This conference call transcript was computer generated and almost certianly contains errors. This transcript is provided for information purposes only.EarningsCall, LLC makes no representation about the accuracy of the aforementioned transcript, and you are cautioned not to place undue reliance on the information provided by the transcript.
spk01: 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.
spk04: 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.
spk11: 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.
spk12: Thanks, Randy. Our first quarter was another quarter of consistent growth that benefited from our overall portfolio of diversified products and services. Although the impact of Omicron on patron visitation in early 2022 provided an easier comparison for the first quarter, we continued to generate growth throughout the quarter due to our balanced business mix. In this morning's press release, we introduced adjusted earnings per share. This measure provides a supplemental view of our earnings that more closely resembled normalized operating EPS, without unusual or non-recurring operating items, as well as removing the amortization expense associated with purchase accounting-related intangible assets from our acquisitions. Adjusted EPS was 43 cents in the first quarter, flat a year ago. A lower tax provision and a decrease in our diluted shares outstanding primarily from our share repurchase activity to date, offset the higher net interest expense due to rising interest rates. On a consolidated basis, we reported year-over-year revenue growth of 14%, driven by 9% growth in games and 20% growth in fintech revenues. Our core businesses performed well, delivering 10% organic growth, and acquisitions contributed an additional $7 million year-over-year, or 4%, to consolidated revenues in the quarter. Our recurring revenues increased 11% and accounted for 74% of the total revenues in the first quarter, while one-time sales grew 25%. The small decline in gross margin percentage was primarily driven by a change in mix as lower-margin gaming equipment and fintech hardware sales grew more rapidly. Adjusted EBITDA of $92.5 million was up 3%, and as a percentage of revenues, adjusted EBITDA was 46%, compared with 51% a year ago. This change primarily reflects the revenue mix shift and the investment in our future, coupled with the impact of acquisitions and higher wages. As we continue to lap the changes in revenue mix and the impact of higher R&D and acquisitions, we would expect adjusted EBITDA as a percentage of revenue to remain relatively flat in the mid to high 40% range throughout the remainder of this year. Free cash flow generated in the quarter was $37 million compared to $52 million a year ago. The decrease primarily reflects an $11 million increase in cash interest from rising interest rates along with increased capital expenditures. As Randy noted, We, in the near term, expect to focus the majority of our ongoing free cash flow on share repurchases. Within the game segment, total revenues increased 9%, while adjusted EBITDA was $54 million compared with $55 million a year ago. In gaming operations, as expected, the daily win per unit improved on a quarterly sequential basis to $38.37 and was down compared with the prior year for it. Install base declined 134 units on a quarterly sequential basis, while growing 513 units year-over-year. We expect to experience a short-term headwind in install base growth ahead of the launch of our two new premium, lease-specific cabinets. We have accelerated our launch plans for these new cabinets and expect to begin showing them to customers later this month and for them to hit slot floors by the end of the third quarter. At G2E this year, we will also showcase even more premium cabinets, along with a new standard for sale portrait cabinet. We expect these new unique form factors to be commercialized by the first half of 2024. As a prudent steward of capital, we plan to maintain our disciplined approach to capital spending. We will balance the replacement expenditures of our installed base using our FlexFusion and DCX cabinets with the availability of the new cabinets and content. Within the FinTech segment, first quarter revenues increased 20% over our prior year, of which 16% was organic growth. This drove 14% increase in adjusted EBITDA to $39 million. FinTech revenue growth in hardware sales was 34%, benefiting partially from a full quarter of e-cash revenues in Australia. Software and other revenues rose 35%, which included the benefit of rolling out our AML software into new customers. Financial services revenue grew 13%, primarily driven by a 13% increase in transactions. Looking at the impact of interest rates on operating results, I'd first remind you that we have $400 million of unsecured notes due in 2029 with a fixed rate of 5%. This equates to roughly $20 million of annualized expense, which is paid in the first and third quarters. Additionally, after prepaying the $6 million of annual required payments on our term loan during the first quarter, we now have $586.5 million of secured term loan outstanding. That debt floats currently at LIBOR plus 250 basis points, roughly $45 to $48 million of annualized interest expense. We also have commercial arrangements to maintain cash at our ATM machines located in certain customer locations. This commercial bulk cash arrangement incurs a variable rate cash usage fee that is based upon the Fed's fund's target rate. The daily average balance fluctuates throughout the year. But as our financial funding services grow, our estimated annualized expense is expected to be in a range of $18 to $20 million for 2023, compared to $9 million in 2022. At current rates, with an end-of-quarter weighted average borrowing rate of 6.4%, and our expectation for strong free cash flow, we remain comfortable with our current level of debt and our