TACT - Earnings call transcript Q3 2024 | TransAct Technologies Incorporated

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Operator

Greetings, and welcome to the TransAct Technologies' Third Quarter 2024 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Ryan Gardella, Investor Relations. Thank you.

You may begin.

Ryan Gardella

Thanks. to Technologies' welcome Earnings Quarter and Call. afternoon, the Third TransAct XXXX Good discussing in results issued we'll the Today, be announced close. after the market release press

Joining those discussion results. of Dillon; Company's key quarter CEO, Steve company financial the call details the us progress on strategies, and third on DeMartino. Today's a President and CFO, John include will operating from the initiatives, and is our

participants for will questions. call then We open to the

which are As as future expectations, a may reminder, events this on contains conference forward-looking, results deemed in about statements forward-looking call this call actual differ be Statements materially. nature. and may and

measures XX-Q. a company, undertakes revise to update all over risks the Regulation non-GAAP please call John. For filings, comparable occur calculated no inherent financial of accordance any on the required, and the press or to will reflect call. Today's the forward-looking to that business and and company's circumstances most be SEC in with and webcast on release of presented events include as TransAct financial I'll with financial list that, today's to non-GAAP reconciliation well as refer directly figures found after in website. And SEC reports it the or When G. including can obligation to full its statements the measures XX-K GAAP company's within turn the meaning of to Forms

John Dillon

of X,XXX for X that head you technology X XXXX. were X and sold foodservice quarterly this progress last about and us sales as months, Ryan, highlighted the level we're $XX.X excellent we we Thanks, meaning had in quarters, all Total to was the we joining team, terminal We placements X,XXX units, proud expect progress into in sales space, good sold, about units. sold last and afternoon, thank quarter, that. made and given the last the the we've by months, million. continue everyone, today. We're the we've for quarter with good units Last feeling pretty approximate FST X,XXX that of

So through walk let's that's of highlights. FST some pretty the good other news. But some

a $X.X recurring the X% up X% down strength million, First, up year-over-year, and was continued FST revenue our sequentially. sequentially but revenue was several from $X.X million, The X% from chain on large line standpoint FST of customers. year-over-year X%

from we a hardware sales up which XX% So units as quarter, X% year FST and period QX, And X,XXX XX% the sold about year-over-year in up good prior feel pretty ago. I as in well. the that sequentially. mentioned, approximately we up was were

run a to fine-tune tracking, discussed that do terminal sales but large going to which we excellent believe the will just As to with We should predict I here. CEO, last And then rate guess those client sustainable. the that we've I more. the we usually will And expand since when well. I especially and of We strategy additional where it's thing a now, company. developing, we placement our say of directionality as just on nurturing process, buy continue believe that that sometimes call, and current this group. to our the very use buy, we've our very We've BXB refocusing got We're buy last a April was be it from land made we and pretty said past, the fundamentally, process year. beginning as technology is of progress. lumps. lot FST in start time I on I'll enterprise that's to a related the continue that an is hard will that final the before, I work in process, assume and focus started with spent acquisitions. We're reiterate, lead well on it's momentum I good But full-time lumpy. reorganization sales right is didn't got the enterprises really and they think the And somewhat to start

a us. And QSR pretty rollout continues overwhelmingly be well, good feedback XXX large a installed X base Terminal of for the units. number of convenience think with our customer units of customers store to we The to sushi I the have past of terminals is a which to positive, as quarter, to we a continues this our even client as of being the with couple large sign. their to sold some about the our quarter major that's and in them. encouraging older on entire And planned set upgrade go placed product large also

remember, don't end terminal who we you out of for Terminal can those means at sunsetted units we XXXX BOHA! X. that are the those which of to the are installed all AccuDate the new upgrades For use XXXX, installed that there base potential the

feeling in new clients sales in we business BOHA! quarter, an take pipeline logo New added for holding coverage We last time. The the the new remains very difference to good target pipeline that X,XXX we from though on quarter, over quarter Quarter-over-quarter add book XX strong strong. X-quarter team. to goals it opportunities into solid the pipe, pipeline we for a have the we remains and opportunity It's compared about had line. consistent. also the set units about even out, business the steady representing We and new revenue I'm and the

XX% We reported down of to revenue and That's casino on Moving $X.X million. year-over-year. gaming.

