Greetings, and welcome to the TransAct Technologies Third Quarter 2025 Earnings Call. As a reminder, this conference is being recorded. It is now my pleasure to introduce Ryan Gardella of Investor Relations. Please go ahead.

Thank you. Good afternoon, and welcome to the TransAct Technologies Third Quarter 2025 Earnings Call. Today, we'll be discussing the results announced in our press release issued after market close. Present from the company is CEO, John Dillon, and President and CFO, Steve DeMartino. Today's call will include a discussion of the company's key operating strategies, the progress on those initiatives, and details on the third quarter financial results. We'll 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 as 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-Q and 10-K. 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 G. When required, a 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'd like to turn the call over to John.

Thanks, Ryan, and good afternoon, everyone, and thank you for joining us today. I'm delighted to report that TransAct delivered another solid quarter in Q3 and continuing momentum that we've built throughout 2025. For the quarter, we sold 1,591 BOHA! Terminals, bringing the year-to-date total to 5,883 units, which is up 58% from the 3,732 units sold through the first 9 months of 2024. I'm pleased with this increase and believe it shows clear progress against our initiatives. As I mentioned in the past, units sold remain the best indicator of a successful sales organization. When I first joined as CEO, I laid out a clear land and expand strategy, and clearly, that expand motion is working well. The improving results for foodservice technology, which we call FST, highlight the effectiveness of our go-to-market improvements, and we believe this trajectory sets us up for ongoing progress and continuing improvement as we move into 2026. Our goal is to build the business with repeatable execution, leaning into the competitive advantages that make TransAct unique and allow us to win in the market. And before diving into the results, let me provide an update on our acquisition of the perpetual license to the BOHA! source code, which we announced back in August. As a reminder, we acquired this royalty-free license for $2.55 million, and it gives us full control to use, host, market, sublicense, distribute, copy, and modify the code. The implementation and stand-up process have gotten off to a good start, and we're encouraged by what this means for TransAct in our BOHA! business. This acquisition provides greater operational freedom, the ability to enhance the software without constraint, and long-term value creation for shareholders and employees. We expect the fully operational and supported version to launch in early 2027 and already see tangible progress towards that goal. Now let me dive into our FST highlights for the quarter. Total FST net sales rose to $4.8 million, up 13% year-over-year, driven by hardware sales and growing recurring revenue, including a particularly strong quarter for labels. Recurring FST revenue climbed to $3.3 million, generating a modest uptick in ARPU to $792 per unit from $700 in the prior year quarter. The main takeaway on the FST side of the business is that we're executing against our priorities and moving the needle meaningfully. We see good momentum, and our GTM changes are yielding positive results. The rollouts from prior quarters are progressing as planned, and our existing base of approximately 40,000 AccuDate 9700 units plus first-generation BOHA! Terminals remains a ripe opportunity for upgrades and expansion. We're focusing on that opportunity alongside new clients and customer growth. We continue driving conversions and expansions with key customers in the third quarter, including further upgrades across multiple Tier 1 accounts. This includes additional rollouts with our major QSR customer and multiple convenience store chains where the Terminal 2 is delivering real value to customers in the form of increased efficiency, reduced waste, and ultimately higher margins for them. We added 2 new logos in the quarter, which, while lower than we expected, was more than offset by expansion with our existing customer base. In line with this, we're excited about 2 recent customer wins that demonstrate the appeal of our BOHA! platform. First, in September, we secured a rollout with one of the nation's largest sushi franchise operators, which has over 2,100 locations. They placed initial orders for 596 units with our Terminal 2 LTE, which means they work with cellular phone lines, in other words, the wireless part. These units are part of a broader initiative to modernize their network, with plans to eventually equip all their locations. The LTE version solves connectivity challenges for franchises in