Transact Technologies (TACT) Reports Q3 EPS of $0.05, Revenues Miss
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Transact Technologies (NASDAQ: TACT) reported Q3 EPS of $0.05, versus $0.33 reported last year. Revenue for the quarter came in at $11.7 million versus the consensus estimate of $12.19 million.
Bart Shuldman, Chairman and Chief Executive Officer of TransAct, commented, “During the 2019 third quarter, TransAct continued the significant transition in the focus of our business to execute on the very large Restaurant Solutions market opportunity that our BOHA! products provides, including recurring software subscription, maintenance and service contracts and label sales and also sales of our purpose-built BOHA! hardware. While our 2019 third quarter results reflect the ongoing transition in our business, including the impact from our decision to exit certain legacy businesses as well as the impact from several large casino and gaming orders in last year’s third quarter that did not repeat, we are achieving notable progress with the roll-out of the BOHA! ecosystem. This success includes a ten-fold year-over-year increase in BOHA!-related SaaS revenue and an approximate three-fold year-over-year increase in restaurant solutions recurring revenue. Importantly, we generated growth in restaurant solutions net sales as well as significant growth in BOHA! label sales and service contracts that are reported in our TransAct Services Group (“TSG”) unit.
“Over the last three months, we have secured two new agreements for the BOHA! ecosystem which include one of our BOHA! SaaS-based apps and the TransAct Enterprise Management System, both of which helped grow our base of recurring revenue, as well as upfront sales of the BOHA! Terminal. These new wins highlight the wide variety of customers the unique BOHA! ecosystem can address and the significant potential of our solution to generate attractive levels of recurring revenue for TransAct. A large corporate customer approved the sale of BOHA! into its more than 1,000 fast food franchise locations across Canada, with active sales initiatives for the solution to franchisees now underway. We expect this three-year contract to yield average annual recurring revenue per unit of $275, and with the customer’s ongoing evaluation of five additional apps and two additional hardware solutions, recurring revenue from this customer could rise over time. We also reached an agreement to deploy BOHA! across a domestic regional food service operator’s 45 locations, 30 of which are expected to go live over the next 12 months. This agreement should yield annual recurring revenue of $2,500 per unit. As existing customers roll out BOHA! and integrate the solution, we have received feedback that it is bringing efficiencies to their businesses and simplifying their back-of-house operations. As a solution designed to lower labor costs, make restaurant and food service providers more efficient and productive and improve food usage, BOHA! is ideally positioned to aid restaurant and food service operators of all sizes as they offset rising wages and increased food costs.
“The commercialization of our BOHA! suite of apps and hardware solutions is gaining momentum, with restaurant solutions recurring revenue nearly tripling in the 2019 third quarter compared to the prior-year period and nearly doubling over the 2019 second quarter. In addition, one of our earlier adopters of BOHA! has already indicated that they are reviewing the potential to significantly increase the number of BOHA! installations from the originally agreed to level. We also saw our engagements with potential new customers rise in the 2019 third quarter. This early success in both deploying BOHA! solutions with current customers and generating new sales leads and trial activity with potential new customers continues to give us a high level of confidence that TransAct can successfully execute on what we believe is a total addressable market opportunity that will potentially exceed $1 billion.
“Our market-leading casino and gaming printer business remains a foundation for our long-term success and at the Global Gaming Expo in Las Vegas we announced an exciting new partnership with Acres 4.0 that will greatly improve the power of our Epicentral solution by opening up new real-time access to gaming floor data. As with the second quarter of 2019, we again saw the year-over-year comparability of our 2019 third quarter results impacted by several large orders that did not repeat. However, our interactions with customers at the Global Gaming Expo leads us to believe that the casino and gaming business remains stable and we expect to continue to benefit from this key market that supports our efforts to continue to ramp up our BOHA! business.
“As we look to the end of this year and in to 2020, we remain confident that BOHA! is on pace to become our largest-ever revenue generating opportunity. Our focus is on driving near- and long-term success for BOHA!, as we are determined to leverage our position in this emerging market to grow our business and create significant long-term value for our shareholders.”
For earnings history and earnings-related data on Transact Technologies (TACT) click here.
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