Everi expects to continue ‘profitable growth in 2023 and beyond’

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Everi has declared a slight increase in gaming revenue in the fourth quarter of 2022 following improvements in both machine sales and operations revenue during the period.

Total revenue for the company grew as well in Q4 by 14 per cent year-over-year to $205.4m, and for the full year by 18 per cent to $782.5m.

CEO Randy Taylor expects the company to “continue delivering profitable growth in 2023 and beyond” following the good year despite potential macroeconomic environment challenges to come.

Everi achieves strong Q4

Publishing its Q4 financials, Everi reported a 14 per cent YoY to $205.4m (Q4 2021: $180.4m, driven by improvements in gaming – up 7 per cent to $113.2m (2021: $105.4m) – and fintech –  up 23 per cent to $92.2m (2021: $75m). 

Recurring revenues grew by 9 per cent to $142.9m (2021: $131.7m) while non-recurring sales improved by 28 per cent to $62.5m.

Operating income rose by 8 per cent to $51.6m (2021: $47.9m) following a decline in operating expenses and a change in revenue mix following product sales growth. However, net income fell to $27m (2021: $88.8m) since Q4 2021 benefitted from $63.5m ‘reversal of the valuation allowance on certain deferred tax assets’.

Everi noted that its adjusted EBITDA improved by 5 per cent to $93.4m (2021: $88.8m) “inclusive of higher development costs to support future growth”, while free cash flow rose to $41.7m (2021: $19.7m) as the prior year period included $31.5m in “placement fees paid to extend an agreement with a customer and to fund incremental game unit placements with another customer”.

For the full year, Everi’s revenues grew by 18 per cent YoY to $782.5m (2021: $660.4m). Its gaming segment improved by 16 per cent to $436.4m (2021: $376.7m) and fintech rose by 22 per cent to $346.1m (2021: $283.7m).

Recurring revenues increased by 12 per cent to $560.9m, net income fell to $120.5m (2021: $152.9m), adjusted EBITDA grew by 8 per cent to $374.1m (2021: $347.2m), while free cash flow came in at a record of $186.7m, an increase of 18 per cent (2021: $158.7m).

Taylor commented: “Everi ended 2022 with another quarter of strong performance, including record fourth quarter revenue and adjusted EBITDA, which extended our record of successful execution on our operating priorities.

“Our ongoing investments in new product development and acquisitions helped grow our product portfolio and addressable markets and are a key driver of our operating success that resulted in an 18 per cent revenue increase, an 8 per cent rise in adjusted EBITDA and a record $186.7m in free cash flow for the 2022 full year.”

Gaming segment growth

Looking at Everi’s gaming segment, revenues rose by seven per cent to $113.2m thanks to a 12 per cent increase in machine sales revenues to $39.8m (2021: $35.6m) and a five per cent improvement in operations revenue, which includes digital gaming, to $73.4m (2021: $69.8m).

The company’s acquisition of Intuicode Gaming contributed $2m in revenues during the quarter.

Everi expanded its installed base by 6 per cent to 17,975 units following ‘continued placements of Smokin’ Hot Stuff Fire and Ice video units and the company’s premium mechanical reel games’.

Digital gaming rose by 51 per cent to $6.2m (2021: $4.1m) thanks to slot content growth and more operators featuring its games. The company also sold 1,944 machines in Q4, up 34 units YoY. 

Operating income for the segment fell to $25.2m (2021: $26m) following “higher revenues from gaming machine sales, offset by lower margins on machine sales due to increased supply chain costs”, higher internal research and development expense and “increased depreciation and amortisation costs associated with recent acquisitions”.

Meanwhile, the gaming segment’s adjusted EBITDA rose to $56.7m (2021: $55.9m).

2023 outlook

Looking ahead, Everi issued its full year 2023 guidance, which includes net income between $88m-$100m, an adjusted EBITDA between $384m-$396m, and free cash flow between $150m-$160m.

The company added that it expects product and hardware sales revenue growth to continue outpacing higher-margin recurring revenues “reflecting contributions from recent acquisitions and the company’s success in increasing its product sales market share”.

Taylor added: “Our team’s great performance during the last several years reflects the balance and diverse strengths across our operations – games, finTech, loyalty, digital and mobile. 

“Together with our solid balance sheet and strong free cash flow generation, Everi is favourably positioned for both consistent near- and long-term growth through our continued investments in growth-focused internal product development initiatives and high-value acquisitions, as well as to return capital to shareholders through opportunistic share repurchases.

“We expect our successful execution on our growth initiatives, combined with our large percentage of high-margin recurring revenues in our overall revenue mix, will help us mitigate potential challenges of the uncertain macroeconomic environment and enable us to continue delivering profitable growth in 2023 and beyond.”