Everi Holdings Inc. Q1 2023 Earnings Call
Hello, everyone. Thank you for standing by and welcome to the every Holdings' 2023 first quarter earnings Conference call.
During todays presentation, all parties will be in a listen only mode. Following the prepared remarks, we will open the call for a question and answer session.
As a reminder, this call is being recorded now let me turn the call over to Jennifer Hills, Vice President Investor Relations. Please go ahead.
Operator, let me begin with a reminder, that our safe Harbor disclaimer, which covers today's call and webcast contains forward looking statements that involve risks and uncertainties that could cause actual results to differ materially from those discussed on today's call. These risks and uncertainties include but are not limited to those <unk>.
In our earnings release today and in other SEC filings, which are posted in the investors section of our corporate website at every dot com.
Because of the potential risks you are cautioned not to place undue reliance on forward looking statements, we do not intend and assume no obligation to update any forward looking statements, which are made only as of today may 10 2023.
We will refer to certain non-GAAP financial measures such as adjusted EBITDA adjusted EPS free cash flow and net cash position a description of each of these non-GAAP measures and reconciliation to the most directly comparable GAAP measure can be found in our.
<unk> release and related 8-K today as well as in the investors section of our website.
This call is being webcast and recorded a link to the webcast and a replay of today's call can be found in the investors section of our website.
On our call today are Randy Taylor, Chief Executive Officer, Mark whereby Chief Financial Officer, Kate well in Howard Fischer General Counsel, Dean Ehrlich games business leader and Darren Simmons Fintech business leader.
Also note that even though he is counting the weeks until he just styles in children. These call Bill fun, It's also still with us today.
Now I will turn the call over to Randy.
Thank you Jennifer good morning, and thank you all for joining us.
Has gotten off to a solid start with first quarter 2023 revenues, increasing 14% to $200 5 million adjusted EBITDA rising, 3% to $92 5 million and free cash flow of $37 1 million. Despite the impact of rising interest rates throughout 2022 and into 2023.
These metrics were in line with our expectations.
We continue to see solid organic revenue growth throughout the quarter across both our games and Fintech businesses overall games revenue grew 9% year over year and Fintech revenues rose 20%.
Our prior investments in R&D drove organic revenue growth of 10% with the acquisitions completed in 2022, adding 4% to our revenue growth.
While macroeconomic uncertainties still cloud the near to medium term horizon.
We remain well positioned for consistent growth due to our investments in internal R&D to develop new gaming content broaden our bandwidth for the introduction of several new cabinets.
And that new product enhancements and features across our Fintech portfolio.
Additionally, our recent acquisitions have expanded our addressable market, while also enabling us to leverage our existing product development capabilities and distribution to scale these products for future growth.
In our games segment revenues from gaming machine sales increased 15% year over year as expected, we experienced a quarterly sequential decline and some operators opted to delay purchases until the launch of our new dynasty view video cabinet, which took place at the very end of the first quarter.
But he was the first cabinet and our new dynasty lined and has a lower profile cabinet was sightlines comparable to a dual screen cabinet.
Initial shipments began on schedule with the first installation at Yamaha Resort and casino in California quickly followed by several other casinos in April initial feedback is highly encouraging and we expect sales momentum to continue to build.
Even with the often discussed increased competition among our peers, we expect introduction of our added content and new differentiated cabinets throughout this year and next will help us maintain our longer term market share growth momentum.
Driven by our increased spending for game development and engineering, we expect to dramatically expand our portfolio of cabinets and content on our next generation dynasty platform.
We anticipate that the W. Two new premium cabinets in the third quarter with several additional new cabinets to be showcased at G TUI, including both standard for sale and premium cabinets.
In March we shipped the first every gaming machines on the exact as systems platform for historical horse racing to the Boston Billiards club and casino in New Hampshire.
And two a coat acquisition provided us with experienced development talent and an existing base of installed games that helped accelerate our entry into the HHR market.
