EVRI - Earnings call transcript Q1 2021

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Operator

Thank you for standing-by. This is the conference operator. Welcome to the Everi Holdings, Inc.

First Quarter 2021 Earnings Conference Call.

As a reminder, all participants are in listen-only mode and the conference is being recorded. now Senior turn Vice would to conference I Pfund, Bill President, Instructions] like the to over [Operator Investor Relations. ahead. go Please

Bill Pfund

Thank Welcome, operator. you, everyone.

covers everyone harbor remind our today’s that me webcast. call Let and of disclaimer safe

to, will earnings and uncertainties filings, could from uncertainties are and those include, call involve differ our release during limited results that contain assumptions, but cause and Our which those statements call. our risks discussed to which actual contained in materially forward-looking These not of are risks SEC update posted in at today We May section other and statements, intend made to are the Investors of today, no X, our everi.com. which in as any forward-looking obligation website XXXX. corporate only and do not assume

place also on not reliance are such statements. cautioned to undue forward-looking You

call will directly the related GAAP and certain refer free each flow call our financial release This Investors and as be description earnings on our a such reconciliation the section well cash webcast a A of be in to to non-GAAP cash measures comparable of adjusted position. measure most A can EBITDA, in of net to as found in measure website. also and We non-GAAP replay today’s as and found the being our link Investors webcast is section X-K recorded. can website. and the

and are who today General Chief will Also Steve and and and Chairman FinTech Leader. us joining Lowenhar-Fisher, today be our the Ehrlich, Chief me recently Simmons, IR finance Randy Everi Rumbolz, Officer; on Kopjo, our projects. joined Leader; Mark Officer; Operating Business and on Mike and Labay, Taylor, Darren assisting Mark Games is Dean Business Officer; me President call Chief Joining Counsel; Kate Executive Financial

Now it’s the Rumbolz. my to over call turn Mike to pleasure

Mike Rumbolz

Bill and and thank you, everyone good for joining us. afternoon, Well, you thank

Miles shareholders moment will Board meeting. be at this take Miles level, retiring advancing to I’d annual Before instrumental to his to the year’s effective on Board Thank all IPO been served growth in since a begin our I At the him XXXX our from today, and since evolution thank has and future He want like has of all Kilburn, well initiatives. Board Everi who the Chairman his promoting XXXX. in you, Miles. of he’s our we We’ll wish miss valuable and been insights the endeavors. in

me by sharing let a highlights review Now, quarter. first our today from observations and few begin the

measured easing and rates. casino the when organic XXXX, we restrictions the the to of substantial to XXXX the gaming industry from believe performance has demand capacity initiatives Our American we have both on such progress we margins, basis, gaming a industry. our is and of impacts and increased with lingering and in tailwind improved and against vaccination of in income, financial EBITDA COVID-XX On even very best make demonstrate quarterly record XXXX net recovery our benefited unit quarter consolidated gaming favorably XXXX. sales flow. And business the to adjusted quarter, as quarter revenue cash our compares as first you of first reflecting parts of not all set levels. might imagine, record pre-COVID though our a into ongoing results growth continue North set our time recovered and our in XXXX’s first that the to records pent-up free Due

balance been adjusted a has the FinTech between and of reflective the an over outstanding operational of up Games over In The fact, EBITDA while stronger. XX% then are of quarter. operating our is income first was our basis, performance record variety examples. On XXXX first never segments was And the quarter these some factors. our XXXX, up of XX% complimentary

and deliver them build a at resulted track customers the efficiencies. since their Our time patrons their developed our same has demand increasing relationships an focus products help in record improves have on developing products Also, every from services with operating this excellence that innovative made consistent we stronger to our confidence customers whose products happen. the collaboration importantly, gives and worldwide team our of that that has operating commitment finally, all they execution and of we and expect. most And

strategy. has share games market. increased the The primary drive our ship prior the the of Now in cabinet made and recurring common II our Class in revenue streams games placements and these continue investment the our quarters, to to I’ll both the success multiple every the gaming daily side have Premium of unit achieved per and including of businesses have quarters as recent years been of that driving impacted pandemic premium higher recurring gains well popular are have pandemic installed in revenue long-term from our my base units in differentiated levels. focus our been it to win Those is our continues why a our The and quarter sustainability growth component the of operations, III remarks sale the the product has success in large gaming investments FinTech in we resiliency in the of our operations. In high increased for the for on throughout Games developing driver supported of business, to player Games that performance XXXX. as with fueling investments growth we XX believe Class margin ongoing our we’ve revenue operations. revenues. few today past the and categories

compared of the growth, games this of the at premium our first XX% quarter. premium XXXX footprint doubled than steady installed result over last a As base end comprise Today, of more two of years. to has our the units XX%

in reflecting casinos. been and commercial of tribal broad-based, casinos penetration rather increased of Our growth Class growing has unit III placements premium units

of first nearly quarter For example, large in California, jurisdiction, the increased has our XXXX. base a tribal XXX% since of premium units

portfolio, XXXX game a on themes wide Empire Kingdom large Our base time premium and is our Dragon curved we’ve area commercial cabinet. XXX% our new a that DCX progressive about to same Empire recently, our period. up jurisdiction two Monsterverse in in dual Nevada, on Very added game cabinet

confident Our Furthering the and our the recently progressive. place that as the games the our approval of ongoing New casinos, the Monsterverse wide of and and as continued success in expand our begin in wide in Nevada wide units area the Mask tribal opportunity in the we Jersey. we’re area this in the game area market now against Karate our record success progressive received category, progress market to units, to category. compete With linked are best joins Class available best III we Kid of in already

to our our the products pipeline record sales we of growing place the have I under am per and of unit of our propel confident share right Now growing daily Games development, our unit, our growth history to new given installed base, our in win business. ongoing ship that elements continue per

within the I have our items turn to FinTech The you the to conventions how become revenue access has FinTech reflecting access As cashless services both now evolved. better and our line of wide services, financial service solutions. line changed cash naming integrated that financial has our represent note of segment business, we the cash will business range

has from financial key reflect indicators the actual the transactions of all dispensed devices. funds occurring to Within access dispensing been services, ATM renamed our cash of performance

completed cashless include wallet, casino advanced kiosk cash our funds by cash in In digital become a both will it through cage. advances personnel self-service and as has our or a at completed fashion, a operations addition, customers either self-service

