Cantaloupe, Inc.

Hello, thank you for standing by. Welcome to the Cantaloupe Second Quarter, Fiscal Year 2017 Conference Call. At this time, all participants are in listen-only mode. After the speaker's presentation, there'll be a question and answer session. To ask a question, you will need to press star one one on your telephone. To remove yourself from the queue, press star one one again. 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.

Thank you. Good afternoon, everyone. Welcome to the Cantaloupe 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. 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 findings 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.canceluk.com. And with that, I would like to turn the call over to Ravi.

Thank you, Meghna. Good afternoon, everyone, and thank you for joining us today for our second quarter fiscal year 2025 call. I'll first start with a high-level view of our Q2 performance. I'll then talk about our fiscal year 2025 second-half priorities before turning it over to Scott to dive deeper into the numbers and our outlook. Q2 financial highlights. During the second quarter, our total revenue increased 13% year-over-year to $73.7 million, 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 $10.7 million, 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. We gain momentum with customers going all in with us. An example is Premier Food Service, 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 EVS 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. 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 new Rhino propane self-service machines. 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. For example, we debited at the VendEx North event in November. Our integrated solution for customers and showcase for the first time smart stores along with unveiling of the next generation of VendManager a premier enterprise software solution that serves the UK and Ireland market. We secured Refresh Collective as a new Venn manager customer and successfully implemented them onto that platform. In addition, we secured multiple smart store and cashless devices across a variety of UK customers. In Mexico, we secured a Venn with one of our large vending customers deploying micro markets for Venn. 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. Moving on to the product side, we launched and deployed new models for our innovative SmartStore series, the Cantaloupe SmartStore 600 and 700. 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 Gauls, which is a parent company of US Patriot. Josh Sandoz, Vice President of Military Operations at Gauls 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. Because of its success, we plan to expand smart stores across all our US 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. 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 in its objective to plant 100 million trees around the world. The campaign ran across a variety of cantaloupe card readers and micro-market kiosks delivering over a million impressions within the first 10 weeks. Our fiscal year 25 second-half priorities will be to continue expanding operations support internationally, specifically in Europe and Latin America, to allow more rapid scaling. We'll 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 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 Q2 results in more detail. as well as our outlook for fiscal year 25.