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spk09: Greetings and welcome to the Every Holdings Inc. fourth quarter 2020 earnings conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr. Bill Fund, Senior Vice President, Investor Relations. Please go ahead, sir.
spk10: Thank you, Hector. Welcome, everyone. Let me remind everyone of our safe harbor disclaimer that covers today's call and webcast. Our call will contain forward-looking statements and assumptions which involve risks and uncertainties that could cause actual results to differ materially from those discussed during our call. These risks and uncertainties include but are not limited to those contained in our earnings release today and in other SEC filings which are posted in the investor section of our corporate website at every.com. We do not intend and assume no obligation to update any forward-looking statements. You are cautioned not to place undue reliance on forward-looking statements which are made only as of today, March 9th, We will also refer to certain non-GAAP financial measures, such as adjusted EBITDA, free cash flow, total net debt, total net debt leverage ratio, and net cash position. A description of each non-GAAP measure and a reconciliation to the most directly comparable GAAP measure can be found in our earnings release and related 8K, as well as in the investor section on our website. This call is being webcast and recorded. A link to the webcast and replay of today's call can be found in the investor section of our website. Joining me on the call today are Mike Rumbles, our chief executive officer, Randy Taylor, president and chief operating officer, Mark Labai, our chief financial officer, Dean Ehrlich, our games business leader, and Darren Simmons, our fintech business leader. Now it's my pleasure to turn the call over to Mike.
spk00: Thank you, Bill, and good afternoon, everyone, and thank you for joining us today. I'd like to begin by sharing a few highlights and observations. Our fourth quarter results were in line with the preliminary numbers that we announced in January. These results demonstrate continued quarterly sequential progress in our recovery from the pandemic-related challenges that began to impact the industry early in 2020 and which continue even today. our improvement occurred despite an increase in jurisdictional restrictions in both November and December, which resulted in increased casino closures and reduced casino activity. Our revenue and adjusted EBITDA improved sequentially from the third quarter, and we generated positive net income, and our free cash flow improved significantly year over year. Now, our impressive fourth quarter performance reflects several of the strengths of our company. The balance of our business between games and our FinTech segments, both of which have a large base of recurring revenue streams. Our focus, investment, and execution in developing innovative products that are increasingly in demand because they help our customers grow revenues, build stronger relationships with their guests, and at the same time, attain greater operating efficiencies. Also, our track record of consistent operating execution, and then, of course, most importantly, the every team whose dedication and collaboration have made it all happen. Now, common to both our fintech and games businesses is the large component of high margin revenues that are recurring in nature. The recurring revenue portions of both businesses' operations have proven to be incredibly resilient as the gaming industry recovers. In the games business, our priority is on developing original, creative, and engaging content. The result of this is a growing portfolio of games that are popular with players and generating strong performance for casino operators. This success is clearly evidenced in the continued sequential growth of our gaming operations installed base. Most significantly, the increase in our installed premium games. Our installed base of premium games has increased every quarter for the past 10 consecutive quarters, including each quarter in 2020, despite the challenges that have been posed by the pandemic. At year end, our installed footprint of premium games was up 1,318 units, or 26%, compared to our then-record installed base, which we had at the end of 2019. This growth came despite the impact of the pandemic, which caused reductions for many of the other suppliers in our space. Premium games now make up more than 41% of our total installed base and have been a driver of our daily win per unit performance. Given the consistent growth achieved in our installed base, our daily win per unit, our growing ship share of unit sales during the last several years, and our pipeline of new products, I am confident that we have the right elements in place to continue to propel the ongoing organic growth of our games business. Said another way, our goal is to become one of the largest premier suppliers of games for casino operators in North America, and we are well on our way. Our iGaming digital business is also showing significant growth, with revenues up 60% year over year, and we are just beginning to ramp it up. From the time we launched our remote game server for B2B service with one customer in April 2019, we are now directly providing slot content to 30 customer sites in three U.S. jurisdictions. And this includes Michigan, which just launched in January of this year. As Michigan opened, we were a launch partner to six of the nine online casinos that went live on day one. On average, we represented about 25% of the content at launch, and we have a number of top-performing games in the market. As an example, we were a key content provider for the BetMGM casino launch. Our Double Ruby game has been one of their most popular titles since then, and we expect to continue to integrate additional innovative content into their offering on a regular basis. As another