Monica Gould - IR Steve Herbert - Chairman and CEO Priyanka Singh - CFO.

Bob Napoli - William Blair George Sutton - Craig-Hallum Gary Prestopino - Barrington Mike Latimore - Northland Capital Markets.

Good day, ladies and gentlemen. And welcome to the USA Technologies Third Quarter Fiscal Year 2018 Earnings Call. Currently at this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time.

[Operator Instructions] Also as a reminder, this conference call is being recorded. I would now like to turn the call over to your host, Monica Gould, Investor Relations for USA Technologies. Please go ahead. .

Thank you Steven, and good morning, everyone. Welcome to the USA Technologies' Third Quarter Fiscal 2018 Earnings Conference Call. With me on the call this morning is Steve Herbert, Chairman and Chief Executive Officer and Priyanka Singh, Chief Financial Officer.

Before we begin today's call, I 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 as a result of certain factors, including, but not limited to, business, financial, market, and economic conditions.

A detailed discussion of the risks and uncertainties that could cause actual results and events to differ materially from such forward-looking statements is included with our filings with the SEC and in the press release issued earlier this morning.

Listeners are cautioned not to place undue reliance on any such forward-looking statements, which reflect management's view only as of the date they are made. USA Technologies undertakes no obligation to update any forward-looking statements whether as a result of new information, future events, or otherwise.

This call will also include a discussion of certain non-GAAP financial measures that we believe are useful for, among other things, evaluating USA Technologies' operating results. These non-GAAP financial measures are supplemental to and not a substitute for GAAP measures such as net income or loss.

Details of these non-GAAP financial measures and the presentation of the most directly comparable GAAP financial measures and reconciliation between these non-GAAP financial measures, as well as the most comparable GAAP financial measures can be found in our press release issued this morning, which has been posted on the Investor Relations section of our website, www.usatech.com.

With that, I’d like to turn the call over to Steve Herbert.

Steve?.

Thank you, Monica, and good morning, everyone. Thank you for joining us to discuss our third quarter fiscal year 2018 results. I am going to start by updating you on our progress in integrating our acquisition of Cantaloupe Systems. I'll then provide a brief overview of the quarter and share some of our recent business highlights.

After my remarks, I'll turn the call over to Priyanka Singh, our CFO to discuss our financial results and guidance in more detail. Over the last six months, we made significant progress in integrating Cantaloupe into our organization.

Since closing the acquisition, we've substantially completed the integration of the work and personnel of all major functions within the combined enterprise. Based on our successful execution we were able to improve our L&T margin profile by swiftly and effectively leveraging our expanded service offering in the marketplace.

As such I am pleased to announce that during the third quarter we exceeded all of the long-term revenue margin target that we put in place less than six months ago.

Specifically in the third quarter we achieved total gross margin of 33%, L&T margins of 41% and equipment margins of 11%, compared to our long-term target of gross margins in the range of 27% to 30%, L&T margins of 36% to 40% and equipment margins of 8% to 10%.

Consistent with the vision we set forth earlier in the fiscal year, we now have an industry leading enterprise platform for the unattended retail market. This scalable platform supports our customers' requirement for cashless payment logistics, inventory planning and more.

Our platform also addresses the vending and micro market segment to our seed markets module, kiosk through QuickConnect and office coffee services through Seed Delivery. All of these end markets can be managed on our ePort Connect platform which makes our solution both versatile and sticky.

We are very pleased with the success we continue to achieve in cross selling our new cloud based analytic software into our existing USA key customer base. Moreover, we are seeing customers add multiple new services from our combined offering.

In the third quarter, we continue to sign agreements to add performance optimization elements of our cloud analytic software into their existing ePort Connect cashless payment base.

Key factors driving our customers' decision to rapidly adopt our new end-to-end platform for the potential to improve operational efficiency, achieve scalability, and maximize the investment they've already made in our market leading ePort Connect platform. Our largest cross-sell during the quarter was with a vending operator in the U.S.

Midwest who had previously transitioned to a 100% cashless on our ePort Connect platform.

