Sign in

You're signed outSign in or to get full access.

TT

TRANSACT TECHNOLOGIES INC (TACT)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 net sales were $10.2M, down 6% sequentially and 23% year-over-year; gross margin compressed to 44.2% from 48.0% YoY as lower volume and competitive pricing weighed on profitability .
  • Management sold 1,639 BOHA! terminals (highest since 2020) and cited sustainable run-rate and sequential momentum in Food Service Technology (FST), despite the loss of a large customer impacting recurring revenue .
  • A $7.3M non-cash tax valuation allowance drove GAAP EPS to $(0.79); adjusted net loss was $(0.06) per share. Management expects no income tax expense/benefit in 2025 until sustained profitability returns .
  • 2025 outlook: net sales $47–$52M and adjusted EBITDA between breakeven and $(2)M; casino OEMs are “back to buying,” with domestic normalization and improving international setup into H2’25 .

What Went Well and What Went Wrong

What Went Well

  • BOHA! terminal momentum: 1,639 terminals sold in Q4, with an eight-quarter CAGR of ~42%; “we believe this new run rate of terminal sales should be sustainable for the entire year” (CEO) .
  • Casino & Gaming stabilization: Q4 casino revenue up ~14% YoY and ~5% sequentially; major domestic OEM partners “back in buying positions” (CEO/CFO) .
  • Cost actions sticking: Operating expenses fell 19% YoY in Q4 and 23% for FY’24 from two rounds of cost reductions totaling ~$5M annualized (CFO) .

What Went Wrong

  • FST recurring revenue down 15% YoY to $2.7M, impacted by a mid-2024 large customer churn; ARPU down YoY (Q4: $875 vs $926 prior-year), albeit up 25% sequentially from $700 (CFO) .
  • POS automation weakness: Q4 POS revenue fell 74% YoY to $0.41M on tough comps and normalization of competitor supply; pricing adjustments underway (CFO) .
  • GAAP net loss widened to $(8.0)M due to a $7.3M non-cash tax valuation allowance; EBITDA and adjusted EBITDA remained negative as volume/mix and competition pressured margins .

Financial Results

MetricQ2 2024Q3 2024Q4 2024
Net Sales ($USD Millions)$11.6 $10.9 $10.2
Diluted EPS ($)$(0.03) $(0.06) $(0.79)
Gross Margin %52.7% 48.1% 44.2%
Operating Margin %(3.8%) (7.7%) (10.3%)
Adjusted EBITDA ($USD Millions)$0.089 $(0.204) $(0.705)

Segment sales (net) by quarter:

Segment ($USD Millions)Q2 2024Q3 2024Q4 2024
Food Service Technology$4.18 $4.32 $4.30
POS Automation$1.15 $1.15 $0.41
Casino & Gaming$5.36 $4.53 $4.76
TransAct Services Group$0.91 $0.86 $0.76
Total Net Sales$11.60 $10.87 $10.23

Key KPIs:

KPIQ2 2024Q3 2024Q4 2024
Terminals Sold (#)1,476 1,355 1,639
FST Recurring Revenue ($USD Millions)$2.8 $2.9 $2.7
ARPU ($)$722 $700 $875
Cash & Equivalents ($USD Millions)$11.13 $11.34 $14.39
Adjusted EBITDA ($USD Millions)$0.089 $(0.204) $(0.705)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net SalesFY 2024$45–$50M (Q2) $43–$45M (Q3) Lowered
Adjusted EBITDAFY 2024$(2.5)M to $(3.5)M prior; improved to $(1)M to $(2)M (Q2) $(1)M to $(2)M (Q3) Raised vs prior range
Net SalesFY 2025—$47–$52M (Q4 PR/8-K) New
Adjusted EBITDAFY 2025—$0 to $(2)M (Q4 PR/8-K) New
Tax RateFY 2025—Expect no income tax expense/benefit (valuation allowance continues) New qualitative guidance

