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spk01: Good morning and thank you for standing by and welcome to the Every Holdings 2023 Third Quarter Earnings Conference Call. During today's presentation, all parties will be in a listen-only mode. Following the prepared remarks, the call will open for 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.
spk00: 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 in 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 investor section of our corporate website at every.com. Because of the potential risk, 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, November 8, 2023. We will refer to certain non-GAAP 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 a reconciliation to the most directly comparable GAAP measure can be found in our earnings release and related 8K today, as well as in our 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 Lonehouse-Fisher, General Counsel, Dean Eric, Dean's Business Leader, and Darren Simmons, FinTech Business Leader. Now I will turn the call over to Randy.
spk09: Thank you, Jennifer. Good morning, and thank you all for joining us today. For the quarter, we reported revenue of $206.6 million, adjusted EBITDA of $96.2 million, and free cash flow of $34.3 million. This brings our year-to-date free cash flow to $122.1 million. During the third quarter, we returned $33.9 million to shareholders through share repurchases, bringing the total of the We have $106 million remaining on our current $180 million repurchase authorization. Our fintech business continued to deliver strong revenue growth in our financial access and software and other businesses. We reached another quarterly high for funds delivered to casino floors of over $11.9 billion. While daily same-store sales growth has returned to the pre-pandemic level, of low to mid single-digit year-over-year growth. We have continued to grow our revenues at a higher rate as a result of our ability to add new customers, products, and services. During a recent global gaming show, G2E, our fintech business continued to highlight our strategy for our digital neighborhood, which is focused on improving the patient experience and driving operator efficiencies. We showed new and updated products across our diverse portfolio of payment solutions, casino and loyalty products, and our mobile offerings that demonstrated our unique position to capitalize on the convergence trends of gaming, hospitality, and online in our core customer footprint, as well as extending our reach into venues and other adjacent business sectors. Our Cash Club wallet won the Payment Solution of the Year Award. We introduced Buy, which combines our digital capabilities with strong game content and allows an operator to offer on-premise digital gaming. We have received strong interest in Buy and are making progress on securing agreements with several operators. We also introduced our mobile Beyond Wallet, a digital wallet that Casimo patrons will be able to use across multiple properties and jurisdictions and includes a comprehensive offering of our mobile wallet for cash access, ticketing, gaming, mobile ordering, engagement and loyalty, rewards, and other amenities. We believe these new products, together with our existing mobile products, will continue to gain traction with our customers. We see additional fintech opportunity in 2024, including our plan to sell a smaller ECAS kiosk in the North American distributed gaming markets in the first half of next year. Our mobile-first initiatives utilize the assets that we acquired from venue ties and provide us the opportunity to grow our base of recurring revenues and expand our market into new adjacencies, including sports, venues, entertainment, retail, hotel, food, and beverage by leveraging our payment and loyalty capabilities. Our games business continued to experience near-term headwinds in the third quarter. We expect a similar impact in Q4 of this year. However, at G2E, we've highlighted new cabinets, new content, and new market opportunities for 2024 and beyond. Starting in 2022, over a 24-month period, we will launch seven new cabinets that refresh our mechanical and video reel for sale and premium cabinets. These cabinets incorporate newer components and technologies and complement our existing portfolio of cabinets. In addition to the new cabinets at G2E, we showed a diverse portfolio of new games, and our targeted release of 25 new themes this quarter to support the launch of our new cabinets and over 80 new themes in 2024. Importantly, this portfolio represents a diversity of content for our video offerings that build in players' favorite game features, additional never-seen-before innovative themes, and our new every content that all in all targets both the entertainment and the avid players. We successfully launched two new cabinets at the end of Q3, Player Classic Reserve and Dynasty Dynamic. Customer response has been positive, and as of the end of October, we have placed nearly 50 of these cabinets into our install base, with another 200 expected to be placed by year end. We look forward to the rollout of our new cabinets in Q4 and into the next year to drive growth in 2024. As we move into 2024, we have additional opportunities to accelerate our growth by increasing our presence in the historical horse racing market, entering the video lottery terminal market in Illinois in the second quarter, and expanding internationally starting with Australia late in the year or early 2025. Despite some recent challenges, we continue to grow share at new casino openings and expansions. We estimate that our share will be more than 10% of the slot floor at new openings in the fourth quarter. Our digital gaming business recorded a 27% revenue growth, and the performance of our bingo operations through the acquisition of the Video King assets has exceeded our expectations