Everi Holdings has announced a merger with IGT’s Global Gaming and PlayDigital, bolstering its gaming equipment, fintech and casino systems services.
In addition, Everi has published its fourth quarter and full year 2023 financial results, reporting growth in FY revenue, but a drop in net income and adjusted EBITDA.
Everi merges with IGT’s Global Gaming & PlayDigital
As previously mentioned, Everi has merged with IGT’s Global Gaming and PlayDigital businesses to “create a global leader in gaming equipment, fintech services and casino systems”.
Through the combination, a “comprehensive and diverse portfolio of high-performing land-based, digital, and fintech gaming products and services” is expected to be created.
Randy Taylor, CEO of Everi, commented: “This morning we announced the strategic combination of Everi with IGT’s Gaming and Digital businesses. We are excited about the opportunity to bring together the two companies to create a world-class leader in gaming solutions for our customers.”
The Everi-IGT merger values the combined businesses at approximately $6.2bn on an enterprise value basis. IGT will spin off a subsidiary owning its Global Gaming and PlayDigital businesses to IGT shareholders, which will combine with Everi.
Under the terms of the agreements, at closing, IGT shareholders are expected to own approximately 54 per cent and Everi stockholders are expected to own approximately 46 per cent of the shares in the combined company.
IGT CEO Vince Sadusky will lead the combined company with Everi Executive Chair Michael Rumbolz serving as Chair of the board of directors.
Subject to receipt of regulatory approvals, the approval by Everi stockholders and IGT shareholders, and satisfaction of other customary closing conditions, the transaction is expected to close in late 2024 or early 2025.
“We are bringing together two businesses with complementary strengths that are stronger and more valuable together,” added Sadusky.
“The combination results in a comprehensive and diverse product offering, addressing more aspects of the gaming ecosystem across land-based gaming, igaming, sports betting, and fintech.
“The creation of separate gaming and lottery companies, each with experienced management teams and simplified business models, better positions each company to service customers and create significant value for stakeholders.”
Net income decline
Publishing its financials, Everi declared a Q4 revenue of $192m, down three per cent year-over-year (Q4 2022: $205.4m). For the full year, revenue improved to $807.8m (2022: $782.5m).
During the quarter, recurring revenues rose by three per cent to $147.9m, while non-recurring revenues declined to $44.1m after “lower gaming equipment and systems and fintech hardware sales”.
Net income declined during both measuring periods, standing at $1.9m in Q4 (2022: $27m) and $84m for the full year (2022: $120.5m).
Q4’s adjusted EBITDA was $82.2m (Q4 2022: $93.4m) and fell across the full year as well to $367m (2022: $374.1m), while free cash flow for Q4 was $19.8m (Q4 2022: $44.2m) and $141.9m for the full year (2022: $190.5m).
Taylor noted: “After several years of rapid growth, 2023 was a transitional year in our gaming business as we executed on our roadmap which included the introduction of four new cabinets and new content. Our fintech business continues to perform well, adding new products and services to our suite of financial access, RegTech and loyalty solutions.
“We generated strong free cash flow of $141.9m after investing $67.6m in research and development and $145.1m in capital investments and returning $100m to shareholders through share repurchases.”
In Q4, fintech revenue improved by three per cent to $94.9m (Q4 2022: $92.1m) following a 25 per cent software and other revenue uptick ($26.4m) and a six per cent rise in financial access revenue ($56m), offset by lower hardware revenues ($12.5m) after strong kiosk sales.
For the full year, fintech revenue improved by nine per cent to $378.7m (2022: $346.1m). Operations revenue stood at $304.1m while equipment and systems revenue was $125m.
Games revenue fell to $97.1m (Q4 2022: $113.2m) during the quarter after drops in gaming operations and gaming equipment and systems revenues ($72.6m and $24.5m respectively), “reflecting near-term headwinds while transitioning to new family of cabinets and roll-out of new content”.
For the full year, games revenue declined by two per cent to $429.2m (2022: $436m). Financial access services revenue was $225.1m, software and other revenue was $99.5m and hardware revenue was $54.1m.
Outlook
Looking ahead, Everi noted that it expects revenue growth in games and fintech in 2024, with adjusted EBITDA up slightly compared to the previous year, while free cash flow is expected to be “flat to slightly down as cash paid for capital expenditures and cash paid for taxes are expected to be up modestly”.
Continued growth is expected in fintech as well, driven by “low-single-digit industry growth and the addition of new products and services to both new and existing customers”.
As for Games, Everi expects “continued pressure in game sales and declines in the installed base in the first half of the year” as it rolls out cabinets and content and removes lower-performing gaming operations units “to maximize our return from invested capital primarily in the early part of 2024”.