However, note, on we're calls. this continued normalization a market predicted we seeing positive as previous of on

existing just order who that stuck We're actively oversupply we're to again. an buying from situation. I'm side, their happy us in is in working client our one help liquidation this reconfigure stock and product some with of of the On OEMs major the them say other markets to begin accelerate down inventory for to to

sense now, this as We with casino, but you may some We heard believe industry slower think IGT we're gaming a data it's bit. overall to slot customer from know still sales this for us excited could continue per rated serious And is contributed basis. term. Epicentral of we of from space we at Epicentral increases coin represent where we and especially factors. offering doing IGT the CasinoTrac. of just their not got the like And anything saw white significant long kind as that little at product Slot trend the sales see a customers. On in be CasinoTrac be XX and -- of slow. previous software. a as subscription our a as in it's seeing with increased it's when result pace product market, we're there, casino revenue, subscription buyers In macroeconomic coin about in but as that's win was we substantial think were on pilot don't the OEM right into of the games of However, Las little is to there's shared to We this XXXX. relationship to results also is we final some Suite have of gaming we're GXE. sorry, this an relative in well, rated traction And our note, our start And selling that across the over deployment August, we some in, nice and I'm a with in well a WPU, them against some Vegas. X,XXX expect unit. some developed CasinoTrac the part anecdotally, until seems activity believe a TransAct but and installed months, Slot year. GXE Suite, compared client, from the of X-month this I partnership the which overall slowing least carded play, of casino We base and

review report a have of driving before everyone on on turn channels unexpected detail, And $XX million We're any an our to between of while and time, something working our update more Next, further I bit as talk outlook. have something financial hard will as we the ensure soon cannot at call the investors lag and outcome revise we bit I Steve we feel demand I most for any the strategic via that wanted million. appropriate to stakeholders. in promise feedback an range I are provide wanted We you to a optimal process. we for its that our and to to provide over to on I company details with about. And $XX for to a quickly lengths we really gaming, prudent casino towards the to of us don't But this news. to and it's the process. our of update Due provide revenue outlook wanted

business. Our cost the been we've side adjusted very the remain will as however, EBITDA; same disciplined the on range of

heard wanted I information you to So that me. sure from make

progress, the the with of up business. terminal Year-over-year summary, So side are pleased in we placement on FST particularly XX%. the

see clearly first process on really than winning product, expect down has additional from the demand been buying growing is XXXX. dynamic us, not come lag the a we're we strong to and demand larger casino positive key this anticipated, the And have normalize started longer in resolve opportunities. gaming It's the the to I'm X. only several of our potential. will currently one of really improvements feedback and is up Terminal FST OEM to excited show one continue in results. we've and from and best The who products with, the customer while and about We're side, of getting product We customers. sales The half

I'd much really review to Steve the report. And for call more the for that, my like a news with numbers. detailed over that's of Steve? the pass So to

Steve DeMartino

today. thanks, us and for everyone, John, Thanks, joining

also to to million, sales a compared quarter in $X.X Let's period. prior third $XX.X our compared for for million, X% third up the in prior was X% year X% foodservice market FST, XX% $XX.X million third down which turn down more quarter the million or and year which our sequentially $X.X were Total the up in technology detail. sequentially and quarter from results period. was net Sales little the were to

subscriptions software Our it year recurring sequentially, sales to as up which down the period. service prior as $X.X the X% million in label was third compared million. includes for but well quarter That $X.X was consumable sales, FST X% and were