for the quarter and year to date. Now let me turn the call over to Mark. Thanks, Randy. But let me begin by adding a little more color on the third quarter operating results. We reported year-over-year quarterly revenue growth of 1%, driven by a 4% growth in FinTech revenues and partially offset by a 1% decline in games revenues. FinTech continued to see solid growth in revenues from financial access services, which grew by $4 million, or 7%. Software and other revenues increased by 12%, benefiting from both organic growth and the contribution from Venutize, which was acquired in the fourth quarter of 2022. Hardware sales decreased by 20% from the prior year. However, the prior year quarter had the benefit of increased sales to support more new openings and expansions than in the current year. In terms of quarterly cadence for equipment sales in the fintech side of the business, I'd remind you that these can be quite lumpy on a quarterly five-quarter basis. Long-term, we continue to see opportunities for ongoing replacement sales of our financial access kiosks and increased market penetration for our loyalty and other fintech hardware. Adjusted EBITDA for the fintech segment increased 1% year-over-year to $39.8 million, inclusive of the impact of higher cost of labor and increased R&D spending. Within the game segment, adjusted EBITDA was $56.5 billion, compared with $57.2 million a year ago. Our installed base and daily wind per unit decreased compared to both the prior year and the second quarter. This was consistent with our expectations as we continue to transition to our next generation of cabinets. In the fourth quarter, we expect our installed base to be down slightly, and partially due to seasonal influences, we also expect daily wind per unit to be down sequentially from the third quarter. As our new cabinets gained traction in the market, we expected the clients in both the units in our install base and our daily wind per unit to moderate before returning to growth. Gaming equipment sales were down $4.4 million from the prior year quarter, which reflects 392 fewer units sold. Partially offsetting the equipment sales decline is $1.4 million in new equipment sales from our Video King acquisition in May and $2.3 million in game theme buyouts related to our recurring revenue portion of the HHR business. The HHR platform provider has the right to buy out certain game themes under certain conditions. When they exercise this right, we receive an upfront payment to compensate us for our share of the lost future recurring revenue related to these game themes. Consolidated gross margin expanded by 110 basis points to 79.7%, primarily due to revenue mix shift to higher margin gaming operations and financial access services revenues from lower margin gaming equipment and hardware sales. Consolidated adjusted EBITDA of $96.2 million was essentially flat year over year to the $96.6 million reported in the third quarter of the prior year. Adjusted EBITDA as a percentage of revenues was 46.6% compared with 47.3% a year ago, primarily reflecting higher payroll expenses and other costs as we continue to invest for future growth. We expect adjusted EBITDA as a percentage of revenue to remain in the mid-40% range in the fourth quarter. Our adjusted earnings per share was 44 cents in the third quarter, which was flat compared to the prior year. a lower income tax provision, and a decrease in our diluted shares outstanding, primarily from our share repurchase activity, which was offset by the impact of lower net income due to lower operating income and higher interest expense. Net interest expense in the quarter was $20 million, an increase from $15 million in the prior year. As a reminder, we have $400 million of outstanding unsecured notes at a fixed rate of 5%, and $587 million of term loan that has a variable rate of interest. At the end of the quarter, our weighted average borrowing rate was approximately 6.7%. Also included in interest expense is the cash usage fee on our ATM vault cash arrangements. Our estimated full year expense for our vault cash is expected to be approximately $21 million compared to only $9 million in 2022. We remain comfortable with our current level of debt and our cash interest costs. We ended the third quarter with total net leverage at 2.5 times trailing adjusted EBITDA, which remains in line with our 2.5 to 3 times target. Recap flow generated in the quarter was $34.3 million compared with $44.9 million a year ago. The decline was the result of $5 million of increased net cash interest costs and $5 million of higher capital expenditures related primarily to the discrete capital items we discussed for 2023, including the new assembly facility in Las Vegas and other IT infrastructure investments. We will continue to focus our capital allocation strategy on reinvesting in our business for growth. This includes maintaining R&D spending on a consolidated basis in a range of 8% to 8.5% of revenues, and as we transition to our next family of gaming cabinets, making increased capital investments in our installed base to drive future revenue growth. While we are still working to finalize our views for 2024, overall, we currently do not expect any material increase in the total capital expenditures from the 2023 levels. Any increased spending on customer equipment should offset the expected reduced spending for discrete items like the build-out of our new warehouse and assembly facility in Las Vegas. From 2018 to 2021, we experienced tremendous revenue growth as we launched our last family of cabinets into our premium footprint. We believe our current increased investment in a broader array of new cabinets and a deeper library of new game themes will result in improvements to our gaming operations and will provide increased revenue and adjusted EBITDA growth. We will continue to focus on driving market share gains with new