H HR machines are an exciting opportunity for us to leverage our proven gaming content across a new category for every one that is rapidly growing and one in which we previously had zero ship share.
But in the Fintech segment, the full integration of E cash holding continues to progress revenues in Australia contributed approximately 4 million in the first quarter. Our digital wallet is already in test at one property in Australia, while work on integrating anti money laundering loyalty and mobile capabilities for the Australian gaming market is also.
Moving forward, we expect these enhanced digital features and new products to the Australian market to provide incremental growth in 2024.
We also expect to introduce the E cash kiosks into the U S. Distributed gaming market later, this year, which will complement our planned entry with V. L. T V. GTA gaming machines early next year.
Our interest into the VLT market as well as HHR allows us to leverage our compelling player proven gaming content across additional channels.
In aggregate represent an estimated 11% to 12% the total installed slot machine base across North America.
These are significant categories in which we previously had zero share in which will help drive additional growth and incremental ship share as we continue to progress towards our 15% target.
Our asset acquisitions of Atlas gaming and venue types of also providing additional opportunities for future growth.
We expect to debut our first Australian studio developed North American games. This fall at GTT.
In 2024, we expect to launch a full array of every products into the Australia market. The second largest slot market after the U S.
Through our <unk> platform, we continue to build and expand relationships, including recent enhancements for Churchill Downs racetrack that enabled an app specifically for the legendary Kentucky Derby.
Additional developments enhancements recently expanded our relationships across the major professional sports leagues in North America, such as teams with major League baseball the NBA NHL MLS and CFL, along with a growing international presence with multiple venue deployments. We believe there is a great opportunity to leverage.
Any ties strengths with our cash wallet and loyalty capabilities to provide enhanced and seamless patron engagement at gaming and non gaming sports and entertainment venues.
Another early phased growth opportunity is the launch of our unique buy branded on property mobile digital gaming platform, which offers casino operators in all in one mobile gaming experience that includes a digital wallet and loyalty capabilities on players phone devices.
We launched by at the Indian Gaming show in late March to a very positive reception as many tribal operators look for opportunities to utilize mobile technology for their guests gaming experiences and grow revenue with VI Blair players can use their mobile device to play every class II and class III digital games.
As with other third party content on premise, including off the casino floor with a geofence location our jurisdiction.
And our digital gaming business, while we continue to expect 2023 to be a relatively quiet year as far as the state by state expansion of legalized I gaming into new jurisdictions, we continue to build out our digital business and offerings in April we expanded our real money I gave me offering to multiple off.
Right are serving their regulated provincial market in Alberta, Canada.
Every digital's player popular game content is now featured at just over 80 real money online casinos and is also available on more than 40, social casinos worldwide.
In addition, we recently received a U K license and now we're working towards a launch in the U K by year end.
Most recently last week, we completed the acquisition of the assets of video King a leading provider of integrated electronic bingo gaming devices, providing us with an additional digital gaming growth channel, we expect to be able to provide every digital game content wallet and loyalty products to our video king customers in the near future.
<unk> further extending our digital neighborhood.
This will improve revenue and margin opportunities for our customers and for every.
With our additional digital offerings. We believe there is a longer term opportunity to leverage our sales force and our relationships, particularly with travel operators to further grow the business.
Within our Fintech digital neighborhood or digital wallet remains an area of exciting long term growth.
Adoption of our wallet technology is largely progressing as expected the pace of which is primarily driven by our casino operator customers. We continue to expect the tribal and regional operators will be the early adopters because of their heavier dependence on frequent repeat customers.
Currently our single solution digital wallet is installed are pending installation at 43 casinos covering 22 jurisdictions in 17 states.
He knows where we have historical data prior to the implementation of our patrons cash wallet, we have seen an increase in both the number of transactions per month and overall dollar spent by casino customer.
Excluding extremely high value customers, which can distort averages transaction for transactions four rated players have increased by one and a half to two times their prior activity. While the average amount funded per month has increased between 20 and 35% over pre wallet adoption as.
