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TT

TRANSACT TECHNOLOGIES INC (TACT)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 net sales rose 21% year-over-year to $13.2M and gross margin expanded to 49.8%; EPS was breakeven, with positive adjusted EBITDA of $0.7M, marking continued operational progress .
  • Results were driven by strong casino and gaming (+58% YoY to $7.1M) and improved Food Service Technology (FST) with recurring revenue up 13% YoY to $3.3M .
  • Versus S&P Global consensus, Q3 revenue modestly beat ($13.18M actual vs $13.10M estimate*) and EPS beat (breakeven vs -$0.02 estimate*), while EBITDA was below consensus ($0.14M actual vs $0.25M estimate*) .
  • FY25 revenue guidance raised at the low end to $50–$53M (from $49–$53M), while adjusted EBITDA guidance maintained at $0–$1.5M; management flagged expected Q4 softness in domestic casino demand as a near-term headwind .

What Went Well and What Went Wrong

What Went Well

  • FST momentum: Sold 1,591 BOHA! terminals in Q3; YTD units 5,883 (+58% YoY), with recurring FST revenue up 13% YoY to $3.3M; CEO: “BOHA terminal sales have been trending in the right direction” .
  • Casino strength: Casino and gaming net sales rose 58% YoY to $7.1M; normalized buying from major OEMs and new charitable gaming OEM win contributed .
  • Margin improvement and adjusted EBITDA: Gross margin expanded to 49.8% (from 48.1% YoY; +160 bps sequentially) and adjusted EBITDA improved to $0.7M; CFO reiterated mid-to-high 40% margin outlook .
  • Strategic control of BOHA source code: Progress on the perpetual license; management expects hosted version launch in early 2027, enabling agility and potential future software monetization; CEO emphasized “greater operational freedom” .

What Went Wrong

  • Domestic casino demand softness: Management expects Q4 casino sales to be sequentially lower due to domestic headwinds (overstock at a large buyer and approvals timing), though international remained strong .
  • POS automation decline: Segment sales fell 65% YoY to $0.4M and are expected to remain ~$0.4–$0.5M per quarter due to competitive dynamics .
  • Limited new logos in FST: Two new logos in Q3 were “lower than we expected,” though expansions with existing customers offset; longer enterprise sales cycles persist .

Financial Results

Consolidated Performance (quarterly comparison)

MetricQ1 2025Q2 2025Q3 2025
Net Sales ($USD)$13,053,000 $13,798,000 $13,176,000
Diluted EPS ($USD)$0.00 $(0.01) $0.00
Gross Margin (%)48.7% 48.2% 49.8%
Operating Income (Loss) ($USD)$(15,000) $(258,000) $14,000
Net Income (Loss) ($USD)$19,000 $(143,000) $15,000
EBITDA ($USD)$221,000 $28,000 $142,000
Adjusted EBITDA ($USD)$544,000 $478,000 $669,000

Year-over-Year (Q3 2025 vs Q3 2024)

MetricQ3 2024Q3 2025
Net Sales ($USD)$10,867,000 $13,176,000
Diluted EPS ($USD)$(0.06) $0.00
Gross Margin (%)48.1% 49.8%
Net Income (Loss) ($USD)$(551,000) $15,000

Actual vs Consensus (S&P Global) and Prior Quarter

MetricQ1 2025 ActualQ1 2025 Consensus*Q2 2025 ActualQ2 2025 Consensus*Q3 2025 ActualQ3 2025 Consensus*
Revenue ($USD)$13,053,000 $11,039,000*$13,798,000 $12,550,000*$13,176,000 $13,100,000*
EPS ($USD)$0.00 $(0.10)*$(0.01) $(0.05)*$0.00 $(0.02)*
EBITDA ($USD)$221,000 $(597,000)*$28,000 $(87,000)*$142,000 $251,000*
# of Estimates (Revenue)—2*—1*—1*
# of Estimates (EPS)—2*—1*—1*

Segment Net Sales

Segment ($USD)Q1 2025Q2 2025Q3 2025
Food Service Technology (FST)$4,908,000 $4,761,000 $4,841,000
POS Automation$618,000 $590,000 $399,000
Casino & Gaming$6,719,000 $7,629,000 $7,144,000
TransAct Services Group (TSG)$808,000 $818,000 $792,000
Total Net Sales$13,053,000 $13,798,000 $13,176,000

KPIs and Balance Sheet

KPI / MetricQ1 2025Q2 2025Q3 2025
BOHA! Terminals Sold (Units)2,350 1,942 1,591
FST Recurring Revenue ($USD)$2,700,000 $3,000,000 $3,300,000
ARPU ($/Unit)—$792 $792
Cash & Equivalents ($USD)$14,178,000 $17,746,000 $20,041,000
Inventory ($USD)$14,415,000 $12,968,000 $11,735,000
Diluted Shares (Units)10,054,000 10,085,000 10,157,000

