Q2 2025 Cantaloupe Inc Earnings Call
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Hello, Thank you for standing by.
Welcome to the kind of low second quarter.
Yes.
Yes.
Speaker Change: For this call at this time, all participants are in a listen only mode.
Speaker Change: After the Speakers' presentation, there'll be a question and answer session.
Speaker Change: I'll ask a question.
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Speaker Change: Also please be reminded that this call is being recorded.
Speaker Change: I'd now like to turn the conference over to your Speaker for today Mcnamara you may now begin.
Mcnamara: Thank you good afternoon, everyone and welcome to the <unk> second quarter earnings Conference call with me on the call today is Rob you laid out there.
Speaker Change: <unk>, Chief Executive Officer, and Scott to watch Chief Financial Officer before we begin today's call. It 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.
Speaker Change: Certain factors, including but not limited to business financial market and economic condition.
Speaker Change: Discussion of the risks and uncertainties that could cause the actual results to differ materially from such forward. Looking statements is included in our filings with the SEC and in the.
Speaker Change: Press release issued earlier today listeners are cautioned to not least undue reliance on any such forward looking statements, which reflect management's views only as of the date they.
Speaker Change: Got to do by the states 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 fill it didn't non-GAAP financial measures that we believe are useless for among other things evaluating canceled due to the operating results. These non-GAAP.
Speaker Change: So the 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 the reconciliation between non-GAAP financial measures as well as the most comparable GAAP financial.
Speaker Change: The measures can be found in our press release issued this afternoon, which has been posted on the Investor Relations section of website at Www Dot cantaloupe dot com and with that I would like to turn the call over to Robyn. Thank.
Robyn: Thank you Magnus and good afternoon, everyone and thank you for joining us today for our second quarter fiscal year 2025 call.
Robyn: I'll first start with a high level view of our Q2 performance.
Robyn: Then talk about our fiscal year 'twenty five second half priorities before turning it over to Scott to dive deeper into the numbers and our outlook.
Robyn: Q2 financial highlights.
Robyn: In the second quarter, our total revenue increased 13% year over year to $73 $7 million, driven by 17% year over year transaction revenue growth.
Robyn: 14% year over year subscription revenue growth.
Robyn: Total adjusted gross margin for the quarter was 41, 7% compared to 37, 2% in the same quarter last year.
Robyn: Adjusted EBITDA for Q2 was $10 7 million or 26% increase compared to prior year, reflecting continued success with our strategy of expanding operating leverage.
Robyn: Now on to our Q2 operating highlights we can.
Robyn: Continue to see strong growth in micro markets and penetration of seed software with existing as well as new customers.
Robyn: We gained momentum with customers going all in with US. An example, its premier food service, who signed an agreement to replace all competitive micro markets with catalog solution and in parallel signed up to go all in with seed software.
Robyn: New customer wins include Evs, threatening who placed an order for several micro markets, including interestingly some geos to replace a full service restaurant at a furniture store located in the southwest region.
Robyn: This supports our hypothesis that kiosk based markets and our newest innovations like spark stores continue to provide more modern self service solutions to an ever expanding set of location types.
Robyn: Our premier and self service payment acceptance and telematics devices continuing to lead the market in North America. For example, Berkshire Foods recently replaced many competitive devices without engage and engage combo units workshop foods continues to grow with our solutions.
Robyn: Evident thing that one reliable trusted partner is key for our growing business to drive greater efficiencies.
Robyn: We're also seeing other vertical C 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.
Robyn: Another example is outdoor vending solutions, we acquired a significant number of our G 11, CDM devices to be placed at Lowe's distribution centers on legal Rhino propane self service machines.
Robyn: On the indirect channel side, we worked with avs to secure a large event in Q2 for our latest engaged bulk units that'll be a game changer for the amusement sector.
Robyn: Allowing customers to purchase multiple play credits in a single transaction through an interactive app that runs on the engage device.