As you would expect from overall casino demographics close to 60% of the wallet users are 40 years of age or older and they account for nearly 75% of the overall funds on wallets.
While the majority of volume today is driven by repeat patron usage, we continue to see a steady growth of new wallet users every day.
Do you contemplate the growth potential of our digital opportunities you quickly realize that we have a strongly focused strategy across both our games and fintech businesses, providing a omnichannel presence to casino operators, leveraging our development efforts in our existing product strengths.
Given the high number of growth initiatives underway do you expect to continue to invest in internal R&D at current levels in the first quarter R&D expenses were about 8% of revenues and we expect to continue to be at or about that level through the remainder of the year.
Having significantly expanded our addressable markets during 2022 and most recently with video King we are focusing our near term attention on integrating these acquisitions.
As we expect to generate strong free cash flow in successive quarters, we will continue to be on alert for any attractive acquisitions. However, we plan to prioritize the majority of our ongoing free cash flow to opportunistically repurchase our shares.
To that end, we announced today that our board approved a new 18 months 180 million share repurchase program that replaces the previous $150 million program, essentially adding approximately 115 million to the remaining $65 million in buyback authority.
Before I wrap my prepared remarks, I want to acknowledge the progress achievement and future growth of our company is a direct result of our outstanding employees I want to welcome our new employees from video King and thank all of our existing employees for their dedication and hard work. They drive our collaborative culture and are the primary reason for our success.
Yes, they are.
We're proud to continue to be recognized as an employer of choice and to be included for a second consecutive year in the top workplaces USA 2023 based on independent employee engagement surveys. This is our 16th top workplace honor it received over the past three years.
Now, let me turn the call over to Mark who will provide more insight into our first quarter financials and current outlook for the remainder of the year.
Thanks Randy.
Our first quarter was another quarter of consistent growth the benefit from our overall portfolio of diversified products and services.
Although the impact of all of them are crowded and patron visitation and early 2022 provided an easier comparison for the first quarter, we continued to generate growth throughout the quarter due to our balanced business mix.
In this morning's press release, we introduced adjusted earnings per share.
This measure provides a supplemental view of earnings that more closely resemble normalized operating EPS without unusual or nonrecurring operating items as well as removing the amortization expense associated with purchase accounting related intangible assets from our acquisitions.
Adjusted EPS was <unk> 43 cents in the first quarter flat with a year ago.
A lower tax provision and a decrease in our diluted shares outstanding.
Generally from our share repurchase activity to date.
The higher net interest expense due to rising interest rates.
On a consolidated basis, we reported a year over year revenue growth of 14%.
Driven by 9% growth in games, and 20% growth in Fintech revenues.
Our core businesses performed well delivering 10% organic growth in <unk>.
Acquisitions contributed an additional $7 million year over year or 4% to consolidated revenues in the quarter.
Our recurring revenues increased 11% and accounted for 74% of the total revenues in the first quarter, while onetime sales grew 25%.
The small decline in gross margin percentage was primarily driven by a change in mix as lower margin gaming equipment and Fintech hardware sales grew more rapidly.
Adjusted EBITDA of 92, and a half million was up 3% and as a percentage of revenues adjusted EBITDA was 46% compared with 51% a year ago.
This change primarily reflects the revenue mix shifts and the investment in our future coupled with the impact of acquisitions and higher wages.
As we continue to lap the changes in revenue mix and the impact of higher R&D and acquisitions, we would expect adjusted EBITDA as a percentage of revenue to remain relatively flat in the mid to high 40% range throughout the remainder of this year.
Free cash flow generated in the quarter was $37 million compared to $52 million a year ago.
The decrease primarily reflects an $11 million increase in cash interest from rising interest rates, along with increased capital expenditures.
As Randy noted.
In the near term expect to focus the majority of our ongoing free cash flow on share repurchases.
Within the games segment total revenues increased 9%, while adjusted EBITDA was $54 million compared with 55 million a year ago.
