Cantaloupe Swings to Loss Amid Soaring Merger Costs

TL;DR

**Cantaloupe's Q1 loss is a red flag, but the pending $11.20/share acquisition by 365 Retail Markets is the only game in town for shareholders.**

AI Summary

Cantaloupe, Inc. reported a net loss of $919,000 for the three months ended September 30, 2025, a significant decline from the net income of $3.572 million in the same period last year. Total revenues increased by 14.1% to $80.853 million, up from $70.836 million in Q1 2024, driven by a 10.2% rise in subscription and transaction fees to $70.325 million and a substantial 49.5% increase in equipment sales to $10.528 million. However, operating expenses surged by 28.9% to $31.886 million, primarily due to a massive increase in merger, acquisition, and integration expenses, which jumped from $197,000 in Q1 2024 to $7.197 million in Q1 2025. The company's cash and cash equivalents improved to $54.985 million as of September 30, 2025, from $51.146 million at June 30, 2025. A key strategic development is the pending all-cash acquisition by 365 Retail Markets, LLC for $11.20 per share, which is currently awaiting HSR Act clearance from the U.S. Federal Trade Commission, expected to close in the first half of calendar year 2026.

Why It Matters

This filing is critical for investors as Cantaloupe, Inc. is undergoing an acquisition by 365 Retail Markets, LLC at $11.20 per share. The reported net loss of $919,000, largely driven by $7.197 million in merger-related expenses, highlights the immediate financial impact of this strategic shift. While revenue growth is positive, the significant increase in operating costs could raise concerns about profitability post-merger if not managed effectively. For employees and customers, the merger's completion in early 2026 will likely bring changes in operations and potentially new product integrations, impacting competitive dynamics in the self-service commerce market.

Risk Assessment

Risk Level: medium — The risk level is medium due to the pending acquisition by 365 Retail Markets, LLC. While shareholders approved the merger on September 4, 2025, the U.S. Federal Trade Commission issued a 'Second Request' on September 17, 2025, extending the waiting period for HSR Act clearance. This introduces regulatory uncertainty and could delay or even jeopardize the $11.20 per share transaction, as the merger is now expected to close in the first half of calendar year 2026, not immediately.

Analyst Insight

Investors should hold their CTLP shares if they believe the 365 Retail Markets acquisition will close at $11.20 per share, as the current stock price likely reflects this pending transaction. However, be aware of the regulatory risk from the FTC's 'Second Request' which could delay or potentially derail the deal. New investors should evaluate if the current market price offers sufficient upside given the fixed acquisition price and regulatory hurdles.

Financial Highlights

debt To Equity

0.54

revenue

$80.853 million

operating Margin

2.0%

total Assets

$389.514 million

total Debt

$38.289 million

net Income

-$919,000

eps

N/A

gross Margin

41.5%

cash Position

$54.985 million

revenue Growth

+14.1%

Revenue Breakdown

Key Numbers

• $919,000 — Net loss (for the three months ended September 30, 2025, compared to $3.572 million net income in Q1 2024)
• $80.853 million — Total revenues (up 14.1% from $70.836 million in Q1 2024)
• $7.197 million — Merger, acquisition and integration expenses (a significant increase from $197,000 in Q1 2024)
• $11.20 — Per share acquisition price (offered by 365 Retail Markets, LLC)
• 14.1% — Revenue growth (year-over-year for the three months ended September 30, 2025)
• 28.9% — Operating expense increase (year-over-year for the three months ended September 30, 2025)
• $54.985 million — Cash and cash equivalents (as of September 30, 2025, up from $51.146 million at June 30, 2025)
• 73,697,229 — Outstanding shares of Common Stock (as of November 3, 2025)

Key Players & Entities

• CANTALOUPE, INC. (company) — registrant
• 365 Retail Markets, LLC (company) — acquiring company
• U.S. Federal Trade Commission (regulator) — antitrust review
• The NASDAQ Stock Market LLC (company) — stock exchange
• Catalyst Holdco I, Inc. (company) — merger party
• Catalyst Holdco II, Inc. (company) — merger party
• Catalyst Merger Sub Inc. (company) — merger party
• Hart-Scott-Rodino Antitrust Improvements Act of 1976 (regulator) — antitrust law