Robyn: To highlight some wins and sports and entertainment.
Robyn: In the enterprise space, we added the San Jose earthquakes at Paypal Park.
Robyn: To be the point of sale provider for all games and events at the stadium. This.
Robyn: 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 trained 25 season.
Robyn: Our integration of SB software and cross sell wins are performing in line with expectations. For example, we debuted at the vet index not event in November our integrated solution for our customers and showcased for the first time smart stores along with Andrea.
Robyn: The next generation of brand manager at <unk>.
Robyn: Enterprise software solution that sells the UK and Ireland market.
Robyn: We secured refresh collector theres, a new win manager customer and successfully implemented them onto the platform.
Robyn: In addition, we secured multiple smart store and cashless devices across a variety of UK customers.
Robyn: In Mexico, we secured a win with one of our largest vending customers deploying micro markets for Burton our focus in Q2 was to deploy and maximize transactions from connections sold previously and we've executed very well on this objective growing transaction volumes across our cashless.
Robyn: <unk> in that region.
Robyn: Moving onto the product side with <unk>.
Robyn: Launched and deployed new models for our innovative smart store Cds, the cantaloupe Smart stores 607 hundred 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 <unk>.
The shortages tariffs.
Robyn: And to engage.
Robyn: While maintain in a seamless and inclusive consumer experience.
Robyn: The solution takes us into self service commerce opportunities well beyond our traditional market Mitch a perfect example of how we are leveraging the solution to extend into retailers is with our partners at guys, which is the parent company of U S. Patriarch <unk>.
Robyn: Our sandoz.
Speaker Change: As president of military operations that golf stated the <unk> 700 door has been a game changer for us exceeding all expectations, we can stock a diverse range of retail products and reduce our labor cost.
Robyn: While maintaining a high standard of security.
Robyn: We're also able to create additional brand amendments with customized marketing apps on eat smart store.
Robyn: <unk> seen an incredibly positive response from our customers who appreciate the on demand access to products like cap steps headlamps batteries, flashlights notepad socks and more.
Robyn: Because of its success, we plan to expand to March towards across all our U S Patriot locations.
Robyn: Within the first few months of launching this product we sold several hundred smart stores that additional expanded store configurations.
Robyn: <unk> placed a trial or acquired solutions and more public environments, such as auto dealerships colleges and universities senior living facilities.
Robyn: Eventual complex is in more.
As part of our strategy to develop and launch more add on products.
So in particular, our SMB customers, we launched our micro lending services under the brand of catalog capital in partnership with Sandbox.
Robyn: We are 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 in micro markets. They need to deploy that next location at all competitive rates.
Robyn: We launched our cantaloupe advantage program.
Robyn: Which allows brands to engage with consumers through digital advertising at the point of sale touch screen devices.
Robyn: The program's first collaboration was in partnership with Mastercard aimed at supporting the priceless planet correlation and its objective to plant 100 million trees around the world.
Robyn: The campaign ran across a variety of cantaloupe card readers and micro market kiosks delivering over a million impressions within the first 10 weeks.
Robyn: Fiscal year 'twenty five second half priorities will be to continue expanding operation support internationally.
Robyn: Specifically in Europe, and Latin America to allow more rapid scaling.
Robyn: We will also continue to refine our go to market strategy across board.
Robyn: And indirect channels to expand our customer base organically and through strategic acquisitions.
Robyn: I am pleased with our second quarter of fiscal year results and remain excited about the future of channel as we execute on our vision to be the global technology leader that power cell service Commerce.
Robyn: Wanted to thank the entire it's analog team for their continued focus on execution, which led to a solid quarter.
Robyn: With that Scott will now review, our Q2 results in more detail as well as our outlook for fiscal year 'twenty five Scott.
Scott: Thanks, Ravi as Robin mentioned, we delivered another strong quarter.