Earnings Call Themes & Trends

TopicQ2 2024 (Q-2)Q3 2024 (Q-1)Q4 2024 (Current)Trend
FST terminal momentum~1,500 terminals; 13 new logos; intl expansion underway 1,355 terminals; 12 new accounts; run-rate sustainable 1,639 terminals; highest since 2020; run-rate sustainable Improving placements QoQ
FST recurring & ARPURecurring +15% QoQ; ARPU $722; drag from hardware-only QSR Recurring $2.9M; ARPU $700; expected rebound with churn roll-off Recurring $2.7M; ARPU $875; up 25% QoQ ARPU recovering sequentially
Casino & Gaming normalizationOEM inventory overhang (2 OEMs); demand below 2023 Down YoY; one OEM still overstocked; normalization expected 1H25 Domestic OEMs “back to buying”; stronger 2025 expected Normalization underway
POS automationTough comps; competitor supply normalized; pricing actions Revenue down YoY; competitive environment Q4 down 74% YoY; pricing adjustment ongoing Headwind persists
Epicentral/SubscriptionMacau deployment; partnership drives ROI CasinoTrac subscription traction (SlotSUITE) Continued traction; monthly recurring per slot (CasinoTrac) Building recurring base
Strategic reviewEngaging parties; pursuing optimal outcome Active with advisor; various stages Process ongoing; complex across two businesses (CEO) Ongoing

Management Commentary

  • “We believe that this new run rate of terminal sales should be sustainable for the entire year and pick up speed quarter-over-quarter as we layer on new client wins while accelerating the upgrade cycle of existing BOHA! customers.” – CEO John Dillon .
  • “All our major domestic OEM partners in casino and gaming are now back in buying positions… We expect 2025 to be the inflection point at which net losses begin to decrease as overall revenue returns to growth.” – CEO John Dillon .
  • “We incurred a $7.3 million noncash charge in the fourth quarter of ’24 to record a full valuation allowance on our deferred tax assets… Looking forward to ’25… we expect to record no income tax expense or income tax benefit.” – CFO Steve DeMartino .
  • “CasinoTrac sells Epicentral… on a subscription basis. So we receive recurring revenue per month per unit… We believe that 2025 will be a positive year over year, casino and gaming sales.” – CEO/CFO .
  • “Two rounds of cost reduction initiatives totaling $5 million on an annualized basis… full effect during the fourth quarter of ’24.” – CFO .

Q&A Highlights

  • FST terminal mix: Large QSR was a “decent chunk,” though not more than half; 2025 expected expansion across multiple jurisdictions and new geographies (CEO/CFO) .
  • Casino OEM demand: All domestic OEMs back to buying; international OEMs largely normalized with the remaining laggards expected to resume in H2’25 (CFO) .
  • Lost C‑store customer: ~$3–$4M annualized revenue; about half rolled off in 2024 (CFO) .
  • New product: EPIC TR80 roll-fed printer re-entry targets sports betting kiosks/VLTs; growing opportunity, especially in Europe (CFO) .
  • Strategic review complexity: Managing two distinct businesses (CNG vs FST) and resource mapping adds complexity to alternatives (CEO) .

Estimates Context

  • S&P Global consensus estimates for Q4 2024 were unavailable at time of request due to provider limits; as a result, we cannot benchmark against Wall Street consensus in this recap [GetEstimates error].
  • Given unavailability, investors should note actuals vs internal outlook: Q4 net sales $10.2M and adjusted EBITDA $(0.705)M; FY’24 landed within revised ranges communicated in Q3 (net sales $43–$45M; adj. EBITDA $(1)M to $(2)M) .

Key Takeaways for Investors

  • FST hardware momentum is real (1,639 terminals) and management expects sustainability; watch for ARPU uplift as software/labels attach over time and as churn effects fade .
  • Casino & Gaming appears past the worst of the inventory overhang; domestic OEMs are buying again, setting up a better 2025, with international OEMs following later in the year .
  • Margin pressure from volume/mix and POS competition persists; cost actions are cushioning OpEx but gross margin likely mid-to-high 40s in 2025 per CFO commentary .
  • The $7.3M tax valuation allowance distorted GAAP EPS; adjusted results better reflect operating trajectory, and 2025 tax line should be neutral until profitability is sustained .
  • 2025 guide ($47–$52M sales; adj. EBITDA breakeven to $(2)M) implies cautious recovery; upside lever is CNG normalization plus FST upgrades and new logos; monitor EPIC TR80 and CasinoTrac subscription adoption .
  • Strategic review remains a potential catalyst; complexity across two businesses noted, but management is engaged and open to options to maximize shareholder value .
  • Near-term trading implications: sentiment likely tied to visibility on FST ARPU attach, confirmation of CNG demand normalization, and any strategic review updates; medium term thesis hinges on converting FST hardware footprint into recurring revenue growth while CNG stabilizes .