TransAct Technologies Incorporated Q3 FY2025 earnings call

Management Statement and Operational Highlights

• BOHA! Terminals: Sold 1,591 units in Q3, with year-to-date total of 5,883 units (up 58% from prior year). Acquired perpetual license to BOHA! source code for $2.55 million, with launch expected in early 2027.
• Foodservice Technology: FST net sales up, recurring revenue up, and momentum from go-to-market improvements. Secured rollouts with a large sushi franchise (1,000+ locations) and a convenience store chain (81 locations).
• Casino and Gaming: Sales up year-over-year but expecting fourth quarter deceleration due to macroeconomic factors. International market strong, and Epic TR80 thermal roll printer expected to be a larger contributor in 2026.
• Financial Outlook: Maintaining full-year revenue guidance of $50 million to $53 million. Adjusted EBITDA expected to range from breakeven to positive $1.5 million for the full year, assuming no major disruptions. Balance sheet strong with $20 million cash.

Segment Performance

• Foodservice Technology (FST): Third quarter net sales were $4.8 million, up 12% year-over-year. Recurring FST revenue was $3.3 million, up 13% year-over-year. ARPU for Q3 2025 was $792, up 13% year-over-year.
• Casino and Gaming: Third quarter net sales were $7.1 million, up 58% year-over-year but down 7% sequentially.
• POS Automation: Third quarter sales were $399,000, down 65% year-over-year from the prior year period.
• TransAct Services Group (TSG): Third quarter sales were $792,000, down 8% year-over-year.

Guidance

• Maintaining full-year revenue guidance of $50 million to $53 million.
• Adjusted EBITDA expected to range from breakeven to positive $1.5 million for the full year, assuming no major disruptions in supplier or demand.
• Inventories expected to tick up in Q4 2025 and 2026 as they restock new products in anticipation of growing future demand.

Risks

• Domestic casino market facing headwinds, leading to expected fourth quarter deceleration in casino gaming sales.
• Tariff situation is a fluid situation that may impact costs, though no further price increases planned currently.

Question and Answer

• Q: Update on casino gaming sales compensation and competitive landscape A: Sales compensation plan incentivizes net new customers and competitive wins. There's a duopoly in the market, but TransAct focuses on winning new deals with better product and services.
• Q: Magnitude of fourth quarter impact on casino gaming A: Not publicly disclosing the magnitude, but demand weakness is already seen and expected to continue in Q4.
• Q: Pipeline and new logo sales in FST A: Sales cycles are long and lumpy. Pipeline is sufficient, focusing on go-to-market and lead generation to improve funnel metrics.