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TT

TRANSACT TECHNOLOGIES INC (TACT)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 net sales were $13.8M, up 6% sequentially and 19% year-over-year; gross margin was 48.2% and diluted EPS was $(0.01) .
  • Food Service Technology (FST) recurring revenue rose to $3.0M (+11% QoQ, +7% YoY) and casino & gaming revenue reached $7.6M (+14% QoQ, +42% YoY), driving adjusted EBITDA of $0.48M .
  • Management raised FY2025 revenue guidance to $49–$53M and adjusted EBITDA to $0–$1.5M, citing momentum in FST and normalization in casino OEM demand .
  • Strategic development: TransAct acquired a perpetual, royalty‑free license to the BOHA! source code (total consideration ~$3.55M including ~$1.0M transition services), enabling in‑house hosting/modification; go‑live targeted for early 2027 .
  • Potential catalysts: guidance raise, BOHA! code control, charitable gaming/printer expansion, and tariff pass‑through pricing actions to preserve margins .

What Went Well and What Went Wrong

  • What Went Well
    • Casino and gaming revenue strength: $7.6M (+42% YoY, +14% QoQ) on normalized OEM buying and charitable gaming wins; Epic TR80 early traction in sports betting/VLT use cases .
    • FST momentum: 1,942 BOHA! terminals sold; FST recurring revenue $3.0M (+11% QoQ, +7% YoY); “ARPU $792” and “land‑and‑expand” pipeline discipline improving .
    • Strategic control of BOHA!: “pivotal moment” to modify/extend code without royalties; expected long‑term value creation and EBITDA accretion due to amortization add‑back .
  • What Went Wrong
    • Gross margin compression to 48.2% (from 52.7% YoY) on mix (more FST hardware), inflation, and competitive pricing in POS automation .
    • Operating loss remained negative at $(0.26)M (vs $(0.44)M YoY); EBITDA modest at $0.03M, down from $0.22M in Q1 .
    • Tariff headwinds drive additional pricing actions; situation “fluid,” implying near‑term margin management challenges .

Financial Results

MetricQ4 2024Q1 2025Q2 2025
Revenue ($USD Millions)$10.231 $13.053 $13.798
Diluted EPS ($USD)$(0.79) $0.00 $(0.01)
Gross Margin %44.2% 48.7% 48.2%
Operating Loss ($USD Millions)$(1.05) $(0.02) $(0.26)
EBITDA ($USD Millions)$(0.99) $0.22 $0.03
Adjusted EBITDA ($USD Millions)$(0.71) $0.54 $0.48

Segment breakdown

Segment Revenue ($USD Millions)Q2 2024Q1 2025Q2 2025
Food Service Technology$4.178 $4.908 $4.761
POS Automation$1.151 $0.618 $0.590
Casino & Gaming$5.359 $6.719 $7.629
TransAct Services Group$0.911 $0.808 $0.818

KPIs

KPIQ4 2024Q1 2025Q2 2025
BOHA! Terminals Sold (units)1,639 2,350 1,942
FST Recurring Revenue ($USD Millions)$2.7 $2.7 $3.0

YoY/Sequential commentary (reported):

  • Net sales +19% YoY and +6% QoQ; FST recurring revenue +7% YoY and +11% QoQ; casino & gaming +42% YoY and +14% QoQ .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Sales ($USD Millions)FY 2025$47–$52 $49–$53 Raised
Adjusted EBITDA ($USD Millions)FY 2025$0 to $(1.5) $0 to $1.5 Raised

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024 and Q1 2025)Current Period (Q2 2025)Trend
FST GTM/process disciplineEmphasized GTM overhaul; pipeline discipline improving Continued land‑and‑expand; 1,942 terminals; $3.0M recurring; ARPU $792 Improving execution, steady pipeline
Casino OEM normalizationDomestic OEMs returning to buying; international laggards improving later ’25 Strong QoQ/YoY growth; new charitable gaming OEM; Epic TR80 ramp expected Normalized demand; new adjacencies
BOHA! source code controlReliance on third party noted as risk Perpetual royalty‑free license; $2.55M + ~$1.0M services; go‑live early 2027; EBITDA accretive Strategic control; long‑term margin tailwind
Tariffs/macro pricingMacro/tariffs cited as risks Added surcharge; planning second pricing action; “fluid” Managing cost pass‑through
Strategic reviewActive in Q4; then suspended in Q1 amid momentum Focus on organic execution; revisit as conditions warrant Pause to prioritize operations
Product expansion (Epic TR80, Epicentral)TR80 rollout; CasinoTrac subscription partnership TR80 traction building; Epicentral recurring via partner Building recurring/printer adjacencies