example, on the Rush Street gaming site, we have the number two top performing game based on average daily wagering since the start. And we have a total of five games among their top 25 best performing games. The interest in iGaming, which is gaining strength as a source of new taxable revenue across multiple U.S. and Canadian jurisdictions, when joined with our proven and growing library of game content, gives us tremendous confidence that our digital business will be an increasing contributor to revenues and earnings in 2021, as well as the years ahead. And in the FinTech business, our strategic focus remains the development and extension of our comprehensive integrated digital neighborhood. During the fourth quarter, two of our large casino customers went live with cashless mobile wallets powered by our digital cash club wallet solution. White labeled to carry each casino's own branding, the cash club wallet is fully customizable to meet the differing needs of our customers. With our flexible system, operators can choose the level of experience that they want to offer to their patrons and the speed at which they move forward. Each of our first two customers began with a soft launch. and then chose initial features and timing to both align with their comfort levels and to fit with their marketing plans for their guests. Our Cash Club wallet enables our customers to deliver integrated digital patron experiences alongside the existing solutions in the casinos. By leveraging operators' investments in infrastructure with the addition of our casino banking as a service capability and our other advanced financial technology, our digital wallet can act as the central hub for payments across the entire breadth of a casino operator's enterprise, from the gaming floor to food and beverage to retail and to hotel and resort amenities. Importantly, the same wallet can be used at each and every one of the operator's casinos. Multiple casinos, multiple jurisdictions, one wallet. For operators with online offerings such as iGaming and sports wagering, it can also provide funding to bridge the patron's online experience with their land-based experience. Our Cash Club wallet solution complements our cash access services. It is fully integrated with all of our loyalty, regulatory, compliance, and financial service offerings and is the next step in providing convenience for players together with a significant cost efficiency for operators. In addition to cost savings, the data and intelligence on patron spending that is gathered through our wallet provides operators with the opportunity to extend their relationship and connection time with their patrons. Our digital wallet fits seamlessly into casinos' existing back of house processes and controls. It also meets the needs of the relevant banking and other financial regulators at the state and federal level, as well as the extensive needs of the various gaming regulators in the United States. We believe we are truly at the forefront of the convergence of payments and loyalty in the digital casino world. With the stringent compliance requirements that we meet and our history of player funding capabilities, we offer the industry a truly differentiated, high-value solution. Now, given the early stage of deployment, we are not yet at a point where it's appropriate to share specific data. However, the initial response from the casino's patrons has been highly positive. and our expectation remains that cashless transactions will increase the total number of transactions performed by patrons, providing yet another growth driver for every in the years ahead. As our cash solution goes live at additional casinos in the coming months, and as the user base expands, we expect to share further insights about these trends with you. Now let me turn the call over to Randy.
spk05: Thank you, Mike, and hello to everyone on the call this afternoon. We continue to show positive inflection from the severe challenges caused by the pandemic throughout most of 2020, and we expect to achieve further operating improvements in the year ahead. Even as we benefit from the ongoing industry recovery, we are maintaining our focus on organic growth by leveraging the strengths and strategies that generated our growth and cash flows in the pre-pandemic months and we expect to drive better product adoption rates and higher returns on our investments. As Mike noted, in our games business, gaming operations continues to demonstrate solid performance, primarily due to the success of our product development and operating execution, which has resulted in continued growth in our install base and an impressive daily win per unit, particularly from our premium units. Revenue from gaming operations was essentially flat with the record revenue generated in the fourth quarter of 2019, despite the impact of closed casinos, inactive units, and lower casino activity. We believe our performance, driven by our install base and daily win per unit, has outpaced the vast majority of our peer sets performance, which is the same trend we were seeing before the pandemic. Another avenue of consistent growth has been the installed footprint of wide area progressive, or WAP, units. Since the initial launch in early 2017, our Class 2 and Tribal Class 3 installed base of WAP units has grown every quarter for 16 consecutive quarters. At the end of 2020, the installed base totaled 1,048 WAP units, up 13 percent from 924 units at the end of 2019. Currently, we have a field trial of commercial Class 3 WAP units underway in Nevada and New Jersey. We expect to go live with Class III WAP units for commercial operators in both states in the second quarter, adding a new channel to continue our growth. Our focus on developing original, creative, and engaging content in differentiated cabinets is also a key factor behind the nice rebound in our equipment sales. Q4 unit sales were up on a quarterly sequential