We came across a bullish thesis on Cantaloupe, Inc. (CTLP) on Substack by P14 Capital. In this article, we will summarize the bulls’ thesis on CTLP. Cantaloupe, Inc. (CTLP)’s share was trading at $8.12 as of May 2nd. CTLP’s trailing and forward P/E were 42.74 and 17.27 respectively according to Yahoo Finance.
A customer interacting with a point-of-sale terminal, demonstrating the impact of targeted loyalty marketing.
Cantaloupe Inc. (CTLP) stands out as a deeply compelling investment opportunity, particularly in the context of its recent share price decline from a 52-week high of $11.36. The drop, largely attributable to macroeconomic uncertainty and small-cap selling pressure, obscures the company’s strong fundamentals and unique positioning as a leader in the fast-growing self-service commerce space. Despite the near-term volatility, CTLP is poised to benefit from powerful secular trends, including increased adoption of micro-markets, smart unattended retail solutions, and cashless payments. Its most recent quarterly results reaffirm the strength of its business model, with robust growth across subscription and transaction revenues. In 2Q25, subscription revenue rose 14.1% year-over-year (Y/Y), while transaction revenue jumped 17.15% Y/Y, supported by a 10.43% Y/Y increase in average ticket sizes and stable take rates. These drivers also pushed average revenue per user (ARPU) up 11.15% Y/Y. The company’s SEED software platform continues to gain traction, with rising attach rates helping boost recurring revenue and customer stickiness. Management reaffirmed full-year guidance, targeting 17.5% Y/Y revenue growth, with strength in equipment sales in the second half—particularly from Smart Store units that carry high margins and are priced between $12K and $15K.
Beyond domestic tailwinds, Cantaloupe’s international expansion—especially in Latin America—offers underappreciated long-term optionality. Though rollout has been methodical, management is focused on disciplined execution and sustainable growth. Meanwhile, the company is exhibiting strong operating leverage. Adjusted EBITDA for the quarter rose 26% Y/Y to $10.7 million, with margins expanding to 14.5%, up from 13% a year ago. Transaction margins increased 4.5% Y/Y to 25.6% due to better routing efficiency and larger transaction sizes. Equipment margins also improved significantly to 9.1%, on track to reach 13.5% by FY28. Subscription margins remained healthy at 78.8%, leaving ample room for incremental gains. Active customers rose 9.6% Y/Y and active devices were up 3.5% Y/Y, reflecting accelerating adoption and growing penetration across both traditional vending and new verticals like sports stadiums, auto dealerships, and senior living centers. With its full-year revenue and margin outlook de-risked, CTLP is well-positioned for continued outperformance and offers an attractive entry point for investors looking for resilient, cash-generating growth stories.
Catalysts on the horizon further enhance the investment case. Cantaloupe is currently exploring strategic alternatives, including a potential sale or go-private transaction, with JP Morgan advising, according to a Reuters report from February 2025. This strategic review is timely, as the company’s financial improvements remain underappreciated by the market. CTLP is guiding for $48 million in adjusted EBITDA in FY25—a 41% Y/Y increase and a 69% CAGR since FY22. At current levels, the company trades at just 11.96x EV/EBITDA on FY25E, significantly below comparable transaction multiples. Even assuming modest upside in EBITDA to $49.5 million, valuation remains attractive at 11.59x. Given its high-margin recurring revenue, scalability, and clean balance sheet, CTLP fits the profile of a business that private equity firms actively seek in the payments and fintech space. Precedent investments such as Insight Partners’ stake in NMI and Providence Equity’s acquisition of 365 Retail Markets highlight strong interest in the category. Strategic buyers are also in the mix. Companies like NCR Voyix (VYX), which is repositioning its business and might look to bolster its self-service capabilities following the divestiture of its digital banking unit, could be logical acquirers, though leverage constraints may limit their participation. Shift4 (FOUR) and Crane NXT (CXT) are longer-shot contenders, but not entirely out of the question.
From a valuation standpoint, the current dislocation offers a compelling risk/reward setup. Capstone Partners estimates the average 2024 M&A EV/EBITDA multiple for payments companies at 18.6x, with comps suggesting a 16x–21x range. Applying an 18x multiple to CTLP’s FY25 EBITDA implies nearly 60% upside from current levels. Even in a no-deal scenario, the stock could re-rate to a 16x multiple, yielding a share price of $10.69 and 42% upside. Longer-term, a DCF model using a 10% discount rate and 16x exit multiple suggests intrinsic value of $12.80—over 70% above current levels. While a failed strategic review could temporarily pressure the stock, CTLP’s durable growth, solid execution under CEO Ravi, and strong financials provide a robust floor. Ultimately, with asymmetric upside tied to both organic growth and potential M&A, Cantaloupe represents a rare opportunity in the small-cap space with multiple paths to value realization.
Cantaloupe, Inc. (CTLP) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 19 hedge fund portfolios held CTLP at the end of the fourth quarter which was 17 in the previous quarter. While we acknowledge the risk and potential of CTLP as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than CTLP but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.