Scott: Our Q2 'twenty five revenue was $73 7 million up 13% compared to Q2 'twenty four.
Scott: Our combined transactions subscription revenue grew 16% to $65 4 million during the quarter.
Scott: This includes $27 million of subscription revenue.
Scott: Our year over year increase of 14%.
Scott: And $44 4 million of transaction revenue, an increase of 17% compared to Q2 2004.
Scott: The overall increase in transaction revenue was driven by the continued move from cash to cashless payments and the trend of higher average ticket sizes due to product mix shift.
Scott: Subscription revenue growth was largely driven by our strength in micro markets, which continues to be our fastest growing segment.
As of December 31, 2024, we had over 32000 active customers and $1 3 million active devices, an increase of 10% and 4% respectively compared to the prior year.
Scott: The average revenue per unit or <unk> for Q2, 'twenty was $202 up 12% from the prior year period.
Scott: As a reminder, this is defined as our total subscription and transaction fees for the trailing 12 months divided by the average total active devices for the same period.
Scott: Our equipment revenue was $8 6 million a decrease of 7% compared to Q2 FY 'twenty four.
Scott: Total gross margin for the quarter was 41, 7% compared to 37, 2% in the same quarter last year, driven by continued expansion of our transaction margin.
Subscription adjusted gross margin was 89, 7% versus 89% in the prior year and transaction gross margin was 25, 6% versus 21, 1% in the prior year.
Scott: This increase was driven by better cost management and improved transaction growth.
Scott: Gross margin on equipment revenues for Q2, FY 'twenty five increased to nine 1% from one 8% in the prior year.
Scott: Total operating expenses in Q2, FY 'twenty for us.
Scott: Increased to $24 5 million compared to $20 7 million in Q2, FY 'twenty four.
Scott: The increase was largely due to expenses incurred by the companies we acquired in the past 12 months check NFC thoughts.
Scott: Net income applicable to common shares for the quarter was $5 million or <unk> <unk> diluted earnings per share compared to net income of $3 1 million or <unk> <unk> diluted earnings per share in the prior period.
Scott: Adjusted EBITDA was $10 7 million in the second quarter compared to $8 5 million in the prior year period, an increase of 26%.
Scott: We ended the second quarter with cash and cash equivalents of $27 7 million.
Scott: As we mentioned in our previous call the decrease in our cash balance compared to our year ending balance as of June 32024 is due to the timing of payments made to our customers for transaction processing.
Scott: This normalized in Q2 25.
Great growth in our operating cash balance for the quarter we.
Scott: We anticipate cash from operating activities to grow throughout the rest of the year in line with the guidance we provided.
Scott: Continuing with the balance sheet, we have recently refinanced and Upsized our credit facility.
Scott: The facility provides for $40 million term loan.
Scott: A $30 million revolving credit facility and a $30 million delayed draw term loan for a total of $100 million.
Scott: Growth and profitability, we have experienced over the past several years has allowed us to secure the facility with very competitive rates.
Scott: This strengthens our balance sheet and provides flexibility for future uses of capital.
Scott: The proceeds from the $40 million term loan were used to repay borrowings under our previous term loan and revolving credit facility.
Scott: The company has not borrowed against the new revolving credit facility or the delayed draw term loan.
Scott: Now turning to our fiscal year 2025 guidance.
Scott: As we said on our last earnings call and based on what we see today, we are reaffirming the following.
Scott: Total revenue to be between 308 at $322 million representing growth of 15% to 20%.
Scott: We expect transaction and subscription revenue to also be in the range of 15% to 20%.
Scott: We expect total U S GAAP net income to be between $22 million and $32 million.
Scott: Adjusted EBITDA to be between $44 million of $52 million.
Scott: And total operating cash flow is expected to be between $24 million at $32 million.
Scott: With that I'd now like to turn the call back over to the operator for the Q&A session operator.
Scott: Thank you.
Scott: As a reminder, if you would like to ask a question. Please press star one on your telephone.