for the $XXX in down ARPU the to quarter Our last and XX% year. X% was was 'XX third $XXX. compared of sequentially down That of third quarter

with QSR to large a number them no a As to to we're recurring currently attached reminder, start. terminals revenue BOHA! of a selling

will ARPU of this we due call. everyone represent our $XXX drag loss near had and recurring terminals now, to have quarter, the continue The range discussed C-store X,XXX this the results, our number. be an also sell customer to terminals in ARPU the first expect our category, we into the of number online wanted fourth in again large once While to our remind into we to expect In approximately that to elements reflected this that future, a quarter our they for these and presents future. I a to that but quarter opportunity a around still came rise we the changes terminal occurred. new just offline ARPU on number to fell

XX% sales down that high they 'XX, remaining down quarter levels customer due Our of were $X.X casino during stockpiled to OEM continues from They and the 'XX. in the large were supply inventory work third one gaming million. to of who crisis primarily printer

printers return John As market position. buying inventories to reconfigure in-stock the and this their a in working liquidation for accelerate of to order we're to customer the mentioned, global with them their

in decreased we of We have On automation of million. rest industry. POS in sales difficult gaming buying $X.X global result the the to in impacted resumed softness decline some year third quarter the as 'XX the experienced believe our quarter the OEMs quarter. from to to third product. XX% This for a may was in unusually also inability by competitor's been positive third supply demand sales the high again largely and comps largest the prior casino all sales the our side, due

In in more are to market addition, back returning the and now online, normalized competitors a this competitive we're fully environment.

to our in market. As the line our products a new take to result, dynamics are with continue the steps, pricing ensure including of adjusting we

TSG. to Services TransAct Moving or Group

'XX. down This legacy high spare were decrease sales sales year TSG to to was quarter, largely customer's last of XX% third year-over-year a due unusually due the in to $XXX,XXX. in the For buy prior parts lottery

result new sales our for current expect a last this any about future we be quarterly we to sales buy, spare going forward. these rate Therefore, As anticipate don't parts. level run our of TSG of

down income Moving now. statement the

from including Our margins. XX.X% was third year quarter are margin down result gross as period. comes was higher prior a which and XX.X%, of significantly overall casino gaming lower the sales in lower that sales This volume,

to mid our be in expect continue gross head we margin forward, to 'XX. XX% range high into the we Going to as

of second from the to external $X of achieved from the the successful full quarter expenses result the large for XX% down resources. instituted cost would in happy expense year, prior round report cost additional the including totaling to reductions savings and million operating also of million, on quarter. also on operating savings level savings quarter. focused experienced reduction separate we've of to initiating QX of total We operating an third these third estimate by regarding reductions round initiative decline cost quarter. we efforts. sequentially of this reducing I'd round. I'm from from effect they initiative and fourth Our expected broad-based for third-party year-over-year the would further other the third year were a from part above date, initiative annualized first like last came $X effect full cost-cutting that our an by and and first late $X throughout then million 'XX estimated X%. The in about and note $X.X on an the We of million quarter this rounds year, in one the to million actions largely that experienced expense the cost second June we There's of $X basis. initiated generate reduction as headcount the the In second over thing third the savings our X of produce annualized We basis, decreased annualized we that

the also year. overall will and see prior we largest in that both to continue consistent shows quarter. occur marketing effect in the our we our of to though the annual as spend see cost in an rounds fourth trade will savings our these attend for with spend from have NACS, reduced quarter, we years, uptick on X trade GXE timing of we shows While this This fourth shows, both the is due

quarter. And sequential a expect total on $X.X expenses the compared Our follows: operating third quarter result, a returning for our and expenses fourth to to were OpEx, now in break as down third as to as So higher be million. basis, engineering quarter they the XX% we R&D quarter the third down to year-over-year

and expenses were selling $X.X Our marketing G&A to down XX% $X.X million, and to expenses million. were down our XX%