In the third quarter, this customer purchased our entire suite of analytic software including Seed Pro and Seed Office for logistics in VMS replacing a competitor's VMS solution, as well as our seed markets micro market optimization solution and seed delivery which automates deliveries with a smartphone or tablet.

This implementation will allow this customer to fully leverage USAT's end-to-end enterprise platform for unattended retail, entirely replacing a competitor's legacy solution. Importantly, some of our cross selling opportunity opportunities also enabled us to expand our international presence.

As you may recall, we gained a small international footprint in Australia and Latin America via the Cantaloupe acquisition. We are working with a partner in Australia to deliver an EMV enabled payment solution for approximately 6,000 locations with the potential for additional locations over time.

We also won new business with a canteen franchise in Canada for the deployment of some of our combined services including EMV enabled cashless Seed Pro, Seed Office, Seed Delivery and seed markets. Again displacing a competitor solution with our end-to-end enterprise platform across nearly7, 500 locations.

With that I'd like to briefly recap our third quarter performance. Revenue increased 35% year-over-year on a GAAP basis, marking our 31st consecutive quarter of year-over-year revenue growth.

Given our increased scale and by continuing to leverage operating expenses, we were successful in converting this revenue growth to improving our non-GAAP profitability. We expanded our customer base in the quarter with the addition of 550 new customers bringing our total customer count to 15,600 on our ePort Connect service.

These new customers will continue to add both connections, as well as new services to existing connections and will drive our revenue and margin expansion over the coming quarters and years. Net new connections rose by 64,000 during the quarter bringing our total connection count to 969,000.

Over 650,000or sixty-seven % of our total connections are now NFC enabled. And we continue to maintain the largest footprint that accepts NFC based mobile payments controlled by a single entity in the United States if not the world. Our service continues to be utilized by consumers at an increasing rate.

We processed over 170 million transactions for approximately $318 million in value during the quarter. As a result, we exited the third quarter on an annual run rate of approximately $1.3 billion for transaction processing.

This momentum enabled us to further solidify our number-one market share position domestically and achieve the same globally in our largest end market in calendar 2017, namely connected vending machines. This is according to a study published in April by IoT research firm Berg Insight.

Moreover, our end markets continue to expand at a healthy pace reflecting the inflection point we're seeing in the adoption of cashless and cloud-based technology solutions in the unattended retail market.

For example, the global installed base of connected vending machines is expected to grow at a 16.2% kegger from 2.6 million units in 2017 to 5.4 million by 2022. And achieve a 32 % penetration globally according to Berg.

Moreover, the kiosk market which represents another substantial opportunity for our company an important vertical for us continues to expand at a healthy pace. According to payments.com, the US kiosk market is projected to reach $1 billion by 2021, led by the growth of food service self-serve kiosks, beverage self-serve kiosks and check-in kiosk.

As an example of our recent success in this market, we grew our QuickConnect connections which are predominantly kiosk based by more than 50% in the third quarter compared to the same last year. Growth in micro markets on our service drove much of this increase. Now I'd like to turn to some of our other recent business highlights.

We recently announced the expansion of our relationship with Ingenico with the completion of a three-year strategic alliance agreement.

We believe through our collaboration both organizations are well positioned to capture additional market share enter and proliferate new unattended verticals and help unattended retail merchants benefit from the power of IOT technology both here and abroad.

Our teams are now actively working together on a comprehensive go to market strategy and training each company's respective sales organizations on broad opportunities. In addition both companies have executive focus on high-priority near-term opportunities.

We're also working with Ingenico to expedite the launch of a combined cashless hardware and cashless payment services solution in North America. With this combined offering among other things, we can provide unattended retail operators the option of using Ingenico's innovative payment hardware via USAT's ePort Connect service.

Merchants can also gain access to automatic updates to payment software settings, security and point-of-sale insight data through our ePort Connect network. And the ability to layer on value-added services like consumer engagement, loyalty programs and payroll deduct.

Through this expanded partnership, we're able to offer vending and other unattended retail markets best-in-class payment solutions that accept new and emerging forms of payment. Along with USAT's ePort Connect suite of cashless payment, consumer engagement and loyalty services.