In gaming operations as expected the daily win per unit improved on a quarterly sequential basis to $38 37 steps.
Was down when compared with the prior year.
[laughter] installed base declined 134 units on a quarterly sequential basis, while growing 513 units year over year.
We expect to experience a short term headwind and installed base growth ahead of the launch of our two new premium lease specific cabinets we.
We've accelerated our launch plans for these new cabinets and expect to begin showing them to customers later this month and for them to hit slot floors by the end of the third quarter.
At G. Chewy. This year, we will also showcase even more premium cats, along with a new standard for sale portrait cabinet.
We expect these new unique form factors to be commercialized by the first half of 2024.
As a prudent steward of capital we plan to maintain our disciplined approach to capital spending.
We will balance the replacement expenditures of our installed base using our flex fusion in D. C X cabinets with the availability of the new cabinets and content.
But there isn't a fintech segment first quarter revenues increased 20% over our prior year.
Of which 16% was organic growth.
This drove a 14% increase in adjusted EBITDA to $39 million.
Fintech revenue growth in hardware sales was 34% benefiting partially from a full quarter of E cash revenues in Australia.
Software and other revenues rose, 35%, which included the benefit of rolling out our software into new customers.
Financial services revenue grew 13%, primarily driven by a 13% increase in transactions.
Looking at the impact of interest rates on our operating results.
From first remind you that we have 400 million of unsecured notes due in 2029 with a fixed rate of 5%.
This equates to roughly 20 million of annualized expense, which was paid in the first and third quarters.
Additionally, after prepaying, the 6 million of annual required payments on our term loan during the first quarter. We now have $586 5 million of secured term loan outstanding.
That debt floats currently at LIBOR, plus 250 basis points, roughly $45 million to $48 million of annualized interest expense.
We also have commercial arrangements to maintain cash at our ATM machines located in certain customer locations.
Commercial vault cash arrangement.
There's a variable rate cash usage fee that is based upon defense funds target rate.
The daily average balance fluctuates throughout the year, but is there a financial funding services grow our estimated annualized expense is expected to be in the range of $18 million to $20 million for 2023 compared to $9 million in 2022.
At current rates with an end of quarter weighted average borrowing rate of six 4% and.
And our expectation for strong free cash flow.
We remain comfortable with our current level of debt and our current cash interest costs.
As at the end of the first quarter. Our total net leverage was two four times trailing adjusted EBITDA.
Which is below our target levels.
Even with our recent video King acquisition, which was funded entirely from our cash balances on hand.
Our expectation for continued share repurchases.
Would expect to remain at or below the target throughout 2023.
Moving onto our outlook historically, while the gaming industry has not been altogether recession proof. It has been relatively resilient driven in part by the significant aging of the American population.
The number of people over the age of 55 in the U S, which is a prime demographic for gaming has increased by more than 65% since the year 2000 and is projected to continue to grow both as a percentage of the U S population and in absolute numbers by the year 2020 thought.
Reflecting the in line in the first quarter results, our balanced business and maintaining our conservative outlook on the year. We today reaffirmed our annual guidance for 2023, which was provided in March when we report our 2022 fourth quarter results.
Our expectations for adjusted EBITDA of between $384 million to $396 million.
And for free cash flow of between 150 to 160 million are unchanged and that's inclusive of our video King acquisition.
As you can see from our guidance of 3% to 6% adjusted EBITDA growth.
I believe it is prudent and reasonable planning for some slower growth this year, even with the benefit from the launch of new products and our recent acquisition.
We raised the bottom end of the range for net income primarily benefiting from a reduction in the expected provision for taxes on a GAAP basis.
This change also increased our outlook for adjusted EPS. We now expect annual net income of $92 million to $100 million and adjusted EPS of $1 58 to $1 66 per diluted share.
This adjusted EPS is based on the number of diluted shares outstanding at the end of the first quarter and does not reflect the potential reduction from additional buyback activity.
And with that I'll now conclude our prepared remarks, and turn the call over to the operator for questions.
