Release Date: August 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Transact Technologies Inc (TACT, Financial) reported total sales of $11.6 million for the quarter, with a notable sequential increase of 9%.
- The Food Service Technology (FST) segment showed strong performance, with revenue up 27% sequentially and 7% year over year.
- The company successfully sold Terminal 2 units to 200 Italian locations, marking entry into a fifth new international market.
- TACT's strategic cost-cutting initiatives have led to a reduction in operating expenses by 32% year over year.
- The company raised its adjusted EBITDA guidance, reflecting improved cost control and revenue flow to the bottom line.
Negative Points
- Revenue from the casino and gaming market decreased significantly by 56% compared to the prior year, due to competition and inventory supply issues.
- The company's ARPU for the second quarter was down 8% year over year, impacted by sales of terminals without recurring revenue.
- POS automation sales decreased by 40% year over year, attributed to difficult comparisons and a return to a competitive environment.
- Transact Services Group (TSG) sales declined by 53% year over year, largely due to high sales of legacy products in the prior year.
- The company reported a net loss of $319,000 for the quarter, compared to net income in the same period last year.
Q & A Highlights
Q: Can you provide more details on the strength from large chains in the FST segment and the impact of the C-store customer on Q2 results?
A: John Dillon, CEO, explained that a large QSR and other significant clients contributed to the FST segment's strength. The C-store customer is a new win, not included in previous numbers, and while not huge, it adds value. The focus is on clients with potential for significant purchases, using a "land and expand" model where initial smaller orders lead to larger follow-on business.
Q: Regarding the two customers with high inventory levels, are you working with them to offload inventory, or are they not buying due to their inventory?
A: Steven Demartino, CFO, confirmed both scenarios. The customers overstocked due to supply chain concerns, and TransAct is assisting them in managing this inventory. Most OEMs have returned to normal buying patterns, except for these two, and TransAct is helping them work through their inventory.
Q: Can you break down the unit placements for the quarter and provide an updated installed base number for the terminals?
A: Steven Demartino, CFO, stated that the total installed base at the end of the quarter was 16,411 units. The 7-Eleven units are still included in this number and will gradually phase out by the end of the year.
Q: How should we think about terminal installations and bookings for the rest of the year?
A: John Dillon, CEO, explained that installations depend on customer rollout plans, which can vary. Revenue is primarily from upfront terminal sales, with recurring revenue following. The sales model involves initial smaller orders with potential for expansion, contributing to future revenue growth.
Q: Regarding the T2 BOHA! Terminals and the 200-unit sale in Italy, do you anticipate selling the additional 3,500 units by year-end 2024?
A: John Dillon, CEO, confirmed the potential to sell into new markets within 2024, though exact numbers are uncertain. Currently, these units have minimal recurring revenue, but there is potential for future sales of software and services.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
