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Everi tightens full-year guidance despite setting revenue record in Q3

| By Robert Fletcher
Gaming machine and financial trading services business Everi reduced full-year guidance for revenue, earnings and free cash flow despite setting another new revenue record in its third quarter.
GiG 2023

At the end of Q2, Everi reiterated that it expected to achieve revenue of between $125.0m (£108.4m/€124.2m) and $132.0m, though this has now been lowered to a range of $112.0m to $117.0m.

Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) guidance was also tightened from between $368.0m and $378.0m to $371.0m to $376.0m, while free cash flow is likely to reach between $190.0m and $197.0m, compared to an earlier estimate of $187.0m to $200.0m.

This reduction in guidance came despite Everi enjoying a successful third quarter, with chief executive Randy Taylor saying that year-on-year growth across revenue, net income and adjusted EBITDA reflected the operating momentum in each of the businesses due to the continued broad-based demand for its products.

“Our strong financial results this year have been driven by steady growth in our recurring revenue streams together with a record level of revenues from gaming machine and FinTech hardware sales,” Taylor said. “Our focus on top-line growth and operational excellence is delivering consistent year-over-year earnings growth and strong free cash flow generation.

“The top-line improvement reflects the wide-ranging demand for our diverse product and service offerings and was driven by ongoing growth in our recurring revenue streams and an even faster pickup in revenues from the sales of fintech hardware and gaming machines.”

Quarterly record

Revenue in the third quarter reached a record $204.3m, surpassing the existing quarterly-high of $197.2m set in Q2 of this year and also representing a 17.4% increase on $95.8m in Q3 of last year.

Of this amount, $112.5m was attributed to gaming, helped by a 57.0% rise in the number of gaming machines sold in Q3. Some $75.0m of this came from gaming operations, $37.5m from gaming equipment and systems and the remaining $41,000 from other gaming activities.

Fintech accounted for $91.8m of all revenue in the quarter, including $53.3m in financial access services revenue, $22.2m in software and other revenue, and a further $16.3m in hardware revenue.

Turning to spending and cost of revenue hiked 51.6% year-on-year to $29.1m and fintech expenses jumped 77.1% to $14.7m. As such, total costs and expenses for the quarter were 32.3% higher at $149.7m.

However, even after accounting for an additional $14.9m in interest expenses, the rise in revenue meant pre-tax profit was an impressive 520.3% higher at $39.7m, compared to $6.4m last year.

Everi paid $10.3m in tax and also accounted for $2.6m in foreign currency translation loss, meaning that it ended Q3 with a net profit of $26.8m, up 325.4% year-on-year. In addition, adjusted EBITDA amounted to $96.6m, another quarterly record for the business.

“With our confidence in our long-term growth prospects and a belief that the current valuation of our company does not fully reflect our underlying strength and growth opportunities, we have been returning capital to shareholders through opportunistic repurchases of our shares as part of our focus on creating additional long-term shareholder value,” Taylor said.

The results come after Everi last month announced it was to diversify beyond the gaming sector, having agreed to acquire “certain strategic assets” of mobile-first engagement platform Venuetize.

Rather than working in gaming, Venuetize deals with the sports, entertainment and hospitality industries. Its clients include the PGA Tour, Churchill Downs and TD Garden Hub, which is an “entertainment district” connected to the home arena of the NBA’s Boston Celtics.

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