current cash interest costs. As of the end of the first quarter, our total net leverage was 2.4 times trailing adjusted EBITDA, which is below our target levels. Even with our recent VideoKing acquisition, which we had funded entirely from our cash balances on hand, and our expectation for continued share repurchases, we would expect to remain at or below the target throughout 2023. Moving on to our outlook. Historically, while the gaming industry has not been altogether recession-proof, it has been relatively resilient, driven in part by the significant aging of the American population. The number of people over the age of 55 in the US, which is the prime demographic for gaming, has increased by more than 65% since the year 2000 and is projected to continue to grow both as a percentage of the US population and in absolute numbers by the year 2025. Reflecting the in-line first quarter results, our balanced business, and maintaining our conservative outlook on the year, we today reaffirmed our annual guidance for 2023, which was provided in March when we reported our 2022 fourth quarter results. Our expectations for adjusted EBITDA of between $384 to $396 million and for free cash flow of between $150 to $160 million are unchanged, and that's inclusive of our VideoKing acquisition. As you can see from our guidance of 3% to 6% adjusted EBITDA growth, we believe it's prudent and reasonable to plan for some slower growth this year, even with the benefit from the launch of new products and our recent acquisition. We raised the bottom end of the range for net income, primarily benefiting from a reduction in the expected provision for taxes on a GAAP basis. This change also increased our outlook for adjusted EPS. We now expect annual net income of $92 to $100 million and adjusted EPS of $1.58 to $1.66 per diluted share. This adjusted EPS is based on the number of diluted shares outstanding at the end of the first quarter and does not reflect the potential reduction from additional buyback activity. And with that, I'll now conclude our prepared remarks and turn the call over to the operator for questions.
spk01: Thank you. If you'd like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd 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. In the interest of time, we ask that you each keep to one question and one follow-up. Thank you. Our first question comes from the line of David Katz with Jefferies. Please proceed with your question.
spk06: Hi, good morning. Thanks for taking my question. I appreciate it. Can you just give us some color or insight into And I know you've talked about sort of growth headwinds in a couple of areas, but specifically around the premium installed base. And I guess what has impacted kind of the cadence or rhythm of new product hitting the market? Or did something miss or get delayed? Or help us just understand that a little bit better. Thank you.
spk11: David, thanks for the question. Basically, what we've seen on our legacy premium product, David, that we'd always expected some churn, but it's coming in a little bit earlier than we anticipated. So what we've done, and we've pivoted quickly, and that is, so we've talked about it on the call, the cabinets that are in our plan for this year, and, you know, a couple of those cabinets were really going to be shown at G2E, but, you know, Dean and his team have done a good job. They've moved two of those cabinets up because, you know, the churn is happening earlier, and so we expect that, you know, if we can get these cabinets up, In front of customers, we can still show growth towards the end of the year, but I would say for probably Q2 and Q3, our expectation now is more of a flattish to maybe modestly down an install. Some of it will continue to work with other cabinets that we can replace, but a lot of it is But the return on that capital, when do you replace it? And we think that we've got just a really great lineup for G2E and next year, and also some premium cabinets that can fill some spots earlier on that we had thought we would have to.
spk06: Got it. I appreciate that. And with respect to the fintech side, Should we, you know, I know there's a lot of ways to look at the, you know, the positive move of the share of purchases and the balance sheet that you've, you know, very aptly, you know, managed all the way down. Should we be thinking about a balance of M&A and growth funding and share of purchases or more of an, you know, sum of one and less of the other? How do we balance those two elements?
spk11: Sure. I think the way we're looking at it right now, David, is we feel that the best use of our cash is investing in this company. We'll still continue to look for tuck-ins if they make sense. But based on what we're trading and just our expectation of how this company will continue to grow, we feel that utilizing the majority of our free cash flow for share purchases will happen for a while until there's a better opportunity for it. So I think short answer is we think investing in the company is a great thing right now. We won't stop looking for small tuck-ins, but- To your point, I think it's leaning towards sharing purchases right now versus acquisitions.
spk06: Okay. Very helpful. Nice quarter, and thank you for taking my questions.
spk01: Thank you. Our next question comes from the line of Jeff Stanchel with Stifel. Please proceed with your question.
spk10: Great. Thanks. Good morning, everyone. Thanks for taking our questions. Starting off, Randy, you talked to some strong early reception for the Dynasty View. I think I can speak for all of us in saying we've been pretty excited to see what this cabinet is going to do on the casino floors, keeping in mind that it's still fairly early here. Just curious if there's any data points you can share on how the cabinet's performing versus floor in some of those early installations that you called out. Thanks.