ATM While principally more of into years supplying operations. business customers that on just facilitating ago, based ATM casinos. type may than majority original today business our provide have is been standalone The machines transactions our financial

of we our value As solutions, out our power continue performing further to of around enhanced into and back of environment patrons will evolve and ecosystem the services. a of gaming own products definition digital this movement in the cement their self-service

also other services other. with information have replaced and We and software

casino revenues comprised revenue RegTech for that and software revenues believe the and efficiency together sales generated. of hardware within of And our this Now those the hardware descriptive for sale use We subscriptions, in item. and up of we from this with operations. is finally, kiosks loyalty, that of the from equipment change revenue line pieces more compliance largest additional sell enhancing from regulatory is software our replaces made component

services. below only the Revenue we’re to grew sequentially XX% and the X% quarter. quarter, access record first XXXX of fourth Turning revenue about the financial over

expect seeing resulted to trends to is XXXX. addition essentially destination in non-existent, quarter increases reflected financial With in driven of Las our best revenues from compared in consecutive sequential all XXXX quarter. on to recovery activity pandemic currently of streak close turning period our over further March first the contracts. in and XXXX virtually casino access halted we Vegas, it are are rise underlying revenues customer increase These the to the our same-store by markets U.S. increases, growth positive to international casinos increased still Canadian that each Since particularly the basis like We same have month revenue when same-store sales during the about travel closed, casinos X% gratifying the same-store in benefit levels. new a

revenue in been also tremendous. growth and Our software other has

revenue. financial the from software assets. loyalty our and from category and the and reflects XXXX focused to The one-time growth. entry This RegTech initial recurring maintenance revenue sales for recurring we services, are portion a quarter. through while incremental first Like software, this services doubled in software generate products of we have our those revenues on since access long-term organic expand first QX revenue to acquired loyalty development, the represented accounted other the related With RegTech continuing support annual Our large both have several new acquisition into and products growth products other of component. XX% revenues XX% revenue and or quarter, under category

over turn let some for Now, color. additional Randy me to call the

Randy Taylor

We doing Thank you, Hello, all everyone. you’re well. hope Mike.

today’s strong operations recurring ensure our to the growth our profitability continue While in are sustainability we of core growth. business and to invest providing environment,

focused are term development will internal longer on organic ongoing product that growth. investments R&D drive Our enhancements and promoting

resume, expenses continue relationships. and we also normal progresses that activities and will as the marketing to year other customer that the begin of As increase expect incur support business business and our operating to more volumes costs we recover,

percentage total lower than improvement expect some pre-pandemic will that supporting margin I’ll levels, a highlight However, expenses years. as compared we do of to as revenue, trend thus prior total

the Now, leverage two strengths. growth opportunities to with some share about you I our like would future more our of for that details exciting

on up. up of more our the a to was quarter fourth are live due and XXXX through growing XX in live When the content of others. January, we that’s preparing to iGaming with growth ramping we went the supplied with quarter. of Today, our Revenues to operators. live midway opened, factor from year-over-year business, and is out A iGaming seven nine major several first XX% live Michigan basis and going six First go then we’re doubled slot that Michigan sequentially with operators. than digital

online Lottery of agreement such and number Our digital the powered the and Manitoba growth as to Jersey, British provide New also is whom expanded and previously into Corporation. with we recently British an content Columbia We through markets operators opened expanding by slot Columbia Pennsylvania Canada.

Another expanding while games our the relationship also country’s growth with some our player number for driver comes games creating successful popular of them adapting operators. games land-based by focus operators. through iGame to available We casino which iGaming world. for new our of large can of library added the is draw land-based growing upon customized leveraging our online operators, fastest development of the games One strengthens

fully the CashClub own our are and a digital exciting significant operators wallet, platform our to in integrated interest experience Wallet, flexible CashClub our and investments our their Wallet they customer solutions. patrons our that existing to enterprise We central and digital gaming the platform beginning needs floor choose and integrates alongside resort system, very opportunity, payments travel of casino allowing cash forward. hub With the transition deliver an hotel and at labeled the move CashClub different the significant Wallet’s in digital for mobile white and want wallet Another operators level banking cashless cashless and importantly and the enable the wide will enterprise-wide to is as very advanced of capability, believe they casino’s with we carry branding. food operators enterprise, entire meet act to operators, retail their a breadth can speed to can commercial infrastructure experience it’s from to beverage, for customizable casino each amenities. to casino our across a of be which offer service at a to our as

us enable operator the be multiple a strengths to with our wallet multiple Importantly, properties a across casino where used can unique funds and provide their jurisdictions. single across

with funding provides Wallet For sports online such operators their iGaming a with experience online patron’s also offerings, land-based experience. and to wagering, as bridge CashClub

for existing Our is CashClub offering RegTech our next solution step with for cost efficiencies and Wallet compliments our financial and it’s the fully It significant access seamlessly convenience back players of and towards integrated gaming services, offerings. fits the loyalty operators. and regulators. the regulators meets and as need of needs financial house processes as the casinos and into the at and federal banking controls well of extensive state level, relevant other

through opportunity loyalty connection at loyalty with and convergence the in the applications. we our the In cash, to the on We forefront come with significant efficiencies addition intelligence the and through extend that their to patrons, player of casino believe relationship property access are the casino data advantages reducing digital of integration spending in for the wallet. and provides It from gathered cost see with also across operators need services the our world. their operators guests time truly financial the

and the truly value With differentiated we the industry funding player history capabilities, that our meet solution. compliance high of we a stringent offer requirements