basis, driven by the strong in-casino performance of the Empire Flex, our newest cabinet. The flex cabinet has been ranked the number one top performing cabinet in the popular portrait category in the Eilers Fantini cabinet performance report for the last seven consecutive months. Our unit sales increased 62% over the third quarter, despite the fact that most operators remain in a capital conservation mode due to the ongoing uncertainty related to the pandemic. Our average sales price was up slightly year over year, but generally in line with our most recent quarters. This reflects a favorable mix of our new for sale Empire Flex cabinets in the overall mix of units sold. Based on the reported Q4 results of several competitors, we believe we are continuing to grow our for sale ship share. We expect this growth to continue in 2021 due in part to the expanding library of game themes for the Empire Flex cabinet, which is garnering positive feedback from our customers and their players, together with the ongoing success of our high-denomination three-reel mechanical products that continue to capture the majority, that is, 18 of the top 25, including the top 10 high-denomination performing game themes, as ranked in the Eilers-Fantini Game Performance Report. Similar to our gaming operations growth, we believe our for-sale ship share gains over the last several years has also outpaced the overwhelming majority of our peer set. In the FinTech segment, cash access revenues declined modestly in the fourth quarter from the third quarter. Given our broad customer base, our revenue in Q4 reflected the impact of the additional casino closures and the overall reduction in casino activity, particularly in November and December when there was an increase in restrictions and casino closures. With casinos reopening and activity rebounding, I'm pleased to note that our same store cash access transactional activity has been improving since the end of 2020, notwithstanding the impact from the severe weather that disrupted much of the country in February. Equipment sales revenues from our FinTech and loyalty products increased 33 percent from the third quarter. The increase was primarily driven by higher unit sales of our self-service promotional kiosks, which were up 39 percent on a quarterly sequential basis and led to a 9 percent year-over-year increase in revenue from loyalty kiosks. While we continue to see solid demand for our financial kiosks, some operators are opting for longer delivery dates or preferring to delay deliveries even as they place their orders. However, given the average age of units in the casinos, we believe the opportunity for further replacements and growth of financial kiosks will improve as macro conditions improve and operators ease their concerns about capital and investing. Regarding our loyalty kiosk, our loyalty product team has done a refresh of our self-service enrollment kiosk hardware to improve its design, footprint efficiency, and player engagement. With its new 32-inch J-shaped monitor, the new kiosk starts shipping this month. With our promo kiosk, now called the Prelude, our team undertook a complete redesign of the hardware in conjunction with upgrading the software to include new capabilities. The Prelude utilizes a 32-inch monitor and can be either standalone or hung on a wall. With the new Trilogy loyalty software, our loyalty platform has taken a giant step forward to significantly expand its capabilities, which dramatically enhances the value to casino operators and convenience for their players. Our Trilogy platform is designed to unify the patron experience across all touch points within the casino. Trilogy goes beyond traditional player loyalty marketing and enrollment programs by utilizing our enhanced solution for promotions, drawings, targeted alerts, card signups and reprints, gift card programs, resort information, and geofencing. The loyalty trilogy promo product line went live at two large casinos in Q4. Trilogy has additional multiple integration points that are currently in cross-functional development between our games, digital, payments, and compliance teams. As we look to 2021, our loyalty team is very busy, and we believe we have a full pipeline of additional new products that will launch throughout the upcoming year. This provides significant opportunity for us to continue to expand our product portfolio, increase our customer base, and grow our recurring revenues. Information services and other revenue was up 7% on a year-over-year basis and up 5% sequentially from the third quarter. This growth reflects an ongoing operator interest in our player loyalty software and subscription products and the value they provide operators, as well as the value of our regulatory compliance products. With a significant portion of this revenue related to service and maintenance contract, each new customer expands our substantial recurring revenue base. Our regulatory compliance solutions also continue to show positive momentum as our footprint continues to grow with new Jackpot Express installations in new jurisdictions. The award-winning Jackpot Express solution enables casino attendants to securely and efficiently process and pay jackpots using a mobile device, Jackpot Express Mobile, or in every Jackpot Exchange kiosk. At the end of 2020, we launched the Jackpot Express Professional Edition upgrade with a major operator and have several more in the pipeline. Jackpot Express Professional Edition allows operators to take advantage of new features and unlock several key integrations with an average digital neighborhood, such as Cash Club Wallet and Trilogy Products. We expect to start our Jackpot Express field trials in Nevada this year with several key partners, as well as launch the product into several other new jurisdictions. Now I'd like to turn the call over to Mark to share his perspective on our performance and current trends. Mark.