negative net X.X% to year X.X% our of sales prior loss was quarter, $X.X operating in income third $XXX,XXX the For or period. sales the or net compared of of operating million

of in On the per third we down adjusted loss $XXX,XXX, our trends quarter loss was with and EBITDA million net Siena minimum period. cash required the quarter facility our million to recorded to or with our of for continues working per last bottom ago compares And $X.XX million our sheet. the third line, and a turning It in of net diluted quarter, which Even under borrowings year. And the for $XX Lending. which quarter, lastly, the credit $XXX,XXX $X.XX capital or $X.XX reported remain the the net balance was income solid. diluted the $X.X with quarter negative ended of over remained share the share to from for $XXX,XXX we year positive, for only

overall, continues the over to strong. And questions. the So that, to position our with I'd liquidity operator Operator? be to turn for like call

Operator

Craig-Hallum question is [Operator first The George from Capital. from Sutton Instructions]

Unknown Analyst

kind or I sounds start of make I like? about gaming sounded in OEM then you repurposing. And you Or on your to that I double-click kind to market them you look is, that of to follow-up being of it you And to a on that relative characterize try George. we Thinking work would of understand side. mean, there what maybe doing environment to that sure It that talking can how just wanted This about Logan talked kind in to liquidating oversupply. kind just XXXX. to like does on subsides are one for still just like is with share? maybe competitive I beyond that. through take casino want guys are and the what that, ability the

Steve DeMartino

John, one? do have that you

John Dillon

expressed was other and configurations. way the Steve, yes. it different there's so that markets markets into the machines Well, have other go I

that there's makes be oversupply also And systems, they one. might And in be who large might it's for to an that for a the make market that that where well like geographical markets, changes but an different an possible easy so another way OEM to existing out have the markets that us other gaming of inventory have in some printers may types we and slight one move other oversupply. to not them those work

large with with that OEMs, might So we get out. and we're to our of worked that able optimistic one of working be kind we're

Steve DeMartino

off games Yes. gets going Logan, that depending on be or loaded into that take sometimes add it depending that it's geographic market accessories they're add might used firmware going different we on or the the to in.

reconfigurations the of are was those type to. So referring John

Unknown Analyst

on competitive other kind with know just what you And then wondering I just environment looks I'm usually guys you and like. one competing of player. anything of there? kind that kind of the are

John Dillon

Well, other bastion an and of new job good got casinos they recovery tend particularly during new the from pretty and around is they're action missing But kind back. pandemic, with that projects. placements their to construction were moats and Yes. in the do head-to-head, a guys the them. We

sense techs, the around one our operating vendor. they not want moats might just We matching inroads. But have you good another work standpoint. Mixing those of from the engineers vendor, and redundancy one a give hard more chain if supply vendor. from units operation, kind frankly, We want are single with But units is it, to floor, to a than maintain, or great on you and the of inroads, will, you ours a real want we're made them. with our you to pretty if working you might

doing show we're to to going we of market cost the terms that to will existing the kind business kind a our best products find share cetera. we go more will are too in be cycles customer. it's within market because have gain of or your make early garnering share can cetera, more additional of et And of reliable, difference et how the So that it through some you effective, are few to to a sustainable. we But replacement tell same much out gained, inroads

Operator

Tyler from Nguyen next Partners. [Operator question Instructions] is from Capital ROTH The

Unknown Analyst

quick a had your I question FST. on

So third second quarter in you quarter. the clients and added the XX

your client trending? is for order what initial is versus how And size ramp a gradual average clients time? So the rate new attachment over

John Dillon

That's a complicated question.

operator. of that things and and when the successful not for the team very why capable service an a some we One where did refocused our we It's with suitable they the QSRs companies and a the is product of lot mom-pa That's it's -- awful large care management operation. is sophisticated large just data. food we're about

So XXX of a standpoint our buy organizations now is of XX can or from focus most units. selling that on minimum a companies to

