TransAct Technologies (NASDAQ:TACT) CEO John Dillon outlined the company’s turnaround efforts, emphasizing growth in food-service software, a stable gaming printer business and an ongoing review of strategic alternatives.
Dillon, who said he was recently appointed CEO after previously serving on the board, described TransAct as a company that historically operated as a printer manufacturer but is now seeking to build a larger software and recurring-revenue business.
The company was founded in 1996 through a merger involving a business spun out of NCR and initially developed standalone point-of-sale printers. While point-of-sale printing has become largely commoditized, TransAct now focuses on vertical markets including casino gaming and food-service technology, Dillon said.
Gaming Business Provides a Stable Base
In gaming, TransAct makes ticket-in, ticket-out, or TITO, printers used in slot machines, as well as roll-based printers for sports betting. Dillon characterized the slot-machine printer market as a duopoly and said TransAct has approximately 35% global market share, though he noted that market-share figures are difficult to precisely determine.
He said casinos typically replace 5% to 8% of slot machines on their floors annually, creating a replacement-driven market. There are roughly 1 million slot machines in North America, according to Dillon, and he described the company’s gaming operation as a steady business with loyal customers, favorable margins and barriers to entry.
Dillon said TransAct previously supplied lottery printers, but that relationship ended several years ago. He said the company could potentially regain that business in the future.
Food-Service Platform Expands Beyond Printing
The company’s Food Service Technology, or FST, operation originated from a date-code printing system developed for McDonald’s. The business has expanded into TransAct’s BOHA! back-of-house platform, which includes touchscreens, software, cloud connectivity, label design, food-preparation applications, temperature monitoring and reporting tools.
Dillon said the platform is intended to help food-service operators address labor costs, labor turnover, food safety and food waste. The systems can support nutritional labels, checklists, timers, menu changes, temperature logs and other compliance-related documentation.
He cited an estimate from AGC Partners that placed the current back-of-house food-service technology total addressable market at about $4 billion, with a potential market of approximately $12 billion by 2032. Dillon said the food-service sector remains relatively early in its digital transformation and offers substantial “greenfield” opportunity.
TransAct targets larger enterprise customers rather than small independent operators, he said. The company supports quick-service restaurants, convenience stores, travel centers and contract food-service operators. Dillon named Pilot, Love’s, TravelCenters of America, Sodexo, Aramark and Compass Group among the types of customers served by the company.
- BOHA! systems support labeling, menu management, food-preparation workflows and analytics.
- The platform can generate food-safety temperature logs required for inspections.
- TransAct also sells preprinted labels, a business Dillon said produces roughly $10 million in annual revenue.
Software Monetization Effort Underway
Dillon said annual BOHA! unit sales have tripled since 2022, when he became CEO. He attributed the progress in part to changes in the sales organization, including new sales personnel, compensation plans and target-market focus.
The company has approximately 22,000 online systems in the field, net of attrition, and added roughly 5,000 online units over the past year, representing growth of approximately 32% to 33%, according to Dillon. BOHA! software revenue increased 47% year over year in the second quarter, he said.
TransAct previously provided software at no charge in many cases and did not own the software it sold, Dillon said. The company acquired the software, moved it to Microsoft Azure and now owns the related intellectual property. It has begun approaching customers whose free software periods have ended and offering paid subscriptions and additional software modules.
During a question-and-answer session, Dillon said a standard hardware unit sells for about $1,200 and that a typical software package is approximately $80 per month. Existing customers pay between $20 and $25 per month at the low end and up to $300 per month depending on configuration, he said. Dillon estimated current software gross margin at about 75%.
He said TransAct plans to begin providing investors with exit annual recurring revenue metrics, distinguishing contracted software revenue from label sales, which he said are not generally under contract.
Strategic Review and Cash Flow
Dillon acknowledged shareholder disappointment with TransAct’s stock performance and said the company has hired an advisor to evaluate strategic options and alternatives that could benefit shareholders. He added that the company has a strong balance sheet and that he is not concerned about its ability to continue operating.
On cash flow, Dillon said management is seeking to operate slightly cash-flow positive and slightly EBITDA positive. He described the gaming operation as relatively predictable despite quarterly fluctuations and some seasonality, and said the company has good visibility into managing that business.
About TransAct Technologies (NASDAQ:TACT)
TransAct Technologies Incorporated develops and supplies transaction-based technology products and related services for specialized markets. The company designs, manufactures and supports thermal printers, print heads, software and other solutions used to produce receipts, tickets, coupons and other transaction documents.
Its products serve the gaming and lottery industries, including casino printers, ticketing solutions and systems designed to support casino operations. TransAct also provides solutions for food-service businesses, including its BOHA! ecosystem, which combines hardware, software and digital tools to help restaurants and other food-service operators manage operational tasks, food safety and compliance.
TransAct serves customers in North America and international markets through direct sales, distributors and other business relationships.