Thank you if you'd like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question Ken.
You May press star two if you'd like to remove your question from the queue for.
For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.
In the interest of time, we ask that you each keep to one question and one follow up thank you.
Our first question comes from the line of David Katz with Jefferies. Please proceed with your question.
Hi, Good morning, Thanks for taking my question I. Appreciate it can you just give us some color or insight into and I know you've talked about sort of growth headwinds in a couple of areas, but specifically around the premium installed base and you know.
I guess, what's you know what is the impact kind of the cadence of rhythm of new product hitting the market or.
So did something mess or get delayed or help us just understand that a little bit better.
Thank you.
Sure David Thanks for the question.
Basically what we've seen on our legacy premium product David that we'd always expected some some churn, but it's coming in a little bit earlier than we anticipated. So what we've done and we've pivoted quickly and that is we've talked about it on the call the cabinets that are.
In our plan for this year and you know a couple of those cabinets were really going to be shown at G chewy, but dean and his team have done a good job they've moved those cab two of those cabinets up.
Because you know that the churn is happening earlier and so we expect that you know if we can get these cabinets in front of customers we can.
Still show growth towards the end of the year, but I would say for probably Q2 and Q3, our expectation now is more of a flattish to maybe modestly down and install some of it will continue to work with other cabinets that we can replace but a lot of it is the return on that capital when do you replace it.
And we think that we've got just a really great lineup for G. TUI and next year and also some premium cabinets that can fill some spots are earlier on than we had thought we would have to.
Got it I appreciate that.
With respect to the.
The Fintech side.
Should we.
There's a lot of ways to look at the you know the.
She says that.
You know very actively managed all the way down.
Should we be thinking about a balance of M&A and growth funding and share repurchases or more of and you know some of one and less of the other how do we balance those two elements.
Sure.
You know I think the way we're looking at it right now David is.
We feel that the best use of our catches you know I'm investing in this company.
Still continue to look for tuck ins, if they makes sense, but you know based on where we're trading and just our expectation of how this company will continue to grow we feel that utilizing you know that the majority of our free cash flow for share purchases will happen for a while until.
So theres a better opportunity for it. So I think short answer is we've taken best thing. The company is a great thing right now.
Stopped looking for small tuck ins, but.
Yeah, I think it's leaning toward share repurchases right now versus acquisitions.
Okay very helpful Nice quarter and thank you for taking my questions.
Thank you. Our next question comes from the line of Jeff <unk> with Stifel. Please proceed with your question.
Great. Thanks, Good morning, everyone. Thanks for taking our questions.
Starting off Randy you talked to some strong early reception for the dynasty view I think I can speak for all of us and saying we've been pretty excited to see what this cabinet is going to do on the.
Casino floors, keeping in mind that it's still fairly early here just curious if there's any data points you can share on how the cabinets performing versus floor in some of those early installations that you called out thanks.
Yeah, it might flip it to dean, but I would say, it's still early Jeff So, but I think we've gotten we received great feedback from our customers and there's you know we have a solid pipeline for that but you know right now I don't know if we've got a really detailed information on how it's performing against house outfits.
Anecdotally, it's doing very well, but it is early on.
But the I'd say the key note that I bring out as the backlog is very robust and there is a I'd say a higher anticipation. Even then I would expect and I always expect a high expectation and.
International backlog. So we're looking forward to seeing those units go out plenty of themes that come out behind.
Our initial launch product and look forward to seeing how this all plays out.
Great. That's helpful. Thanks, Great. Thanks, Dean and then for my follow up moving to the capital allocation strategy really nice to see the new authorization.
Mark I was hoping you might provide some perspective on how aggressive you expect to be cadence why should we expect repurchases to ramp sharply in Q2, just given where the stock sits today and in the yield on that or does it make sense for the video game payment to flow through before for kind of ramping up here any thoughts there would be appreciated. Thanks.
Jeff I'll start and I'll, let mark kick in look I think we're gonna be a opportunistic and prudent as we go I think you're you state it right.
