TransAct's Q3 2025: Contradictions Emerge on Casino Gaming Strategy, FST Pipeline, and 2025 Financials

Date of Call: November 10, 2025

Financials Results

• Revenue: $13.2M, down 5% sequentially, up 21% YOY (prior year $10.9M)
• EPS: $0.00 per share (breakeven), compared to a net loss of $0.06 per share in prior year
• Gross Margin: 49.8%, up from 48.1% YoY and up 160 bps sequentially
• Operating Margin: 0.1% of net sales, compared to -7.7% in the prior year period

Guidance:

• Maintained full-year 2025 revenue guidance of $50.0M–$53.0M.
• Adjusted EBITDA expected to be breakeven to $1.5M for full year 2025.
• Gross margin expected to remain in the mid- to high-40% range for the remainder of 2025.
• Expect Q4 casino sales to be sequentially lower with recovery anticipated in 2026.
• Cash of ~$20M will fund remaining ~$2.2M source-code payments (≈$200k in Q4'25, ≈$2.0M in 2026); inventories to modestly increase into 2026.

Business Commentary:

* Foodservice Technology (FST) Growth: - TransAct Technologies reported 5,883 BOHA! Terminals sold year-to-date, up 58% from the same period in 2024. - The growth in FST is driven by improvements in the go-to-market strategy, increased recurring revenue, and successful conversions with key customers.

• Acquisition of BOHA! Source Code:
• TransAct acquired a perpetual license to the BOHA! source code for $2.55 million, granting operational freedom and the ability to enhance software without constraints.

• This acquisition is expected to create long-term value for shareholders and employees, with a fully operational version planned for early 2027.

• Casino and Gaming Sales Dynamics:

• Casino and gaming sales reached $7.1 million in Q3, up 58% year-over-year, but down 7% sequentially.
• The sequential decline is due to macroeconomic challenges and reduced demand in the domestic casino market, while international sales remain strong.

• Financial Performance and Outlook:
• TransAct's adjusted EBITDA remained positive at $669,000 in Q3, reflecting a significant improvement from a $204,000 loss in the prior year period.
• The company maintains a strong balance sheet with $20 million in cash and continues to focus on execution and operational improvements to drive shareholder value.

Sentiment Analysis:

Overall Tone: Positive

• Management described Q3 as a "solid quarter" with BOHA! unit sales up 58% YTD, recurring FST revenue growth and positive adjusted EBITDA; they reiterated FY revenue guidance ($50M–$53M) and highlighted a $20M cash balance while noting a temporary Q4 casino slowdown and expectation of recovery in 2026.

Q&A:

• Question from Jeff Martin (ROTH Capital Partners): Can you provide an update on the initiative to be more aggressive and incentivize winning competitive casino deals, and comment on the competitive landscape?
  Response: Sales comp was restructured to reward net-new and competitive wins, which increased urgency and deal pursuit; market is effectively a duopoly and they compete on product/service rather than a price race.

• Question from Jeff Martin (ROTH Capital Partners): Can you quantify the magnitude of the fourth-quarter impact on casino gaming?
  Response: Management declined to quantify publicly; they are already seeing demand weakness into mid-November, expect Q4 casino sales to be weaker than Q3, and view the softness as temporary with improvement in 2026.

• Question from Jeff Martin (ROTH Capital Partners): On non-charitable gaming, are you seeing regulatory progress that could open more states into 2026?
  Response: Management is constructive: states often follow peers, creating winner-take-all opportunities for statewide contracts and we expect the market to be an important growth area.

• Question from Jeff Martin (ROTH Capital Partners): Can you help frame the FST new-logo pipeline and how new logo sales are developing?
  Response: Sales cycles are long and lumpy; pipeline coverage is sufficient to hit internal forecasts; the two new logos landed have sizable long-term volume potential and the team is focused on GTM funnel metrics.

