Executive Summary

Q3 2023 revenue was $206.6M (+1% YoY), Adjusted EBITDA was $96.2M (flat YoY), and Free Cash Flow was $34.3M (down YoY), with Games facing near‑term headwinds and FinTech growing mid‑single digits .
Management lowered the full‑year outlook: Net income, EPS, Free Cash Flow, and Adjusted EPS now expected at the lower end of prior ranges; Adjusted EBITDA expected to be in line with the prior year, citing games softness and higher interest costs .
Games segment revenue declined 1% YoY to $111.5M; gaming equipment sales fell 12%, DWPU dropped to $36.26, and unit sales were 1,449, while FinTech revenue rose 4% to $95.1M on higher financial access and software revenue .
Management highlighted strong FinTech wallet traction (all‑time high $11.9B funds to floors) and product launches (Player Classic Reserve, Dynasty Dynamic), with new cabinets and market entries (VLT, UK mobile) targeted for 2024 as key catalysts .
Consensus estimates from S&P Global were unavailable via our tool; result comparisons to Street are therefore not provided (S&P Global data unavailable) [SpgiEstimatesError].

What Went Well and What Went Wrong

What Went Well

FinTech delivered 4% revenue growth to $95.1M, with financial access services +7%, software and other +12%; funds delivered to casino floors hit an all‑time quarterly record of $11.9B (+9%) and cashless transactions +51% YoY .
Recurring revenues increased 7% YoY to $154.3M, representing 75% of total revenue, supporting stability despite lower one‑time sales .
Management emphasized strategic progress: “We continue to execute on our operational and product roadmap… next generation cabinets… more than 80 new game themes” and advances in Digital Neighborhood and mobile wallet; entry into VLT and UK mobile markets targeted in early 2024 .

What Went Wrong

Games revenue declined 1% YoY to $111.5M; gaming equipment & systems fell 12%, DWPU decreased to $36.26 (vs. $39.56 YoY), and units sold fell to 1,449 (vs. 1,841 YoY) .
Net income fell to $26.6M (vs. $29.4M YoY) and Free Cash Flow fell to $34.3M (vs. $44.9M YoY), reflecting higher interest paid and discrete capex tied to the new production facility and IT investments .
Management expects installed base and DWPU to be down sequentially in Q4 due to seasonality and product transition; recurring HHR contributions reduced by theme buyouts (upfront payment received) .

Financial Results

Metric	Q3 2022	Q1 2023	Q2 2023	Q3 2023
Revenues ($USD Millions)	$204.3	$200.5	$208.7	$206.6
Operating income ($USD Millions)	$54.6	$52.0	$53.3	$52.4
Net income ($USD Millions)	$29.4	$28.1	$27.4	$26.6
Diluted EPS ($USD)	$0.30	$0.30	$0.29	$0.29
Adjusted EPS ($USD)	$0.44	$0.43	$0.41	$0.44
Adjusted EBITDA ($USD Millions)	$96.6	$92.5	$96.1	$96.2
Free Cash Flow ($USD Millions)	$44.9	$37.1	$47.7	$34.3
Cash and cash equivalents ($USD Millions)	$258.6	$293.2	$210.6	$209.4
Net Cash Position ($USD Millions)	$103.3	$106.8	$28.4	$38.0

Segment revenue and profitability:

Segment Metric	Q3 2022	Q2 2023	Q3 2023
Games total revenues ($M)	$112.5	$113.1	$111.5
Gaming operations total ($M)	$75.0	$77.8	$78.4
Gaming equipment & systems ($M)	$37.5	$35.3	$33.1
Games operating income ($M)	$25.8	$24.4	$21.4
Games Adjusted EBITDA ($M)	$57.2	$58.1	$56.5
FinTech total revenues ($M)	$91.8	$95.6	$95.1
Financial access services ($M)	$53.3	$55.7	$57.2
Software & other ($M)	$22.2	$24.0	$24.8
Hardware ($M)	$16.3	$15.9	$13.1
FinTech operating income ($M)	$28.8	$28.9	$31.0
FinTech Adjusted EBITDA ($M)	$39.4	$38.0	$39.8