We are the of positive. transactions from operators activity initial the seeing transactions patrons Everi will by in total the growth years and from cashless the our has interest casino’s providing transaction driver ahead. upon for performed increase patrons, Based substantial by the response expectation patrons the remains another number initial casino’s been

future deployment, However, given we at to and appropriate share not data stage where of growth it’s the early project a point specific potential. yet are

at As and with further the casinos our live the to about we insights base user expands, cashless expect go upcoming solutions months these you. share trends additional in

our the free and flow share perspective turn Mark? to outlook. cash to like his over I’d on Mark to Now call

Mark Labay

Randy. Thanks,

Before discussing thoughts how our are like increase free our cash on significant in flow structure. our at we to outlook, some provide the and I’d looking capital

the liquidity. significant quarter. period, year essentially the of capital our cash expenditures equal Our was free a XXXX. The cash flow adjusted bolstering of reported we cash first in the ago to also represents the record further a the from in to doubled flow free of sheet flow more quarter. earned balance growth This we in term all than benefited compared generated cash by free that flow flow-through EBITDA our improves modest level more near This free

recovery diminish, position had industry the this reduce uncertainty ultimately to and macroeconomic liquidity the As the more surrounding than to environment originally we continues added our our us quickly of leverage may expected.

total is it did momentum change currently of environment net While towards reducing We in leverage there have borrowings lower the ratio. our may our a pandemic goal slowed leverage not debt XXXX, surrounding favorable reducing and and achieving recognize the capital markets.

continues, and As capital operations strengthen preserve structure current overall sheet in attractive any our level that options assuming the year the enhance that progresses and of stability we balance should our expect to prospectively. of or you look liquidity, would advantage our our optimize take

taxes net than for year, several terms years this of come. of federal loss operating the In to cash not you as expect accumulated components we about modeling, for meaningful to flow of the cash with carryforwards, free the year, more think pay million rest do of $XXX and

could to customers’ rate XXXX. the managed the the To-date, in Regarding of first expenditures recovery. we’ve mark our capital quarter water capital match low quarterly in represent run I capital our expenditures, spending believe

we As or businesses It’s have expect event the spending, I stalls, foresee pull flow quarterly further previously and capital the important meaningfully cash in match XXXX. recovery continues, increase the or to in our in an annual above we recovery spent back free the projects. that see as ability generate. to to of on deferred that level levels we the note to not our to slows But creeping complete spend I the expenditures certain would would delayed undertake expect

for not from two cash second that acquired still $X quarter payment final the in would to occur and of loyalty flow assets contingent the price everyone free the This you for up of consideration from for are flow the review includes and we expenditures I MGT. to computation. – of that cash your purchase sellers full expect million our cash installment quarter. the the year, second free remind assets have cash flow noteworthy $XX for As related by earned the the models the Atrient we million part will These

outlook Turning out the demand. the frame drivers, quarter, our increased. on vaccination casino adjusted for EBITDA, clearly activity the results macro up quarter capacity from casino and to revenue throughout across To rising first up easing of puts to and rates our has likely takes pent activity first the Limitations U.S. benefited casino due picking

that degree some dollars believe likely added by reopening a markets of are or impacted for other there’s consumers’ where closed. capacity the might As results We recovery. result, benefit and not to quarter the those still like still throughout for entertainment international continue receded discretionary Canada the of With opportunity still an first year. see our competition options from customers other some further in restrictions as casinos we do increases

However, plans conservation in capital XX year-end. capital our in remain discussions XX of to a with are instead days on through the customers, many next focused mode. still Their spending

range expenses wide operations and more quarter Given believe slightly comparable first quarter second adjusted increase of operating return our the of to below variable to of drivers outlook XXXX EBITDA remain throughout be to as revenue ahead to could year, the continue the performance. second begin levels. well that XXXX. It of normalized this will our quarter will We

be choices flow competing do million the recovery is becoming cash but more the without and due becomes available, vaccinated. entertainment notes likely half in performance, first an more remain a as and less sustained generated expenditures, our the for believe of the than in population gradual $XX.X semi-annual interest improvement the capital June With corresponding will the industry. a for further overall increasing payments should we We expectation quarterly year We not expect expect free in in ramp record more are gaming industry strong, with that of significant the back this dollars quarter.

second our record for the of the players And the exceed return then setbacks, typical turn that in to said results their make back the adjusted would XXXX. year half expect EBITDA our the favorite barring any and report With of larger the of up half With being operator best macro some will the of call to I’ll further we we that portion in customers demographics questions. that casinos. second

Operator

go Please B. you. Thank David Instructions] from Bain The first comes [Operator question Riley. ahead. from

