanta, as well as the Abastur show in Mexico City. Our innovative smart store solutions, such as Cooler Cafe and Smart Cafe, allow consumers to make a payment, unlock the cooler, grab their items, and walk away. Our advanced technology provides greater security for the store owner and a faster, frictionless buying experience for the consumer. We're also experiencing progress with new original equipment manufacturers and partners integrating cooler cafe kits and our smart lock technology. Finally, we continue to innovate with Cantaloupe One. Our Cantaloupe One platform continues to grow penetration in the mid-market and is serving as a great benefit for operators who want to bundle the purchase of new card readers from Cantaloupe with seed software. Two recent wins were Larsen Vending and Cam. I also want to share some exciting updates on progress with our international expansion. We hosted a successful launch event in the UK on the 28th of September with over 100 prospects, partners, and industry professionals and are pleased to report a high degree of interest and excitement for our products and services. We showcased next-generation technology including full digital screen retrofit doors for vending or coolers. Age verification enables smart coolers and smart lockers. This event allowed us to showcase our innovative solutions to the European market and also highlighted our commitment to bringing the best, most reliable solutions to customers and partners alike in this market. We've also been adding new international customers including Decorum Vending out of the UK, who ordered 700 devices. In Portugal, we implemented Cantaloupe's cashless payment technology on Clubmaster's golf ball dispensers, which is another great example of product market fit in Europe and in an adjacent vertical. Our second priority for fiscal 24 is to optimize cost of goods sold. In Q1, We improved margins on every revenue line compared to the prior year. Transaction margins continued to benefit from the cost optimization and price standardization we put in place. We reduced network fees, which improved subscription margins, and equipment continued to benefit from a more stable pricing environment. Our third fiscal year 24 priority is maintaining discipline on operational expenses. In Q1, OPEX declined by 5% compared to the same period in the prior year, and we saw notable improvement in GNA, which declined 10% year-on-year, driven by decreased infrastructure and professional services costs. We also completed the integration of the three-square market business in Q1 into our enterprise financial systems. Fiscal year 24, will benefit from our fiscal year 23 initiatives, including migrating to the AWS platform for cloud infrastructure, integrating Salesforce, NetSuite, and other IT infrastructure improvements across the organization. I'm pleased with this strong start to the fiscal year, and I'm excited about the future of Cantaloupe as we execute on our vision to be the global technology leader that powers self-service commerce. I want 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 Q1 results in more detail, as well as review our outlook for fiscal year 24. Scott?