Lastly during the third quarter, we completed three very well-attended technology summits across the country, which were focused on educating both Cantaloupe and USAT customers about our new end-to-end enterprise platform, share success stories on how we can help them increase revenue and operating efficiencies, while decreasing cost and to discuss our technology roadmap In addition to the cross-training in education we offered, customers from both USA and Cantaloupe presented best practices, discuss the impact the services have had on their businesses and participated in panel discussions to an audience of their peers.

We also had several strategic partners including Apple provide a glimpse into unattended retail trends and where the industry is headed from a payments perspective, as well as how the consumer shift to self-service is both leveraging existing technologies and accelerating new advancements.

In closing, we are very pleased with the continued momentum across our business and the many opportunities ahead of us to pursue new unattended markets, driven by the growing tide of digital payment trends including the increased volume of mobile wallet transactions, and rising consumer demand for more unattended retail options that is giving rise to new, disruptive shock shopping experiences such as Amazon.gov.

We're pleased that we're quickly approaching the 1 million connection milestone to our service. It's a historic milestone for our company particularly just one year after crossing the 500,000 mark.

Looking forward, we intend to expand our presence across unattended retail markets to take advantage of the inflection point we're seeing in the adoption of cashless and cloud-based technology solutions, as a result of these trends. With that I'll now turn the call to Priyanka to provide a more detailed financial overview of our results.

Priyanka?.

Thank you, Steve and thanks to everyone for joining the call. I'm particularly pleased with our ongoing execution which has enabled us to deliver records third quarter financial results, while at the same time making considerable progress in further integrating Cantaloupe.

The strength and consistency of our business model is evident in our third quarter results. Total revenue grew 35% to $35.8 million. We also generated in almost 500 basis points expansion in our adjusted EBITDA margins as we benefited from significant operating leverage due to a growing scale.

We've also successfully executed an opportunity to further increase our margin profile as we integrate the two companies and achieve anticipated cost synergies. This quarter our gross margins expanded by more than 800 basis points to 33 %, reflecting our acquisition of Cantaloupe which added high margins recurring software revenue.

Gross margins were also favorably impacted this quarter by the lower mix of equipment revenue. At 41 % our L&T margins are expanding. This expansion is driven by a higher software revenue mix and also the best benefit from Cantaloupe accretive margin profile.

Our long-term customer contracts and diversified offerings provide us with a highly visible and high margin recurring revenue streams. With our stronger combined offering, we control the full technology stack creating more value generating relationships with our customers. We're also making tactical progress.

Our combined sales force is now actively selling the full suite of USAT and Cantaloupe products. Our customers' reaction is the most exciting part for us. It was evident at our recent technology summits that they recognized the potential of the new combined organization and this is a testament of the opportunities that we believe lie ahead of us.

Now I would like to briefly review USA Technologies' third quarter results and our outlook for the remainder of the full 2018. We had another strong quarter as we continue to drive top-line growth while expanding our profitability. Our total revenue increased 35% year-over-year to $35.8 million. Our non-GAAP net income doubles to $0.04 per share.

On a pro forma basis, total revenues increased 12% and license and transaction fees increased 25%. We continue to make strides in growing our connection base and customer count, as well as our diversified suite of services to an expanding customer base.

We added 64,000 net new connections in the third quarter bringing our total connection count to 969,000 connections, up 92% compared to the same quarter last year. And within a striking distance of our one million connection goal.

We also added 550 new customers and in the quarter at a total of 15,600, an increase of 26% compared to 12,400 in the same quarter of last year. With the growing customer base, existing customers accounted for 92% of our gross new connections in the quarter.

License and transaction fees increased 55% year-over-year to $27 million and accounted for 75% of our total revenues. Equipment sales were $8.8 million which decreased 2% year-over-year. This decrease was driven by a large equipment sale made to a strategic customer towards the end of the same quarter last year.

As we have stated in the past, equipment continues to be an enabler helping us to deliver high margin services to our end customers. In addition, we continue to experience quarter-over-quarter variability in equipment revenue depending on the mix of services sold in a given quarter.