David Bain

a digital congratulations ticket Darren, Great. Thank kind the benefits out, happened on you relative wallet Mike out you. to that proliferation shouldn’t And match with TITO the the to casino CapEx and compare to needs we believe to ticket fast there least to technology it any in, strong of spend or needs – transformation? talk rollout clearly. TITO. Is when very make at to outlined quarter this reason that that roll relatively Randy that when or

Mike Rumbolz

me get I’ll the a you’re commercial basis offering necessarily different on address oftentimes Well, technology where all that to working of that it yes, tends different let case their ability you David, commercial into you’ll multiple just jurisdictions vendors the to their not jurisdictions, the tribal regulators I’m let question approval. multiple turn to me, time us different There regulatory regular in casino both jurisdictions system introduce. That’s test so can with and and in subject in with find agendas, we technology the but tends the to fairly operators be there be the on Darren, particular. and over – – are of to sorry

jurisdictions be in have I rollout point commercial than And in then that, approvals to move in a quick So but ticket? forward been you looking multiple versus still commercial address expect do the to jurisdictions. this tribal we for would want faster at time. somewhat Darren, We’ll that with

Darren Simmons

and kind says, when I I referencing felt actually in it in like but TITO when David, gaming TITO, took got diapers But that for guess Dean was you’re years, still probably gaming that happened it happened, my as Well, remember overnight. launched friend right. of

of somewhat – before in the to to components other this digital pivot And in in I cashless be and somewhat said so components. I some and again, kind revolutionary think evolutionary I see

our pace the adoption at we’re the patrons. So going of and customers of their

need opportunity to at think feel – are been that’ll roll we’ve at how I rollouts. said as go. they are I between it And operators in technology some about But operationally it’s what as in looking good in terms I of is, bring that do pace, sort pivot And, about early I out. think cashless that the to in they calls, commercial certainly said, data previous I regulators our and So want differences the what have looks educating good in. the with where jurisdictionally what have with really there think again, Mike jurisdictions and of I’ve think it’s and But certainly in like terms it them a been is. tribal, we engaged everybody of the different digital of the the to feels this what is and terms

we’re high really would – and for very at pace is it So I the the our pace it’s customers of us. in say, – general

We lot flight it so. of a in have with projects

David Bain

that’s would question game with we’re reports second my I then share when And And or normalcy, into don’t in think if would dynamic, ship sustainable see XX% volume some fantastic. know buying I we’ll from activity that to I side. returns clearly guess, think mean, of any the to competitors what, I there be as is on not terms finished gains. is reason Okay, all it? the an added be or but that look there

Darren Simmons

that we make would be we’ve able able Yes, to I not whatever to sustain and that share. don’t think believe would, it to any gains there’s reason been ship

budgets capital in finalized are and released operations. our the customer’s As

you there think So that anything that systemic from and Dean, there’s that I I gains us those mean, is continuing of. nothing I see can realizing is would them. stop don’t, yes.

Dean Ehrlich

we provide we me, the compelling games, if of if providing. we’ve that to ship becomes hold be a that buying here, proportional, share a been and customers percentage continue just Up to should ex-amount and are it to our product able it’s class, our do then jobs

David Bain

thanks guys. Okay, great. All right,

Operator

ahead. from Stantial go from Jeff Stifel. comes question Please next Our

Jeff Stantial

plans. questions. with Good for Great. our to the leadership Chairman of want Thanks, And appointed say, formally being afternoon, congratulations, I just succession on also, Thanks on start Mike taking that everyone. operator. Board.

to on everyone first with truly this foremost, call staying and here. hand the do But reins think you start you I even see congratulations. involved, deeply off relieved just after is

Mike Rumbolz

you. Thank

Jeff Stantial

on And succession that note, wanted your on plans. get the here I thoughts to updated

a is what’s the just experience candidate you or their looking would appreciated. background search, it Just in any Board on for like ideal the and provide, color can be other

Mike Rumbolz

I’m at process involved Yes. address – looking an board the to months. to been the Jeff, necessary get you lay but several elements reticent they’ve if and narrowed deeply a assume, are where the to a front I possible. both The be a more try go, has internal that’s well of – that’s little in CEO The for little resume that of. get of position for next ongoing the let board know selection field years out me the would me and review you’re in to board. we’ll But two planning external over it. I’ll bit, to candidates let been trying over here succession getting now aware and the somewhat well And will

can be some industry, businesses of and mean, – foremost, a are that the C-suite or handoff, companies but coming of our first the gaming looking very gaming and for have in licensing hit the for and of often think a somebody experience requirements, regulatory prepared all easy they’re obviously Executive both the in So or surprising that’s universe gaming with outside from has one other, understanding for the to and come with. the in to or certainly of they I I Senior this FinTech there kind position business in be be reality they an a

of to applications and for financially years. licensing asked them limits regulators that just And everything fill candidates fairly the oftentimes So say, suddenly we has narrow would that quickly. choice and to pool hundreds candidates. think pool here upon hundreds that board an of be had front done a you’ve it the come and have excellent at. of basically in that been robe they looking out, I will I show And of

Jeff Stantial

you Switching appreciate customer limitations the really operators the integrate trying That’s you time I CashClub I’m for say. into you over solution, gears what in frequently the here your with with two how just meet prospect Wallet, some well? two-pronged many great. as the for of a the the for to versus customers include starting mortar of online offering are to guess get how many new of the my more Okay, Thanks. of for do aspirations I I’m helpful. context the just being, versus with color discussion allowed the And as layering curious potential to bat. how also are approach sense striving a offering and brick of how omni-channel are wallet the wallet right the to off off

