Transact Technologies ((TACT)) has held its Q3 earnings call. Read on for the main highlights of the call.
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TransAct Technologies’ recent earnings call presented a mixed sentiment, highlighting both significant growth and notable challenges. The company showcased impressive sales growth in BOHA! Terminals and casino gaming, supported by a robust balance sheet. However, difficulties in POS Automation, domestic casino demand, and fewer new logo acquisitions than anticipated tempered the overall positive outlook.
BOHA! Terminal Sales Growth
TransAct Technologies reported a remarkable increase in BOHA! Terminal sales, with 1,591 units sold in Q3, bringing the year-to-date total to 5,883 units. This represents a 58% increase from the 3,732 units sold in the first nine months of 2024, underscoring the strong market demand for these terminals.
Foodservice Technology Revenue Increase
The company’s Foodservice Technology (FST) segment experienced a 13% year-over-year increase in net sales, reaching $4.8 million. Recurring FST revenue climbed to $3.3 million, resulting in an average revenue per unit (ARPU) increase to $792, up from $700 in the previous year quarter.
Casino and Gaming Sales Growth
TransAct’s casino and gaming segment saw net sales rise to $7.1 million, marking a 58% increase from the previous year. This growth was driven by a new OEM win and normalized buying patterns from major OEMs, highlighting the segment’s robust performance.
Strong Balance Sheet
The company maintains a strong financial position with $20 million in cash, providing ample working capital and flexibility for future growth initiatives. This solid balance sheet is a key asset for TransAct as it navigates market challenges and opportunities.
New Customer Wins
TransAct secured significant new customer wins, including a rollout with one of the nation’s largest sushi franchise operators, initially ordering 596 units. Additionally, a convenience store chain with 81 locations was added to the BOHA! customer base, expanding the company’s market reach.
Decline in POS Automation Sales
POS Automation sales experienced a significant decline, dropping 65% year-over-year to $399,000. This decrease reflects a normalization in sales levels due to competitive market dynamics, presenting a challenge for the company.
Challenges in Domestic Casino Market
The domestic casino market is facing headwinds, with slowing demand impacting fourth-quarter sales expectations. One large buyer is currently in an overstock position, awaiting jurisdictional approvals, which adds to the sector’s challenges.
Fewer New Logo Acquisitions
TransAct acquired only two new logos during the quarter, falling short of expectations. However, this was partially offset by expansions with existing customers, indicating some resilience in customer relationships.
Forward-Looking Guidance
Looking ahead, TransAct Technologies remains optimistic, maintaining its full-year revenue guidance of $50 million to $53 million. The company expects adjusted EBITDA to range from breakeven to $1.5 million. Additionally, the strategic acquisition of a perpetual license for the BOHA! source code for $2.55 million is anticipated to enhance long-term value, supporting the company’s growth strategy.
In summary, TransAct Technologies’ earnings call reflected a mixed sentiment, with strong growth in key segments like BOHA! Terminals and casino gaming, alongside challenges in POS Automation and domestic casino demand. The company’s robust balance sheet and strategic initiatives provide a solid foundation for future growth, despite the hurdles faced in the current market environment.