For example, during the third quarter a portion of our cashless sales required a lighter configuration of equipment or no equipment at all, as we were successful in up selling our combined offering to Cantaloupe's existing telemetry only customer base.

These synergistic sales resulted in incremental higher margin L&T revenue, however, since only additional cashless readers were needed for these units it resulted in lower equipment revenues, while still maintaining equipment margins and driving higher software revenue for the future.

Another factor impacting equipment revenue in the third quarter was our continued growth in the kiosk space. As Steve mentioned, we have grown additions to our QuickConnect service which drives cashless conversion without any additional equipment sales by almost 50% this quarter compared to the additions made in the same period last year.

With equipment continuing to be just an enabler and not all these essential in newer verticals we grow in, we expect our gross margins to be favorably impacted by this trend as is in evident in our gross margin trends this quarter.

However, as in the past, we do expect variability in our equipment revenue and margins quarter-over-quarter depending on whether the sale requires a hardware unit or not. Now turning to margin. Our L&T gross margins this quarter was 40.7%, which is an almost 900 basis point expansions compared to USAT's standalone margin of 32% last year.

As I noted earlier, we have exceeded our long-term gross margin targets of 36% to 40% which we set just six months ago. We expect our L&T margins to continue to expand as we successfully drive additional services down the pipeline. Our equipment margin was 10.6% compared to 11.6% last year.

We continue to expect equipment margin to be in the mid to high single digits for the remainder of the full 2018.

At $4.3 million, our adjusted EBITDA more than doubled and regenerated almost 500 basis points expansion in our adjusted EBITDA margin, reflecting the scalability of our business, the strength of our revenue composition and the continued discipline around expense control, as well as the impact of achievement of cost synergies surrounding our acquisition.

Now moving to expenses. SG&A expenses for the third quarter were $9.6 million, or 26.7 % of revenue. Our SG&A expenses increase year-over-year due to Cantaloupe expenses as well as an increase in sales and marketing related expenses, as we continue to increase our market share.

We expect SG&A expenses in the fourth quarter to be similar to the trends seen in the third quarter. We also expect that SG&A as a percentage of revenue will experience variability driven by the equipment revenue trends. However, this quarter SG&A as a percentage of L&T revenue decrease 130 basis points compared to the second quarter of this year.

Based on the cost reduction actions that we have implemented, we have already realized $0.5 million of the announced $3 million annualized cost reduction measures. Our long-term target is to decrease SG&A expenses as a percentage of total revenue to the 15% to 20% range.

However, there will be variability depending on the hardware sales achieved within the quarter. Our adjusted operating income was $2 million compared to $0.5 million last year. Non-GAAP net income was $2.2 million or $0.04 per share, compared to $0.6 million or $0.02 per share last year.

This quarter we recognized the tax benefit of $2.1 million driven by a change in our overall expected tax rate resulting from a change in expected M&A expenses. Turning to the balance sheet. Net working capital totaled $14.6 million at the end of the third quarter, up from $5.8 million at the end of last fiscal year.

Our cash balance at the end of the third quarter was $17.1 million, up $4.4 million from the end of last fiscal year. Overall, we are very pleased with a successful integration of Cantaloupe and with the company's continued momentum enjoying our revenues, expanding our L&T margins and improving our profitability.

We continue to derive increases and connections from deeper penetration of existing customers and without compelling combined offerings we're able to expand our footprint with new customers as well.

We believe there are scalable financial models through our recurring revenue streams positions as well to capitalize on the growth opportunities ahead of us. Turning to our outlook.

Now that we are six months into the integration and additionally in life of [Indiscernible] regarding our strategy with respect to equipment sales, we now expect our full year fiscal 2018 revenue to be in the range of $138 million to $142 million.

However, with the expanding L&T revenue and associated margins and our Q3 performance, we are raising our adjusted EBITDA to be between $14.5 million and $15 million. We continue to believe that our total connections at the end of fiscal 2018 will range from 1.03 million to 1.07 million.

