Cantaloupe (CTLP: $6.26: NASDAQ) is a leading enabler of electronic payments for the unattended, low dollar value, point-of-sale (POS) transactions at vending machines and self-service laundry facilities. For context, Cantaloupe domestically processes over $2.6 billion in total annual payment value from the 1.2 million POS devices connected to the company’s cloud infrastructure. Recurring revenue constitutes 80% of its total, with the lion’s share derived from its $1.1 billion in POS transactions, and subscriptions making up the remainder. Investors may recall the company rebranded itself in 2021 from USA Technologies, changed management and embarked on a multi-year reorganization. Uneven results followed. However, recent growth initiatives, like improving penetration rates, acquisitions, and a more efficient cost structure are coalescing, creating the potential for accelerating top line growth and higher profits. Furthermore, Cantaloupe is expanding into adjacent verticals for which it is well situated like EV charging, entertainment and gaming, smart retail (such as pharmaceutical dispensary) and other IoT services. We are intrigued by this dynamic story which could benefit from post pandemic labor shortages, inflation, and the continuing consumer desire for convenience.