Contradiction Point 1

Casino Gaming Market Share and Strategy

It reflects contrasting statements about the company's strategy and market share in the casino gaming segment, which are crucial for understanding the company's competitive position and growth potential.

Can you update us on the casino gaming initiative to incentivize competitive wins and the competitive landscape in this market? - Jeff Martin(ROTH Capital Partners)

2025Q3: We've incentivized our sales team to focus on new deals and competitive wins. Our strategy is about being competitive, not engaging in a race to the bottom. - John Dillon(CEO)

Does this represent a new level of market share in the casino and gaming segment? Is the market share growth sustainable? - Jeffrey Michael Martin(ROTH Capital Partners, LLC, Research Division)

2025Q2: John highlights increased focus and passion in casino and gaming, aiming to erode competitors' market share. - John Dillon(CEO)

Contradiction Point 2

Casino Gaming Demand and Weakness

It indicates a shift in the company's outlook on the demand for casino gaming products, which could impact revenue expectations and strategic focus.

What was the magnitude of the fourth quarter impact on casino gaming? - Jeff Martin

2025Q3: We are seeing weakness in casino gaming demand, which will impact the fourth quarter. We expect this to be temporary, with an improving set of dynamics in 2026. - Steve DeMartino(CFO)

Can you discuss pipeline conversion for CAC ST? - Jeff Martin

2025Q1: Our sales pipeline in casino gaming and gaming technology is strong, with 14 new customers added this quarter. We continue to see growth in digital gaming and gaming technology, which represents the fastest-growing segment in our casino gaming business. - John Dillon(CEO)

Contradiction Point 3

FST Pipeline and Conversion Rates

It reflects differing levels of confidence and focus on the food service technology (FST) market, which is a critical area for growth.

How are new logo sales in FST developing from a pipeline perspective? - Jeff Martin

2025Q3: Sales cycles are long and lumpy, especially targeting large foodservice organizations. The 2 new accounts have potential for significant volume over time. Pipeline remains covered, and focus is on speeding the top of the funnel and improving conversion rates. - Steve DeMartino(CFO)

What's the current status of the FST pipeline? How is conversion progress? Which end markets are showing the most traction? - Jeff Martin

2025Q1: The FST pipeline is stable, and the conversion is progressing well. The company is seeing traction in the grab-and-go market, particularly with large national sushi providers, and the food service management market, working with clients like Sodexo and Aramark. - John Dillon(CEO)

Contradiction Point 4

Casino Gaming Market Dynamics

It involves differing perspectives on the state of the casino gaming market and the strategic approach to compete within it, which can impact business strategy and financial projections.

Can you provide an update on the casino gaming initiative and the competitive landscape in that market? - Jeff Martin(ROTH Capital Partners)

2025Q3: We've incentivized our sales team to focus on new deals and competitive wins. Our strategy is about being competitive, not engaging in a race to the bottom. - John Dillon(CEO)

What is your outlook for casino gaming in 2025 if macroeconomic conditions continue to improve? - Jeff Martin(ROTH Capital Partners)

2024Q4: In casino gaming, next year will be a tougher year than this year based on all of the headwinds that are in front of us. - John Dillon(CEO)

Contradiction Point 5

Impact of Casino Gaming Weakness on 2025 Financials

It involves differing expectations regarding the impact of casino gaming weakness on the company's financial performance in 2025, which is crucial for investor projections.

What was the magnitude of the fourth quarter impact on casino gaming? - Jeff Martin(ROTH Capital Partners)

2025Q3: We are seeing weakness in casino gaming demand, which will impact the fourth quarter. We expect this to be temporary, with an improving set of dynamics in 2026. - Steve DeMartino(CFO)

What is your outlook for casino gaming in 2025 given continued macroeconomic improvements? - Jeff Martin(ROTH Capital Partners)

2024Q4: In casino gaming, next year will be a tougher year than this year based on all of the headwinds that are in front of us. - John Dillon(CEO)