We also continue to expect the Cantaloupe transactions will be accretive in fiscal 2018 net of one-time transaction and integration expenses and any purchase accounting adjustments. This concludes our financial update. I will now turn the call back to Steve. Thank you..

Priyanka thank you very much. I believe now operator we will move to Q&A..

[Operator Instructions] Our first question comes from Bob Napoli of William Blair. Your question please..

Thank you and good morning. Nice job, Steve and Priyanka. First question just on the Ingenico partnership, on their call last week they mentioned a significant deal they signed in unattended segment that will ramp up along the year.

Is that just referring to the same agreement or is that a specific contract that you guys are rolling out together in the back half of calendar 2018?.

We believe they were referring to us--they didn't use a name but we're fairly certain they were referring to this same three-year strategic alliance..

Okay. And the large Midwest cross sell that you made.

Has that already rolled into the numbers or is that rolling in over the next and still to come?.

I think that's still to come..

Still to come, Bob..

Yes. They have some work to do. So that's still to come which points directly to Priyanka's comment about us believing that there'll be a continued expansion of the margin numbers and so forth particularly on L&T..

That's right..

I guess just as it relates to that, are you guys --are you thinking about updating your financial targets?.

That's a good question, Bob. Definitely, as we enter into fiscal 2019 guidance that we will provide towards the end of our Q4 earnings call. We will definitely look at updating our long-term guidance and all measures given the success that we've had in meeting most of them already..

Great and then just on Cantaloupe; the integration I mean are the cost saves --you had a small amount I guess in the current quarter. So we should get a full run rate of the cost saves? When and just on the growth side and this is more of a growth story than a cost save story I think on the Cantaloupe.

Do you have the team in place? I mean obviously one of the founders I think moved on.

I don't think that was a surprise but is the organization now -- are the expense energies complete, we'll see that next quarter and then from the growth perspective is the team in place?.

So I'll address the expense synergies and I'll let Steve address the team. On the expense synergies, Bob, we feel really good about having been able to realize cost savings and synergies so quickly in the game. And we had announced our Q2 earnings towards the beginning of February.

We had just completed that exercise and essentially well and we were able to see the results right away. There will be some amount of quartilization if you may of the additional savings that we will see in Q4 having the full quarter's benefit and obviously as we enter into fiscal 2019, we will see the full benefit of the synergistic actions in 2019..

Thank you, appreciate it..

And Bob regarding the team, yes, I've been around for a while and we just in my mind we just have a world-class team. We were sorry to see Mandeep go, one of the founders but he's -- the man is a serial entrepreneur and he wants to move on to his next thing which is fine.

But the team is very strong and I think it's probably important to note that his co-founder Anant Agarwal has actually relocated with his family to this area and he is doing exceptionally well. And there are other very strong executives that have joined the team. So we'll miss Mandeep but with all due respect him we have a very, very strong team.

And look forward -- we look forward to leveraging that team going forward for the shareholders..

Thank you. Our next question comes from George Sutton of Craig-Hallum. Your question please..

Thank you. I think one of the fascinating parts of this story is all the unattended opportunities that are getting created for a variety of different reasons. And I wondered if you can give us a sense of the breadth of the things that you're looking at and able to work with.

I mean we've talked about things like touch tunes and mini key, but I'm curious how broad are these opportunities and how are you attacking it from a sales perspective?.

Yes, thanks for the questions. George. We -- one of the areas that we're seeing significant growth in is in something that we call micro markets. And those are -- yes think of it as a small Amazon.gov. Of course, it's and one that doesn't cost many hundreds of thousands of dollars.

I don't know exactly what those things cost, but you've got some amazing technology. But we literally have thousands of these micro markets on our service and consumers are able to go in and really pick up anything they want.

It could be something along the line of food and beverage, but it could also be with the shifts we're seeing in retail; it could be things that we are typically buying in an attended fashion in retail.

So that's something that we expect to continue to grow as retail goes through what is nothing more than -- it's just -- it's something less than a major, major shake-up. And those retailers going to have to find new ways and cost us, more cost-effective ways to get to consumers. So we're seeing a lot of activity there and in other places as well..