and existing customers and expanding our product lines and geography service to leverage our existing offerings. While we will continue to evaluate token acquisition opportunities that support our product development and growth objectives, In the near term, with our share price far below what we would consider to be fairly valued, we expect to place a higher priority in our capital allocation towards returning excess cash flow to shareholders through share repurchases. Moving on to our outlook. For FinTech, we continue to expect to see high single-digit revenue growth for the year. For the games business, based on the current headwinds and until our new cabinets and games have the opportunity to gain traction with operators and their patrons, We expect greater near-term pressure on our unit sales and decline in our install base and daily win per unit. We also expect reduced recurring revenue contributions from our HHR portfolio due to the third quarter game-themed buy-offs. In total, for games, we now expect revenues to be flat to down 1% for the full year. On a consolidated basis, primarily as a result of our lowered outlook for the games business, we now expect consolidated adjusted EBITDA for the full year 2023 to be in line with the prior year. Net income, gap-based earnings per share, free cash flow, and adjusted earnings per share are now expected to be at the lower end of the guidance ranges provided in August during our second quarter earnings call. We expect our lower operating income to be offset by lower net interest expense, lower taxes, and lower capital expenditures. Our estimates for earnings per share and adjusted earnings per share are based on the shares outstanding at the end of the third quarter and do not reflect any potential benefit from future share count reductions from any additional buyback activity. As Randy highlighted, we continue to execute on our roadmap for long-term profitable growth in both our games and fintech business. We are excited to begin to see our recent investments in people and the new studios reach casino floors over the next several quarters. We believe this, combined with our expansion into the BLT market, will drive a return to growth in games next year. And with that, I'll now conclude our prepared remarks and turn the call over to the operator for questions.
spk01: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is at the question queue. You may press star 2 if you would like to remove your questions from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the start keys. One moment, please, while we poll for questions. The first question comes from the line of Jeff Stanchel with Stifel. Please go ahead.
spk08: Hey, good morning, guys. Thanks for taking our questions. Starting off here on the game house business, Ray, I think last call you talked to targeting sequential growth and installations to resume sometime around year end, potentially bleeding a bit into 2024. Now that G2E is in the rear view mirror and you're starting to see installations ramp up for some of the newer cabinets, I'm just curious, is that still the right timeframe or just how are you thinking about that, you know, given something to think about data points? Thanks.
spk09: Sure, Jeff. I would say we probably were a little more bullish where we would end the year, probably thought we would be up. I think at this point, I think our installed base will be slightly down by the end of the year. There's a couple factors in there. We do have some units that are out due to renovation. They'll come back in the first quarter. But what we are seeing, our newer cabinets get out in the field. So we put out about 50 of the newer cabinets in October. And we have another 200 that we expect to install. So overall, I think we'll see a slight decline in our install base through quarter end. But we do expect to start to grow next year. Whether that'll be Q1, it's hard to say. It'll just depend on how the new units and the new cabinets are take on, but the expectation is next year the install base will start to grow again.
spk08: Okay, great. That's helpful. Thanks, Randy. Maybe stick with the games business one for Dean or Randy, whoever wants to take this. Obviously, a ton of focus last couple quarters on the stepper category in particular coming out of the G2E. Curious if you have a sense on kind of how overall category market-wide sales have been trending just given it does seem like we're coming into a bit of a refresh cycle for Stepper specifically. And then from a shift share perspective, do you have expectations as we look out to 2024 and 2025 that you'll continue to sort of share this category evenly with a couple of different competitors? Or I guess in other words, kind of what point does the performance of the content start to outweigh push from other operators to diversify hardware a bit. Let me know if that makes sense, kind of the way I phrased it out.
spk09: No, I think it does, Jeff, and I'll take the first piece and then Dean can add on. But look, I think we're still very comfortable and very bullish on our mechanical products. Clearly, two big competitors have refocused in on the mechanical area. So we think that, you know, there'll be more of a split. I think we've got, we received a greater amount of our fair share in the last few years. And now I think it's going to be closer to, you know, a split between those three, you know, main operators in that area. So we still feel very comfortable with mechanical. And I would say, again, mechanical is only 20 to 30% of the market. Let's realize that we're also focused on video. And that's where we think is the best area for us to grow. But we think we're going to continue to maintain a very nice share in mechanical and think that we'll continue to compete very well. And in my view, we'll be at the top of that. But we'll see how that plays out. Dean, anything to add?