Mike Rumbolz

Well, Darren, why don’t mute. on you wanting to take Darren that. Looks,

Randy Taylor

customer. – presence, that’s by I’ll we have would sales it’s customer online I the If are in this they of first side. the say, thing I maybe one out an really so comes jump mute, from on discussion in. Darren that think

want mortar customers to are very and bricks their So allow I transfer online. that do think a They interested will to over in. product

hard whether it’s think say at what they games front It’s happens that think not say don’t have for our each time, force but not I there’s that access meeting to they’re sales I we’re or would when we in how cash is that So what renewing different me talking I the it and a because back their to of talking and pieces I the think discussions talking casino really all at was the to about. much and about goes wallet, Darren do. very look wants them it’s the forefront of about

Darren with yet. et that cetera. VIP, not And want They just to may want Some of only it just them I’ll again. to show that, let

Darren Simmons

Randy. Yes, I there, was on talking mute

Sorry.

from strategy, that they but also say discussion So overall, being and I to talk strategy sort cashless about of yes, we that that key it’s multi-jurisdictional, that Again, Randy’s a would to the multi-property, brick have it’s our standpoint is say wallet would wallet operators multi-platform. want I digital to mortar point, a do connect.

the online to presence to through be. presence, online sports do else whether iGaming they the or that connect mortar definitely might whether whatever or their and So that’d be want be brick

yes, having about across is So full that move of – yes, very thinking because, discussion part overall as real together of their and that are and digital. engagement to strategically part multiple it’s again, that patron view they how the to player the as their platforms critical they their and strategies pivot tie operators of

Jeff Stantial

Okay, strong congrats quarter. color, on Thanks Helpful. and the a everyone for great. all in really

Operator

go from Please Our next question from comes ahead. David Jefferies. Katz

David Katz

digital if strong and right? pretty Good quarter. how afternoon, a way, think or qualitative we terms congrats for paid everyone you to get on wanted could back some discuss of wallet I should it? about the structural And in you upfront, to how And can you go how earn works. any sort side paint of your off if of or is, on a of that installation us there you that, how anything picture cost sort sort that of

Randy Taylor

go far as development Darren specific will it’s the And know of about, pushing to can start Because talked very a other be David, transactional keep it you is by there’s because incurred turn to again, how Darren. customer kind we give consistent then specific take I’ll customer and Because piece then someone’s we But a I’ll access, a are fees but over But it. one cash about which and saying bit it’s software a can in again, it’s fee as it. there’s customer our that cost. other to are and money therefore environment my clearly it view. different I it there’s in more, and there’s of, customer, hard it’s but we but this, by each in costs developing digital of the account. as But little says advantage to maintenance. cost in again, are transactional very with as back also these there that

Darren Simmons

Yes.

think or I obviously of advance dispensing through fees whether the easy be revenues that David to cash the maybe that think we way transaction. transactions transactions transactional, it So there’s are transactional right? support, garnered are is, that cash today, the other

That’s we this transaction type. transaction us So is fees digital, another associated to as move with right, just got it. towards

of this remember sort from of and products. support. associated modules FinTech software also also, connecting premium associated So But But of it annualized it got and other that come into business standpoint. we’re components sort with does the obviously a software we’ve with other

not trick integrated it’s loyalty, compliance integrated a This pony, just is it’s okay? one into products. So into

along just of goes of No, to the these binary it’s no, now – transacting through us. are there’s you’re a discussions, not contributing of so opportunity for a terms that lot So in kind components into digital wallet. that revenue others no,

as transaction we digital are types volume pivot mentioned, new increased Randy the wallets. transaction introducing wallet. as And So towards with associated see then, we we

those monetize we So we expect as well. that

if we’ve out and the fees accounts bank to now got bring it are right their wallet. bring into money as ecosystem opportunity operator, money for of be we transaction funds into associated going the in but in it with they’ve coming So back had players also we to put their

so that And with fee there’s associated also.

service the wallet as we part a that So able and transaction products types other and compliance. greater then transaction to loyalty include, it volume and as our relates that will that of provide to including new and services we we be support,

David Katz

it. Got at next was we be adopt isn’t think just of of what some is, getting if I quarter side to clear, customers on this costs had I sort there XX part upfront your hypothetically, And right? lump that,

Darren Simmons

Yes.

But So of by play in here. potentially this charge customer, could our some development come maybe we case case do to that our customers. obviously, with we there’s what customized would into terms

the So now customers. built of do nothing, customization is our more again, our got infrastructure out. to we’ve that kind It’s of for

David Katz

Mark, ask just quarter second was recall help other to for it? was just years of the term in you that wanted one us $XXX can detail. million the I place in that callable becomes XXXX, And Perfect. two put loan,

Mark Labay

Yes.

through there’s XXXX. on interest, call soft of months interest a the six for then And paying You’ve whole got April make X%. there for you’re thereafter

David Katz

Got it. Got it.

Okay. Thank very you much.