spk08: Thanks, Randy. To begin, I would note that in the fourth quarter, we recorded $2 million of charges that were added back in determining our reported adjusted EBITDA, as we believe these charges are non-recurring in nature. $1.4 million of the charges related to the GAINS segment and $0.6 million related to the FinTech segment. These costs were primarily associated with the consolidation and exiting of certain office and warehouse facilities no longer needed as more of our workforce continues to work remotely, and these reductions support our ongoing cost savings initiatives. As part of this consolidation, we also disposed of certain old and excess inventory items that we did not want to move to our new warehouse facility. From an overall financial perspective, I believe the most impressive result in the fourth quarter was our year-over-year increase in free cash flow, which has more than tripled versus the year-ago period on essentially an equivalent level of adjusted EBITDA, This improvement reflects lower year-over-year cash interest and a reduction in our capital expenditures. A key portion of our capital expenditures is for investment in our gaming operations installed base. Our quarterly sequential basis, our fourth quarter net installed base increased by 489 units. So we did not cut our capital expenditures in a way that inhibits our ongoing growth. As you review your models and look towards 2021 cash flow, I would remind you that there are several notable cash expenditure items that are expected in the first half of 2021 that are not part of our free cash flow computation, but they will impact our cash balances. These include the final payment of our 2019 asset acquisition from Atrient, including the expected contingent consideration earned, which results in a total of up to $20 million. And this will be paid in the first half of 2021. Also included in the first quarter is the funding of approximately $5 million for the remaining litigation settlement that was included in the charges we reported in the fourth quarter of 2019, and $5 million for the final purchase price payment related to the 2019 MGT asset acquisition that is expected to be paid in the second quarter of 2021. In February, we took advantage of lower interest rate environment and reduced the LIBOR floor on our $735.5 million Senior Secured Term Loan. We reduced the floor by 25 basis points, which saves approximately $1.8 million in cash interest on an annualized basis at the current market rates. Those cash savings will provide an ongoing boost to the free cash flow we expect to generate from our operating results. Regarding cash taxes, with more than $450 million of accumulated net operating loss carry-forwards, we do not expect to pay meaningful cash taxes for the next several years. Our primary use of our growing free cash flow will be to bolster our liquidity during this pandemic and to ultimately reduce our leverage. While the pandemic has slowed our momentum towards lower leverage, it did not change our goal of achieving a lower net leverage ratio. Now let me show you some perspectives on our near-term outlook. The financial markets now appear to believe a macro and gaming industry recovery is no longer an if, but rather a when event. While that would represent a significant improvement in the overall outlook, we believe there is still some near-term uncertainty created by the pandemic and other macro related factors that need to be considered as part of these views. Not the least of which is the desire by our customers to remain in capital conservation mode. At least until patron restrictions are further loosened, vaccination rates increase, and the public becomes more comfortable gathering in large public settings. As we look to the first quarter, many of our customers are still impacted by restrictions that cause lower activity levels, while others still have their casinos closed. Given this current gaming environment and the current levels of activity we have seen since year end, we are guardedly optimistic that our first quarter revenue and adjusted EBITDA will be comparable to or slightly ahead of our fourth quarter performance. And we expect to again generate positive net income. We anticipate that our free cash flow will improve sequentially in the first quarter and may also exceed the prior record for first quarter free cash flow generated in 2019. While we are not forecasting a significant ramp in current quarterly performance without a corresponding improvement in the overall gaming industry and the macro environment, we believe a gradual industry recovery is likely as more of the population becomes vaccinated and some of the typical demographics that make up a larger portion of our customers' best players return to their favorite casinos. Barring any further macro setbacks, that would position the industry and every to enjoy a better second half of the year as compared to the first half of 2021. With that, I'll now turn the call back to the operator for questions.
