Transact Technologies (TACT) Q3 2025: BOHA Terminal Sales Jump 58%, Offsetting Casino Demand Dip
Transact Technologies’ third quarter underscored a decisive pivot to food service technology as BOHA terminal sales surged 58% year-to-date, counterbalancing emerging weakness in casino and gaming demand. The company’s acquisition of BOHA source code and ongoing expansion within convenience and quick-service restaurant channels signal a multi-year transformation, even as domestic gaming faces cyclical headwinds. Strategic capital allocation and recurring revenue growth position TACT for resilience and long-term upside as it leans into software and platform control.
Summary
- Food Service Momentum: BOHA terminal sales acceleration and recurring FST revenue signal platform traction.
- Casino Demand Softens: Domestic gaming headwinds emerged, though international and non-casino verticals offset some risk.
- Balance Sheet Strength: Ample cash and disciplined inventory management support continued investment in software and GTM expansion.
Performance Analysis
Transact’s third quarter results revealed a business in transition, with food service technology (FST) gaining share and recurring revenue becoming a larger driver. FST net sales climbed 13% year-over-year, propelled by hardware shipments and a notable 13% jump in average recurring revenue per unit (ARPU) to $792. The company’s BOHA platform, a cloud-connected kitchen automation and labeling system, is increasingly central to this growth, with 1,591 terminals sold in Q3 and 5,883 year-to-date, up sharply from the prior year period. Recurring FST revenue reached $3.3 million, up 13% year-over-year, reflecting both software subscriptions and consumable label sales.
Casino and gaming sales rebounded 58% year-over-year to $7.1 million, but management cautioned that domestic demand is decelerating due to macroeconomic softness and customer overstocking. International and non-casino verticals, including sports betting kiosks and charitable gaming, provided some offset. Meanwhile, legacy POS automation and services continued to shrink, now representing a minor share of total revenue. Gross margin expanded to 49.8%, up 160 basis points sequentially, aided by mix and pricing actions, while operating expenses rose 8% on higher compensation and sales investment.
- BOHA Terminal Acceleration: Year-to-date sales up 58%, confirming land-and-expand strategy effectiveness.
- Recurring Revenue Mix: FST recurring revenue now forms a majority of FST sales, driven by labels and subscriptions.
- Casino Volatility: Domestic market headwinds flagged for Q4, with international and new verticals as partial offsets.
Transact exited the quarter with $20 million in cash, a direct result of inventory reduction and disciplined cost management, providing flexibility to invest in software and platform initiatives.
Executive Commentary
"The improving results for food service technology, we call it FST, that business highlights the effectiveness of the go-to-market improvements, and we believe this trajectory sets us up for ongoing progress and continuing improvement as we move into 2026."
John Dillon, Chief Executive Officer
"Our gross margin performance reflects higher sales as well as a higher mix of casino and gaming sales compared to the prior year, somewhat tempered by modest cost headwinds from overhead, inflation, and tariffs."
Steve DiMartino, President and Chief Financial Officer
Strategic Positioning
1. BOHA Platform Control and Expansion
The acquisition of the BOHA source code for $2.55 million is a pivotal move, granting Transact full autonomy to develop, host, and monetize its core food service software. This unlocks roadmap flexibility, including the potential launch of a BOHA app store, which could meaningfully expand high-margin software revenue streams by enabling direct upsell to existing hardware customers. The company expects the fully supported hosted version to launch in early 2027, with capitalized costs to be amortized over five to seven years.
2. Recurring Revenue and Label-First Strategy
Recurring FST revenue, encompassing software subscriptions and consumables, is steadily rising in both absolute and per-unit terms. Management highlighted a near-term focus on “labels only” deals, leveraging Transact’s reputation for cost-effective, best-in-class labeling solutions. This strategy not only drives stickier customer relationships but also positions the company to capture incremental wallet share even among non-terminal buyers.