Games KPIs:

KPI	Q3 2022	Q2 2023	Q3 2023
Total installed base (period end)	17,735	17,812	17,676
Average units installed (during period)	17,669	17,855	17,802
DWPU ($)	$39.56	$37.22	$36.26
Units sold	1,841	1,597	1,449
ASP ($)	$18,496	$20,512	$19,485

FinTech KPIs:

KPI	Q1 2023	Q2 2023	Q3 2023
Funds advanced ($USD Millions)	$2,968.0	$3,005.0	$3,042.4
Funds dispensed ($USD Millions)	$8,113.0	$8,176.2	$8,376.2
Check warranty ($USD Millions)	$462.4	$483.6	$490.7
Total value processed ($USD Millions)	$11,543.4	$11,664.8	$11,909.3
Total transactions completed (Millions)	36.2	36.3	37.4

Guidance Changes

Metric	Period	Previous Guidance (Aug 9, 2023)	Current Guidance (Nov 8, 2023)	Change
Net Income ($M)	FY 2023	$98–$106	“Lower end of the guidance ranges”	Lowered
Adjusted EBITDA ($M)	FY 2023	$380–$386	“In line with the prior year”	Lowered
Free Cash Flow ($M)	FY 2023	$147–$153	“Lower end of the guidance ranges”	Lowered
Earnings per diluted share ($)	FY 2023	$1.05–$1.13	“Lower end of the guidance ranges”	Lowered
Adjusted EPS ($)	FY 2023	$1.62–$1.67	“Lower end of the guidance ranges”	Lowered

Notes: Prior guidance ranges raised net income and adjusted EPS relative to May; Q3 update signaled lower-end outcomes and Adjusted EBITDA flat YoY, driven by games pressure and interest costs .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 & Q2 2023)	Current Period (Q3 2023)	Trend
Digital Neighborhood & mobile wallet	Wallet adoption driving 10%+ of cash to floor at mature sites; transactions per visit +2.5x; spend +15–20%; expanding payments (Apple Pay, PayPal)	CashClub Wallet won “Payment Solution of the Year”; continued strong interest; BeOn Wallet introduced for multi‑property use	Strengthening
Games cabinet roadmap	Dynasty Vue rollout; accelerated premium cabinet launches (Dynasty Dynamic, Player Classic Reserve) ahead of G2E; more consistent cadence planned	~50 new premium cabinets placed in October; ~200 more expected by year‑end; additional launches in Q4/Q1	Transition ongoing; ramp in 4Q/2024
Installed base & DWPU	Installed base down slightly in H2; aim to hold base; DWPU ~mid‑$37s for FY	Installed base expected slightly down by year‑end; DWPU down sequentially in Q4 (seasonal) before stabilizing with new cabinets	Near‑term pressure; improvement expected 2024
Market expansion (HHR/VLT/iGaming)	Video King integration to expand Bingo; HHR growth; UK iGaming license obtained; integration timelines late ’23/’24	Entry into VLT (Illinois) and UK mobile gaming early 2024; broader international expansion late 2024/2025	Building pipeline
Capital allocation	Target net leverage 2–2.5x; active buybacks ($140M remaining at Q2)	Repurchased 2.4M shares ($33.9M) in Q3; $106.1M authorization remaining	Ongoing buybacks
Macro & interest costs	Weighted avg borrowing ~6.6%; vault cash fees rising; FCF resilient	Weighted avg borrowing ~6.7%; vault cash expense ~$21M for FY; interest paid higher; FCF impacted by discrete capex	Interest headwind persists

Management Commentary

“We continue to execute on our operational and product roadmap… next generation… more than 80 new game themes… increased emphasis on the video reel segment.” — Randy Taylor, CEO .
“Our Fintech business continued to deliver strong revenue growth… funds delivered to casino floors… over $11.9 billion.” — Randy Taylor .
“We successfully launched 2 new cabinets at the end of Q3, Player Classic Reserve and Dynasty Dynamic… placed nearly 50… another 200 expected by year‑end.” — Randy Taylor .
“We remain comfortable with our current level of debt… total net leverage at 2.5x trailing adjusted EBITDA.” — Mark Labay, CFO .
“We believe our increased investment in a broader array of new cabinets and a deeper library of new game themes will… provide increased revenue and adjusted EBITDA growth.” — Mark Labay .