Finished the video King acquisition, but I think you should expect to see repurchases on a pretty steady basis.
Over the next 18 months, depending on how our share price follows but.
Much committed and you know I didn't say it in the quarter, we didn't do anything because the video king, but I think based on on how we look at our share price. We expect it to be very consistent and it may be a little bit more front end loaded than back end loaded mark anything to add look I think you've nailed that Randy I would just say when we announced the initial one.
As we've expanded it.
Refresh this current iteration of the repurchase plan. Our goal has always been that we believe the strength of our free cash flow generation enables us to divert a good portion of our cash flow to a steady portion of our cash flow back to share repurchase and that's our expectation, we expect to be steady and consistent using a portion of that over time. So I think you should expect.
See kind of that.
Is there anything special that just steady consistent buybacks.
Great. That's helpful. Thanks to all and congrats on a nice quarter.
Thanks, Jeff.
Thank you. Our next question comes from the line of Barry.
True Securities. Please proceed with your question.
Great. Thanks, so much I wanted to dive a little bit more into the EBITDA guidance and the reiteration you.
You mentioned in Q1 in line than maybe I think it came in a little bit ahead of the street, but then you youre, adding in video King now so I guess has anything changed in terms of the outlook for this year.
For the guidance.
Or else all else equal would you steer people, maybe a little closer to the high end now that video King has been added.
Okay.
Yeah, I would say a couple of things Barry you know one you know.
When we gave our guidance in early March we were obviously thinking about you know.
King and when that acquisition would close and how quickly it would close.
So you know part of that was in our range and probably at the higher end of that range, but second of all you know I don't think we had a really looked at the installed base being you know I'll say flattish for the next couple of quarters flattish to modestly down. So I think the two are kind of offsetting each other a little bit and so.
That's why we still think we're very comfortable in that range, Barry like all things equal and if if we.
We didn't have a little bit of a of a you know.
I'll say up.
<unk> headwind in our.
Install base, we probably would be at the higher end, but I think right now we still very feel very comfortable and.
But we're in that range and you know again, there's just so many things that everybody's looking at towards the back end of the year that I. Just think you know staying in that range as is prudent and that's where we're at.
Understood understood.
And then just for a follow up.
I'm interested in the cash kiosks coming into the U S distributed gaming market any early feedback from operators as you prepare to launch and I guess more more in poorly how big do you think that market opportunity is.
Where early very so I would say look we've done a lot of of research we've done a lot of discussions with our customers in those locations I think they definitely want a new product there and are excited that we're coming to it but I don't I think it's kind of early to tell you how.
Big that is but look we do think it is a growth opportunity for us, but you know right now it's a little early to kind of give any indication of how much that'll be this year, but we feel very comfortable that that product from E cash will be.
We'll be we'll be well.
The customers will like what we have there. It's just you know there are regulatory processes you Gotta go through and so when it'll be there as is the it's a timing issue from my standpoint.
Got it understood alright, thanks, so much.
Thank you.
Thank you. Our next question comes from the line of John Davis with Raymond James. Please proceed with your question.
Hey, good morning, guys, Mark I, just want to follow up a little bit on your commentary on margins.
I think they were down about 500 basis points. The first quarter I think I just want to clarify I think you said that they would be kind of flattish year over year for the remainder of the year. So it gets you to kind of down 100 to 200 basis points for the full year, just want to make sure I heard that correctly.
Yeah, we we kind of framed out that we thought we would be kind of consistent with where we are is we're always trying to drive home in these kind of levels.
Mid to high 40% range. So I think it's reasonable to think it's kind of consistent now that the acquisitions are kind of all lapping themselves, we seem to be kind of getting to that.
Similar cadence on the hardware sales and the mix of our total revenue. So I think that's how to think about it.
Okay, and then Randy I know, we talked a lot about capital allocation on this call and obviously good to see the buyback, but just curious mark made a comment that you would kind of stay at or below the low end of your kind of two and a half to three times leverage target just curious where the stock is like why not take leverage maybe to the midpoint to be a little bit more aggressive on on buyback.