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Sales ($USD)FY 2025$49–$53M $50–$53M Raised low end
Adjusted EBITDA ($USD)FY 2025$0–$1.5M $0–$1.5M Maintained
Gross Margin (%)2H 2025Mid-to-high 40s (qualitative) Mid-to-high 40s (qualitative) Maintained (qualitative)

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 2025)Previous Mentions (Q2 2025)Current Period (Q3 2025)Trend
FST momentum & land-and-expandAll-time high 2,350 units; FST revenue +49% YoY Rollouts progressing; land-and-expand across QSR and c-stores 1,591 units; two new logos; expansions at tier-one accounts Sustained growth; pipeline deepening
BOHA source code licenseN/APerpetual license acquired; $2.55M + $1.0M services; go-live early 2027 Implementation progressing; “greater operational freedom”; go-live early 2027 reiterated Strategic capability building
Casino & gaming dynamics$6.7M revenue; improving demand Rebound; normalized OEM buying; charitable gaming OEM win Domestic softness expected in Q4; international strong; TR80 traction Near-term headwind; diversified drivers
Tariffs & pricing actionsN/ATariff surcharge; second pricing action planned Second small price increase implemented; no pushback Managed pass-through; watch costs
Labels & recurring revenueN/ARecurring FST +11% seq.; +7% YoY Recurring FST +13% YoY; labels strength; exploring labels-only customers Expanding recurring base
New product: Epic TR80N/AEntered market; modest sales Building traction for 2026 Early-stage adoption
Regional trendsN/AN/AInternational casino strong; domestic soft Mixed geography
Cash & inventory$14.2M cash $17.7M cash; proactive inventory reduction $20.0M cash; expect inventory to tick up as demand restocks Strengthened liquidity

Management Commentary

  • CEO (FST momentum): “BOHA terminal sales have been trending in the right direction, confirming a positive market response to our BOHA solution suite.”
  • CEO (source code license): “Greater operational freedom…the ability to enhance the software without constraint, and long-term value creation…We expect the fully operational and supported version to launch in early 2027.”
  • CEO (sales incentives, casino competition): “We jiggered the plan so that if you close a net new customer…you’re going to get paid more…we’re very mindful that we have a bit of a duopoly…we like to think that our product is sufficiently better…and they can win head-to-head.”
  • CFO (margins and tariffs): “Third quarter gross margin was 49.8%…up 160 bps sequentially…we implemented a second small price increase…we haven’t experienced any significant pushback.”
  • CFO (balance sheet and source code accounting): “We crossed $20 million in cash…we expect to capitalize the $3.55 million…begin to amortize…over a five to seven-year period.”

Q&A Highlights

  • Casino competitive stance and incentives: Enhanced compensation to prioritize net-new and competitive wins; focus on disciplined, head-to-head product/service differentiation .
  • Q4 casino outlook: Management expects sequentially lower Q4 casino sales due to domestic demand softness and overstock/approval timing, with recovery expected as 2026 unfolds .
  • Regulatory opportunity (charitable gaming): Winner-take-all state contracts can drive concentrated demand; management sees attractive growth potential as more states regulate .
  • FST pipeline and new logos: Sales cycles are long and lumpy; current pipeline coverage supports internal forecasts; land-and-expand strategy with large operators continues .

Estimates Context

  • Coverage remains limited (typically 1–2 estimates per quarter*). Q3 revenue and EPS delivered modest beats, while EBITDA came in below consensus, reflecting mix and cost dynamics*.
  • Expect analysts to raise FY25 revenue at the low end in line with company guidance and to refine near-term casino estimates lower given management’s Q4 domestic softness commentary .
MetricQ3 2025 ActualQ3 2025 Consensus*Surprise
Revenue ($USD)$13,176,000 $13,100,000*+$76,000 (beat)
EPS ($USD)$0.00 $(0.02)*+$0.02 (beat)
EBITDA ($USD)$142,000 $251,000*-$109,000 (miss)

Key Takeaways for Investors

  • FST is the structural growth engine: recurring revenue and labels strength underpin margins and cash generation; land-and-expand with large enterprises should sustain unit and ARPU trends .
  • Near-term caution: management flagged Q4 casino softness; traders should anticipate weaker sequential casino prints and watch for international offsets and charitable gaming momentum .
  • Gross margin trajectory improved: mix and pricing actions (tariff pass-through) support mid-to-high 40s margins; monitor overhead/inflation headwinds .
  • Liquidity and balance sheet optionality: $20M cash and inventory reductions create flexibility to invest and absorb near-term volatility, including source-code in-housing .
  • Strategic upside from BOHA source code: full control may unlock faster product cycles and new monetization (e.g., app store) post-2027; longer-term margin and EBIT uplift potential .
  • Valuation drivers: Expect estimate tweaks—FY25 revenue low-end raised; Q4 casino reset; watch adjusted EBITDA trajectory given recurring growth and cost discipline .
  • Catalysts: Additional tier-one FST wins, labels-only adoption, charitable gaming state wins, TR80 traction, and clarity on domestic casino demand normalization .

Footnote: *Values retrieved from S&P Global.