Operator

Our question ahead. go from Jonas next from Truist comes Securities. Please Barry

Barry Jonas

I from we you. then this segment little win participation about of start Can side unit a those cadence Thanks. was any a games would ahead maybe And we’re also the the give more levels Thank growth? as with what’s well be helpful. per where sustainable? daily that to think seasonality are results Just color want year, throughout on thinking. of thought also at driving you

Mike Rumbolz

Yes.

the than premium been has it give games. you base growth quick larger it throughout XXXX and to remember then couple tell a you turn Barry, in sustainable. to particularly been I’ll a there standard thoughts But has has just just it’s Dean Let why growing of been the me and

played should because generates. whether You that fee premium it participation if it’s or and expect of fee, greater games whether more are customers that deserve a by our play those games a fee a it’s the flat

we me faster of as continue answer. premium we will but that base. portion I to have grow as it games that’s give the long And grow base him of the our that. let to and of portion baseball to and that Dean inside So think you over as, continue continue, our the personally a turn growth

Dean Ehrlich

We’ve I of out between or Fusion what me continued DCX or well. out just premium your this Skyline Mike. of premium theme Press that latest we at perform could years, in is launched a of base I you When substantially there, and or And Renegade in to it’s there, sustainable. it put install Arena last to Your got categories top five really product really, product we that Revolve just couple sector if have the point. variety on over categories or different Luck don’t grows know Flex even the

of turn We can continue to the areas have lot a sustainability. that to that

looking rollout well be dates of threats just I’m expect that as good. So continue our we the in the to products Obviously, comfortable with to very we of pretty hit categories. covering to those product and terms got each as should

Barry Jonas

wondered, great. thoughts in replacement segment? I on get preservation tied same just as cycle over Great, updated commentary with FinTech, And capital and a general kiosk then the timing, just related the game the to does question, follow-up up to shifting any that

Mike Rumbolz

does. the And same it Yes, hear going it really to mean, you’re Randy. does. I from thing

Randy Taylor

efficiency piece I just getting still fine I on a that was now. expenditure, its or it more opposed right devices. to something diminish don’t little the They’re kiosks longer just in making the containment customers tooth today cost to that supports choice kind importance. make as those game focused core They’re our a products either, towards works like so are when critical. capital revenue operating of between stuff, revenue a or operation choices have to want is of floor these saying generating replacing generating revenue

Darren Simmons

terms Yes, of casino tremendous casino, capital we’ve I if but of I think, that little But have and had the with. constraint our again, I in don’t openings did of know seeing. we still amount that a And that new success we’ve spots turns maybe second expansions, think foresight. a some we’re in bright half, there’s some, bit a

constraints We’re they’re still of half, again, the how second capital certainly, clear, but cuing kind totally of, off still I which and some operators viewing there. there’s not is think

Barry Jonas

everybody. All right. Thanks Great.

Operator

next question from Our from John Raymond Davis go ahead. James. Please comes

John Davis

I made just range. the start are I’ll XXXX, that could structural Mark, basis through XXX kind XXX some probably the guessing But is basis on think little of that look the versus XXX to higher. a upper Maybe to you up you pandemic margins points I they points If bit I’m points thought margins. and be XXX guys of end

margins expected this the bit But a about rest talk any a trend how commentary growth. kind expect quarter. through continue the you quite would of for think to little will just there, XX% I bit just better maybe was you year? invest So to I than the of

Mark Labay

Yes.

recurring back basis. a a growth equipment revenue come talked customers are seeing flows now line that higher and like we’re have in capital aren’t and – the seeing that strong that certainly as buying to all quarterly through contributor back mix results where sales improved right really things in our the we’ve the we’re on you’re calls and exhibiting think, here to gaming I operations, bottom much There’s that record shift, margin. these streams prior the and contributing there’s biggest is on about this margin come revenue the quickly most higher margin

is, I start all keeps higher I’ll think normalized in continue the that capital today, terms into those as it we constrained But still levels back recurring getting to, more it XXXX, of pandemic higher of once go that to forward the generating we’re call keep them being through or and periods. past we should and added get probably base getting margins our the starts belief stays levels. XXXX normalized revenue

John Davis

XXX basis doesn’t Okay. to Sustainably points, it seem higher, basis of versus out margins realm call on reality. XXX an the normalized of pre-pandemic

Mark Labay

Yes.

John Davis

do I have Okay. organically obviously down they’ll to then from the level prepared And organically about strong in and leverage, Mark, to but what of heard mid alluded comments my guys given Q the in the XQ performance here, XQ, in your remarks quickly, by math, you XX. kind

you’re how get reducing guys kind to? of like on think comfortable just talked like about Just the you over think about leverage, next a there state curious, you operate to And leverage about quarters? where normalized you organically steady and actual and you basis? guys leverage do where curious just getting So several you would targets how can

Mark Labay

that to leverage. with felt acquisitions clearly if X externally To gave to really to or level We had way definitely deal other growth, maximum good look wanted that Sure. us a overall closer We’ve X that’s your talked is point one the was that. from internally times things leverage about we needed flexibility, that earnings allowed that to total front. ratio. organically, at times, be us pre-pandemic on flexibility go comfortable We for below to

we the leave to it is balance when debt clearly point with some at we the afford paying I incremental that time XX.XX%. better sheet improving way have margins the the want makes and is the to better troubling do other probably we’re to that, extent that can down could at sheet. EBITDA If position, may and replace at wouldn’t plus make something The the right on sense is that’s sense. in balance term or worst The a that. now we the to loan L piece do on

John Davis

on And just Okay. then that front.

want you down and call for I I December. just bond make right? sure they stepped think X.X% that I to in is the have

Mark Labay

correct. Every December. That’s

bond premium steps in just X% a under now there’s – and at just December. X% we’re it under So to down

John Davis

XQ? I takes puts flat you conservatism, to about historically, to XQ I Randy, I go up I’m everything maybe the the maybe guys or kind sat make some vaccinations. wildest down. into some can if when reported. a or appreciate you’ve catching why kind could go than the for as that that it But of sort competition Mark, we look then, might kind X% that significantly forwards take trying guys to I in you XQ put was guys issues don’t and more you just as sure that X% just is to takes And and seen of comp pull dreams at this we better from Okay. as Mike had you a any I know as XQ just we this. slightly of think be entertainment appreciate step everyone’s months least of add XQ, couple ago appreciate of – talk I but more is very sequentially, or think where