Management Commentary

  • CEO: “We sold 1,942 BOHA! Terminals in Q2… trajectory positions us for sustainable progress… good process, discipline and resolve” .
  • CEO on BOHA! code: “pivotal moment… freedom to modify, extend and enhance… without royalties or contractual constraints” ; “expect it will eventually enhance our financials” .
  • CFO: Will capitalize ~$3.55M (purchase plus services) and begin amortization when hosted version goes live (early 2027); EBITDA accretive immediately due to amortization add‑back .
  • CFO on margins/tariffs: Gross margin expected mid‑to‑high 40% for 2025; added surcharge and planning further pricing action to offset tariff increases .

Q&A Highlights

  • FST excluding large QSR: Management emphasized disciplined GTM, targeting accounts with attractive economics, and ongoing sales training focused on ROI messaging; two new logos closed in Q2 .
  • QSR software attach: “The answer… is yes” to dialogue about adding recurring software to terminal deployments .
  • Casino market share: Greater intensity and compensation focus on winning new customers; incursions into competitors’ installed base; charitable gaming opportunity highlighted .
  • Outlook clarity: Revenue guidance raised to $49–$53M, adjusted EBITDA to $0–$1.5M; casino run‑rate expected to persist barring disruptions .

Estimates Context

  • Q2 2025 consensus: Revenue $12.55M vs actual $13.80M (beat); Primary EPS $(0.05) vs actual $(0.01) (beat); EBITDA $(0.087)M vs actual $0.028M (beat). Coverage thin: 1 estimate for revenue and EPS in Q2 [GetEstimates: Primary EPS Consensus Mean, Revenue Consensus Mean, EBITDA Consensus Mean; Revenue - # of Estimates; Primary EPS - # of Estimates].
  • Prior periods: Q1 2025 revenue estimate $11.04M vs actual $13.05M; EPS estimate $(0.10) vs actual $0.00; Q4 2024 revenue estimate $10.37M vs actual $10.23M; EPS estimate $(0.095) vs actual $(0.79) (tax valuation allowance impacted) [GetEstimates: same as above].
  • Values retrieved from S&P Global.*
MetricQ4 2024Q1 2025Q2 2025
Revenue Consensus Mean ($USD)$10.37M$11.04M$12.55M
Revenue Actual ($USD)$10.23M $13.05M $13.80M
Primary EPS Consensus Mean ($USD)$(0.095)$(0.10)$(0.05)
Primary EPS Actual ($USD)$(0.79) $0.00 $(0.01)
EBITDA Consensus Mean ($USD)$(0.715)M$(0.597)M$(0.087)M
EBITDA Actual ($USD)$(0.989)M $0.221M $0.028M

Other Q2 2025 Press Releases

  • New contract foodservice win: BOHA! Temp/Checklist live across 55 locations; 21 sites using BOHA! Sense; ramp opportunity to add Terminal 2 over time .

Key Takeaways for Investors

  • Topline momentum re‑established: strong casino OEM demand and growing FST recurring revenue underpin FY guide raise .
  • Strategic control of BOHA! code is consequential: removes royalty drag, improves agility, and supports long‑term margin profile; EBITDA accretive due to amortization mechanics post go‑live .
  • Mix/tariffs are near‑term margin watch‑items; management is executing pricing actions to offset input cost headwinds .
  • Pipeline discipline and land‑and‑expand strategy support FST unit growth and recurring attach; QSR software attach is being actively pursued .
  • Emerging adjacencies (charitable gaming, Epic TR80, CasinoTrac/Epicentral subscriptions) diversify growth drivers and build recurring revenue streams .
  • Coverage is thin; results beat consensus on revenue, EPS, and EBITDA with only one estimate in Q2—scope for upward estimate revisions if trends persist.*
  • Near‑term trading implications: positive sentiment from guidance raise and estimate beats; monitor tariff pass‑through effectiveness and margin trajectory; medium‑term thesis leans on FST recurring scaling and BOHA! code control to structurally improve profitability .