Q&A Highlights

Installed base trajectory: Management now expects a slight decline by year‑end due to renovations and product transition, with growth resuming in 2024 depending on cabinet uptake .
Mechanical/stepper category dynamics: Competition intensified as two large suppliers re‑entered steppers; EVRI expects a more even split in share across major competitors while focusing growth on video .
International expansion: Australia targeted late 2024/early 2025; UK mobile gaming and VLT (Illinois) in early 2024; viewed as promising but early stage .
FinTech momentum: High‑single‑digit revenue growth outlook supported by new customers and products (loyalty/compliance/mobile); Venuetize complements mobile‑first expansion into sports/venues .
Capex/FCF cadence: 2024 capex expected broadly flat vs 2023; more customer equipment spend offset by completion of discrete warehouse/IT investments; aim to grow EBITDA next year .

Estimates Context

Street consensus via S&P Global was unavailable for EVRI in Q3 2023 using our tool; comparisons to estimates cannot be provided (S&P Global data unavailable) [SpgiEstimatesError].
Based on management’s updated guidance, near‑term estimate revisions are likely skewed lower for Games (flat to down revenues for FY) and consolidated Adjusted EBITDA (flat YoY), with EPS/Adjusted EPS targeted to the lower end of prior ranges .

Key Takeaways for Investors

FinTech remains the growth engine (financial access +7%, software +12%), with wallet and mobile solutions gaining traction; recurring mix at 75% supports resilience .
Games faces a transitional “air pocket” (DWPU down, unit sales lower) amid cabinet refresh and stepper competition; the rollout of Player Classic Reserve/Dynasty Dynamic and additional launches through Q1/Q2 2024 are critical for re‑acceleration .
Full‑year guide effectively lowered: Adjusted EBITDA ~flat YoY and EPS metrics at lower end; this raises the bar for 4Q cabinet placements and 2024 execution to re‑establish growth — monitor Q4 installed‑base/DWPU trends and order flow (bold negative surprise) .
Interest expense and vault cash fees are meaningful headwinds to FCF; discrete capex largely behind them by year‑end, suggesting cleaner FCF conversion into 2024 .
Share repurchases continue ($33.9M in Q3; $106.1M remaining), providing EPS support amid lower net income; capital allocation remains balanced with leverage ~2.5x (potential valuation support) .
Strategic optionality: Bingo (Video King), HHR, VLT (Illinois), UK mobile/iGaming and international expansion broaden the TAM and diversify revenue streams — watch regulatory/licensing and content traction .
Trading implications: Near‑term sentiment likely tied to Games cadence and Q4 sequential metrics; medium‑term thesis hinges on video content depth, cabinet adoption, and FinTech wallet/mobile scale .

Additional Data Points and Clarifications

Consolidated gross margin expanded to 79.7% in Q3 (vs. 79.1% in Q2), driven by mix shift to higher‑margin gaming ops and financial access services; Adjusted EBITDA margin was 46.6% in Q3 .
HHR theme buyouts generated $2.3M, recognized upfront to offset lost future recurring revenue, contributing to recurring/non‑recurring mix but reducing future HHR recurring contributions .
Q3 non‑recurring items: $1.6M asset acquisition/non‑recurring professional fees; $0.3M consolidation; $0.1M severance; partially offset by ($0.2M) litigation fees (insurance proceeds) .

S&P Global estimates disclaimer: Street consensus values were unavailable via our S&P Global interface for EVRI; therefore, no estimate comparison table is provided.

Everi Holdings Inc. (EVRI)·Q3 2023 Earnings Summary