supermarkets or off-network environments, eliminating the need for MiFi devices while enabling reliable cloud access and remote updates. This enhances food quality, operational consistency, and efficiency, leading to better customer experiences and improved financial margins. As I said in the announcement, this deployment reinforces the real-world value of our BOHA! platform, reflecting its strong ROI, reliability, and scalability. Additionally, in October, we added another convenience store chain with 81 locations to our growing BOHA! customer base. They've deployed 73 BOHA! Terminal 2 devices for labeling workstations and adopted BOHA! Temp at 47 food service locations to digitize back-of-the-house operations. This integration streamlines workflows, reduces manual processes, and supports passive compliance while driving higher margins and operational efficiency. Before moving on, I wanted to mention that we're looking at 2 unique revenue opportunities in the boat space: one near-term focus and a second on a longer-term visionary path. The first looking at near term is that our labels are not only an important contributor to recurring revenue, but a fundamental strength of the business. We have some prospective customers who may be interested in labels only, as we are recognized as the best-in-class provider and, importantly, cost-effective versus our competitors. Second, from a longer-term visionary perspective, we're evaluating the development and launch of an app store for our BOHA! Terminals to allow existing users to opt into new software purchases right over the hardware. This is a future project on our roadmap to consider now that we own the software. I wanted to point that out, but it is a future project, and I think it's a great idea, and I'm looking forward to making progress on it. For developments that are currently hardware-only, this could be a key driver of future software revenue, and we'll update you on these initiatives as we develop them in the coming quarters. Shifting to casino and gaming, we recorded net sales of $7.1 million in the quarter, which was up 58% from the year prior. However, as everyone has seen in the headlines, domestically, we are facing challenges on the demand side of the environment, with Las Vegas and broader casino performance encountering headwinds. Our domestic OEM partners have indicated slowing demand, and one large buyer from the first 9 months of 2025 is now in an overstock position while awaiting jurisdictional approvals on new machines. We currently believe this to be a macroeconomic situation that we expect will flatten out in coming quarters. While we do expect this to impact our fourth quarter sales, we are hopeful that improving dynamics will emerge as we enter and move through 2026. I'd note that these factors are not being seen internationally, where we had a strong quarter both sequentially and year-over-year. That said, we are also seeing traction with our Epic TR80 thermal roll printer, which is used in sports betting kiosks, video lottery terminals, and other applications. Sales for the first 9 months of 2025 have been modest, but we anticipate it becoming a larger contributor in 2026. Before handing the call over to Steve, let me update our financial outlook for 2025. Based on third-quarter and year-to-date performance, we're maintaining our full-year revenue guidance of $50 million to $53 million, reflecting continued FST expansion and casino stability amid the anticipated fourth-quarter deceleration. Adjusted EBITDA is expected to range from breakeven to positive $1.5 million for the full year, assuming no major disruptions in supplier or demand. I'd also like to call out that our balance sheet remains strong. We have $20 million in cash on the balance sheet at the end of '23, thanks to inventory sell down and disciplined management. This provides us ample working capital and flexibility to navigate any headwinds while positioning us for enhanced profitability and progress in 2026. To close out, I'm pleased with our third quarter results and the progress across the business. We drove significant BOHA! Terminal sales growth year-to-date, achieved higher FST sales with strong recurring contributions while maintaining positive adjusted EBITDA for the third straight quarter. The BOHA! platform is expanding successfully across our core subverticals, including convenience stores, health care, and sushi operators with two solid wins in recent months. We believe that our casino and gaming business remains strong despite experiencing some macro-driven economic softness, which we currently anticipate will continue during the fourth quarter. We maintain our focus on execution, operational improvements, and fiscal discipline to drive shareholder value. Now, I'll turn the call over to Steve for a detailed review of the financials.

