TransAct Technologies Incorporated

Greetings and welcome to the Transact Technologies fourth quarter 2025 earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce Ryan Gardella, Investor Relations. Please go ahead.

Thanks, Paul. Good afternoon. Welcome to the Transact Technologies fourth quarter and full year 2025 earnings call. Today we'll be discussing the results announced in our press release issued after market close. Joining us from the company is CEO John Dillon and President and CFO Steve DiMartino. Today's calls will include a discussion of the company's key operating strategies, the progress on these initiatives, and details on our fourth quarter and full year financial results. We will then open the call to participants for questions. As a reminder, this conference call contains statements about future events and expectations which are forward-looking in nature. Statements on this call may be deemed forward-looking and actual results may differ materially. For a full list of risks inherent to the business and the company, please refer to the company's SEC filings, including its reports on Form 10-K and 10-Q. Transact undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances that occur after the call. Today's call and webcast will include non-GAAP financial measures within the meaning of SEC regulation sheet. When required, reconciliation of all non-GAAP financial measures to the most directly comparable financial measures calculated and presented in accordance with GAAP can be found in today's press release as well as on the company website. And with that, I'll turn the call over to John.

Thanks, Ryan, and good afternoon, everyone, and thank you for joining us today. I'm pleased to report that Transact closed 2025 with a strong fourth quarter, building on the momentum we established earlier in the year. This performance positions us well, heading into 26th. as we focus on driving revenue growth in the FST, that's food service technology vertical. And we expect software to serve as our primary growth engine going forward, supported by targeted and disciplined investments across the business, particularly in marketing and growth initiatives. And I'll share some of those details shortly. In the fourth quarter, we sold 1,434 BOHA terminals, bringing the full year total to 7,317, which is a 36% increase year over year from 24 when we sold 5,371 units. On day one, my top priority was to improve our go-to-market and sales motions. There is always still work to be done, but given the success we've had placing new terminals, it's clear to me that we're moving in the right direction. The growth underscores the effectiveness of the land and expand strategy that we use as we continue to increase penetration within the customer base. And it's a large customer base, so that's good. Units sold continue to be the best leading indicator of our sales organization's performance, so I report that every quarter. And it is encouraging to see strong retention across our install base, which is one of the metrics I'm hoping to introduce next. probably in the next quarter or two as we discuss the different KPIs, key performance indicators that we report and we use to measure internally. I'm going to report those publicly. Before going into the quarterly highlights, let me update you on strategic priorities for 26. As many of you know from our discussions, we're evolving our focus towards revenue growth, of course, but particularly in FST, food service. And we're funding that expansion through the steady cash flows from our casino and gaming vertical. We believe that software is unequivocally our growth engine going forward. And that this is where we'll drive not just revenue, but also margin expansion. In 25, we took an important step forward with our acquisition of the source code for the And in 26, we intend to leverage our control of the code to enhance the offerings, introduce new applications, and capture higher margin recurring revenue. That's ARR, annual recurring revenue, and that's software. We expect to deliver positive adjusted EBITDA for 26 while making targeted investments in sales and marketing to support the growth without compromising our fiscal disciplines. This includes strengthening our sales team with a sharper focus on the software-led solutions and prioritizing the upselling of software modules into the existing customer install base. We are refining our go-to-market strategy with emphasis on competitive pricing, some strategic partnerships, and targeted outreach in high-potential sub-verticals such as the QSR, which is quick-serve restaurants, convenience stores, grab-and-go sushi, which has turned into a really strong market for us, and corporate food services. Those are people that do, say, a stadium or a campus, a college, university, or a hospital organizations that under contract will provide the food services, and we are having good success in that market, sub-market as well. These initiatives will require measured increases in spending, including selective hires in key roles, expanded digital marketing, and continued investment in our product roadmap. We plan to maintain a disciplined cost management regimen to target positive adjusted EBITDA and preserve the strength of the balance sheet. We should hope we're going to do that, and we are. On that note, the transition following our acquisition of the BOA source code is progressing smoothly. We've made tangible strides standing up our own fully operational version, and we continue to expect the launch targeted for mid-year 2026. This ownership not only provides operational freedom, but also enables us to accelerate software innovations, like exploring an application store model for our terminals, for example. This could allow users to opt into new applications directly on the hardware. It would drive additional software revenue streams as well. It's still a future project, but one we're excited about as we shift from a hardware-centric focus to a software-driven solutions provider environment. We're also working on migrating existing customers to a public cloud platform, which will enhance scalability and open up more cross-selling opportunities for us. Longer term, we're aiming to get our install base up to something like $200 per machine per month. That would be AR or actually MRR, monthly recurring revenue. It's a great thing if we can do it, and that's where we're targeting. This would unlock significant value given our growing install base. I think right now we've got some 18,000 to 19,000 online terminals in the marketplace, and we're adding more every day. So