TransAct Technologies (NASDAQ:TACT) reported higher first-quarter 2026 sales and swung to profitability, helped by strength in its casino and gaming business and continued growth in recurring revenue tied to its food service technology platform.
On the company’s earnings call, CEO John Dillon said TransAct delivered a “solid” first quarter, with total net sales of $14.4 million, up 10% from $13.1 million in the prior-year period. Adjusted EBITDA was $1.4 million, compared with $544,000 a year earlier and negative $499,000 in the fourth quarter of 2025.
Food service strategy centers on recurring software revenue
Dillon said the company remains focused on growing its Food Service Technology, or FST, business, with software serving as the “primary growth engine” supported by targeted investments to accelerate sales.
FST net sales were $4.7 million in the quarter, down 4% from $4.9 million in the prior-year period and down 2% sequentially. TransAct sold 1,370 BOHA! terminals during the quarter, driven mostly by upgrade orders from its installed base of more than 40,000 older units, Dillon said. The company ended the quarter with 19,959 online terminals, an increase of 1,062 from the fourth quarter of 2025.
Recurring FST sales, which include software and service subscriptions as well as consumable label sales, rose 26% to $3.3 million from $2.7 million a year earlier. Dillon said software revenue increased 23% year-over-year, giving management confidence in its strategy to monetize software more effectively.
“In the past, we didn’t really do this,” Dillon said, referring to monetization of the installed base. “In fact, software was often bundled for free to make a hardware sale. Now our focus is to ensure that our customers are paying for and receiving the fair market value of our leading software offering.”
DeMartino said average revenue per unit, or ARPU, was $709 in the first quarter, down 7% from $761 a year earlier and down 6% from $756 in the fourth quarter. He said the company is making progress transitioning a large hardware-only customer toward a recurring model and expects that effort to contribute positively to ARPU in coming quarters.
Labels and new customer wins support FST pipeline
Label sales totaled $2.6 million in the quarter, up 26% from the prior-year period. Dillon attributed the increase to stronger volumes from long-standing customers, including Love’s Travel Stops and Hissho Sushi, as well as the company’s 2025 win at Yummy Sushi.
Dillon said labels are a margin-accretive part of the business and help increase customer retention because TransAct designs software and assists with labeling systems. He also said labels-only deals could become an entry point for customers that may later adopt additional BOHA! Suite applications.
During the first quarter, TransAct landed 22 new logo accounts through direct sales and market partners, with approximately 1,405 potential future units. Dillon described the company’s approach as a “land and expand” strategy, adding that expansion business from existing customers requires less sales investment than winning new accounts.
Dillon also highlighted the January hiring of Chief Marketing Officer Dana Loof, saying she has improved TransAct’s marketing structure, competitive positioning, messaging and lead generation efforts. He said the company has already seen improvements in its press cadence and digital presence and is working on updates to its website.
Casino and gaming sales rise sharply
Casino and gaming net sales increased 24% to $8.3 million from $6.7 million in the first quarter of 2025. DeMartino said domestic sales rose 20% year-over-year, supported by several large domestic original equipment manufacturers, while international printer sales increased 35%, with contributions from Europe and the Asia-Australia region.
Dillon said the company’s Epic TR80 product is gaining traction internationally in roll-fed gaming applications, including kiosk betting. He described casino and gaming as cyclical and “lumpy,” but said it remains a significant free cash flow contributor and that TransAct expects that to continue in 2026.
DeMartino said the company expects quarter-to-quarter fluctuations in casino and gaming sales, but still expects the segment to contribute positively to cash flow throughout the year.
Margins improve as operating costs edge higher
Gross margin rose to 50.3% in the first quarter, up from 48.7% a year earlier and 47.6% in the fourth quarter. DeMartino said the improvement was largely due to strong casino and gaming sales. The company continues to expect full-year 2026 gross margin in the high-40% range.
Total operating expenses were $6.5 million, up 2% from $6.4 million in the prior-year period. Engineering and research and development expenses fell 16% to $1.4 million as TransAct began capitalizing R&D costs related to bringing BOHA! software in-house. Selling and marketing expenses rose 5% to $2.2 million, reflecting new hires, higher travel expenses and commissions tied to stronger sales. General and administrative expenses increased 10% to $2.9 million, primarily due to higher share-based compensation and recruiting fees.
POS automation sales of the Ithaca 9000 printer were $620,000, essentially flat from $618,000 a year earlier. DeMartino said those sales remain in a normalized range. TransAct Services Group sales declined 5% to $764,000, driven by lower spares and accessories revenue as the legacy installed base continues to wind down.
Company raises adjusted EBITDA outlook
TransAct reaffirmed its 2026 net sales outlook of $55 million to $57 million. Dillon said the company raised its adjusted EBITDA outlook to a range of $1 million to $1.75 million, citing first-quarter performance.
Dillon also said TransAct is making progress on moving its software to a new platform after acquiring the software source code last year. He said the expected go-live date has been pulled forward from the first quarter of 2027 to late second quarter or early third quarter of 2026. He said ownership of the source code and launching TransAct’s own hosting platform are important to the company’s recurring revenue model and could support future software innovation, including a potential application store model for its terminals.
TransAct ended the quarter with $18.8 million in cash, compared with $20.4 million at year-end 2025. The company had $3 million in outstanding borrowings under its credit facility with Siena Lending.
The call also marked DeMartino’s final earnings call as CFO after a 30-year career with TransAct. Dillon thanked him for his service, noting that DeMartino has been with the company since its original IPO in 1996 and is expected to support the company in various capacities through at least the end of the year. No analysts asked questions during the call’s question-and-answer session.
About TransAct Technologies (NASDAQ:TACT)
TransAct Technologies Inc designs, manufactures and distributes secure card issuance systems and embedded transactional printing solutions for a variety of industries. The company’s portfolio includes high-speed card printers, card personalization and issuance software, as well as embedded printers used in kiosks, point-of-sale terminals, lottery machines and gaming applications. TransAct’s products are built to deliver reliable, on-demand printing and secure card encoding for markets that require rapid, accurate issuance of payment cards, identification badges and tickets.
Within its secure card solutions segment, TransAct offers turnkey systems that integrate card printing, magnetic stripe encoding, smart card personalization and instant card issuance software.