FAQ

Risk Factors

• HSR Act Clearance for Acquisition [high — regulatory]: The pending acquisition by 365 Retail Markets, LLC is subject to clearance under the HSR Act from the FTC. Delays or failure to obtain clearance could prevent the transaction from closing, impacting shareholder value and strategic direction.
• Integration Expenses Impacting Profitability [medium — operational]: Merger, acquisition, and integration expenses surged from $197,000 in Q1 2024 to $7.197 million in Q1 2025. This significant increase directly contributed to the net loss and highlights the costs associated with strategic M&A activities.
• Shift to Net Loss [medium — financial]: The company reported a net loss of $919,000 for the quarter, a reversal from a net income of $3.572 million in the prior year. This is primarily driven by increased operating expenses, particularly M&A costs.
• Competitive Landscape [medium — market]: The unattended retail market is competitive, with evolving technology and consumer preferences. Cantaloupe's ability to maintain its market share and innovate in payment solutions and software is crucial for sustained growth.

Industry Context

Cantaloupe, Inc. operates in the unattended retail and payment solutions market, serving sectors like vending, micro-markets, and laundromats. The industry is characterized by increasing adoption of cashless payments, smart devices, and integrated software solutions for inventory management and consumer engagement. Key trends include the demand for seamless payment experiences and data analytics to optimize operations.

Regulatory Implications

The primary regulatory hurdle is the pending HSR Act clearance from the FTC for the acquisition by 365 Retail Markets, LLC. Failure to secure this approval could halt the transaction. Compliance with data privacy regulations and payment processing standards remains an ongoing operational requirement.

What Investors Should Do

1. Monitor HSR Act clearance status.
2. Analyze the sustainability of revenue growth drivers.
3. Evaluate the impact of integration costs on future profitability.
4. Assess the company's cash position and burn rate.

Key Dates

• 2025-09-30: End of Q1 Fiscal Year 2025 — Reporting period for the current 10-Q, showing revenue growth but a net loss due to increased expenses.
• 2025-11-03: Outstanding Shares of Common Stock Date — Provides the basis for per-share calculations and understanding the total equity structure as of a recent date.
• 2026-H1: Expected Closing of 365 Retail Markets Acquisition — Key future event that will fundamentally change the company's ownership and operational structure, pending regulatory approval.

Glossary

HSR Act

The Hart-Scott-Rodino Antitrust Improvements Act of 1976, which requires parties to certain large mergers and acquisitions to notify the Federal Trade Commission (FTC) and the Assistant Attorney General of the Antitrust Division of the Department of Justice (DOJ) and to wait for a prescribed period before consummating the transaction. (Crucial for the pending acquisition by 365 Retail Markets, LLC, as it requires FTC clearance.)

Merger, acquisition and integration expenses

Costs incurred by a company related to the process of combining with or acquiring another company, including legal fees, advisory fees, and costs associated with merging operations. (These expenses significantly increased in the current quarter, impacting the company's net income.)

Deferred revenue

Revenue that has been received by a company but not yet earned. It is recorded as a liability until the goods or services are delivered. (An increase in deferred revenue from $1.990 million to $3.975 million suggests future revenue streams from unfulfilled obligations.)

Goodwill

An intangible asset that arises when a company acquires another company for a price greater than the fair value of its identifiable net assets. (A significant portion of Cantaloupe's assets ($103.075 million) is goodwill, indicating past acquisitions.)

Year-Over-Year Comparison

Compared to the prior year's first quarter, Cantaloupe, Inc. has demonstrated robust revenue growth of 14.1%, driven by both subscription/transaction fees and a significant surge in equipment sales. However, this top-line improvement was overshadowed by a substantial increase in operating expenses, particularly merger, acquisition, and integration costs, which ballooned from $197,000 to $7.197 million. This led to a swing from a net income of $3.572 million to a net loss of $919,000, highlighting the immediate financial impact of strategic M&A activities. The company's cash position has improved slightly, but the overall profitability picture has deteriorated due to these elevated expenses.