spk07: I would just say that we continue to provide a pipeline of what we think are very compelling products. You know, if you look at the Eilers list and high denomination and even lower denomination in the mechanical side, we still dominate it. I mean, we're half of the list. So that's telling me that our products continue to resonate. But what we're most excited about is the stuff that's also coming out that we feel put us in – a good position to continue to move forward on the mechanical side.
spk02: Great. That's very helpful. Thank you both. I'll pass it on. Thanks, Jeff. Appreciate it.
spk01: Thank you. Next question comes from the line of Barry Jonas with Truistic Yardbees. Please go ahead.
spk06: Hey, guys. We've seen the consolidation in the space between lottery and gaming How strong is the case still for GAINS and FinTech to be together?
spk09: Look, from our standpoint, we've had this combination since 2014, and it's done very well for the company. There are cost synergies, there are revenue synergies, and these businesses are complementary. So we continue to believe in the combination of the two businesses. However, we don't have an entrenched management. If someone ever came to us with an offer of one or the other side of the business that was compelling, we definitely look at it. But I still don't believe the market really sees some of the things that we do with these two businesses with our byproduct where now we're utilizing our digital assets and incorporating our cash access into an on-prem mobile product mobile gaming product and I think there are other synergies here so I still believe right now that these two businesses together is the right answer for every but we will continue to you know to evaluate anything that comes our way great that's really helpful and then you know I'm somewhat excited about your international roadmap would love to kind of hear more about it and
spk06: somewhat curious to get your views about how big international could be relative to the domestic business in terms of revenue or EBITDA. Thanks.
spk09: Sure. I'll start a little, probably a little more color. We're in the early stages, so I don't want to overstate what's out there, but clearly going into Australia where it's the second largest market for gaming machines is going to be big for us. We just need a small piece of that market. And if our content and cabinets resonate, I think it'll be very positive for us. Look, it's more like at the end of 24 and into 25. But I think it just adds to the other markets and areas that we're going into, you know, VLT, continuing to increase our share in HHR and Australia. So I think all those things continue to allow us to grow and show growth in 24 and 25. So it's early, but it's very promising from our standpoint.
spk02: Great. All right. Thanks so much. Thank you.
spk01: Thank you. Next question comes from the line of Chad Bannon with Macquarie. Please go ahead.
spk04: Morning. Thanks for taking my question. I wanted to start with FinTech for Randy or Darren. Based on your guide, revenues are expected to grow high single digits, so really positive there. On the financial access service transaction side, that year-over-year growth remained significantly higher than the market growth. So as we look into 24, understanding that you're not giving guidance, can you help us think about, you know, when either some of the acquisitions, anniversary, kind of how you're thinking about, you know, can this business continue to grow at least mid-single digits? Really good momentum right now. Just want to understand, you know, how that can look over the next six to 12 months. Thanks.
spk09: Sure. I'll start again, and Darren can add. Look, I still think we're extremely bullish on on FinTech. Darren and that team has proven that even in a, and if you go back to pre-pandemic in 2019, when we had low to mid single digit growth, we grew faster than the overall, I'll say same store growth because of the other products and services that we have to sell. And so we continue to do very, very well on new business that comes up. And so you add that along with the investments we're making in loyalty and compliance and now into buy and beyond. I think that we always look at the fintech businesses, singles and doubles, and Darren continues to find ways to add revenue into that fintech side of the business. And we would expect to continue to grow in 2024.
spk04: That's great. And can venue ties and some of the non-traditional gaming pieces of that, will that start to be a bigger contributor in 24? Or are you still kind of planting the seeds on some of the items that you talked about, Randy, with relationship to sports, retail, hotel? Is that more of a multi-year opportunity or can we start to see that in 24?
spk09: Well, I'm going to turn it over to Darren, but I will just say that, you know, on Monday we had, you know, a major league team in the office. And I will say Venutize continues to look and work into the sports area. So I think it's an area for growth. But Darren, I'll let you kind of add on that one since you're a little closer to it.