that's an important opportunity for us. And for context, data from comparable SaaS software service models shows that this level is very achievable. And we'll emphasize this through our sales team software-focused pitches, the GTM, the go-to-market enhancements, and the sales training. So that's a key area of focus for us in 2016. Now, turning over to the FST highlights for the fourth quarter, total FST net sales came in at 4.8 million, up 12% year-over-year, fueled by hardware placements, expanding software adoption, and record quarter for labels. Recurring FST revenue reached 3.4 million, with the ARPU, that's the average revenue per unit, at 756 per unit. Labels hit an all-time high at 2.6 million in the quarter. And while label sales can be lumpy, they're not only margin accreted, but they also help us build sticky, no pun intended, sticky long-term relationships with our customers by providing best-in-class, cost-effective labels that help operators with compliance, branding, and efficiency. We're fostering greater retention and hopefully opening doors for future software integration sales in the future. Customer intimacy is really important, and this allows us to be a key part of the customer's, if you will, business operation, and we enjoy that, and it's a good relationship, and we have a degree of competence that none of the other vendors that might be in the marketplace do. Our BOHA terminal two rollouts from prior quarters continue to progress as expected, and our installed base of roughly 40,000 legacy, these are offline terminals to Accudate and the first generation BOHA units, remain a prime opportunity for additional upgrades. We saw solid conversions and expansions throughout 2025, including further deployments with our large global QSR and also within the C-Store customer base where our Terminal 2 is boosting efficiency, reduces waste, improves margins for our clients. In the fourth quarter, we had three new logo additions with about 600 potential future units, and we're confident in our new logo pipeline for 2026. As I mentioned last quarter, we're also excited about two potential new revenue levers in BOHA. Near-term, the labels business, as I mentioned, continues to perform well with potential for label-only deals where customers value our quality, expertise, pricing edge, and our label design software. Longer-term, the App Store concept I mentioned could transform our terminals into platforms for third-party applications, significantly boosting software revenue and, frankly, stickiness. In accordance with our public disclosure obligations, we'll keep you updated when appropriate as these initiatives develop, but our improving sales and GTM strategies placing heavy emphasis on these software opportunities. Before moving on, let me touch on our new Chief Marketing Officer, Dana Loof, who joined us recently to lead our marketing and growth initiatives. And while it's still early days, For Dana, she has hit the ground running, and it's been an absolute pleasure working with her so far. Her priorities will include competitive positioning, messaging, a press release drumbeat, and lead generation. And of course, all of the content that we generate and that we create will find its way to refresh our somewhat lackluster website presence. It's been kind of a thorn in my side. I want that website to tell our story and tell it effectively, and we're going to get there pretty soon. As well, I expect to complement that with an active investor outreach program beginning in Q2 to tell a story, share the strategy along with our plans for growth. We're looking forward to the impact she will have on our business and we'll keep you all a price of progress against these initiatives. Shifting to casino and gaming, we recorded net sales of 5.3 million for the quarter, up 13% from last year. and 2025 sales of 26.9 million, up 32% from 2024. While we did see some sequential softening in domestic demand towards the end of the year as anticipated due to macro headwinds in Las Vegas and broader casino performance, for some reason, the international sales continue to be strong. Our new domestic OEM win, which we talked about in the last few quarters, gave us significant momentum in 2025, which has begun to taper off a bit as they work down their inventory while they wait for the next jurisdictional approval for new rollout. Although casino and gaming business is highly cyclical, I want to emphasize that there is always significant free cash flow generated from it, and we do not expect that to change in 2026. Different topic in gaming and casino are A relatively new Epic TR80 in the marketplace, the thermal roll printer, is gaining traction in sports betting kiosks and video lottery terminals, and we anticipate it to become a more meaningful contributor this year. Overall, this vertical remains a reliable cash cow, funding our FST investments while we explore expansion like charitable gaming and deeper Epic Central integrations for recurring revenues. Moving on to financial guidance for 26, the company expects 26 net sales to be between 55 million and 57 million. With an adjusted EBITDA, the company expects that to come in between 800,000 and 1.5 million positive. So I'm optimistic about the direction of the business in 26, particularly around our FST software initiatives and Dana's priorities for the year. We've delivered consistent BALHA growth, recorded solid label performance in the fourth quarter, and achieved both our revenue and adjusted EBITDA guidance for the year. Our enhanced sales team and GTM, that's go-to-market strategy, will emphasize software upsell, partnerships, and targeted subvertical expansion to drive this forward with measured incremental investments intended to keep us above that adjusted EBITDA break-even line and to protect our balance sheet. We believe that our casino business provides stability regardless of where we are in the cycle of the market and controlling our software unlocks tremendous potential for the recurring revenue growth. Our focus remains execution, fiscal discipline, and creating shareholder value through prudent growth. And we look forward to updating you on progress in that regard. To sum it up, this was a turnaround. It's been a lot of work. It's been a lot we have to do. A lot's been done, and we believe we've now turned the corner. The original opportunity is still in front of us, and we're ready to go get it and deliver on the promise. Lots of work ahead, but now it's all what I call it's all good work. So with that, let me pass the call over to Steve for a more detailed review of the numbers. Steve?