Filing Documents

• ctlp-20250930.htm (10-Q) — 982KB
• a20250930-exx311.htm (EX-31.1) — 10KB
• a20250930-exx312.htm (EX-31.2) — 10KB
• a20250930-exx321.htm (EX-32.1) — 4KB
• a20250930-exx322.htm (EX-32.2) — 4KB
• ctlp-20250930_g1.jpg (GRAPHIC) — 98KB
• 0001628280-25-050174.txt ( ) — 6833KB
• ctlp-20250930.xsd (EX-101.SCH) — 49KB
• ctlp-20250930_cal.xml (EX-101.CAL) — 107KB
• ctlp-20250930_def.xml (EX-101.DEF) — 165KB
• ctlp-20250930_lab.xml (EX-101.LAB) — 611KB
• ctlp-20250930_pre.xml (EX-101.PRE) — 403KB
• ctlp-20250930_htm.xml (XML) — 945KB

- Financial Information

Part I - Financial Information Item 1. Condensed Consolidated Financial Statements Condensed Consolidated Balance Sheets - September 30, 2025 (unaudited) and June 30, 2025 3 Condensed Consolidated Statements of Operations - Three Months ended September 30, 202 5 and 202 4 (unaudited) 4 Condensed Consolidated Statements of Comprehensive (Lo ss) Income - Three Months ended September 30, 202 5 and 202 4 (unaudited) 5 Condensed Consolidated Statements of Convertible Preferred Stock and Shareholders' Equity - Three Months ended September 30, 202 5 and 202 4 (unaudited) 6 Condensed Consolidated Statements of Cash Flows - Three Months ended September 30, 202 5 and 202 4 (unaudited) 7 Notes to Condensed Consolidated Financial Statements (unaudited) 8 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 23 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 31 4.

Controls and Procedures

Controls and Procedures 32

- Other Information

Part II - Other Information Item 1. Legal Proceedings 33 1A. Risk Factors 33 2. Unregistered Sales of Equity Securities and Use of Proceeds 33 3. Defaults Upon Senior Securities 33 4. Mine Safety Disclosures 33 5. Other Information 33 6. Exhibits 34

Financial Information

Part I. Financial Information

Condensed Consolidated Financial Statements

Item 1. Condensed Consolidated Financial Statements Cantaloupe, Inc. Condensed Consolidated Balance Sheets September 30, 2025 (Unaudited) June 30, 2025 ($ in thousands, except share data) Assets Current assets: Cash and cash equivalents $ 54,985 $ 51,146 Accounts receivable, net 41,862 37,927 Finance receivables, net 5,253 5,422 Inventory 47,655 45,703 Prepaid expenses and other current assets 13,711 12,727 Total current assets 163,466 152,925 Non-current assets: Finance receivables, net 5,076 5,750 Property and equipment, net 39,761 39,125 Operating lease right-of-use assets 7,515 7,735 Intangibles, net 21,835 23,331 Goodwill 103,075 103,222 Deferred income taxes, net 41,568 43,253 Other assets 7,218 6,517 Total non-current assets 226,048 228,933 Total assets $ 389,514 $ 381,858 Liabilities, convertible preferred stock, and shareholders' equity Current liabilities: Accounts payable $ 61,741 $ 58,741 Accrued expenses 22,480 19,748 Current obligations under long-term debt 1,936 1,917 Deferred revenue 3,975 1,990 Total current liabilities 90,132 82,396 Long-term liabilities: Long-term debt, less current portion 36,353 36,746 Other noncurrent liabilities 8,471 8,965 Total long-term liabilities 44,824 45,711 Total liabilities 134,956 128,107 Commitments and contingencies (Note 14) Convertible preferred stock: Series A convertible preferred stock, 900,000 shares authorized, 385,782 and 385,782 issued and outstanding, with liquidation preferences of $ 23,590 and $ 23,301 at September 30, 2025 and June 30, 2025, respectively 2,720 2,720 Shareholders' equity: Common stock, no par value, 640,000,000 shares authorized, 73,693,758 and 73,289,054 shares issued and outstanding at September 30, 2025 and June 30, 2025, respectively — — Additional paid-in capital 488,557 486,759 Accumulated deficit ( 236,845 ) ( 235,926 ) Accumulated other comprehensive income 126 198 Total shareholders' equity 251,838 251,031 Total liabiliti

View Full Filing

View this 10-Q filing on SEC EDGAR