spk10: Yeah, look, I think, as I've said a few times now, you know, Venutize really complements our overall deep product roadmap that we've actually been executing on now for a number of years. So I think you need to look at it as complementing, you know, the mobile solutions that we've got, you know, that are really resonating with customers. Again, we got tremendous feedback at G2E. you know, just around our whole mobile strategy as it relates to, you know, how we're thinking about sports, venues, entertainment, and, you know, how our customers are seeing, you know, that convergence that continues to trend, you know, with gaming, online, sports and venues. And so, you know, I think, you know, as Randy said, You know, I think we continue to win new business, win new customers because of, you know, the deep product set that we have and our ability to execute and deliver on the value that we have across our ecosystem of products and services. So, again, still feel good about where we're at, and it's 24 with the momentum that we've got here.
spk04: Appreciate it. Thanks, Darren.
spk02: Thanks, Chad.
spk01: Thank you. Next question comes from the line of George Sutton with Craig Hellam. Please go ahead.
spk05: Thank you. Mark, I wanted to ask you about cash flow and free cash flow into 2024. Understanding you're not giving guidance, but just generically as we look at the cash flow you're generating this year versus what you'll be positioned to do next year, can you just give us a sense of any large puts and takes that we should be aware of?
spk09: Yeah, you know, I think we tried to, as you highlighted, we're not going to give guidance. I'll be careful not to suggest I'm giving guidance right now. But we expect growth next year from where we are this year in terms of the EBITDA line of where we are. We all know what's happening with interest rates. Certainly, we're exiting the year higher than we entered the year. So that could be a little bit of a negative, depending on your views, forward views on how interest rates and how quickly they start coming down. I think there's I believe they will start coming down or at least holding from these levels. So that should be kind of consistent, I think. And from a CapEx perspective, I tried to highlight that we really are investing in the business next year. I think we've got a tremendous amount of New products specifically on the game side available to us. So we think it's going to drive some nice, compelling revenue growth for us as we move forward. So we'll lean in a little bit more into the customer equipment side. And we have a lot of new product available to us to refresh that installed base and really drive revenue growth. But that growth in the, the, the. Customer equipment is probably offset by the declines in terms of what we're going to see in terms of those discrete items. You know, we'll have completed the build out of our new Las Vegas assembly and warehouse facility, some of the discrete IT projects that we had mentioned at the beginning of the call. Those kinds of things will be coming out of the numbers. So I suspect our CapEx number will be probably, when we come out, we've got it somewhere in the neighborhood of where we are today for 2023. And we still believe from a cash tax perspective, we'll still be in a pretty good spot from a cash tax perspective. I would suspect we're probably not much different than what we're paying this year in terms of cash taxes, unless tax rules change. So it feels like we're in a nice spot for growth on that line right now. But again, I'll hold off or reserve the rest of that commentary until we kind of get to year end and kind of share some more views of 2024.
spk05: Great. A question for Dean. Obviously, we've talked about this air pocket in terms of product availability and generations. Can you just make it simple for us in terms of what maybe the top three cabinet or content availability you're really focused on when those are expected to be available? What should we be closely watching for?
spk07: So I'll go down the list of new cabinets that are coming out in the timing. It's probably the easiest thing. So Player Classic Reserve launched at the end of September. Dynasty Dynamic also launched at the end of September. So Randy talked about the 50 units that are currently out in the field and the 200 unit backlog. So those are the first two. Dynasty Soul, which is our new for sale portrait cabinet, will launch in December, but it'll be a small amount of units towards the end of December and then really into 2024. And then our sole sink, which is our premium version of our new portrait cabinet, will launch in early Q1. So that's the cadence of the four cabinets. Also, to remind you that we really just launched VUE at the end of Q1 this year, and a plethora of content really is coming out, I would say, towards the end of the year and to next year as well. So we will have two video cabinets, which is obviously the biggest category of opportunity to position out into the commercial market. not commercial, all markets. So that's the strategy, George. I hope that answers that for you.
spk05: That's outstanding. Very helpful. Thank you.
spk02: Thank you.
spk01: Next question comes from the line of John Davis with Raymond James.