3. Gaming Segment Adaptation
Casino and gaming remains a significant revenue contributor, but the outlook is clouded by domestic demand softness and overstocking among key customers. The company is adapting by incentivizing new logo wins and targeting verticals such as charitable gaming and sports betting kiosks, where the “winner-take-all” nature of state contracts could yield outsized wins if adoption broadens. International performance remains a relative bright spot.
4. Sales Compensation and Go-to-Market (GTM) Execution
A revamped sales compensation plan now rewards competitive takeaways and new customer wins, sharpening focus on net new logos over simple expansion. While new logo additions in FST fell short of expectations this quarter, management remains confident in pipeline coverage and is intensifying efforts on lead generation, funnel optimization, and Tier 1 account expansion, particularly in QSR and convenience channels.
Key Considerations
TACT’s Q3 results reflect a business model shift from legacy hardware to software-enabled, recurring revenue solutions, underpinned by disciplined capital allocation and operational execution. The quarter’s context is shaped by:
Key Considerations:
- Platform Autonomy: Full BOHA source code control unlocks product roadmap flexibility and higher-margin software monetization.
- Recurring Revenue Upside: Labels and subscriptions are driving ARPU growth, with “labels only” deals expanding addressable market.
- Gaming Cyclicality: Domestic casino demand is softening, but international and non-casino verticals offer some counterbalance.
- Balance Sheet Flexibility: $20 million in cash supports continued investment in product, GTM, and potential M&A or R&D initiatives.
- Sales Execution: New incentives and pipeline management aim to accelerate new logo wins, though FST cycles remain long and lumpy.
Risks
TACT faces material risks from cyclicality in its casino and gaming business, where domestic demand is already weakening and overstocking could persist into 2026. The long sales cycles in FST, coupled with reliance on a handful of large customers, introduce lumpiness and forecasting uncertainty. Tariff-related cost inflation remains a watchpoint, though recent price increases have not yet triggered customer pushback. Execution risk around the BOHA software transition and app store vision also looms, with significant investment not yielding returns until 2027 and beyond.
Forward Outlook
For Q4 2025, Transact guided to:
- Sequential decline in casino and gaming sales due to domestic headwinds
- Steady to modestly rising FST revenue, with continued focus on recurring streams
For full-year 2025, management maintained guidance:
- Total revenue of $50 million to $53 million
- Adjusted EBITDA between break even and $1.5 million
Management highlighted several factors that will shape the outlook:
- BOHA platform expansion and new logo wins in FST
- International and non-casino gaming momentum as potential offsets to domestic softness
Takeaways
TACT’s Q3 marks a turning point as recurring revenue and platform control become central to the investment case, even as legacy segments face cyclical and competitive pressure.
- FST Growth Engine: BOHA terminal acceleration and recurring ARPU expansion provide a foundation for durable, higher-quality revenue.
- Gaming Volatility: Domestic casino softness is a headwind, but the company’s push into new verticals and international markets could cushion the impact.
- Software Transition: The shift to BOHA platform ownership and potential app store economics is a multi-year lever that remains in early innings but could transform TACT’s margin profile if executed well.
Conclusion
Transact’s Q3 2025 results showcase a company in active transition, with BOHA-driven FST momentum and recurring revenue growth offsetting near-term gaming market volatility. The balance sheet strength and strategic software moves set the stage for a more resilient, higher-margin business model, though execution risks and sector cyclicality warrant close monitoring.
Industry Read-Through
TACT’s results reinforce the broader industry trend toward software-enabled automation and recurring revenue in food service and retail tech, as legacy hardware becomes commoditized and margin-dilutive. The company’s experience in casino and gaming also highlights the sector’s sensitivity to macro cycles and regulatory shifts, with overstocking and demand volatility likely to ripple across peers. The move toward platform control and app ecosystems is a clear read-through for other vertical solution providers seeking to capture higher-margin, sticky revenue streams while navigating hardware commoditization and channel disruption.