Transact Technologies ((TACT)) has held its Q4 earnings call. Read on for the main highlights of the call.
Transact Technologies recently held its fourth-quarter earnings call, revealing a mixed sentiment. The company celebrated strong growth in Baja terminal sales and a recovery in casino and gaming revenue. However, these positives were overshadowed by significant declines in total net sales, FST revenue, and recurring revenue. Additionally, a substantial non-cash charge impacted net income, painting a picture of a challenging year with some bright spots and strategic cost reductions.
Record Baja Terminal Sales
The fourth quarter marked a milestone for Transact Technologies, with the highest number of Baja terminals sold since 2020, totaling 1,639 units. This achievement reflects a robust 42% compounded annual growth rate in Baja terminal placements over the last eight quarters, signaling strong demand and market penetration.
Casino and Gaming Revenue Growth
Transact’s casino and gaming segment showed promising recovery, with fourth-quarter revenue reaching $4.8 million. This represents an increase of approximately 13.5% to 14% year over year and a 5% sequential rise. The company remains optimistic about continued growth in this segment.
Cost Reduction Initiatives
The company successfully implemented cost reduction initiatives, decreasing operating expenses by $1.3 million or 19% in the fourth quarter and by $7.6 million or 23% for the full year. These measures have helped mitigate some of the financial challenges faced during the year.
Strong Balance Sheet
Transact Technologies ended 2024 with a strong balance sheet, boasting $14.4 million in cash, a significant increase from $2.1 million at the end of 2023. This provides the company with liquidity for at least the next twelve months, offering a buffer against potential financial headwinds.
Significant Decline in Total Net Sales
The company reported a significant decline in total net sales, which were $10.2 million for the fourth quarter, down 23% compared to the same period in 2023. For the full year, net sales fell 40% to $43.4 million, highlighting the challenges faced in maintaining revenue growth.
FST Revenue Decline
FST revenue remained flat sequentially at $4.3 million in the fourth quarter, but experienced a 9% year-over-year decline. For the full year, FST sales were down 1% compared to 2023, reflecting ongoing challenges in this segment.
Recurring Revenue Decline
Recurring FST sales saw a 15% decline in the fourth quarter and a 3% drop for the full year, exacerbated by the loss of a significant customer. This decline underscores the volatility in maintaining consistent revenue streams.
Non-Cash Charge Impacting Net Income
A $7.3 million non-cash charge was recorded to account for a full valuation allowance on deferred tax assets, contributing to a net loss of $8 million for the fourth quarter. This charge significantly impacted the company’s financial results.
Decline in POS Automation and TSG Sales
The fourth quarter saw a sharp decline in POS automation and TSG sales, with decreases of 74% and 73% respectively compared to the prior year. These declines highlight the challenges in these segments.
Forward-Looking Guidance
Looking ahead to 2025, Transact Technologies provided guidance anticipating total revenue between $47 million and $52 million, with adjusted EBITDA ranging from breakeven to a negative $2 million. The company expects continued recovery in the casino and gaming segment, assuming no supply chain or demand disruptions. Despite challenges, Transact remains optimistic about its strategic initiatives and market opportunities, particularly in the food service technology sector.
In summary, Transact Technologies’ earnings call reflected a year of mixed results, with strong growth in specific areas like Baja terminal sales and casino revenue, countered by declines in overall sales and recurring revenue. The company’s strategic cost reductions and strong balance sheet provide some stability, while forward-looking guidance suggests cautious optimism for 2025.