spk11: Yeah, I might flip it to Dean, but I would say it's still early, Jeff. But I think we've gotten, we received, you know, great feedback from our customers. And there's, you know, we have a solid pipeline for that. But, you know, right now, I don't know, Dean, if we've got any really detailed information on how it's performing against House.
spk07: You know, anecdotally, it's doing very well, but it is early on. But I'd say the key note that I'd bring out is that backlog is very robust, and there is, I'd say, a higher anticipation even than I would expect, and I always expect a high expectation of an initial backlog. So we're looking forward to seeing those units go out. Plenty of themes to come out behind our initial launch product, and look forward to seeing how this all plays out.
spk10: Great. That's helpful. Thanks, Dean. And then for my follow-up, moving to the capital allocation strategy, really nice to see the new authorization. Mark, I was hoping you might provide some perspective on how aggressive you expect to be. Cadence-wise, should we expect repurchases to ramp sharply in Q2, just given where the stock sits today and the yield on that? Or does it make sense for the video king payment to flow through before kind of ramping up here? If there's any thoughts there, it would be appreciated. Thanks.
spk11: Jeff, I'll start and I'll let Mark kick in. Look, I think we're going to be opportunistic and prudent as we go. I think you stated it right. We just finished the Video King acquisition, but I think you should expect to see repurchases on a pretty steady basis. over the next, you know, 18 months, depending on how our share price follows. But, you know, we're very much committed. And, you know, I didn't say in the quarter, we didn't do anything because of Video King. But I think based on how we look at our share price, we expect it to be very consistent. And it may be a little bit more front-end loaded than back-end loaded. Mark, anything?
spk12: Look, I think you nailed it already. I would just say, when we announced the initial one, and as we've expanded and refreshed this current iteration of the repurchase plan. Our goal has always been that we believe the strength of our free cash flow generation enables us to divert a good portion of our cash flow to a steady portion of our cash flow back to share repurchase. And that's our expectation. We expect to be steady and consistent using a portion of that over time. So I think you should expect to see kind of, as Randy said, just steady, consistent buybacks.
spk10: Great, that's helpful. Thanks, all, and congrats on the next quarter. Thanks, Jeff.
spk01: Thank you. Our next question comes from Ryan, a very generous with Truist Securities. Please proceed with your question.
spk08: Great, thanks so much. I wanted to dive a little bit more into the EBITDA guidance and the reiteration. You mentioned Q1's in line, but maybe I think it came in a little bit out of the street. But then you're adding in Video King now. So I guess, has anything changed in terms of the outlook for this year for the guidance? Or else, all else equal, would you steer people maybe a little closer to the high end now that Video King has been added?
spk11: Yeah, I would say a couple of things, Barry. When we gave our guidance in early March, we were obviously thinking about video keying and when that acquisition would close and how quickly it would close. So part of that was in our range and probably at the higher end of that range. But second of all, you know, I don't think we had really looked at the install base being, you know, I'll say flattish for the next couple quarters, flattish to modestly down. So I think the two are kind of offsetting each other a little bit. And so, you know, that's why we still think we're very comfortable in that range, very like all things equal. And if, you know, we didn't have a little bit of a, you know, I'll say a slight headwind in our performance, Install base, we probably would be at the higher end, but I think right now we still feel very comfortable and that we're in that range. And, you know, again, there's just so many things that everybody's looking at towards the back end of the year that I just think, you know, staying in that range is prudent, and that's where we're at.
spk08: Understood, understood. And then just for a follow-up, you know, I'm interested in the eCash kiosk coming into the U.S. distributed gaming market. Any early feedback from operators as you prepare to launch? And I guess more importantly, how big do you think that market opportunity is?
spk11: We're early, Barry. So I would say, look, we've done a lot of research. We've done a lot of discussions with customers in those locations. I think they definitely want a new product there. And are excited that we're coming to it. But I don't, I think it's kind of early to tell you how big that is. But look, we do think it's a growth opportunity for us. But, you know, right now it's a little early to kind of give any indication of how much that'll be this year. But, you know, we feel very comfortable that that product from eCash will be, you know, The customers will like what we have there. It's just, you know, there are regulatory processes you got to go through. And so, when it'll be there is the, it's a timing issue from my standpoint.
spk08: Got it. Understood. All right. Thanks so much.
spk10: Thank you.
spk01: Thank you. Our next question comes in line of John Davis with Raymond James. Please proceed with your question.