spk09: Thank you. At this time, we'll be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation cone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Your first question comes from the line of David Bain with B. Riley. Please proceed with your question.
spk01: Great. Thank you. Very nice quarter again. So, you know, just to start, I actually went to the Hard Rock in Florida and signed up for the digital wallet. It was, you know, fast, completely intuitive, and I left thinking this could be one of the largest structural changes on the floor since Tito. But my question is, you know, how we make this standard to the end user over time. So there was great signage that was placed on the floor. But I'm just curious as to what some of the broad-based strategies are that you can share as to how, you know, you or casinos will promote, you know, to the end player, promote that linkage in order to ramp proliferation.
spk00: Sure. Thanks, and good to hear from you, David. One of the clearest methods that the casino operators can use to increase adoption is to provide incentives. And we know that the operators have been considering and discussing a variety of incentive types. But certainly one of the ways that you can incentivize is through the loyalty system, which is also connected through every so that they can first identify judge the spend activity and the cash access activity of the customer and then actually make them an offer through the loyalty program, whether it be for additional free play or some sort of a comp. It's probably the easiest, most frictionless way of getting to the patron that has the wallet on their phone and making an offer to them to either bring them back or to keep them in the casino space longer. As we expand the wallet into casinos that also have online either sports wagering or iGaming, you can also see the operator using that as an enticement to further expand adoption of the wallet by offering the various kinds of offers that you already see in the sports wagering space and to some degree in the iGaming space. So I would anticipate those being probably amongst the first, but it's really up to the creativity of the operators to come up with as many as they need.
spk01: Great. Thank you. Okay. And then... You know, Mark, I appreciate and understand the comments on the near term and sort of the gradual improvement remark in the industry, but, I mean, you also cited sort of the, you know, the return of the key demographic, and we've all been hearing the encouraging, you know, operator commentary, and you're speaking with your sales team, you know, just trying to understand, you know, using a benchmark maybe like 2019, you know, Could we get back to normalcy before the end of the year? Is there anything that you can opine on there, or should we just think about that deeper into 22? Just kind of any big picture would be helpful.
spk08: I think Randy hit on it in his commentary how we've seen some improvement. I think we would all agree that fourth quarter was a little bit challenging in terms of the, I'll call them the transactional kind of volumes that were being performed by patrons as casinos, more casinos closed. as a result of the pandemic and further restrictions were implemented. I think what we've seen since the start of the new year is things have gotten better since Q4 a little bit, but it's still a little bit choppy. The weather has come into play in February. There was a happening a little bit, but that's not an excuse, just a fact there. But I think what we're seeing, if you look back as 2019 as a benchmark, that we could start approaching those 2019 levels. And possibly doing better. You know, where we really benefit is the growth in our installed base and our premium units. And I think that positions us very nicely to perform very well on a like-for-like basis compared to the 2019 kind of levels. And we have a lot of new products that are very in demand on the fintech side, on things like our loyalty products and even some of our compliance products that seem to be generating some buzz in our pipeline as well. So we do think that you could start approaching those 2019 levels, but we really think capital is going to be the biggest challenge for us in terms of new equipment sales, games, and some of our kiosk products as customers wait for those patrons really to be back and be certain before they start to be willing to commit to capital they have available to them.
spk01: Got it. Okay, great. Thank you, guys.
spk00: Thanks, David.
spk09: Your next question comes from the line of Jeff Stanchel with Stifel. Please proceed with your question.
spk06: Hey, great. Thanks. Afternoon, everyone. I just want to start on cashless gaming. We've seen several strategic partnerships struck since the last earnings call. I'm just curious if this has changed your thoughts overall on competitive positioning, market share. Is this approach something you would consider, or do you think going at it yourself presents you know, the most value upside longer term. Just curious to get your updated thoughts there.
spk00: Sure. I'll give you my view and certainly can let Darren weigh in with his thoughts after. You know, the announcements by various competitors, especially the system operators, really hasn't changed our view of things. I mean, we are Our product is an omni-channel product. We're agnostic as to whatever system is on the floor. We're multi-jurisdictional. We can go multi-platform for online. So we're also multi-system, and we are the only wallet, to my knowledge, that can be used with the same wallet in multiple jurisdictions with the same casino operators' casinos. But we also, you know, we're also offering the ability to open that wallet up to purchases in retail, in hotel, in food and beverage, in entertainment, as well as online retail, for that matter, if the casino operator has an online store. So with all of those additional benefits included, and opportunities coming from our wallet, I'm not really as concerned about, you know, various other companies that are trying to enter the space for the first time. Great.