Scott: We also ask that you. Please wait for your name and company should be announced before you proceed with your question one moment, while we compile the Q&A roster.
Speaker Change: The first question that we have today will be coming from the line of Chris Kennedy.
Speaker Change: I just wanted to ask Larry.
Speaker Change: Good afternoon.
Speaker Change: Good afternoon. Thanks for taking my question and appreciate all of the new detailed in the supplement.
Speaker Change: Can you just talk about the average revenue per unit and how that's evolved.
Speaker Change: It's got to be driven kind of by your business mix going from traditional vending to micro markets.
Speaker Change: <unk> stores, what have you and how your average ticket price has gone up can you just talk about the evolution of your business. Please.
Speaker Change: Please.
Chris: Yes, sure Chris happy to do so and thanks for the question.
Chris: So overall, we have seen a lot more growth related to the transaction processing. It is due to the fact that we are processing that our average ticket size.
Chris: It's gone up significantly over the past couple of years.
Chris: When we laid out at Investor day back in December of 2022, we've listed out.
Our customer was to buy every product that we offer.
Chris: At our list price that would get up to $400 per unit that still holds true.
Chris: <unk> shifted a little bit more and probably could go up a little bit higher based off of the transaction processing and then with some of the new software that we've released like our Pic easy product Nrc's analytics.
Chris: Hey, Chris and you add to that we have.
Chris: It also had.
Speaker Change: Sales strategies be very intentional about what are the locations, we are deploying our solutions into and out of those locations.
Speaker Change: We can maximize revenue not just what our customers would consequently for us. So so part of it has been to make sure. We are not going after marginal customers and lower potential revenue locations.
Speaker Change: Understood. Thank you and then any update on your international strategy and can you just remind us what your business mix is U S versus international Thanks for taking my questions.
Speaker Change: Yes, we continue to track well on the on the international side, but in the case of Latin America in particular, we did a little bit off.
Speaker Change: Take a couple of steps back to be able to leap forward. We had sold some fairly nice deals and we wanted to make sure that those deployments were very robust and working as well as they possibly could and that we were maximizing the number of transactions that came through from all of those locations. So thats been.
Speaker Change: A tweak now we have kind of passed that stage, where again in a more of expanding the footprint and in both Latin America and EMEA. We've also had.
Speaker Change: Some nice wins in the last quarter in micro markets as well.
Speaker Change: As you know has been.
Speaker Change: Kind of an appealing new segment of our business.
Speaker Change: Other than that in terms of mix, it's really largely stayed the same we think it will accelerate further.
As we execute on our second half priorities, but as of now we are tracking to kind of the same mix, which is it's under under 5%.
Speaker Change: Got it thank you.
Speaker Change: Yeah.
Speaker Change: Thank you one moment for the next question.
Speaker Change: And our next question will be coming from the line of Gary Christina.
Speaker Change: Barrington Your line is open.
Speaker Change: Hi.
Speaker Change: Good afternoon Scott.
Scott: Couple of questions here first of all on this new.
Scott: Lending micro lending that you're doing through cantaloupe capital.
Scott: Are you you're originating whatever loan you are I would assume it's for equipment or whatever.
Holding that paper or do you sell that to your partner that I could write a name down there could you explain how this works.
Scott: Yes, we don't hold any other paper and.
Scott: And we don't even.
Scott: Right.
Scott: The loans the way. This is done is through as you rightly pointed out to a partner.
Scott: The nuance there is we are able to offer customers, who are really used to coming to seed software in particular as kind of their ERP and they'll go to system.
Scott: A very convenient way to go through a few questions point and click and then get approved for a loan.
Scott: And from a partner that they trust, which has us so it's sort of us being the gateway.
Scott: This process as a lot of comfort to our customers and also makes it easier because of our knowledge of their business and their knowledge of our.
Scott: Brand and reputation.
Scott: Okay.
