Everi Holdings Inc. (EVRI)·Q1 2024 Earnings Summary

Executive Summary

• Q1 2024 was a transition-heavy, softer quarter: revenue $189.3M, diluted EPS $0.05, Adjusted EBITDA $80.3M, with consolidated gross margin expanding ~80bps to 80.9% amid revenue mix shift; Games revenue fell, FinTech was slightly down on hardware, but financial access volumes hit records .
• Guidance was lowered: FY24 Adjusted EBITDA now expected down y/y (vs “up slightly” in prior guide), Free Cash Flow down, cash taxes $15–$20M; capex flat-to-up slightly; FinTech expected flat y/y in Q2 and back to growth in H2 .
• M&A remains the key catalyst: management reiterated expected close of the IGT Global Gaming/PlayDigital merger in late 2024/early 2025, citing $75M cash synergies and $10M capital savings, modest pro forma leverage (3.2–3.4x), and potential special dividend; to preserve cash, EVRI terminated its stock repurchase and implemented a mandatory sell-to-cover policy for equity tax withholding .
• Games “green shoots”: new cabinets/themes saw early recognition (e.g., Eilers top indexing), but installed base declined (-595 units Q/Q) and unit shipments were light; management expects H2 improvement as content pipelines and cabinet deployments accelerate .

What Went Well and What Went Wrong

What Went Well

• Record FinTech throughput: 39M transactions and $12.4B total value processed; same-store trends improved after January weather headwinds, with April/early May tracking mid-to-high single-digit growth .
• Early traction for new Games content/cabinets: Eilers recognition for Dynasty Sol and Dynamite Pop; momentum building for Player Classic Signature and premium launches (Dynasty Sol Sync, Dynasty Dynamic, Player Classic Reserve) .
• Digital/iGaming growth: digital revenue ended the quarter a little over $7.3M, up ~12–13% y/y; EVRI went live in the UK and is expanding in Europe/LatAm with partners .

Quotes

• “We are extremely excited about the opportunity to bring together the best of both of our businesses… close the merger in late 2024 or early 2025.”
• “We expect to see performance improvements… which should positively impact both for sale and lease units.”
• “Same-store volumes began to improve late in the first quarter and remain steady… we expect consolidated hardware sales will recover over the balance of the year.”

What Went Wrong

• Games headwinds: installed base declined by 595 units Q/Q; unit sales were 1,021 at ASP $20,827; early performance of Dynasty Vue was weaker than anticipated until more content arrives .
• FinTech hardware softness: lower ticket redemption kiosk sales in certain foreign jurisdictions and loyalty equipment tied to timing of software sales/acceptance weighed on segment revenue .
• Elevated OpEx/R&D and merger-related costs: $15.7M in merger costs in Q1, contributing to lower GAAP operating income/net income; Adjusted EBITDA declined y/y to $80.3M .

Financial Results

Consolidated P&L and Cash Metrics

Margins

Note: Consolidated gross margin expanded to 80.9% in Q1 2024 due to mix shift to higher-margin categories .

Segment Revenue Breakdown

KPIs

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “We still anticipate closing the merger in late 2024 or early 2025… with modest pro forma net leverage of 3.2–3.4x and the ability to generate strong free cash flow.”
• “Estimated $75 million in cash synergies, and an estimated $10 million in capital savings… driven by procurement productivity, streamlining assembly processes and real estate optimization.”
• “We expect to see performance improvements… which should positively impact both for sale and lease units.”
• “Daily win per unit of $34.51 was down slightly… we expect DWPU to improve as we roll out new cabinets and new content.”
• “Financial access services revenues grew 2.1%… processed a record 39 million transactions and delivered a record $12.4 billion of funding.”

Q&A Highlights

• FinTech OpEx/R&D levels: management sees Q1 OpEx/R&D levels as the right run-rate going forward, expecting normalization as revenue rebounds in H2 .
• Games shipments and merger impact: unit shipments down y/y; difficult to quantify any deal-related sales impact; focus remains on new cabinet/content performance .
• Confidence in H2 Games momentum: “green shoots” from new themes (e.g., Eilers rankings), with lift from swapping older units and deploying premium cabinets .
• Digital growth and international expansion: live in UK; ~12–13% y/y digital revenue growth; continued expansion planned in Europe/LatAm .
• Hardware seasonality/timing (FinTech): hardware tends to be lumpy and tied to contracts; management expects ramp through rest of year .
• Installed base/capital discipline: decision not to replace in lower-performing locations (concentrated in two customers) to protect returns; expect occasional similar choices .
• Special dividend and capital policy: terminated buyback and instituted sell-to-cover to preserve cash for potential special dividend under merger agreement framework .

Estimates Context

• Wall Street consensus (S&P Global) for EVRI Q1 2024 EPS and revenue was unavailable via our SPGI integration due to missing company mapping; as a result, explicit comparisons to S&P Global consensus cannot be provided here. Values retrieved from S&P Global are unavailable.

Key Takeaways for Investors

• Guidance reset: FY24 Adjusted EBITDA and FCF now guided down y/y; the near-term setup is softer, but management expects H2 improvement as content pipelines mature and cabinet deployments broaden .
• FinTech resilience: record throughput and steady same-store growth offset hardware timing; segment should return to y/y growth in H2 .
• Games inflection watch: monitor DWPU and installed base trajectory; Eilers recognition and premium cabinet rollouts are early positives, but shipment momentum needs to materialize through Q2/Q3 .
• Merger path and capital policy: anticipated late-2024/early-2025 close with defined synergy targets; special dividend potential is a tangible catalyst; buybacks paused to preserve cash .
• Cash taxes/interest: effective tax rate 22–25% and cash taxes $15–$20M for FY24; interest expense sensitive to rates with $581M term loan variable and $400M notes fixed at 5% .
• Execution priorities: accelerate content approvals/installs (including VLT entry in Illinois) and bolster premium cabinets to drive H2 unit sales and DWPU; maintain discipline replacing low-return placements .
• Narrative movers: any regulatory updates on the IGT merger, evidence of Games momentum (unit sales/DWPU/installed base), and FinTech hardware cadence could drive stock reaction near term .