Mike Rumbolz

that? their our yet their be I we’re from are even it certainly Yes. going it’s Mike. the are I John, Directionally, I exactly let we the ahead side, really in the agree capital hearing thought to. we on Randy of And they casino expect We in going wild might believe and mean, don’t to dream some and is pretty be what talk want clarity grow where on dreams, would with this high trying second higher. to have my wildest our And skis to can expenditure here. it. floor half say think I we’re here. be about want I budgets sky? And got – I how doubts. in that, But our to maybe conservativism. they just to of haven’t just you And to is the expectations. didn’t be they if customers is business we since Mark I’ll and year. get chime going that does

more not we still rest there here possibility that get and you’re awhile. reserving, that reopened. virus may the There yet to that being don’t casinos and at additional be are have shutdowns the spike shut casinos there us have in ahead always the the states. customers mean, for industry, certain just of I see careful this hearing may else, think of our time, anything I we of same So than as

I’ll we’re I to so anything trying thoughts. let cautious you Randy And But than else. their think, be or just more Mark give

Randy Taylor

we’ve as in we month we’ve John, extremely for And was strong think we seen wasn’t compared and well, an own March we what seen in haven’t through what go just March, again, April, strong just for as started as month in a Look, as as I the internal there our us to month positive It close us. is the finished of still March. process. data, April

should but know visit customers in there, the talked coming prepared personnel just we of There’s visibility about are are hard be So you terms the in it’s as for our on our that settling, to able we themselves, the To of us the also will, we get more. still if thinking we now to to back tell lack remarks revenue how were revenue. there that normal much, Mike’s that casinos about. point, uncertain in and

Customers and marketing having some attend starting travel expenses are of visitation, there’s things naturally these going to on and rising. things like operating back are are starting we’re shows to again. gaming back come just our expenses, So costs where up are so

industry. in back the GXE us the and going half there’s big get happen again, you of the a As to year, cost for in is

we’re the things. revenue operating expenses on side uncertain So arising, of

softening revenue. where we’re there’s Mike’s and I be really be think trying with opportunities measured may was think on expenses little QX here look, to I rising strong, expenses, point, So to a but in the suggesting, slightly rising

still it just not... You’re but positive, might

Mike Rumbolz

beat that say to John, the Yes. you hope fact we’re didn’t that going we XXXX. miss did I

Randy Taylor

disagree you I pointing comparable. Mark we QX because to and more and you Look, think said think I I were totally I am. John, how with Mike aggressive

a reasonable, I to you there’s to thought. I I I So And going second back it up. our hit trying how look, But April, there’s was upside look QX thought But can the we – upside? we’re point, Mark’s we’re to that’s of year, be things that’s when included. think to guess, And to is XXXX, want Yes, else that’s Mike’s but conservative, half And see say, QX where think call QX comparable us quarter it’s look, just on going – than initial which QX. you mean, more I are a May of to more have June is on to beat come significant uncertainty. just there comparable. it’s in and just to think QX, point, anybody says, be the

And XXXX disagree The this we’re but numbers. than, so, really that’s feel at to I I anything how I think, So we and Mark we’re completely. much? think with going to not I more real Mike don’t why point, feel good, question is good and we’re ready say, feel beat give

John Davis

if conservative, the there’s outside, take to Well, bank. Randy, it

one quickly. last very me for So

Canada much point? back like reminders, down was? us, obviously revenue at back but zero some shut go Obviously at Just you point, what point. was EBITDA or this or if that pretty will to this basically come it’s it of that something remind Can XXXX percentage like completely at you

Randy Taylor

it’s that concentration I’ll would a it risk in We haven’t we a but provided we not not that division that enough kind financial. of from call the – of depth, carve – significant level it, a it’s out stuff a

of So our you still XX% can total contributing. venture to less it’s volume, but probably it say than

important diminish us. I that to it’s want don’t to So

Mike Rumbolz

with contribute provinces. the various going And that to through it’s now some future because we’re more contracts in of going

Mark Labay

hard just number put one, It’s on to that John. a

John Davis

That’s fine.

Okay. guys. All right, thanks

Mark Labay

Thank you.

Operator

go ahead. from Our next Beynon question comes from Macquarie. Please Chad

Chad Beynon

a question. Thanks start year. guys. to for great Hi. Good my afternoon, the taking Congrats on

Just one for me.

in more ground commercial of expectations. I guess a into gaming XXXX is drill lot guys opportunity. wanted and a think just little probably have I bit to the covered WAP you your this But

You a Jersey, had the obviously Nevada of New the regulators you’ve approved ton with and markets. outside WAPs links in of your these WAP just that mentioned success

to markets, Just some you some trying to of that you’re here. these already success the out. if And the if start you’ve frame quickly out, operators had I of in aware can productivity trial or well how guess, product with they’re some product pushing get

understand this Just back Thanks. the to in of year, about the and half then how that. think trying to beyond

Mike Rumbolz

to you add the do Sure. color Dean, want for that?

Dean Ehrlich

want you just start, me to you do or Do Sure. want to take it?

Mike Rumbolz

ahead. go no, No,

the been in intimately involved process. You’ve

and the than make don’t fact it limited you. field to any us I’ll that, the So I trial other into only money we out very them. allowing leave from that would games But probably devolve

Dean Ehrlich

Okay.