Scott: Are you finding that at times some of your smaller clients.
Scott: Maybe as you're going more upstream on the equipment side they were capital constrained.
Scott: <unk> would help them to.
Scott: To grow there you hit that you hit the nail on the head you had been nail on the head that is exactly why.
Scott: We did this in fact it was.
Scott: This initiative has been on.
Scott: Our road map for almost a couple of years, we've just been working really hard to find the right partner the right solution the right user experience, which matters a heck of a lot, especially when you get to that.
Scott: Small and medium business segment.
Scott: And yes, the <unk>.
Scott: Aim was to free up capital constrained so that.
Scott: Our customers can buy more micro markets more cashless payment devices and subscribe to more seats software that's ultimately our goal.
Speaker Change: Okay and you are not on the hook for anything that I, just want to make sure I'm clear on that.
Speaker Change: That is correct.
Ravi: Okay, and then I just just from some of your narrative Ravi It strikes me as that.
Ravi: Really the growth here is being driven by micro markets in a big way.
Ravi: Could you just segment it out.
Speaker Change: Is it micro market smart stores, and then seed software I mean, just just could you maybe lay out what are some of the key growth drivers, where you're having a lot of a lot of success with your product lines.
Speaker Change: So we've got as you have seen healthy growth in both components of our recurring revenue in that transaction and payment processing as well as the.
Speaker Change: The subscription revenue.
Speaker Change: On the subscription revenue growth is largely driven by an expanded footprint of micro markets. The new smartphone product, but also newer locations and and what I would call a mix shift in the locations thereof.
Speaker Change: Products are place so as I as I mentioned earlier, when we go from potato chips to Cob Salads, then location becomes more valuable than what we earn from that location becomes more valuable.
Speaker Change: Similar factors applied to their transaction payment processing, because again as we deploy smart stores in our marketplaces.
The revenue that's generated on transactions per location is significantly higher than that makes it keeps improving.
Speaker Change: <unk> keeps improving so that's.
Speaker Change: That's a growth driver in itself.
Speaker Change: We're also seeing now, particularly with smart store that the location types that we addressed historically, that's where corporate break rooms.
Speaker Change: In some cases certain other locations have drastically expanded now we are in universities and hospitals, we have in car dealerships, we have an assisted living centers.
Speaker Change: All kinds of new locations, which is exciting to me and bodes really well for the future of Campbell.
Speaker Change: Okay, great. Thank you so much for answering those questions.
Speaker Change: Thank you one moment for the next questions.
Speaker Change: And the next question will be coming from the line of Mike Latimore.
Speaker Change: Of Norse capital I'm, sorry, Northland capital. Please go ahead.
Mike Latimore: Alright, great. Thanks, a lot.
Speaker Change: Great job on the margins and EBIT growth again here.
Speaker Change: On the subscription and transaction gross margin.
Speaker Change: Continues to improve as this kind of a sustainable level.
Mike Latimore: Hey, Mike Thanks for the question so.
Mike Latimore: We feel absolutely as a sustainable level.
Mike Latimore: Continue to see increases, especially as it relates to the transaction gross margin.
Mike Latimore: When you look at what makes that up.
Mike Latimore: You've seen over the past 18 months as increase in our take rate.
Mike Latimore: When you look at it sequentially, it's pretty even with where it was last quarter I think we've kind of tapped out on increase in the take rate, but we continue to get benefits from the cost reduction measures that we've taken and a lot of the.
Mike Latimore:
Mike Latimore: <unk> and cost savings that we've done there we've contingencies benefit from.
Mike Latimore: Then as the average ticket prices a little bit higher because there is a fixed fee component to our pricing.
Mike Latimore: Will also help increase the margins.
Speaker Change: Okay excellent.
Mike Latimore: And then.
Mike Latimore: Subscription growth the subscription growth rate improved a little bit this quarter sounds like micro markets.
Mike Latimore: The driver of that.
