Everi Holdings Inc.

Hello everyone, thank you for standing by and welcome to the Every Holdings 2023 First Quarter Earnings Conference call. During today's presentation, all parties will be in a listen only mode. Following the prepared remarks, we will open the call for a question and answer session. As a reminder, this call is being recorded. Now let me turn the call over to Jennifer Hills, Vice President Investor Relations. Please go ahead.

Thank you, Operator. Let me begin with a reminder that our Safe Harbor disclaimer, which covers today's call and webcast, contains forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those discussed on today's 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 Investors section of our corporate website at every.com. Because of the potential risks, you are cautioned not to place undue reliance on forward-looking statements. We do not intend and assume no obligation to update any forward-looking statements which are made only as of today, May 10, 2023. We will refer to certain non-GAAP just financial measures such as adjusted EBITDA, adjusted EPS, free cash flow, and net cash position. A description of each of these non-GAAP measures and reconciliation to the most directly comparable GAAP measure can be found in our earnings release and related 8K today. as well as in the investor section of our website. This call is being webcast and recorded. A link to the webcast and a replay of today's call can be found in the investor section of our website. On our call today are Randy Taylor, Chief Executive Officer, Mark Labai, Chief Financial Officer, Kate Lohenhauer-Fisher, General Counsel, Dean Ehrlich, Games Business Leader, and Darren Simmons, FinTech business leader. I would also know that even though he's counting the weeks until he just dials into these calls, Bill Funn is also still with us today. Now I will turn the call over to Randy.

