Yahoo Finance Transact Technologies Inc (TACT) Q1 2024 Earnings Call Transcript Highlights: Navigating ...
Total Revenue: $10.7 million, down 52% year-over-year.
FST Revenue: $3.3 million, down 5% year-over-year.
Recurring FST Revenue: $2.4 million, up 3% year-over-year.
Casino and Gaming Revenue: $5.7 million, down 64% year-over-year.
Net New Installations: 856 for the quarter.
Total Online Terminals: 15,370 in service.
Adjusted EBITDA: Negative $701,000 for the quarter.
Net Loss: $1 million or $0.1 loss per diluted share.
Full Year Revenue Guidance: Adjusted to $45 million - $50 million.
Full Year Adjusted EBITDA Guidance: Between negative $2.5 million and negative $3.5 million.
Release Date: May 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
Recurring revenue increased to $2.4 million, showing growth in stable income sources.
Introduced the new Baja T2 product, receiving positive feedback and approvals, indicating innovation and potential market expansion.
Entered new markets such as assisted living communities, demonstrating versatility and ability to adapt technology for various needs.
Added eight new customers with potential for significant terminal sales, enhancing future revenue prospects.
Strong international demand for QSR technology, indicating robust global market presence and growth potential.
Negative Points
Total sales decreased by 52% year-over-year to $10.7 million, indicating significant revenue challenges.
One large client transitioning to a smartphone app model, which will replace substantial label sales revenue.
Loss of 7-Eleven as a client due to their shift to an in-house technology solution, impacting future revenue and installed base.
Casino and gaming revenue down 64% due to market oversupply and competitive pressures.
Adjusted EBITDA projected to be negative, between -$2.5 million and -$3.5 million, reflecting operational and financial struggles.
Q & A Highlights
Q: Can you provide details on the eight new logos and the potential terminal volume they represent? Additionally, have the two FST transactions that slipped into Q2 been shipped? A: (John Dillon - CEO, Director) The eight new clients represent the potential for over a thousand units over time. We employ a land-and-expand strategy, starting small and expanding as the product proves its ROI. Regarding the two transactions that slipped, one was delayed due to a security audit by a large QSR, but it's back on track now. The other is expected to close in the next few weeks.
Q: With the change at 7-Eleven moving to an in-house system, can you clarify the impact and your perspective on this development? A: (John Dillon - CEO, Director) 7-Eleven's shift to an in-house system was a strategic decision to cut costs, not a reflection of our product's performance. They are moving all in-store applications to a single smartphone system. This will impact about 5,400 of our terminals and reduce our recurring revenue. However, this doesn't reflect a loss due to product performance but rather their internal strategy change.
Q: Can you discuss the new casino gaming terminal model and any potential software opportunities in sports betting? A: (John Dillon - CEO, Director) The new model, TR. 80, is a kiosk printer for sports betting, replacing the Epic 80. It's designed specifically for this purpose and fits well into sports betting kiosks. Regarding software, it's too early to determine if there's a direct software opportunity like Epic Central in sports betting, but client intimacy and digital communication might play a role in future developments.
Q: Could you provide an update on the strategic alternatives being explored by the company? A: (John Dillon - CEO, Director) We are currently working with an advisory service to explore strategic challenges and opportunities, including M&A strategies. We will update our investors as significant developments occur.
Q: What are the terminal numbers for this quarter, and how does it compare to previous quarters? A: (Steven Demartino - President, CFO) We ended the quarter with 15,370 terminals, having sold 901 new terminals during the quarter. This is part of our ongoing efforts to expand our terminal base and market presence.
Q: With the ongoing changes in 7-Eleven's technology strategy, how do you see this affecting other convenience stores and their adoption of your technology? A: (John Dillon - CEO, Director) While 7-Eleven's move is specific to their strategy, it doesn't necessarily reflect broader market trends. Our technology tends to offer more significant advantages in more complex operational setups than a typical convenience store like 7-Eleven, so we continue to target those opportunities where our solutions can provide the most value.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
