TransAct Technologies Incorporated Q1 FY2026 earnings call

Strategic Direction

• Primary growth focus is high-margin recurring software revenue in the FST vertical, replacing the historical model of one-time hardware sales with bundled free software. The company now owns its software, enabling direct monetization of the existing install base.
• Long-term target is $100 to $200 per machine per month in recurring software revenue across the growing install base, which management expects to unlock significant value.
• The company follows a land-and-expand go-to-market strategy, with targeted focus on high-potential sub-verticals including quick service restaurants (QSR), convenience stores, grab-and-go sushi, and corporate food service management, alongside disciplined cost management to maintain balance sheet strength.

FST Segment Operational Progress

• Sold 1,370 BOHA terminals in Q1 2026, mostly driven by upgrade orders from the company's 40,000+ unit installed base of older products. Added 1,062 new online terminals quarter-over-quarter, ending Q1 with 19,959 online terminals.
• Software revenue grew 23% YoY, confirming the strength of the recurring revenue strategy. Q1 2026 annual recurring revenue (ARR) was $3.3 million, and the company will begin reporting detailed ARR metrics quarterly going forward to improve transparency.
• Label sales are margin accretive, increase customer relationship stickiness with low attrition, and serve as a gateway to sell full BOHA suite solutions to new customers. 22 new logo accounts were added in Q1 2026, with approximately 1,400 potential future units.
• The software port to a new hosted platform is progressing ahead of schedule: the go-live date has been pulled forward from Q1 2027 to late Q2 or early Q3 2026. Ownership of the platform will enable future growth opportunities including an in-house or partner-sourced application store model for terminals.

Artificial Intelligence Positioning

• Management views AI as an accelerant for the business, reducing mundane developer tasks and freeing engineering capacity to build new applications for the FST platform.
• Transact's integrated hardware-software-application solutions model insulates the company from the competitive risks of AI that impact simpler standalone SaaS businesses. Its full offering including IoT sensors, printing capabilities, and system integrations is not easily disintermediated.

Organizational Updates

• A new Chief Marketing Officer joined in early January 2026, and has already delivered meaningful improvements to competitive positioning, brand messaging, lead generation, press cadence, and digital presence. A website update is underway to improve conversion, and management expects significant improvements in market presence moving forward.
• Longtime CFO Steve DiMartino is retiring after 30 years with the company, and will remain in a support role through the end of 2026.

Financial Operational Highlights

• Gross margin rose to 50.3% in Q1 2026, up from 48.7% YoY and 47.6% in Q4 2025, driven by strong casino and gaming sales. Adjusted EBITDA for the quarter was $1.4 million, compared to $544,000 in Q1 2025 and a negative $499,000 in Q4 2025. Net income was $800,000 ($0.07 per diluted share), up from $19,000 in the year-ago period. The company ended the quarter with $18.8 million in cash and $3 million in outstanding debt.

Transact Technologies reported total net sales of $14.4 million for Q1 2026, a 10% year-over-year (YoY) increase. The performance of each segment is as follows:

• Food Service Technology (FST): Net sales of $4.7 million, down 4% YoY and down 2% sequentially from Q4 2025. Recurring FST revenue (including software, support, and labels) reached $3.3 million, up 26% YoY. Label sales specifically hit $2.6 million, up 26% YoY. This segment accounts for approximately 32.6% of total net sales.
• Casino and Gaming: Net sales of $8.3 million, up 24% YoY and up 55% sequentially from Q4 2025. Domestic sales grew 20% YoY, while international sales grew 35% YoY. This segment accounts for approximately 57.6% of total net sales.
• POS Automation (Ithaca 9000 printer): Net sales of $620,000, essentially flat YoY. This segment accounts for approximately 4.3% of total net sales.
• Transact Services Group (TSG): Net sales of $764,000, down 5% YoY. The decline is driven by the wind-down of the legacy installed base and near-complete liquidation of legacy thermal POS paper inventory. This segment accounts for approximately 5.3% of total net sales.

• Management reaffirms the full-year 2026 net sales guidance range of $55 million to $57 million.
• Management raised the full-year 2026 adjusted EBITDA guidance range to $1 million to $1.75 million, based on strong Q1 performance.
• Full-year 2026 gross margin is expected to remain in the high 40% range.
• TSG sales are expected to continue a slow, gradual decline as the legacy installed base winds down, with minimal to no revenue expected from legacy consumable products going forward.
• POS Automation sales are expected to remain in their current normalized range for the remainder of 2026.
• Casino and gaming sales, while lumpy quarter-to-quarter, are expected to continue contributing positive free cash flow for the full year 2026.

• Casino and gaming sales are inherently cyclical and experience quarterly lumpiness, though management notes the segment has historically bounced back from downturns and continues to grow long-term.
• The company notes that all forward-looking statements carry inherent risk, and actual results may differ materially from current expectations. A full list of risks is available in the company's SEC filings, including Forms 10-K and 10-Q.

No questions were submitted by participants during the Q&A segment. After the Q&A queue was confirmed empty, management opened the door for follow-up inquiries offline via the Investor Relations team, then closed the call.