<unk> given.
What seems like a pretty incredible value at this level.
Yeah. It's great question, John I would just say look I'm.
I'm very pleased that our board Hum.
The $180 million and I'm, not saying that we might not do something down there down the road, but I think we're just start here and just see how it how it plays out I'm not you know how you know how.
Aggressive I am John So I don't think that should be any news to you that I think putting a 180 million out there now almost for two and a half per cent of our value I think that's.
Where we're at and I think we're comfortable with that.
And I'm not ready to go the next step just yet, but we'll see how we trade in and what happens over the next you know six to 12 months.
Okay I appreciate it guys. Thanks.
Thanks, John .
Thank you. Our next question comes from line of.
Chad Beynon with Macquarie. Please proceed with your question.
Good morning, Thanks for taking my question I wanted to ask about the venue ties you guys have now own this for I believe six or seven months.
Strength in the sports entertainment hospitality consumer at a different stadiums and in live events and there continues to be announcements with newer stadium and more investments in tech. So can you just give us a little taste in terms of how this acquisition is progressing how we.
You should think about when this becomes more of a meaningful.
Contributor thanks.
Sure check look it's I'd just say, it's early and I think we're about but any REIT probably six to seven months in you know is as in any acquisition.
You've got to get in there and figure what's going on with it but we think it's still a great acquisition I think it's going to be more of a growth generator in 2024, as we really kind of figure out how much more we can integrate our other products between wallets and loyalty into their offerings.
It's been a great acquisition, but I think it's more of a growth driver and in 2024, but its coming along really kind of at the pace. We expected. There's you know as it already knows the acquisitions are always are always.
Challenging and I think it's it's going along just a way we expected it but it's more of a 'twenty for growth.
Okay. Thanks, Randy and then regarding the just the health of the U S gaming customer we've heard from a lot of operators that there has been some weakness in some southern regions and I think that's really just been more of a comp issue versus anything else, but within your whether its class II versus class III or.
Geographically speaking have you seen anything that kind of fed into into the R. P. D. <unk> outside of the mix issue you know that that you believe is as a as a negative trend or do you think.
The same store trends are kind of stable notwithstanding some of the ins and outs of of of cabinets. Thanks.
Sure Oh look I think the best indicators that we have really as our cash access business and I think it's really in line with what we had expected. We knew Q1 January and February with Omicron was going to be there's going to be up in cash access would perform or expected it to perform really well what we've seen really in April and in <unk>.
May is it's it's coming back down to what I would say is that you know low single to mid.
Single.
Growth on a same store basis, and that's our best indicators. So you know right now I don't I don't think I've seen we have not seen anything that points to a specific region. We're fairly diverse not fairly we are diverse across North America. So we don't you know, we always see us and you know something happens in one region and it's offset by something else, but right now I haven't.
<unk>, we have not seen anything that indicates anything different than what we expected which was it would settle down you know in the in the second quarter as it ramped throughout the year and assuming no major a meal.
You know macro impacted it would be that a.
More you know.
Low single to mid single growth.
Thanks, Randy appreciate it nice quarter.
Thank you.
Yeah.
Thank you. Our next question comes from the line of Edward Engel with Roth. Please proceed with your question.
Hi, Thanks for taking my question you noted that there is some some of your customers might have delayed shipments I'm just given the dynasty being lost and QQ. Just curious I mean do you expect that pent up demand to be released pretty quickly into the <unk> or is that more of just kind of flows through until to the rest of the year.
But I'd love to say it all is going to come in Q2, but my guess is it'll it'll come throughout the year and I think there are some that are early adopters and they'll take it quickly and I think there are some that will kind of wait to see how the game performs and so it's you know it's it's not going to all hit in Q2, but look we think it'll ramp throughout.
The year and so it'll impact you know to Q3 and Q4 is as well assuming that the cabinet does and the games do what we expect.