spk06: That's helpful. Thanks. Such a gears and moving over to equipment sales for the gaming segment. A recent industry survey quoted slot managers as expecting to allocate about 10% of four, 12-month shift share to your machines on average. And I know in the past you've kind of called out a similar run rate, long-term target. I guess my question is this. Do you think the pandemic has accelerated the path to that, call it 10% on a go-forward basis? And kind of by that, what I mean is, you know, historically speaking, shock to demand, like the one we are seeing now, can sometimes be catalysts. for folks to reconsider, you know, their kind of historical purchasing tendencies or biases or whatever you want to call them. You know, is that something you're seeing now or do you think there's potential to see as we start to see capital budgets normalized?
spk00: Yeah, you know, that certainly can be part of it, Jeff. In my view, it's really a testament to the tremendous job that the games development studios have done. And I don't want, you know, Dean to get too big a head because he's going to have to change from his 10% to another percentage pretty soon if we actually hit that mark. But at the end of the day, it's the performance of the games that has been driving the sales, as well as the, in all honesty, the beauty of the new cabinets and their ability to fit very seamlessly into a floor configuration. And the combination of those, I think, has really driven the greater ship share on the sales side. But, you know, the 10% was Dean's long-term goal. We have to see it actually occur before we force him to raise it up again.
spk06: Great. Thanks. That's really helpful. And congrats on another strong quarter.
spk00: Thank you.
spk09: Your next question comes from the line of Barry Jonas with Truist Securities. Please proceed with your question.
spk02: Hey, guys. I wanted to ask about margins or specifically the margin expansion that you've been seeing now. Maybe by segment, how much of this do you think is sustainable on a go-forward basis?
spk08: Barry, I'll take this one, I guess. I think our mix right now is very beneficial to us in terms of how we've come out of this recovery. Again, we said on previous calls, some of our greatest strength was our ability to get some of our recurring revenue streams back in action very quickly. So those are generally our higher margin products, whether it's gaming operations revenue, whether it's cash access services. And where we've seen the challenges in the revenue has been on the equipment sales side. And again, because the inventory component in there, those are usually the lower margin products. So So I think you'll see in the near term especially that we'll continue to have higher margins. But I think as you move forward, what we've been doing very effectively is managing our cost structure, trying to trim out some of the unnecessary costs or managing our costs better, things like reducing our office spaces, which is going to help on the expense side of things. But we're also expanding those recurring revenue streams that have the higher margins. So you're going to attack it two ways. And I think if you kind of want to think of it in terms of comparability to 2019, it's David Bain kind of mentioned on the first question, I think you'll see that longer term as we normalize, you'll probably have slightly higher margins for us going forward as we continue to see more of that recurring revenue streams being a larger portion of our total revenue.
spk02: Great. And, Mike, after what you've experienced, you and the industry experienced in 2020, do you have any updated thinking about the benefits or, I guess, lack thereof to house gaming and fintech in the same company?
spk00: Actually, I do. I mean, well, I've got several observations. The first is the next time I see a black swan, I'm probably going to shoot it. But beyond that, you know, and I said in my prepared remarks, I mean, the amazing resilience of both segments of our company, both games and fintech, and the amount of recurring revenue that that was so resilient and came back as quickly, if not quicker, than the equipment sales revenues, to me, really pushes me into the camp even further of these two businesses finding a tremendous home and a great synergy being together under one umbrella. I'm constantly asked, because I'm bullish on keeping both businesses in one company. I'm often asked about, well, you know, but would you split them up? And, you know, I've always said for the right dollars, of course, but I don't see any reason to. There's no strategic need to do that. I think they're highly complementary, and this has really proven it.
spk02: Understood. All right. Thanks so much, guys.
spk00: Thanks, Barry.
spk09: Your next question comes from the line of Mark Palmer with BTIG. Please proceed with your question.
