US – Record year for Everi with FinTech and gaming boomingBy Phil - 2 March 2022
Everi Holdings, a premier provider of land-based and digital casino gaming content and products, financial technology and player loyalty solutions, enjoyed a record year in 2021 with revenue increasing by 72 per cent to $660.4m compared to $383.7m in 2020, and exceeding the prior record year achieved in 2019 by 24 per cent, or $127.2m.
The year was boosted by fourth quarter results with revenues increasing by 51 per cent to a quarterly record $180.4m from $119.6m in the 2020 fourth quarter.
FinTech revenues for the 2021 fourth quarter increased to a record $75.0 million compared to $54.6 million in the fourth quarter of 2020, primarily reflecting an increase in financial access services and software and other revenues.The company’s games segment revenues increased to a quarterly record of $105.4m compared to $64.9m in the fourth quarter of 2020, reflecting record sales of gaming machines and growth in gaming operations revenues, which includes increases in both the installed unit base and in Daily Win per Unit.
The installed base as of December 31, 2021 was a record 16,903 units, a year-over-year increase of seven per cent, or 1,158 units. The installed base increased by 482 units on a quarterly sequential basis. In January 2022, subsequent to year-end, 204 gaming units went live at a new Oklahoma tribal casino that was originally scheduled to open in the 2021 fourth quarter.
The premium portion of the installed base increased by 21 per cent, or 1,362 units, year over year and by 489 units on a quarterly sequential basis to a record 7,840 units. This was the 14th consecutive quarterly sequential increase in premium units. Growth was driven in part by continued placements of Cashnado units, as well as the Company’s popular premium mechanical reel games and Wide-area Progressive (WAP) gaming machines.
Digital revenue rose 156 per cent to $4.1m compared to $1.6m a year ago and was four times the 2019 amount. The B2B revenue increase more than offset a decline in B2C revenue as the company has now fully exited its B2C social gaming operations. Digital revenue growth reflects an expanded base of iGaming operator sites featuring Everi’s games – including new customer sites in Connecticut, and in Ontario and New Brunswick, Canada, that went live during the 2021 fourth quarter – along with a growing library of available slot content.
Revenues from the New York Lottery systems business increased to $5.9m compared to $4.5m in the fourth quarter of 2020.
Gaming equipment and systems revenues generated from the sale of gaming machines and other related parts and equipment grew to a quarterly record $35.6m in the fourth quarter of 2021 compared to $15.2m in the fourth quarter of 2020. The Company sold a quarterly record 1,910 new units at an average selling price (ASP) of $18,106 in the 2021 fourth quarter, up 140 per cent from 797 units at an ASP of $18,060 in the 2020 fourth quarter. The unit growth reflects an increase in industry ship share driven by the popularity of an expanding game library supporting the Empire Flex video reel cabinet and the ongoing performance of the Player Classic mechanical reel cabinet.
Michael Rumbolz, Chief Executive Officer of Everi, said, “Our record fourth quarter 2021 results capped a year in which we delivered record-setting annual financial performance across our business. Driven by significant successes in both our Games and FinTech segments, we achieved new all-time full-year records for revenues, net income, Adjusted EBITDA, and Free Cash Flow.
“This performance reflects our strategic focus on growing our recurring revenues and our continued investment in the development of new and enhanced products that help our customers grow revenue and manage their business more effectively. The dedicated and collaborative efforts of our talented global workforce to execute on our operating priorities is clearly evidenced in these strong results. As we begin 2022, our core recurring-revenue businesses continue to grow and our newer initiatives – including iGaming and cashless wallet technology – have a strong foundation from which we expect to generate substantial contributions to our future financial performance.
“For 2022, we expect another year of steady growth as our operating results benefit from the continued expansion of our installed base of leased gaming units, growing ship share of gaming machines sold, continued increases in same-store financial access transactions and ongoing organic growth of our Loyalty and regulatory compliance (“RegTech”) solutions. Ongoing momentum in these product categories combined with our prudent management of operating and R&D expenses is expected to deliver another year of strong Free Cash Flow generation that will continue to enable Everi to allocate capital towards return-focused investments that generate further growth.
“Our capital allocation priorities will focus on increasing investment in internal product innovation and product enhancements to sustain consistent longer-term growth, as well as the continued pursuit of scalable, bolt-on acquisitions that can expand our product portfolio, boost our addressable market, geographically grow our currently served markets, and further diversify our revenue sources. Our recent announcements to acquire ecash Holdings and certain assets of Atlas Gaming in Australia provide long-term growth opportunities that complement our business strengths.”
Randy Taylor, Everi‘s President and Chief Operating Officer, added, “Our fourth quarter financial results reflect the successful alignment and execution of our operating initiatives. Despite a year that began with substantial pandemic impacts, our Games business achieved record gaming machine unit sales and ended the year with a record-high gaming operations installed base. Our FinTech business generated significant year-over-year quarterly growth in same-store financial access transactions and funds processed that exceeded historical growth rates and our Loyalty and RegTech software solutions recorded double-digit revenue increases.
“Our operating momentum has been driven primarily by the strength of our high-margin Games and FinTech recurring revenue operations. Momentum in our Games business is evidenced by the achievement of the 11th consecutive quarter-end increase in our installed base of gaming operations units, inclusive of higher-earning premium units that helped drive a year-over-year increase in daily win per unit. Record quarterly slot machine sales of 1,910 units, a 62% sequential increase over the strong 2021 third quarter unit sales and a 42% year-over-year improvement over the 2019 fourth quarter, reflect continued growth in our ship share of replacement units. With annual industry replacement sales expected to increase in 2022, the investments we have made to expand and extend our Games portfolio have positioned Everi to achieve consistent progress towards our longer-term target of a 15% ship share for units sold.
“Our FinTech business generated record revenue, operating profit and Adjusted EBITDA in the fourth quarter, reflecting the benefit of our investments in the development of a comprehensive portfolio of integrated solutions that allow customers to operate more efficiently and productively. During the quarter, we facilitated more than 31 million transactions that delivered nearly $10 billion in value of funds to casino floors, a 25% increase over the then-record level of funds delivered in the pre-pandemic 2019 fourth quarter.
“Our improved earnings continue to translate into substantial Free Cash Flow, which increased more than five-fold year over year in 2021 to $158.7 million; a level that exceeds the last five years combined. We expect to continue to generate strong Free Cash Flow this year, which positions us to increase the capital we allocate towards return-focused investments in product innovation to sustain our growth and provide continued optionality to pursue accretive, scalable acquisitions that further enhance our growth prospects. We believe the Company’s best years are still ahead and with a well-defined operating plan and our team’s exceptional ongoing execution, we will continue to build stakeholder value.”