spk11: Please go ahead. Hey, good morning, guys. Just wanted to follow up a little bit on the free cash flow commentary, but specifically, Mark, on CapEx. You know you would expect it to be kind of flattish next year but if I recall you had about 25 million of one-time ish type products between 15 million for the the new uh manufacturing facility and you know 10 million or so from uh I think a transition ERP if I recall correctly but just maybe talk about some of the puts and takes just specifically on capex as we enter 2024
spk09: Are you waiting to talk about guidance, John? I like it. All right. I'll dance a little bit. Look, John, I think, again, we talked about having maybe a little bit more CapEx this year. That kind of framed out of my prepared remarks. We think, you know, with what we've been spending so far this year, that our CapEx in total is kind of coming down a little bit from where we had provided explicit guidance, maybe an explicit update last quarter of like 142 to 144 million for the full year. So I think we'll spend a little bit less just because Q3 was a little lighter in terms of customer equipment. We're getting new equipment and now we're starting to roll that out. And we've probably been a little bit under some of the discrete items that we've spent on what we projected this year, which was kind of in that 25 to $30 million kind of range is what we kind of thought was there. So you're getting a little bit of of total capex decline overall and where we are again as we move forward you know i really want to make sure it's important that we keep investing in the infrastructure of the footprint but you know i'll also highlight that that our rd expense we think is adequate for what we need to spend and it's still at that 8.5% range compared to revenue. So we think we're investing enough in that. But from a CapEx perspective, I think you should expect to see it kind of similar because the discrete items that we're saving this year into next year, I expect will be made up for with the increased customer equipment spend as we refresh the install base.
spk11: Okay. Yeah, no, that's perfect. I appreciate the color there. And then Maybe Randy or Mark, as we think about the guy down the $8 million or so versus your prior guidance in EBITDA for this year, how much of that would you contribute to macro versus micro, like the air pocket and cabinets and content versus potentially lower GGR or just general macro conditions?
spk09: Look, John, it's hard to say. Look, we're still seeing reasonable growth in our, you know, as we look to our our fintech business, our cash access, cash to the floor. But it is going, it's lowering down, it's been lowering each quarter, but still I'll say a low single-digit growth. So I think there's some impact from the macro, maybe you've heard it from operators, probably a little bit more in the regional market, Las Vegas still doing well. But I think, look, ours is we're in a transition period. And so we know that There's some impact to us as we transition to the newer cabinets and the newer content. And so it's probably a little skewed more to that than macro. But again, right now, macro seems to be holding in line what we hear from other operators. And I think the big question will be how it does next year. But so far, I would say that it's more from our standpoint, this transition, getting those new cabinets, getting that new content, so that we're set up well to grow in 2024.
spk11: Okay, thanks. And last, quickly, I just want to clarify one of Mark's comments to the prior question. I believe I heard you say, Mark, that you would expect EBITDA growth next year. Just wanted to confirm that. And even if macro were to deteriorate further, do you think you can still grow EBITDA next year?
spk09: Look, we haven't given guidance yet. We always expect ourselves to grow on a year-over-year basis. And as I sit here today looking at the macro where it is today and without completing my true 2024 roll-up just yet, I am expecting growth year-over-year. I'm expecting to see us grow. We always strive to have growth on an annual basis. So I do see it growing. Yeah, John, I'll answer that really easily. The answer is yes.
spk02: Thank you, Andy. Thanks, guys. Thanks, John.
spk01: Thank you. Next question comes from the line of Ella Macias with Jefferies. Please go ahead.
spk03: Good morning, everyone, and thanks for taking my question. I just wanted to ask if we could get some color on R&D and whether it remains at a stable level or how to think about it moving forward. Thank you.
spk09: Sure. I think Mark touched on it a little bit, but I'll just reiterate. We still look to spend, I'll say on the expense line, somewhere between 8% and 8.5% of expense, R&D expense, as a percentage of revenue. We think that number is in line with larger competitors. Obviously, from a pure dollar standpoint, they spend more than we do, but we think that's an adequate amount to really support both businesses, being fintech and games. And that doesn't account for the amount that you capitalize. So we feel good about that. It's what Dean's worked with throughout this year to kind of line up his hardware, the new content he's got coming out, and we've stayed within that range. So I don't anticipate that range going up or down because I think we believe that, you know, one of our main, you know, tenants in capital allocation is to continue to reinvest in the company, and that really is that R&D line that drives both fintech and games.
spk02: Okay, great. That's all. Thank you. Thank you.
spk01: Thank you. There are no further questions at this time. I would now like to turn the floor over to Randy Taylor for closing comments.
spk09: Well, we'd just like to thank everyone for joining us today. We appreciate your continued interest, and we look forward to providing an update on our business and our outlook for 2024 in our fourth quarter year-end call in March.
spk02: Thank you very much.
spk01: Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.
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