Thank you, John, and thanks, everyone, for joining us this afternoon. Let's turn to our third quarter results in more detail. Total net sales for the third quarter were $13.2 million, which was down 5% sequentially but up 21% compared to $10.9 million in the prior year period. Sales from our foodservice technology market or FST for the third quarter were $4.8 million. That was up slightly by 2% sequentially and also up 12% compared to $4.3 million in the prior year period. Our recurring FST revenue, which includes software and service subscriptions as well as consumable label sales for the third quarter was $3.3 million. That was up 10% sequentially and up 13% compared to $2.9 million in the prior year period. Our ARPU for the third quarter of '25 was $792, which was consistent sequentially with Q2 but up 13% year-over-year. Our ARPU for Q3 improved versus the prior year due to strong growth in label sales. Our casino and gaming sales were $7.1 million, which was down 7% sequentially but up 58% year-over-year, reflecting the market rebound John discussed. Results were further driven by a new OEM win for use in non-casino charitable gaming applications, combined with normalized buying from almost all our major OEMs. As John mentioned, we expect our fourth-quarter casino gaming sales to be sequentially lower due to dynamics in the domestic casino market. POS automation sales for the third quarter declined sequentially by 32% and also declined 65% from the comparable prior year period to $399,000. As we discussed in the past, we believe that Ithaca 9000 printer sales have now reached a new normalized level based on competitive dynamics. Consequently, we expect sales for POS automation to remain in the range of $400,000 to $500,000 per quarter for the foreseeable future. Moving to TransAct Services Group or TSG, for the third quarter, TSG sales were down 8% year-over-year to $792,000. This decrease was due to lower demand for legacy spare parts on a year-over-year basis, somewhat offset by higher shipping revenue. We expect TSG sales to remain at about this quarterly run rate going forward, consistent with normalized demand. Moving down the income statement now, our third quarter gross margin was 49.8%, which was up from 48.1% in the prior year period and up 160 basis points sequentially. Our 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. We expect gross margin to remain in the mid- to high 40% range for the remainder of '25. I also wanted to give a brief update on our tariff situation. During the third quarter, we implemented a second small price increase to the original tariff surcharge we implemented earlier in '25 on applicable imported items. We did this to cover incrementally higher tariff and air freight charges we're incurring. So far, we haven't experienced any significant pushback from customers and don't believe this has negatively impacted our sales performance for the quarter. While we don't have any further price increases planned at this time, this is a fluid situation that we'll continue to closely monitor and update you all as needed. Our total operating expenses for the third quarter increased by 8% from the prior year third quarter to $6.5 million. Our engineering and R&D expenses for the third quarter were essentially flat at $1.65 million. Our selling and marketing expenses were up 11% to $2.1 million, and our G&A expenses were up 10% to $2.8 million. The increase in G&A was due largely to higher incentive and share-based compensation expense from our improved financial results. For the third quarter, we had positive operating income of $14,000 or 0.1% of net sales compared to an operating loss of $837,000 or negative 7.7% of net sales in the prior year period. On the bottom line, we recorded net income of $15,000 or breakeven EPS, compared to a net loss of $551,000 or negative $0.06 per share in the year-ago period. Our adjusted EBITDA for the quarter remained positive at $669,000, which was up from an adjusted EBITDA loss of $204,000 in the prior year period. Lastly, turning to our balance sheet. As John mentioned, we crossed $20 million in cash and cash equivalents on our balance sheet at the end of the third quarter. This was largely the result of a proactive inventory reduction program we initiated at the beginning of '25. Since the start of the year, through a combination of selling off remaining stock of older products and more tightly controlling stock of other products, we have been able to reduce our inventory levels by over $4 million. However, we expect inventories to tick up some beginning in the fourth quarter and into '26 as we restock new products in anticipation of growing future demand. In terms of our debt, we continue to maintain $3 million of required minimum borrowings under our $10 million credit facility at the end of the third quarter. Before I close, as we discussed last quarter, we believe the purchase of a copy of our source code will largely be a balance sheet event until we go live with our hosted version, which we anticipate to occur in early '27. To that end, we expect to capitalize the $3.55 million of consideration to be paid plus any additional costs we incur related to in-housing the source code through the go-live date in early '27. These costs will appear as an intangible asset on our balance sheet. At the go-live point, we'll begin to amortize the total amount of those capitalized costs to cost of sales on our income statement over a 5- to 7-year period. As of the end of Q3, we have made the first 2 installment payments totaling $1.35 million and capitalized these costs, which appear as an intangible asset on our balance sheet at the end of September. From a cash perspective, we expect to fund the remaining $2.2 million of the $3.55 million purchase price plus any other related costs from the current $20 million of cash on our balance sheet. The remaining $2.2 million is expected to be paid in installments, with approximately $200,000 to be paid in the fourth quarter of '25 and the remaining approximately $2 million to be paid during 2026. And with that, I'd like to turn the call over to the operator for questions.