Now if I look at the 550 new customers this quarter.

Could you give us a sense of the proportion that are related to unattended or the non traditional vending?.

Well I guess that the best number we could give you there is related to our QuickConnect connections which are -- they're just --they're not vending. They're for bio mugs, they're not vending. So they're kiosk oriented; it's a company trying to reach consumers in an unattended fashion including things like micro markets.

And Priyanka probably knows the exact numbers but I'm going to estimate here. I believe we added somewhere near 4,500 new connections in that part of our business, which was in the third quarter which was a 50% increase over prior year.

So that's a significant movement in business outside of that market and in addition outside of the vending market, in addition to that we're closing in on a 100,00 overall connections in that part of the business.

So it's -- and we've talked before I personally I have always been a fan, a big fan of the kiosk market as a very significant growth opportunity for us long-term, and it's nice to see this type of traction..

And last if could Priyanka I just want to make sure I understand the equipment strategy going forward particularly as Ingenico comes in as a large partner. Obviously, the equipment revenues were lower than expected which we could care less about but it's just an optical thing.

I want to make sure I understand so how you're thinking about equipment going forward?.

So on that George, equipment like you said right it's just an enabler for us. We think about it it's typically skewed in the second half of the year. So we do expect as you can see in our guidance; we do expect Q4 to be relatively stronger in terms of hardware related cashless sales.

And we expect that to stay out and specifically talking about Ingenico, we look at Ingenico as a great partner potentially no impact in fiscal 2018 in the fourth quarter, but as we get into fiscal 2018, we do expect to start to gain traction on equipment with that partnership similar to the way we have with our other equipment manufacturer.

And what really excited about Ingenico is we will now be able to source hardware within Ingenico, sell it internationally and be able to service it internationally in any part of the world. So I think that's going to be unique with the Ingenico partnership that we have not had so far..

Thank you. Our next question comes from Gary Prestopino of Barrington Research. Please go ahead..

Hi, good morning. Steve you mentioned cross-selling activities starting to pick up.

Is there any way you can maybe get to surround that with some metrics and then talk about what the pipeline looks like going forward?.

Well, I'll start with it the easiest one, Gary. Good morning by the way. The pipeline for that is really very significant. If you look at --but the largest cross sell opportunity is with USA technologies' existing base.

We have with today's count 15,600 customers on that service currently with almost a million connections and as we know those aren't fully penetrated. Those customers have anywhere between 2.5 and 3.5 million locations in total. So the pipeline if you can call it that; the pipeline is incredibly rich with customers that we already have.

So I don't want to be overly optimistic, but I would expect if the trend that we're seeing now continues, I would expect this to have more and more of an impact on our business going forward, not particularly on the hardware side but on the L&T side which of course we know is -- that's the crux of our business, that's the most important part.

So I hope that answers your question..

Somewhat. Let me phrase it another way, all right. If you've got one million connections right now, all right.

Realistically, how many of those potential connections are big enough to want to uptake the Cantaloupe cloud-based software in your opinion? Or is it all of them? Half of them? Three quarters?.

Yes. I would say there's a small percentage Gary that are --they're really small operators. Anyone with less than say 50 machines there that's a company that is it's simply not going to be able to leverage in enterprise platform.

They may be able to pick up one additional service, but when we think about selling two, three, four additional services that's we're moving farther up the food chain. But those smaller customers are --they're de minimus in terms of the million connections..

Okay, alright. And then Priyanka just to make sure I'm on the same page here. Starting in 2019, you're going to realize the full amount of the $3 million of cost savings. That is correct..

That is correct, Gary. That is correct. We saw some of it in this quarter that we just closed. We will see most of it in the current quarter in Q4 and then the annualization of the benefit we will see in the fiscal 219. .

In terms of that and I haven't modeled it out but in terms of the to 15% to 20% of revenues that you think SG&A expenses can get to, is that really a 2019 event or are we talking a couple of years down the road?.

That's a really good question, Gary. It really depends on our equipment sales.