spk02: Hey, good morning, guys. Mark, I just want to follow up a little bit on your commentary on margins. I think they were down about 500 basis points the first quarter. I just want to clarify, I think you said that they would be kind of flattish year over year for the remainder of the year. So it gets you to kind of down 100 to 200 basis points for the full year. I just want to make sure I heard that correctly.
spk12: Yeah, we kind of framed out that we thought we would be kind of consistent with where we are as we're always trying to drive home in these kind of levels in the mid to high 40% range. So I think it's reasonable to think it's kind of consistent now that the acquisitions are kind of all lapping themselves. We seem to be kind of getting to a similar cadence on hardware sales in the mix of our total revenues. So I think that's how to think about it.
spk02: Okay. And then, Randy, I know we talked a lot about capital allocation on this call, and obviously good to see the buyback. But just curious, Mark made a comment that you would kind of stay at or below the low end of your kind of two and a half to three times leverage target. Just curious where the stock is. Like, why not take leverage maybe to the midpoint to be a little bit more aggressive on buybacks, given what seems like a pretty incredible value at this level?
spk11: It's a great question, John. I would just say, look, I'm very pleased that our board, you know, Proved 180Million and I'm not saying that we might not do something down down the road, but they were to start here and just see how it how it plays out. I'm not, you know, how, you know, how aggressive I am John. So I don't think that should be any news to you that I think putting 180Million out there, you know, almost 13 and a half percent of our value. I think that's where we're at and I think we're comfortable with that. And I'm not ready to go the next step just yet, but we'll see how we trade and what happens over the next, you know, six to 12 months.
spk02: Okay. Appreciate it, guys. Thanks.
spk11: Thanks, John.
spk01: Thank you. Our next question comes from the line of Chad Bannon with Macquarie. Please proceed with your question.
spk00: Morning. Thanks for taking my question. Wanted to ask about Venutize. You guys have now owned this for, I believe, six or seven months. A lot of strength in the sports, entertainment, hospitality consumer at different stadiums and live events. And there continues to be announcements with newer stadium and more investments in tech. So can you just give us a little taste in terms of how this acquisition is progressing, how we should think about when this becomes more of a meaningful event? contributor. Thanks.
spk11: Sure, Chad. Look, I'd just say it's early. I think we're about five, right, probably six to seven months in. You know, as in any acquisition, you've got to get in there and figure what's going on with it. But we think it's still a great acquisition. I think it's going to be more of a growth generator in 2024 as we really kind of figure out how much more we can integrate our other products between wallets and loyalty into their offerings. It's been a great acquisition, but I think it's more of a growth driver in 2024, but it's coming along really kind of at the pace we expected. As everybody knows, acquisitions are always challenging, and I think it's going along just the way we expected it, but it's more of a 24 growth.
spk00: Okay. Thanks, Randy. And then regarding just the health of the U.S. gaming customer, we've heard from a lot of operators that there has been some weakness in some southern regions. And I think that's really just been more of a comp issue versus anything else. But within your, whether it's class two versus class three or geographically speaking, have you seen anything that kind of fed into the RPD outside of the mix issue that you believe is is a negative trend or you think same-store trends are kind of stable, notwithstanding some of the ins and outs of cabinets. Thanks.
spk11: Sure. Look, I think the best, you know, indicator that we have really is our cash access business. And I think it's really in line with what we had expected. You know, we knew Q1, you know, with January and February with Omicron was going to be up and cash access would perform or expected to perform really well. What we've seen really in April and early May is it's coming back down to what I would say is that, you know, low single to mid single growth on a same store basis. And that's our best indicator. So, you know, right now, I don't think I've seen we have not seen anything that points to a specific region you know we're fairly diverse not fairly we are diverse across north america so you know we don't uh you know we always see you know something happens in one region and it's offset by something else but right now i haven't seen we have not seen anything that that indicates anything different than what we expected which was it would settle down you know in the in the second quarter as it ramped throughout the year and assuming you know, no, you know, major, you know, macro impact that it would be that a, you know, a more, you know, low single to mid single growth.
spk00: Thanks, Randy. Appreciate it. Nice quarter. Thank you.
spk01: Thank you. Our next question comes from the line of Edward Engel with Roth MKM. Please proceed with your question.
spk05: Hi, thanks for taking my question. You noted that there is some some of your customers might have delayed shipments, just given the dynasty being launched in 2Q. Just curious, I mean, do you expect that pent up demand to be released pretty quickly into the 2Q? Or is that more of just kind of flows through until the rest of the year?