Mike Latimore: I would imagine micro markets and further enhanced by smart stores will continue to benefit subscription I mean should we think about subscription growth rate.
Mike Latimore: Kind of improving from here.
Speaker Change: Yes, so we did see good acceleration at this quarter last quarter, we are at 11, 5% year over year growth this quarter at 14, 1%.
Speaker Change: The guide that we gave for this year it was 15% plus.
Speaker Change: In line with that guide that we provided.
Speaker Change: Great.
And then.
Speaker Change: Throughout the year.
Speaker Change: And I guess, just maybe similar but transaction dollar volume growth I think was 15, 5% that also improved from the first quarter.
Is that tied to micro markets as well.
Speaker Change: Micro markets and smart stores that's correct.
Speaker Change: Okay.
Our operators are really pushing to sell more refresh stage.
And with that that has a higher ticket price.
Speaker Change: Alright.
Speaker Change: Okay and I should.
Just to make sure we don't over index on the micro markets in the smart stores.
Speaker Change: There is.
Speaker Change: A new category, which we call internally smart retail.
Speaker Change: Smart vending if you will and there is a phenomenon of selling more headphones and electronics and cosmetics and pharmaceuticals et cetera out of smarter newer generation vending machines and that also contributes to higher ticket sizes and higher transaction values as well as volumes.
Speaker Change: Okay.
Speaker Change: Makes sense. Thank you.
Speaker Change: Yes.
Speaker Change: Thank you as a reminder, if you would like to ask a question. Please press star one on your telephone one moment. Please.
Speaker Change: Our next question will be coming from the line of George Sutton of Craig Hallum. Your line is open.
Speaker Change: Thank you.
Speaker Change: Just a clarification on the micro lending program given that you have cantaloupe one.
Speaker Change: Just curious is there a certain customer scenario, where you would look to do one versus the other does this suggest any changes and cantaloupe one.
Speaker Change: Thanks, George that's a really good question and clarification. These are aimed at very different use cases, so cantaloupe warners.
Speaker Change: Primarily aimed at somebody using a 100% of our solution and finding a way to scale back without sort of.
Speaker Change: Stretching their balance sheet is the best way I can put it.
Speaker Change: The micro lending product that we have launched goes well beyond that so our.
Speaker Change: Our customers can use that to fund working capital they can use that to fund new equipment purchases and so they can they can use it for several things that go beyond just our cashless payment devices, our micro markets et cetera, and so in that sense. It's.
Speaker Change: It's a broader canvas if you will.
Speaker Change: Understand okay. That's very helpful. And then you had mentioned Ranbaxy.
Speaker Change: Next north so can you just give us a sense of the feedback you've got from.
Speaker Change: Uh huh.
Speaker Change: Both partners and customers with the new product that you showed them.
Speaker Change: Well exceedingly positive.
Speaker Change: It's a rare scenario of a product where.
Speaker Change: The demand is far ahead of where we anticipated and so.
Speaker Change: We're almost we're working to ensure that the pace of scaling as the rate peso scaling but.
Speaker Change: The feedback in North America has been great and now with <unk> in Europe has been phenomenal as well.
Speaker Change: And then just and then one of the drivers it solves for sorry, the real driver is it solves for theft.
Speaker Change: The challenge historically with vending machines has been that they have been perceived as ordered especially the coil based vending machine and even though the modern form factors are better received the historical challenge of micro markets has been turfed. So they do very well in high trust locations like corporate break rooms.
They do poorly in low trust locations like a transit station et cetera.
Speaker Change: Theres more tendency to to have perfect.
Speaker Change: And now with retail theft, clicking up more and more the <unk>.
Speaker Change: Smart store has been very well received as a kind of solution thats all for all these constraints.
Speaker Change: Got you just one other thing relative to your.
Speaker Change: Cantaloupe advertising that you the program that you launched and you mentioned the $1 billion impressions can you give us a sense of what is the economic benefit to you from that how do you charge for that.