So client. new the minimum to that's a going scale we're typically get at where a

Now work X order of easier learn implementation the big new brand, operations. we it's operator, thing with success, success customer go a XX good they early like machines or in then an they'll try or our strategy, a lot experience things a few it's the back mean kind that they're case a us product what interesting or clients either learn that or us. But for with a on land-and-expand that's challenge they take to a it -- their more good we'll from operation have. an a for from up with expanding for going with always the their depending service because the while is branches somebody things up represent be into for other And stores, more and smaller and may from just of pick calls client facilities of us a doesn't a few the to and it because or if might out not stores other support on standpoint, we and

units try mean last would say if selling new as a couple of for the the want camel's a they is you the in units us. out tell we we're to a I of new on maybe the should potential, companies and mean, and the and X order, knows, not And really I think is So XX customer I customers a call telling into X to QSR is that product indicator massively is it's than hard to it's massively sweet important. easier -- getting average. be on X but want this you to average trying big an quarter, or more or spot existing that's not the assume price hundred because it's selling stores as to kind tent product customer. XX machines, that and land everybody to if X,XXX ASP, that I good nose that's the really pretty a But they buy going big cheaper added

So so we try well to prove and early get grow the then from and it technology, small, works that in there. business

be working. team our So seems and is that, targeting to sales it like

Unknown Analyst

So markets are within? particular are clients that there any the end

John Dillon

Say again?

Unknown Analyst

particular any within? the that markets there are Are clients end

John Dillon

Not the X service across sub-verticals industry. foodservice in about We QSRs, got particular. sell We've quick restaurants. within

space have for stores. strong We A us is sushi. convenience

Now going grocery sushi oftentimes stores. into is

label it's thing, want ingredients in to and read up you go you know you you are. that the safe to a pick If what the want and sushi and

into also We sell restaurants.

investment like the to a can new -- a somebody that we through and sales companies, investment, when And LinkedIn it into nurture a A lot you'll but now, as have a team funnel trade we've much are ROI get get map, the with out success with because call now, at or team We other early And kind each team, charge that Sodexo it's qualified you step to there. be get better? We're a but a service charge with there? we're either step. we're a would food do bottlenecks? say, there next we the step don't white potential or each to better mentioned people I which of be the more it who kind that a of a choke we're prefer system. the gotten like stage. easier of it Are and a where proposal, client vehicles. And these those in you improve, a or food could the you BOHA! very banner e-mail, the at operations, standpoint like is I meeting at And calls, lot standpoint. and technology, out like it sales or the it and go-to-market by, lead, step from fact on rate a of sales that got through somebody different do need And a off management new for from different point marketing process the that, the is safety a some we're online, whether becomes says, I'd tracking getting I well a I whole all to and lead. And talk still, then information close we I'd for like over start the And is then you with of doing out, and good all a feel good things. next of store the be to show, like, organization of starts targeted. that somebody and part goes also our not food. they're yield a kind the all rinse very and way, good the in how the ROI as stories could the wash And your it demonstration? from be great. in get getting tracking We've getting charge the maybe one sharing sales one, this first we're help could and where we're in industries. we're They're salespeople first figuring if actually then we're it paper different an from digital kind frankly. way looking and installing it and different of experienced, ROI, I you get clients getting sudden, of it develops suspect, and client to GTM, return all to days they're a better. them focused, efficiency from are track on get of each repeat We learning we SQL, a know, tools comes can follow-up. serve then the of What they somebody one a we're of pretty we're somebody call, which the the They understanding that's next of data carry to where customers It's with study team. of BOHA! and things points ad any kind could in the which got candidly, creating better through better a personas of work of that platform. And happy things it's or an Aramark. And hand quarter calculator people each are of lot the kind can on along the to about sales of the And steps, and times, there better refining. The these motivated do in one and be work

Unknown Analyst

conversion Could mentioned for also, what And particularly in improved potential you the 'XX. guys elaborate you rates is driving that?