Helpful. Thanks, and then I guess.
How shall we think about I guess, a S piece I guess bigger picture over the next couple of quarters, you've got dynasty, which I'm. Assuming is accretive then you've got a chart, which I would assume it's dilutive do those offset or do you think one kind of overpowers together.
Yeah, one item to keep in mind. It is is we also have turn event.
Units in there, which sometimes drives up our asps a little bit. So look I still think we're in the 19 range, but I don't think you either it goes much higher than that and again, sometimes turn event will skew that because theres other.
Hardware and software that's associated with that so that kind of gets blended into that overall ASP, but I think we still feel pretty good at that 19 range.
Great and then I guess does that mean that <unk> was probably I guess, given the mix shift towards the tournament.
Correct correct.
Perfect. Okay. Thank you.
Thank you Ed.
Thank you. Our final question. This morning comes from the line of George Sutton with Craig Hallum Capital Group. Please proceed with your question.
Thank you the superstar in the room I would assume would be darrin with the 16% organic growth for Fintech This quarter U.
You you addressed some.
Some of the cash access numbers, but you know, we're certainly assuming a much slower organic growth for the rest of the year I wondered if you could just address that.
That dynamic and what might change from Q1 to the other quarters.
George I think youre spot on and we talked a little bit about the G. G. R. But I think we still have which is going to be slower, but I think darrin is still very bullish in his head a little bit big right now, but he's very bullish about how the loyalty product is is running it's got a nice pipeline there.
A M L up into up into Canada is doing well again, we talked about the cash units I don't know how much of that will really hit.
This year, but we expect some of that to go into the distributed gaming market. So you know look I think Darren had a great quarter Fintech has had a great quarter, we knew that coming in just given the situation last year, but I think he feels really pretty strongly and I'll, let him kick in but I think we feel pretty strongly that fintech should should.
To grow pretty steadily unless there's some type of a macro a pullback, but it's not going to be what we saw in Q1.
No I think you did already I think again Q1, the anomaly from last year with omicron. So it will go back to probably more normalized growth.
The only probably differences, we've probably seen a lot more international in Q1, then kind of kind of from year over year. So that was kind of interesting, but you know I think George our business on the Fintech side very diversified across different product lines. So I think that creates a lot of strength for us and you know again the sales pipeline.
<unk> is strong and so we feel real good about the cadence of where we're at and and are excited about all the good things happening on both sides of the business, including deals with all the premium cabinets and games. He's got some are new so a lot of strength there.
Gotcha I'd have a big ahead, if I looked like George plenty as well so.
Right.
[laughter], one one quarry and Randy you mentioned, 11% incremental opportunity or or sort of Tam can you just walk through what you were building into that.
Number.
I'm trying to make sure that if that was on the on the H H R. N V. L. T that I talked about that 11%, 12% is that so again that that's talking about markets that really haven't been there I think the the VLT market is like 180000, and then the HHR is you know.
20, or getting close to 20 moving to 30 so those.
Those are maybe a little bit less than that HHS, maybe maybe a little less than 20, but we think over time, it's going to continue to grow. So we just look at those two markets as markets that we have not played in we just recently.
Launched as we talked about our every cabinets on the exact system in Q1 so.
So you know I, just think again as we look at the growth opportunities for every you know we continue to look at other verticals, we've not been in and execute on them I give dan and his team.
Kudos for getting into H H R. Two that in to coda acquisition.
We're doing VLT really on on our own and so I expect to be there in 24, So I look at both of those Georgia as areas where we.
We continue to have runway to grow.
Super Thanks, guys.
Thanks George.
Thank you, ladies and gentlemen that concludes our question and answer session I'll turn the floor back to Mr. Taylor for any final comments.
Just to say thank you for joining us today. We appreciate your interest in every and we look forward to providing you with an update in our on our Q2 call in early August thanks for joining us.
Thank you. This concludes today's conference call you may disconnect. Your lines at this time. Thank you for your participation.