Executive Summary
Cantaloupe Inc posted solid Q3 FY2025 results with revenue of $75.4 million, up 11% year over year, driven by 10% growth in both transaction and subscription revenue. Equipment revenue rose 18% to $10.2 million, supported by continued success of the Smart Store offering. The quarter featured margin expansion, with total adjusted gross margin at 41.6% (vs. 39.6% a year ago) and adjusted EBITDA of $13.9 million, up 37% YoY. However, reported net income benefited unusually from a one-time tax asset release, which elevated GAAP profitability for the quarter. Management highlighted a strong cash-generating quarter (operating cash flow of $22.4 million) and meaningful progress in customer adoption, international expansion, and new product initiatives. Management reaffirmed strategic priorities, notably Europe and Latin America expansion, direct/indirect go-to-market optimization, and product innovation including Engage Pulse and seed analytics. The outlook was updated for FY2025, with revenue guidance of $302â$308 million and adjusted EBITDA of about $96 million; GAAP net income guidance now reflects the tax asset release and is projected to be $64â$70 million. Investors should monitor near-term equipment demand (notably SmartStore), macro-driven capital spending cycles, international growth, and the sustainability of earnings power once the tax-related uplift normalizes.
Key Performance Indicators
QoQ: 888.26% | YoY:955.76%
QoQ: 885.29% | YoY:1 018.53%
Key Insights
Revenue, Gross Margin, EBITDA, Net Income, EPS, ARPU, Active Customers, Active Devices, Cash Flow...
Financial Highlights
Revenue, Gross Margin, EBITDA, Net Income, EPS, ARPU, Active Customers, Active Devices, Cash Flow
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
75.43M |
11.09% |
2.31% |
| Gross Profit |
31.36M |
16.55% |
2.09% |
| Operating Income |
6.90M |
60.74% |
11.94% |
| Net Income |
49.16M |
955.76% |
888.26% |
| EPS |
0.67 |
1 018.53% |
885.29% |
Key Financial Ratios
operatingProfitMargin
9.15%
operatingCashFlowPerShare
$0.31
freeCashFlowPerShare
$0.25
Management Commentary
Key management themes and quotes from the Q3 FY2025 earnings call:\n- Revenue and profitability trajectory: "During the third quarter, our total revenue increased 11% year over year to $75.4 million driven by a 10% year-over-year transaction revenue growth and 10% year-over-year subscription revenue growth." This underscores a balanced growth dynamic across both revenue lines. The company also highlighted margin expansion, noting "Total adjusted gross margin continues to expand for the quarter, at 41.6% compared to 39.6% in the same quarter last year" and an EBITDA uplift to "$13.9 million, a 37% increase".\n- Cash generation and liquidity: "Q3 was one of our best quarters for cash generation, with total cash from operating activities achieving $22.4 million" and "We ended the third quarter with cash and cash equivalents of $46.3 million".\n- Product momentum and strategic wins: Management emphasized strong SmartStore demand as a centerpiece of growth, stating "the SmartStore continues to be I'd say, our hottest selling product" and that there is a visible fourth-quarter ramp in equipment revenue driven by SmartStore deployments. The company also noted enterprise and SMB momentum, including notable wins (e.g., DC vending, Peppy Foods).\n- Weather and macro backdrop: Management attributed a portion of quarterly transaction shortfall to weather events in January-February, noting that "Transaction revenue in the quarter was materially impacted by several adverse weather events and storms" and that equipment purchases had been deferred due to macro uncertainty, which they expect to rebound in Q4.\n- International growth and strategic priorities: The call reiterated focus on scaling in Europe and Latin America and refining go-to-market strategies across direct and indirect channels. Management also introduced Cantaloupe Capital to accelerate customer equipment investments.\n- Guidance and outlook: Scott Stewart outlined the revised FY2025 outlook, including revenue of $302â$308 million and adjusted EBITDA of $96 million, with the note that the total US GAAP net income guidance reflects the tax asset release. Management signaled confidence in a rebound in equipment demand in the near term.
"breached the $200 ARPU mark for the first time, which was part of our strategic goals"
â Ravi Venkatesan
"the SmartStore is basically the most sought after product that people want to learn about, order, and find out how they can get it and deploy it as soon as possible."
â Ravi Venkatesan
Forward Guidance
Management updated FY2025 guidance to reflect a more conservative revenue trajectory in the near term while emphasizing margin expansion and cash generation. Key points:\n- Revenue guidance: $302â$308 million for FY2025, representing 13â15% growth, with transaction and subscription revenue growth now anticipated at the lower end of the prior 15â20% range.\n- Profitability and cash flow: FY2025 adjusted EBITDA is guided at roughly $96 million; total operating cash flow is expected to be $24â$32 million, signaling continued strong cash generation.\n- Tax and net income: Reported GAAP net income guidance of $64â$70 million is skewed higher by the release of a large deferred tax valuation allowance ($42.2 million in Q3), which is non-recurring and provides a favorable one-time boost to reported earnings; excluding this tax benefit, the bottom-line would be materially lower.\n- International growth: Expected international revenue to exit the year at 3â4%, with continued expansion in Europe and Latin America into FY2026.\n- Demand cadence and risks: Near-term demand appears tied to macro visibility and the pace of equipment purchases, particularly in the SMB and enterprise segments. Management cited an April rebound in equipment sales, suggesting the fourth quarter could be a strong step-up, especially in SmartStore deployments.\nInvestor takeaway: The company is delivering margin expansion and robust cash flow while executing a strategic push into international markets and higher-value product families (SmartStore, seed analytics). The achievability of the FY25 revenue target hinges on the durability of the implied rebound in hardware purchases and the sustained growth of subscription/transaction revenue. Key monitorables include: Q4 hardware revenue momentum, international revenue progression, and the sustainability of profitability once the tax-related uplift stabilizes.