Company Overview
Everi Holdings Inc. (EVRI) is a premier provider of gaming entertainment, financial technology, and player engagement solutions for the casino and digital gaming industries. With a rich history spanning over two decades, Everi has emerged as a trusted partner, delivering innovative products and services that drive operational efficiencies and enhance the overall player experience.
History and Evolution
Founded in 1998 as Global Cash Access, the company initially focused on providing cash access services to casino operators. Over the years, Everi has strategically expanded its portfolio, diversifying into gaming content, financial technology, and player loyalty solutions. This transformation has positioned the company as a comprehensive solutions provider, catering to the evolving needs of its customers in the ever-changing gaming landscape.
The company's journey began in 1998 when it was established as Global Cash Access, offering cash access services to casino patrons. As the business grew, it expanded its services to include check warranty, compliance and data software, and other related offerings. In 2004, Global Cash Access made a significant move by going public on the New York Stock Exchange, marking a new chapter in its growth story.
A pivotal moment in the company's history came in 2015 with the acquisition of Multimedia Games Holding Company, Inc., a provider of gaming technology solutions. This strategic move allowed Everi to expand into the gaming operations and gaming equipment segments, complementing its existing financial access and compliance businesses. Following this transformative acquisition, the company rebranded itself as Everi Holdings Inc., reflecting its broader scope of operations and renewed focus on providing comprehensive solutions to the gaming industry.
Throughout its history, Everi has demonstrated resilience in the face of various challenges. The company successfully navigated the 2008 financial crisis, which had a significant impact on casino spending and patron activity. By diversifying its product and service offerings, Everi was able to weather this difficult period and emerge stronger. Additionally, the company has shown adaptability in response to changing regulations in the gaming industry, making necessary investments in compliance and data software solutions to support its customers' evolving needs.
Business Segments
Everi's core business segments include Games and FinTech. The Games segment offers a wide range of gaming machines, including Class II, Class III, and Historic Horse Racing (HHR) slot machines, which are placed under participation and fixed-fee lease arrangements or sold directly to casino customers. Additionally, the segment provides and maintains central determinant systems for video lottery terminals (VLTs) installed in the State of New York and similar technology in certain tribal jurisdictions, as well as business-to-business (B2B) digital online gaming activities and bingo solutions through consoles, integrated electronic gaming tablets, and related systems.
The Games segment generates revenues from two main streams: Gaming Operations, which includes revenues derived from the installed base of leased gaming machines deployed at customer locations and the daily win per unit generated from these devices; and Gaming Equipment and Systems, which includes revenues derived from the sale of gaming machines and the average sales prices generated from these machines.
The FinTech segment is a leader in providing financial access and related services to gaming operators, including digital, cashless, and physical cash options across mobile, assisted, and self-service channels. This segment also offers loyalty and marketing software and tools, regulatory and compliance (RegTech) software solutions, other information-related products and services, and hardware maintenance services. Everi's FinTech solutions are secured using an end-to-end security suite to protect against cyber-related attacks, ensuring appropriate levels of security for its customers.
The FinTech segment generates revenues from three main streams: Financial Access Services, which includes revenues based on the total dollar and transaction volumes processed; Software and Other, which includes revenues from software sales, support and subscription-based services; and Hardware, which includes revenues from the sale of financial access and loyalty kiosks and related equipment.
Financials
In recent years, Everi has demonstrated strong financial performance. For the fiscal year 2023, the company reported total revenues of $807.82 million, a testament to its ability to navigate the challenges of the pandemic and capitalize on the industry's recovery. The company's net income for the same period was $84.00 million, highlighting its profitability and financial stability. Operating cash flow (OCF) for fiscal year 2023 was $292.23 million, with free cash flow (FCF) of $147.12 million.
In the third quarter of 2024, Everi reported total revenues of $187.85 million, a decrease of 9% compared to the same period in the prior year. The decline in revenues was primarily driven by a decrease in the Games segment, which saw a reduction in both unit sales and the daily win per unit in the installed base. However, the FinTech segment demonstrated resilience, with an increase in revenues from software sales, support-related services, and higher transaction and dollar volumes processed.
Despite the quarterly revenue decline, Everi's profitability remained strong, with an operating income margin of 6% for the third quarter of 2024. The company's net income for the quarter was -$2.57 million, a decrease from the $26.64 million reported in the same period of the prior year. Operating cash flow for the quarter was $393.00 million, with free cash flow of $361.86 million.
For the three months ended September 30, 2024, the Games segment contributed $91.55 million to total revenues, while the FinTech segment contributed $96.31 million. The company's operating income was $11.43 million for the quarter, with the Games segment generating an operating loss of $15.38 million and the FinTech segment generating operating income of $26.81 million.
Everi operates predominantly in the United States, with no material international operations reported.
Liquidity
The company's liquidity position remains robust, with a current ratio of 1.06 and a quick ratio of 0.97 as of September 30, 2024. Everi's cash and cash equivalents stood at $267.21 million as of December 31, 2023, providing ample resources to fund its operations and strategic initiatives. The company's debt position is also well-managed, with a debt-to-equity ratio of 3.86 as of the end of fiscal year 2023. Additionally, Everi has a $125 million revolving credit facility, which was undrawn as of the latest quarter, further enhancing its financial flexibility.
Innovation and Research & Development
Everi's commitment to innovation is reflected in its investment in research and development, which amounted to $67.63 million in the fiscal year 2023. This focus on innovation has enabled the company to introduce new gaming content, financial technology solutions, and player engagement tools, keeping it at the forefront of the industry.
Future Outlook
Looking ahead, Everi has provided guidance for the full-year 2024, anticipating total revenues in the range of $750 million to $775 million and adjusted EBITDA between $300 million and $315 million. This guidance reflects the company's confidence in its ability to navigate the evolving market conditions and capitalize on growth opportunities.
Everi's strategic acquisitions have also strengthened its offerings and expanded its customer base. In 2023, the company acquired certain strategic assets of VKGS LLC (Video King), a provider of integrated electronic bingo gaming tablets, video gaming content, instant win games, and systems. This acquisition has enhanced Everi's bingo solutions and further diversified its portfolio.
The company's consistent financial performance, innovative product pipeline, and strategic initiatives have positioned Everi as a dominant player in the gaming and financial technology industries. As the industry continues to evolve, driven by technological advancements and shifting consumer preferences, Everi remains well-equipped to navigate the challenges and capitalize on the emerging opportunities.
The company faces industry trends such as the digital transformation of the gaming industry, which presents opportunities for innovation and growth, as well as regulatory compliance challenges across different jurisdictions. Everi's focus on developing products and services that provide gaming entertainment, improve customer patron engagement, and help casino customers operate their businesses more efficiently positions it well to address these trends and capitalize on future growth opportunities.
Conclusion
In conclusion, Everi Holdings Inc. (EVRI) is a compelling investment opportunity, with a strong track record of growth, diversified revenue streams, and a robust financial position. The company's strategic focus on innovation, coupled with its commitment to delivering comprehensive solutions, positions it for continued success in the dynamic gaming and financial technology landscape. Despite recent challenges in the Games segment, Everi's FinTech segment continues to demonstrate resilience and growth potential. With a solid liquidity position and ongoing investments in research and development, Everi is well-positioned to navigate the evolving market conditions and capitalize on emerging opportunities in the gaming and financial technology sectors.