The first question comes from the line of Jeff Martin with ROTH Capital Partners.

John, could you give us an update? You mentioned on the last quarter earnings call that in casino gaming, you're getting more aggressive and you're incentivizing winning competitive deals. Just curious how that initiative is going? Can you give us an update on the competitive landscape in that market?

I was on mute. Thanks for the question, Jeff. Let me just say that when you build a sales compensation plan for our sales team, you should assume that they're entirely coin operated. In other words, they're going to do exactly what makes them the most money. So what we did is we designed a plan so that if they close a net new customer or if they take a customer away from a competitor, they will get paid more. Without being too specific, it has definitely turned up the heat and enthusiasm to win business. That said, we're mindful that we have a bit of a duopoly in the marketplace, as we have one major competitor that we respect. We're not in a race to the bottom. They have their share, and we have ours. But when a new casino is set to come online, we're right there, and we believe our product and services are superior, along with our field team being the best in the business. We're focused on that, and the sales team is aware that winning new deals will lead to greater compensation than simply selling more products to existing customers.

Great. And then, Steve, I don't know if you can give us a sense of the magnitude of the fourth quarter impact on casino gaming?

Not yet, Jeff. I mean, we're not going to publicly disclose that, but we are seeing weakness in demand. It’s already mid-November, and we've observed this during the last month and a half. We expect this trend to continue for at least the remainder of the fourth quarter. I think it’s a temporary situation, and when we move into 2026, we should see improvements. However, for now, it appears that the fourth quarter will be weaker than the third quarter.

Right, right. Okay. And then with respect to the non-charitable gaming markets, are you seeing much on the regulatory front that we can see more states open up as we head into 2026 here?

Yes, that's very true. I mean, it's an opportunity for state governments to generate revenue without raising taxes. It’s quite interesting, similar to reinstating lotteries where some of the money goes to education, and some goes to the state, which they can use for other needs. Some of it goes to the player and some to either the operator or the venue. The market in this space is a winner-takes-all. When a vendor that supplies our machines wins, they often will get 100% of the business from a state. It looks promising in many states, and when one state adopts these changes successfully, others typically follow suit. We believe this area holds considerable potential for TransAct.

Great. And then my last question is on the new logo side in FST. I think you had 2 new logos last quarter. This quarter you commented that this was below your expectations. Could you help us frame how the pipeline is and how the new logo sales are developing from a pipeline perspective?

Sure. The sales cycles are long and tend to be uneven, especially since we're targeting the largest organizations in the food service industry. It resembles selling enterprise software. However, the 2 new accounts that we landed have the potential to deliver considerable volume over time, fitting into our land and expand strategy. The pipeline remains consistent. We have sufficient coverage to meet our internal forecasts. I'm comfortable with that. We continue to focus on go-to-market strategies, lead generation, and other initiatives that speed up the top of the funnel. While more new accounts are always better, the accounts we secured this quarter are expected to sustain us in the future. I'm closely monitoring performance and keeping our focus on that.

There are no further questions at this time. I'd like to turn the call back to John Dillon for closing remarks.

Thank you very much for your time and attention. We're happy to discuss the quarterly performance with anyone interested. You can reach out to Ryan Gardella, our IR representative. Again, thank you, and best wishes.

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.