Chad, If And So inception number through a raised out in it the continuously toughest really model units wide that’s incrementing, ended side, – wide that’s to area commercial We’ve not to the field wide look have footprint, the proven and what side. sprint progressive there. success area through certain right? its a slow progressive and at progressive expect good links, our thing the methodical get to had how up is call sustainability. they’re the products the our tribal III with trial, now, some of it is It’s huge other you II we’ve crawl. a would I we’ve a get our area just Class because to in the happen I to to same on Class point.

you we fair I throughout going not think the of can to, that expect reasonably are XXXX, I’m there, to of year, as to go be current I the would up, I follows I got get there. ramp confidence I think roadmap give – I part calendar number that where So and we say. but this it products tons have can’t of would confidence the tons say to a in I bigger think and out

Mike Rumbolz

Yes, I right. that’s think

Chad Beynon

perfect. Nice it. Appreciate quarter. guys. Okay, Thanks

Mike Rumbolz

Thanks, Chad.

Operator

George next question Our Craig-Hallum. from from ahead. Sutton Please comes go

George Sutton

hear never smoking always expect Randy out of to the hot the wheel I aggressive. mouth Well, word of hoped to wicked you. Taylor. Thank I hear

could customers relative and of that Randy to term casino the And initially sorry, not curious before. for the for if they really know I’m customers consumers term customers. apps, just trademarked. hopefully an also I’m migrate progress Darren, curious, – And offering CBaaS doing accelerate a created old. the if as which look these thing, they’re to quickly But using that your entertaining. from have I’m using just offering. and was words heard an like very So one something operator heard app the whale I have I everything this used the that or was is are served if one doesn’t predominantly your the will see, casino-banking-as-a-service, Dean think And to CashClub used I we I’m Wallet, today, another of just today app, wondering one you player other

Darren Simmons

of is, again, interesting of the when not and huge What’s utilization, looked demographics data it’s is the at datasets. still kind we it’s again, the early very

Kind So widespread I higher of because groups. expected. think the some fairly it’s of kind XX obviously, in those as age of the XX, is it’s interesting we spend plus

that more there certainly used digital more are aspects and those getting like technology think of to. and people mobile I and is,

betting hotel, – the platform. pressure iGaming so sort there And to from would to their hearing that certainly sort towards this of ahead competitive iGaming make be leading out and digital want sports retail, their want and and they sure the And they between even talk land-based of operations, customers the into to that about opportunities entertainment, land-based – for patrons. transform interconnectivity I of to again, that into start is, business and our they their kind get start it’s then of again, beverage we’re really say, their want gaming kind to bridge to non-gaming food, of land-based want cashless and and they’re they

– technology, this the year it’s olds XX great. is in and they’re certainly fairly so, that That yes, very looking to a XXs attractive at tells which by and having competitive about from even – that’s just it’s this year not is to and or certainly adopting widespread, you XX the that XXs me the is olds are to So a say, strategically just demographics XXs. driver, this just they’re technology the again, going worried be I not standpoint, would

to think I think get to I the and providing of really adoption. player the be the at that what’s that end the So it’s going operators about going is experience they’re day,

George Sutton

Got you.

market But more couple XXXX, your of for In had just did years back the remind and the at just look you as for part now. incredible sort then of mature get and the breadth market to of we look out of industry earlier Speaking maturity, market the you a you called an of Dean, we that. XXXX, offerings.

see were XXXX better. some That since back budgets relative were of this costs, pressures the lot that? is to CapEx getting about a talk XXXX Can on then to to You comparing. environment and call looking was you starting engineer

Dean Ehrlich

I initially our Mike shaded more substantial. side that of premium footprint is in performance, in think the terms our much

can you that each would but the one know we’re helps more compare from that don’t it go So trying to it’s we and answer offerings say, less if should for XXXX, categories, growth know have you money product to I made of that? Did we’ve thing to as I have set I to playing you’re spending I foundation get putting That’s want. there. in that. traditionally and if in say, in especially platforms miss the of in investments field, supposed to be XXXX our able we side the if run. XXXX, success you when continue and I answered. the have Or currently be Right – side, basically do that product the in each a that premium the it’s of you out there XXXX We else? have is something to how forward. now, you work. this to And product kind the job of

Randy Taylor

a a is development Randy. you’re the were to where produce, the have I going, great we Dean’s pandemic This times, and we development and if of what reset talent would and I paying say, more did tough Are but done talking you I think towards in kind terribly need to that’s think is costs? success Because for great that to say, – But out on we’re because we’re able job would we there. done we’re some ensure competition that. having we seeing place Dean’s board. right now that staffing. we’ve I And it people and continue right been we the And have believe have still people the job there, the of the are

we type feeling Dean we’re about I success. roadmap right hitting of really where of think – for little and feels a And there, continue bit developers, now, need is a little just his a right lot pressure his really feel So being now. we’re but good good able bit pressure at those of from of there to

George Sutton

That’s That question. very guys. Thanks helpful. my answers

Mike Rumbolz

Thanks, George.

Operator

Randy Taylor remarks. for back This concludes like any turn would the to the to conference closing question-and-answer session. over I

Randy Taylor

continue In balance our call. sustainable we building joining look on Thanks achieving strengthening as our closing, to providing look to you us. value. to the We sheet ahead, growth, to we update our and on long-term maintain year expect next focus an shareholder forward for quarterly with

Operator

today’s call. concludes This conference

a for your participating may Thank pleasant have lines. and You you disconnect day.

Everi (EVRI) 6 May 212021 Q1 Earnings call transcript