If you think about a quarter like this a better metric is to look at SG&A as a percentage of L&T because you can see that quarter-over-quarter we've seen that go down, but because we had lesser Hardware related cashless sales that resulted in the optics of it looks like SG&A as a percentage of revenue has not moved.

It really depends in a quarter-over-quarter basis; there will be some variability but over a long term period if you think about a three to five year period annually we should be able to be in that range, in the 15% to 20% range..

And then the last question just deals with my last question the L&T margins. Have we hit a mark here of 40% plus that can be assumed to be sustainable going forward? And this is just on the L&T gross margin..

Yes. We do believe so Gary we've been working very hard on all sides of the equation. The sales team has done a fantastic job with the cross sell and we expect to see the benefit of that in the future quarters. On the cost side, we've been working very closely that our wireless providers, we're also looking at our card processing cost.

So we are looking on all sides of the equation to ensure that we continue to be in this range going forward. And we are very pleased that we were able to hit this milestone within six months of the acquisition when we have set this target for ourselves just six months back..

Thank you. Our next question comes from Mike Latimore of Northland Capital. Your question please..

Hi, thank. Excellent results.

I don't know if you can break the connections out this way but do you have either gross or net connections by cashless versus business optimization?.

Mike that's probably something we'd have to follow up with you on. Not at the fingertips right now but we can get a little bit more granular with you on a one-on-one call..

Okay, thanks.

And then you talked a little bit about I think selling cash percent to Cantaloupe existing kilometer base, is that a kind of a consistent ongoing opportunity or is that more you periodic?.

Well, it's significant, it's a significant opportunity the Cantaloupe came over with a few hundred thousand connections, the large majority of which did not have cashless.

So there is an opportunity there, there's a cross-sell opportunity there but by a wide margin the larger --not to minimize that, that's a good opportunity for us, but the other cross-sell opportunity is much larger, a million connections and the ability to sell in multiple new services a handful of them.

So but it's nice to have that cross-sell opportunity both ways..

Yes for sure.

And then I think in the past you talked about 30% to 40% ARPU selling Cantaloupe into the USA tech base that's still the right way to think about that?.

That is the right way to think about it, Mike. As we convert --so like Steve indicated, a big chunk of Cantaloupe connections are not cashless. So obviously they don't have the transaction processing run through which impact the ARPU from a transaction processing standpoint.

But as we get more success in the higher margin revenue, we do expect that to continue to grow..

And then just last Ingenico. I know this is a building a relationship but Steve you mentioned you're working with them on some high-priority items.

I guess can give a little more color on that? Is that --is it more the international market? Is that spending as a kiosk all the above?.

Yes. We've got our arms around vending pretty tightly. So what you'll see -- and first of all just answer the first question. Our initial focus with Ingenico will be in the North America market and then will start to venture out internationally. They're in approximately 130 countries.

So we have many to choose from and we have to sit down together and figure the priorities out but the near-term opportunities that we are focused on are very likely to be outside of vending perhaps a kiosk opportunity. One of their retailers maybe looking to get outside of the bricks-and-mortar that they're in right now.

They --as you can imagine they do business with virtually every major retailer in North America. So it would be opportunities like that that we'd be pursuing with them. They have terrific coverage and a wonderful brand and great support in those markets. So we're looking to play to our strengths there both fronts..

Thank you. This concludes our Q&A session. At this time, I like to turn the call back to Mr. Steve Herbert, CEO for closing remarks. Please go ahead..

Thanks very much to everyone for joining our call today. Before we close, I'd like to extend my thanks to our customers, partners, our shareholders for their continued support and enthusiasm.

I especially want to thank on behalf of the management team all of the employees in our combined company for their hard work and superior execution, particularly on the integration of the two companies. It's an honor to work with each of them each day. We're looking forward to updating everyone on our progress next quarter.

And hope to see many of you at some of the upcoming investment conferences we will be attending. And thanks again for your time. We sincerely appreciate your support and look forward to talking to you soon. .

Thank you, ladies and gentlemen, for attending today's conference. This concludes the program. You may all disconnect. Good day..