Thank you, Jennifer. Good morning, and thank you all for joining us. The year has gotten off to a solid start, with first quarter 2023 revenues increasing 14% to $200.5 million, adjusted EBITDA rising 3% to $92.5 million, and free cash flow of $37.1 million, despite the impact of rising interest rates throughout 2022 and into 2023. These metrics were in line with our expectations. We continue to see solid organic revenue growth throughout the quarter across both our games and fintech businesses. Overall, games revenue grew 9% year over year, and fintech revenues rose 20%. Our prior investments in R&D drove organic revenue growth of 10%, with acquisitions completed in 2022 adding 4% to our revenue growth. While macroeconomic uncertainties still cloud the near to medium term horizon, we remain well positioned for consistent growth due to our investments in internal R&D to develop new gaming content, broaden our bandwidth for the introduction of several new cabinets, and add new product enhancements and features across our FinTech portfolio. Additionally, our recent acquisitions have expanded our addressable market, while also enabling us to leverage our existing product development capabilities and distribution to scale these products for future growth. In our game segment, revenues from gaming machine sales increased 15% year over year. As expected, we experienced a quarterly sequential decline as some operators opted to delay purchases until the launch of our new Dynasty View video cabinet, which took place at the very end of the first quarter. The view is the first cabinet in our new Dynasty line and is a lower profile cabinet with sight lines comparable to a dual screen cabinet. Initial shipments began on schedule with the first installation at Yamaha Resort and Casino in California, quickly followed by several other casinos in April. Initial feedback is highly encouraging and we expect sales momentum to continue to build. Even with the often discussed increased competition among our peers, We expect the introduction of our added content and new differentiated cabinets throughout this year and next will help us maintain our longer-term market share growth momentum. Driven by our increased spending for game development and engineering, we expect to dramatically expand our portfolio of cabinets and content on our next-generation Dynasty platform. We anticipate the debut of two new premium cabinets in the third quarter, with several additional new cabinets to be showcased at G2E, including both standard for sale and premium cabinets. In March, we shipped the first every gaming machines on the Exactus Systems platform for historical horse racing to the Boston Billiards Club and Casino in New Hampshire. Our Intuit code acquisition provided us with experienced development talent and an existing base of install games that helped accelerate our entry into the HHR market. HHR machines are an exciting opportunity for us to leverage our proven gaming content across a new category for every, one that is rapidly growing and one in which we previously had zero ship share. Within the FinTech segment, the full integration of eCash holding continues to progress. Revenues in Australia contributed approximately $4 million in the first quarter. Our digital wallet is already in test at one property in Australia, while work on integrating anti-money laundering, loyalty, and mobile capabilities for the Australian gaming market is also moving forward. We expect these enhanced digital features and new products to the Australian market to provide incremental growth in 2024. We also expect to introduce the ECAS kiosk into the U.S. distributed gaming market later this year, which will complement our planned entry with VLT BGT gaming machines early next year. Our entrance into the VLT market, as well as HHR, allows us to leverage our compelling, player-proven gaming content across additional channels that, in aggregate, represent an estimated 11% to 12% of the total installed slot machine base across North America. These are significant categories in which we previously had zero ship share and which will help drive additional growth and incremental ship share as we continue to progress towards our 15% target. Our asset acquisitions of Atlas Gaming and Venutize have also provided additional opportunities for future growth. We expect to debut our first Australian studio-developed North American games this fall at G2E. In 2024, we expect to launch a full array of every product into the Australian market, the second largest slot market after the US. Through our Venutize platform, we continue to build and expand relationships, including recent enhancements for Churchill Downs Racetrack that enabled an app specifically for the legendary Kentucky Derby. Additional developments and enhancements recently expanded our relationships across the major professional sports leagues in North America, such as teams with Major League Baseball, the NBA, the NHL, MLS, and CFL, along with a growing international presence with multiple venue deployments. We believe there is a great opportunity to leverage Venutize's strengths with our cash wallet and loyalty capabilities to provide enhanced and seamless patron engagement at gaming and non-gaming sports and entertainment venues. Another early phase growth opportunity is the launch of our unique bi-branded on-property mobile digital gaming platform, which offers casino operators an all-in-one mobile gaming experience that includes a digital wallet and loyalty capabilities on players' own devices. We launched Vi at the Indian Gaming Show in late March to a very positive reception, as many tribal operators look for opportunities to utilize mobile technology to further their guests' gaming experiences and grow revenue. With Vi, players can use their mobile device to play Avery's Class 2 and Class 3 digital games, as well as other third-party content on-premise, including off the casino floor with a Geofest location or jurisdiction. In our digital gaming business, while we continue to expect 2023 to be a relatively quiet year as far as the state-by-state expansion of legalized iGaming into new jurisdictions, we continue to build out our digital business and offerings. In April, we expanded our real-money iGaming offering to multiple operators serving a regulated provincial market in Alberta, Canada. Every digital player popular game content is now featured at just over 80 real money online casinos and is also available on more than 40 social casinos worldwide. In addition, we recently received a UK license and now are working toward a launch in the UK by year end. Most recently, last week, we completed the acquisition of the assets of VideoKing, a leading provider of integrated electronic bingo gaming devices providing us with an additional digital gaming growth channel. We expect to be able to provide average digital game content, wallet, and loyalty products to our Video King customers in the near future, further extending our digital neighborhood. This will improve revenue and margin opportunities for our customers and for every. With our additional digital offerings, we believe there is a longer-term opportunity to leverage our sales force and our relationships particularly with tribal operators to further grow the business within our fintech digital neighborhood our digital wallet remains an area of exciting long-term growth the adoption of our wallet technology is largely progressing as expected the pace of which is primarily driven by our casino operator customers we continue to expect the tribal and regional operators will be the early adopters because of their heavier dependence on frequent repeat customers Currently, our single solution digital wallet is installed or pending installation at 43 casinos covering 22 jurisdictions in 17 states. In casinos where we have historical data prior to the implementation of a patron's cash wallet, we have seen an increase in both the number of transactions per month and overall dollars spent by a casino customer. excluding extremely high value customers which can distort averages transaction for transactions for rated players have increased by one and a half to two times their prior activity while the average amount funded per month has increased between 20 and 35 percent over pre-wallet adoption as you would expect from overall casino demographics Close to 60% of the wallet users are 40 years of age or older, and they account for nearly 75% of the overall funds on wallets. While the majority of volume today is driven by repeat patron usage, we continue to see a steady growth of new wallet users every day. As you contemplate the growth potential of our digital opportunities, you quickly realize that we have a strongly focused strategy across both our games and fintech businesses on providing an omnichannel presence to casino operators, leveraging our development efforts and our existing product strengths. Given the high number of growth initiatives underway, we expect to continue to invest in internal R&D at current levels. In the first quarter, R&D expenses were about 8% of revenues, and we expect to continue to be at or about that level through the remainder of the year. Having significantly expanded our addressable markets during 2022, and most recently with VideoKing, we are focusing our near-term attention on integrating these acquisitions. As we expect to generate strong free cash flow in successive quarters, we will continue to be on alert for any attractive acquisitions. However, we plan to prioritize the majority of our ongoing free cash flow to opportunistically repurchase our shares. To that end, we announced today that our board approved a new 18-month, $180 million share repurchase program that replaces the previous $150 million program essentially adding approximately $115 million to the remaining $65 million in buyback authority. Before I wrap my prepared remarks, I want to acknowledge that the progress, achievements, and future growth of our company is a direct result of our outstanding employees. I want to welcome our new employees from Video King and thank all of our existing employees for their dedication and hard work. They drive our collaborative culture and are the primary reason for our success. We are proud to continue to be recognized as an employer of choice and to be included for a second consecutive year in the Top Workplaces USA 2023 based on independent employee engagement surveys. This is our 16th Top Workplace Honor received over the past three years. Now let me turn the call over to Mark, who will provide more insight into our first quarter financials and current outlook for the remainder of the year.