spk03: Yes. Thanks, gentlemen. Another question on the Cash Club wallet. I know that you are not at the point at which you are ready to share metrics with regard to the wallet, but conceptually, how should we think about the take rate on the wallet relative to other digital wallets that are out there from various other market participants?
spk00: Yeah. Well, I guess the first thing I would say, and I'll turn it over to Darren and let him speak to the uptake and the adoption rate. But, you know, we're live in two casinos and we're tracking that. I'm not aware of anyone else that has a solution that's alive in in two, or with two casino operators, I should say. One of those operators has it in multiple casinos, the same wallet, and nobody has that out there. So with respect to others, I don't know that I see them having any kind of a real uptake at this point. I think they're quite a bit behind us. But Darren, do you have objectives that you wanted to share?
spk07: Yeah, well, look, I think, again, still early days, still what I would consider very soft launches with our customers. And, again, it's really just all about their own planning in terms of how they translate this into their enterprise. But the early data is very encouraging. You know, if you sort of think about David Bain's comments earlier, you know, look, it's a simplified user experience. It's got great utility for the operators because, you know, You know, there's a lot of efficiency that come along with this digital transformation. So I expect, based on our early information that we have on the data, that I think the adoption will be strong, and this will certainly move the needle for us because, you know, again, it provides just another, you know, alternative for patrons in terms of how they're enjoying their entertainment experience and how the operators can connect to that patron experience from their differentiated platforms, whether that be the brick and mortar, whether that be their retail, whether that be their online sports or iGaming.
spk03: Thanks very much.
spk09: Your next question comes from the line of Chad Beynon with Macquarie Group. Please proceed with your question.
spk04: Good afternoon. Thanks for taking my question, guys. Congrats on the results. Hi. As we think about your game ops unit division and the opportunity, whether it be premium or just the entire base, I know at prior investor days and on former conference calls, when things were a little bit more predictable, you had provided some goals, and I think you exceeded those goals in 2019 and 2020 in terms of units. Can you just help us think about the white space that remains for you guys or the cabinet white space that could further drive this in 2021 and 2022? And maybe if I can go as far as asking, should we expect growth in 2021 in the gaming ops units division, given where it currently stands? Thanks.
spk00: Yeah, absolutely. Well, I can give you my point of view and then I'll turn it over to Dean. But, you know, I expect to see growth this year. I don't know that we can maintain the kind of growth that we've had for the last 10 consecutive quarters at the same rate, but I certainly expect growth. I also expect some churn in the underlying installed base in that we may see some casinos go from Class 2 to Class 3. and take some of our games out of the installed base. But you hit on a key, which is we now have another metric that Dean is responsible for that he's put out previously that he's now going to have to change. So, Dean, do you want to speak to those issues?
spk11: I don't know if I would call them issues, but I'd call them potential opportunities. So, Chad, I mean, the bottom line is that we got five different product categories that we continue to develop into between our Empire DCX, our Empire Arena, our Renegade install base. We just launched FlexFusion. And then Skyline Revolve is really, it's our mechanical wheel product, high denomination that we're starting to get some significant traction on that has plenty of opportunity. So I think the building blocks are there, but as you've heard, it's a repetitive tone. It depends on what happens out within our industry and our customers, but our plan is to have a product offering that will continue to allow us to grow and to do our best to take as much advantage of that as possible.
spk04: Great. Thanks, Dean. Appreciate it. And then regarding the digital on the game side, the formerly interactive division, small but important, and DraftKings talked about a much larger iGaming market in North America that probably is positive for players you know, the outlook for digital for you guys and for your competitors. You elaborated on some of the successes so far, but just wanted to ask if you could, you know, go a little further and just kind of talk about what the game plan is there, more titles. It sounds like you have a few things that are working really well. You know, it should be a much more fragmented space. And obviously from a digital perspective, there's less barriers to entry, but just wondering if you could kind of frame out the opportunity there.
spk00: Sure. And I'm going to turn it over to Randy to really speak to that. But I would note that, I mean, we have each of the games that are produced in digital are made for digital. And they're made for the ability of our RGS to send them to other sites. So they're using a lot of our existing game features and gameplay types in the field. But we haven't really dipped into the depth of our catalog yet to bring along the sheer number of games that we could. But, Randy, do you want to speak to where you see digital going?
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