Steve DeMartino

a process. It's

that deal, don't closed to it's the most be you the lowest down going name common Well, that if what of a top know funnel lead If really, to yield at the a work the really, a is you really denominator, name. low. ability from a your think name, all person is, the about anything to it's way about

we're wins the better and targeted at the we're getting our metrics. that's it, we get old if we're And areas joined a order it, team we're -- attention and But an goal can on our the reason that have measure metrics. team at to paying And in I the and and the is that and The kind good. saying better you improve really it. So field, nobody marketing executing the trust yield in We is in product lot are can't is is. the we it, and me, better at at to building working you to have where that's of sales better kind looking on the is improve, that and don't We're job. the focus be there's of everybody that. everybody's an just process end think a of looking we're good we unless and on And where measuring Well, hip. end. doing

Unknown Analyst

you were When to back casino to mentioning lastly, excess normal the that And inventory. you so return gaming are customers patterns? still in working market through guys do expect

Steve DeMartino

machine. our you It's for get just get ship pandemic to things making slot thing ticket gaming I afraid up were swing product. one, the going the persist. and you can't then of punch back that ticket again in a everybody basically chain problems pretty to get the supply out and cropped action went couldn't lot a in vendors crazy or outages industry validator to chain adjacent the industry. pandemic of and them There supply in, industry They you then can't supply they couldn't were hard into and a end that gut the was when bill and if at machine people overbought. stock a many and A say. or slot the mean the a need would And and wanted had you're our

buying, hit, started because good I units, I when supplier, in can so supply a various triaging clients. XX and up them. weeks, we in they them basically or chain hand it's when because they usually, to need allocating went kind of And says were industry as or we normally, to about mean, the to a them X X crazy I XXX get if calls were times client there mouth when need and the But

business the the some couldn't got anything. even supply nervous of all And in so vendors they and other

they the mentioned that especially seeing of overbought, gaming a believe the and as that. slot life And So we're North little that to lot the and casinos in slowdown a we to the like back on they And that work things just like of lot in industry. overbought. And of my roared then I now reason American, people, casinos a a way flocked marketplace, back got the right that. call, -- to is American bit that the their belief through for manufacturers the in

kind in breath, and We long-term going gradually that whatever now now, plot new normal, XXXX. a little looks problem kind a bulge when that to going bulge bit was of take happens, forward subside kind the there don't but like. in do down right headwinds a back see breath now things to now we are it's okay, market opportunity, of any catch normal. love think of in with kind are So we which And to and our everybody there and of that settling time a of it's like, see

Operator

This John for concludes to closing question-and-answer Dillon would session. to the like back floor turn over comments. the I

John Dillon

gaming a folks, is believe message. normalcy lot We thanks good got for about that joining you've us listen, reach just We casino here. going a to today. Well, hope probably I FST. It's new XXXX. feel pretty the

cost spending working time of that going We're business. We're overstocked. one Steve a quite out the still and great And of through. the line is ROTH reasonably here doing coming on a process. we a -- with I going not in I'm Conference are job the operate to stock We're down. control line. company that focused top remaining the be just that's to November. at thing. and good up that. And mentioned heads the -- as one can We we're running lot with last doing we're showing bottom work smaller OEM

and a of we them I'll it's I'm I York to XXth call, to and a there, the in you get think to City, if take if take can happy you are time. that. New and call, always do or and with to a any me you be want We're XXth, any open want the one-on-one

think all you we've up, I you with coming you enjoy So God some I lot. And hope Thanks got and bless. we'll speak very great much. Again, that, again don't to I holidays up. them. wrap thank a soon, if

Operator

teleconference. today's concludes This

lines for your disconnect Thank you at may You this time. your participation.

TransAct Technologies (TACT) 7 Nov 242024 Q3 Earnings call transcript