Everi has reported a slight rise in gaming revenue for the fourth quarter 2022 due to improvements in machine sales and operations revenues during that period.
The company’s total revenue grew by 14% year-over-year, to $205.4m. It also grew by 18% to $782.5m for the entire year.
CEO Randy Taylor expects the company “continue to deliver profitable growth in 2023, and beyond”, following the positive year, despite possible macroeconomic challenges.
Everi has a strong fourth quarter
Everi published its Q4 financials. It reporteda 14% YoY increase to $205.4m (Q4 2021, $180.4m). This was driven by improved gaming, up 7 percent to $113.2m (2021, $105.4m), and fintech, up 23 percent to $92.2m (2021, $75m).
Recurring revenues increased by 9 percent to $142.9m (2021 $131.7m), while non-recurring revenue rose by 28 percent to $62.5m.
After a decrease in operating expenses, and a change of revenue mix due to product sales growth, operating income increased by 8 percent to $51.6m (2021 : $47.9m). Net income declined to $27m (2021 : $88.8m), as Q4 2021 saw $63.5m in’reversal’ of the valuation allowance for certain deferred taxes assets.
Everi reported that the adjusted EBITDA rose by 5% to $93.4m (2021 : $88.8m), “inclusive of higher developmental costs to support future growth”, and free cash flow rose from $41.7m (2021 : $19.7m) because $31.5m was paid in placement fees to extend an agreement with customers and to fund incremental unit placements with other customers”.
Everi’s revenue grew 18% YoY to $782.5m (2021 – $660.4m). Gaming segment saw a 16 percent increase to $436.4m (2021 – $376.7m). Fintech saw a 22 percent rise to $346.1m (2021 – $283.7m).
Recurring revenues rose 12 percent to $560.9m and net income fell to $120.5m (2021 – $152.9m). Adjusted EBITDA increased 8 percentage points to $374.1m (2021 – $347.2m). Free cash flow reached a new record $186.7m which is an 18% increase (2021 – $158.7m).
Taylor said: “Everi finished 2022 with another quarter full of strong performance, including record fourth-quarter revenue and adjusted EBITDA. This further demonstrates our track record of execution of our operating priorities.
“Our continued investments in product development and acquisitions helped us grow our product portfolio, addressable markets, and were a key driver for our operating success. They resulted in an 18% revenue increase, an 8% rise in adjusted EBITDA, and $186.7m in cash flow for the 2022 year.”
Gaming segment growth
Everi’s gaming section saw revenues rise by 7 percent to $113.2m due to a 12% increase in machine sales revenues at $39.8m (2021 – $35.6m) as well as a 5 per cent improvement in operations revenues, which includes digital games, to $73.4m (2021 : $69.8m).
Intuicode Gaming was acquired by the company, which contributed $2m to revenues in the quarter.
Everi’s installed base grew by 6 percent to 17,975 units after ‘continued placings of Smokin’ Hot Stuff Fire and Ice video unit and the company’s premium mechanical reels games’.
The growth in slot content and the addition of more operators that offer its games helped digital gaming grow by 51% to $6.2m (from $4.1m in 2021). In Q4, the company sold 1,944 machines, an increase of 34 units YoY.
The segment’s operating income fell to $25.2 million (2021: $26m). This was due to “higher revenues from gambling machine sales, offset with lower margins on machine sale due to increased supply chains costs”, higher internal research expense and “increased amortisation and depreciation costs associated with recent acquisitions”.
The gaming segment’s adjusted EBITDA climbed to $56.7m (in 2021, it was $55.9m).
2023 Outlook
Everi’s full-year 2023 guidance was issued by the company. It includes net income between $88m and $100m, adjusted EBITDA between $384m-396m, free cash flow between $150m-162m, and an EBITDA of between $384m-396m.
According to the company, product and hardware sales revenue growth will continue to outpace higher-margin regular revenues. This is due to recent acquisitions and the company’s success in growing its product sales market share.
Taylor said: “Our team’s outstanding performance over the past several years reflects our balance and diverse strengths across all of our operations – digital, games, finTech and loyalty.
Everi’s solid balance sheet and strong free liquidity generation make it a favorable choice for consistent near- to long-term growth. We continue to invest in high-value acquisitions and growth-focused internal product development initiatives. Shareholders also get a return capital through opportunistic stock repurchases.
“We believe that our success in executing our growth initiatives and our high percentage of high-margin, recurring revenues in the overall revenue mix will help us overcome potential challenges in the uncertain macroeconomic climate and allow us to continue to deliver profitable growth in 2023.