spk11: Well, Edward, I'd love to say it all is going to come in Q2. My guess is it'll come throughout the year. You know, again, I think there's some that are, you know, early adopters and they'll take it quickly. I think there are some that will kind of wait to see how the game performs. And so it's, you know, it's not going to all hit in Q2, but look, we think it'll ramp throughout the year. And so it'll impact, you know, Q3 and Q4 as well, assuming the cabinet does and the games do what we expect.
spk05: Um, helpful. Thanks. And then I guess, um, how should we think about, I guess, ASPs, I guess, bigger picture of the next couple of quarters. Um, you've got dynasty, which I'm assuming is a creative, then you've got HHRs, which I would assume is dilutive. Do those offset or do you think one kind of overpowers the other?
spk11: Yeah, one item to keep in mind, Edward, is we also have turn event units in there, which sometimes drives up our ASP a little bit. So, look, I still think we're in the 19 range, but I don't think that it goes much higher than that. And, again, sometimes turn event will skew that because there's other hardware and software that's associated with that cell that kind of gets blended into that overall ASP. But I think, you know, we still feel pretty good at that 19 range.
spk05: Great. And then, I guess, does that mean that one cue was probably, I guess, given a mixed shift towards the tournament? Correct. Correct. Perfect. Okay. All right. Thank you. Thank you, Ed.
spk01: Thank you. Our final question this morning comes from the line of George Sutton with Craig Hallam Capital Group. Please proceed with your question.
spk09: Thank you. The superstar in the room, I would assume, would be Darren with the 16% organic growth for FinTech this quarter. You addressed some of the cash access numbers, but we're certainly assuming a much slower organic growth for the rest of the year. I wondered if you could just address that dynamic and what might change from Q1 to the other quarters.
spk11: George, I think you're spot on. We talked a little bit about the GGR, but I think we still have, which is going to be slower, but I think Darren is still very bullish, and his head's a little bit big right now, but he's very bullish about how the loyalty product is running. He's got a nice pipeline there. AML up into Canada is doing well. Again, we talked about the e-cash units. I don't know how much of that will really hit, you know, this year, but we expect some of that to go into the distributive gaming market. So, you know, look, I think Darren had a great quarter. Fintech had a great quarter. We knew that coming in just given the situation last year. But I think he feels, you know, really pretty strongly, and I'll let him kick in, but I think we feel pretty strongly that, you know, fintech should continue to grow pretty steadily unless there's some type of a macro pullback. But it's not going to be what we saw in Q1.
spk03: No, I think you hit it, Randy. I think, again, Q1, the anomaly from last year with Omicron. So we'll go back to probably more normalized growth. I think the only probably difference is we've probably seen a lot more international in Q1 than kind of from year over year. So that was kind of interesting. But, you know, I think, George, our business on the fintech side, very diversified across different product lines. So I think that creates a lot of strength for us. And, you know, again, the sales pipeline, again, It's strong, and so we feel really good about the cadence of where we're at and excited about all the good things happening on both sides of the business, including Dean's with all the premium cabinets and games he's got coming new. So a lot of strength there.
spk09: Gotcha. I'd have a big head if I looked like George Clooney as well. So one question, Randy. You mentioned 11%. incremental opportunity or sort of TAM, can you just walk through what you were building into that larger number?
spk11: I'm trying to make sure that if that was on the, on the HHR and BLT that I talked about that 11 to 12%, is that, so again, that that's talking about, you know, markets that, you know, really haven't been there. I think the, the BLT market is like 180,000. And then the HHR is, you know, 20 or getting close to 20 moving to 30 so those are or maybe a little bit less than that hhr may be maybe a little less than 20 but we think over time it's going to continue to grow so we just look at those two markets as markets that we have not played in we just recently um launched as we talked about our every cabinets on the exact system in q1 um so you know i just think again as we look at growth opportunities for every You know, we continue to look at other verticals we've not been in and execute on them. You know, I give Dean and his team, you know, the kudos for getting into HHR through that Intuit code acquisition. We're doing VLT really on our own, and so expect to be there in 24. So I look at both of those, George, as areas where, you know, we continue to have runway to grow.
spk09: Super. Thanks, guys. Thanks, George.
spk01: Thank you. Ladies and gentlemen, that concludes our question and answer session. I'll turn the floor back to Mr. Taylor for any final comments.
spk11: Just to say thank you for joining us today. We appreciate your interest in every and we look forward to providing you with an update in on our Q2 call in early August. Thanks for joining us.
spk01: Thank you. This concludes today's conference call. You may disconnect your lines at this time. Thank you for your participation.
Disclaimer