TransAct Technologies. It's a name that evokes a sense of quiet consistency in the world of specialized printers, particularly in the casino and gaming space. But beneath the surface of recent earnings calls, a much more dynamic narrative is unfolding, one that even seasoned analysts might have missed. 7-Eleven, the ubiquitous convenience store chain, just dropped a bombshell, terminating their use of TransAct's BOHA! terminals. On the surface, this looks like a devastating blow, a $3.6 million annualized recurring revenue hit. But what if, within this setback, lies the seed of a truly remarkable turnaround for TransAct?

Let's rewind to John Dillon's, TransAct's CEO, opening remarks on the Q1 2024 earnings call. He paints a picture of a company on the cusp of transformation, evolving from a hardware provider to an agile, industry-agnostic transaction validation platform. It's ambitious, but is it just corporate buzzword bingo, or does the data support this vision?

The 7-Eleven situation, initially alarming, reveals a fascinating nuance. 7-Eleven, with their parent company's vast engineering resources, spent years developing a custom, in-house smartphone application to handle every in-store function. BOHA! wasn't replaced, it was outmaneuvered by a highly specialized, single-client solution. Dillon, refreshingly candid, admits to being blindsided but also points out that 7-Eleven, with its relatively simple store operations, wasn't an ideal showcase for BOHA!'s true capabilities.

Now, here's where the plot thickens. While losing 7-Eleven stings, it frees TransAct from a low-ARPU client, potentially opening the door to much more lucrative opportunities. Dillon, in both the Q4 2023 and Q1 2024 calls, emphasizes a new strategic focus: landing and expanding within the 'top thousand organizations' in the US and their international operations. These are complex, multi-unit businesses with sophisticated back-of-house needs, the perfect playing field for BOHA!'s robust capabilities.

And the numbers, cautiously optimistic yet intriguing, offer a glimpse into this potential shift. TransAct's FST pipeline growth, a new metric Dillon introduced for transparency, has exploded, increasing by a staggering 161% over the past two quarters. This indicates a significant, forward-looking opportunity, one that dwarfs current FST sales. Even more telling is the addition of 20 new logos (new clients) in just the past two quarters, clients with the potential to purchase thousands, if not tens of thousands, of BOHA! terminals.

The question now is execution. Dillon acknowledges that progress will be lumpy, a reality for any company navigating the complex sales cycles of the enterprise market. But the ingredients for a compelling comeback story are in place: a refocused sales team, a streamlined cost structure (achieving $3 million in annualized operating expense savings), and a new product, the BOHA! T2, designed specifically for the demanding needs of enterprise clients.

Hypothetical Scenario: TransAct's Potential Comeback

Here's a hypothesis, based on the available data:

Assume: TransAct successfully lands just five new enterprise clients in 2024, each with the potential to deploy 5,000 terminals over the next 24 months. Result: This translates to a potential 25,000 terminal deployment, nearly doubling their current installed base and eclipsing the 7-Eleven loss. Further Assume: These new clients opt for recurring revenue features (labels, software, etc.) with an average ARPU of $800 (considerably higher than the 7-Eleven ARPU). Outcome: TransAct generates $20 million in annualized recurring revenue from these new clients alone, a nearly six-fold increase from the 7-Eleven loss.

This is, of course, a hypothetical scenario. But it illustrates the potential magnitude of TransAct's new strategy, a strategy hidden in plain sight within the very transcript that seemingly delivered a significant setback. 7-Eleven might have walked away, but in doing so, they might have inadvertently set the stage for a TransAct comeback story far more dramatic and lucrative than anyone imagined.

BOHA! Terminal Deployments Over Time

The following chart illustrates the potential growth in BOHA! terminal deployments based on the hypothetical scenario outlined above.

"Fun Fact: TransAct's printing technology has even been used to create edible receipts! Talk about a sweet deal."