John: Yes, so John.
Speaker Change: Orange.
Speaker Change: There are two or three different models, so that our market places, where we can list quarter on quarter, our screens and they added.
Speaker Change: Therefore me laser based on per impression, it's highly automated and and.
Speaker Change: And fairly standard business model and we sure.
Speaker Change: Canoe streams with our customers as well who operate those locations. There is another model, where its bespoke campaigns and bespoke advertising that's either from.
Speaker Change: An interested party, who wants to reach those audiences or a manufacturer of.
Speaker Change: Products that are sold out of those locations of machines and there.
Speaker Change: It's more custom pricing and more custom deals because the impressions are relatively more valuable to them and and it tends to be based on the number of people walking through location that will actually cast their eyes on that then so.
Speaker Change: Ultimately it boils down to impressions, but those are the broad two models in the marketplace based model and that is a.
Speaker Change: Custom vivo or sell the publisher of the advertising on X model in both cases, we use this as a way to increase the revenue our customers derive from their existing platform.
Speaker Change: Got you perfect. Okay. Thanks, guys.
Speaker Change: Thank you.
Speaker Change: Thank you one moment for the next question.
Speaker Change: And our next question will be coming from the line of Josh Nichols of B Riley. Your line is open.
Josh Nichols: Yes, Thanks for taking my question and good to see the acceleration.
Josh Nichols: In subscription and transaction fee growth quarter over quarter.
Josh Nichols: Just kind of curious if you could provide a little bit more color I know you reaffirmed the guidance, but it was a relatively wide range at least on the top line between the low and the high end is that driven mostly by like.
Josh Nichols: What's going to happen in terms of equipment sales for the back half of the year and what's kind of the delta between those two if you could elaborate a little bit please.
Josh Nichols: Yes sure so.
Josh Nichols: That is right. It is mostly driven by the larger equipment sales in the back half of the year with.
Josh Nichols: With the smart stores that we launched were selling the entire store itself. So it's not a $250 point of sale devices.
Josh Nichols: 12, $15000 smart store.
Josh Nichols: And as those ramp up we're expecting the equipment revenue to ramp up in the back half of the year, especially as we get to the fourth quarter.
Josh Nichols: But with that in mind still keeping the.
Josh Nichols: Transaction and subscription revenue growing somewhere between 15% to 20%.
Josh Nichols: Got it that makes sense. So then you've continually come up above expectations in terms of the profitability. When you look at like the EBIT trend over the last few quarters. It's been up significantly I know you reaffirmed 44 to 52, but given the margin profile that you guys.
Josh Nichols: Our scene it seems like you'd be hard pressed for those margins to come in like near the lower end of the range I'm just trying to think about how to think about the EBIT guidance for the remainder of the year given the <unk>.
Josh Nichols: Stability profile, which has improved pretty significantly over the last few quarters.
Josh Nichols: Yes.
Josh Nichols: As we've gone through the year, we're tracking right to the midpoint of our guidance and that's we're expecting towards the end of the year as well. So we have seen the increase in the margins that could be benefit towards as we get through the end of the year.
Josh Nichols: But everything that we see right now we're still going towards the midpoint of the guidance.
Josh Nichols: I appreciate it thank you.
Josh Nichols: Thank you. This does conclude the Q&A session I would like to go ahead and turn the call over to Ravi for closing remarks. Please go ahead.
Ravi: Thank you operator again I continue to be very excited about the future of cantaloupe. Both in terms of new products that we've launched and the adoption rates that we are seeing as well as continuing to penetrate the market with our best in class seed software as well as cashless payment devices.
Ravi: And telematics solutions, we appreciate the engagement and interest of our investors and with that we'll conclude this call. Thank you.
Ravi: Thank you so much for joining today's conference call you may all disconnect.
Okay.
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Ravi: Okay.
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