Q2 2023 Everi Holdings Inc Earnings Call
[music].
Hello, everyone. Thank you for standing by.
And welcome to the every Holdings, Inc. Second quarter 2023 earnings Conference call.
During todays presentation, all parties will be in a listen only mode.
Following the prepared remarks, the call will be opened for a question and answer session.
As a reminder, this call is being recorded.
Now, let me turn the call over to MS. Jennifer Hills Vice President.
Investor Relations. Please go ahead.
Thank you operator, let me begin with a reminder, that our safe Harbor disclaimer, which covers today's call and webcast contain 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 contained 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 risk you are cautioned not to place undue reliance on forward looking statements, we do not intend and assume no obligation to update forward.
Forward looking statements, which are made only as of today August nine 2023.
We will refer to certain non-GAAP financial measures such as adjusted EBITDA, adjusted EPS and free cash flow and that cash position.
Description of each of these non-GAAP measures and a reconciliation to the most directly comparable GAAP measure can be found in our earnings 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 <unk>, Chief Financial Officer, Kate Mollenhauer Fisher General Counsel.
Dean Ehrlich games business leader and Darren Simmons Fintech business leader now I will turn the call over to Randy.
Thank you Jennifer good morning, and thank you all for joining us.
The quarter, we reported revenue of $208 7 million.
Adjusted EBITDA of $96 1 million and free cash flow of $47 7 million.
This brings our year to date free cash flow to 87 7 million.
In the second quarter, we used our free cash flow generated along with cash from our balance sheet to acquire certain assets of video King and returned $40 million to shareholders through share repurchase.
Fintech business continued its strong revenue growth with a 13% increase over the prior year period.
Our games business revenue was relatively flat as compared to the prior year, primarily due to lower unit sales in Q2 of 2023.
Our unit sales in the quarter compared to a strong year for new openings and expansions in 2022.
Our fintech business continues to perform well with strong double digit revenue growth driven by growth in dollars delivered to the casino floor for our customers and the expansion of products and services to new and existing customers.
This creates a greenfield a growth opportunity that we believe will provide a runway of high single digit revenue growth for the full year and is driven by a healthy pipeline of existing signed orders across our diverse high recurring revenue product line, including payments.
Check loyalty and mobile solutions.
As we reinvest for growth we are executing on our multi year strategy that centers around maximizing value to both the patron any operator through our digital neighborhood of interconnected touch points, which we expect will grow our total addressable market.
We are also expanding financial access services across attended self service and mobile channels. We can now fully enabled cashless across the casino floor without the need for sign ups and external caps.
Through swaps system integrations by leveraging costs here are mobile payment product quick ticket or cashless purchase of a traditional gaming Boucher.
Now a quick transfer which allows patrons to deposit their slot tickets directly back to their bank card, we extend cashless at the tables slots and our full service kiosk.
Our digital wallet continues to gain traction and we work closely with our customers as they adopt digital cashless capabilities to provide new financial access products and services to their patrons.
While the data is compelling with the most mature installed property is showing that the wallet accounts for more than 10% of their overall cash the floor.
And the majority of patrons using a wallet have shown a two and a half times increase and there are a number of transactions per visit and a 15% to 20% more dollar spend per visit.
We have already added additional revenue generating payment types, including Apple pay Paypal and quick transfer and expect this to grow as patron acceptance of the wallet increases.
We remain bullish on the opportunities to grow our business with our recent acquisitions, including E cash, which should drive long term growth in North America and.
North American distributed gaming markets.
<unk> is also contributing to our ongoing mobile first initiatives that will grow our base of recurring revenues and expand our market into sports venues Entertainment retail hotel food and beverage and by leveraging our combined capabilities with payments and loyalty.
All of this will be on display at G chewy, demonstrating our gold standard digital ecosystem mission critical products and services.
In our games business, we are executing on our extensive new product roadmap. We are moving forward with the introduction of our next generation family of new premium and for sale cabinets over the next several quarters.
At the end of the first quarter, we began selling the first cabinet in our next generation family of cabinets The dynasty view.
It's new for sale cabinet and a growing portfolio of game themes. We expect sales of dynasty for you to continue to ramp and be an increasing contributor to our game sales in the future.
Building on this foundation of additional hardware, we will introduce our next for sale Cabinet dynasty sold at <unk> in October .
The dynasty. So it was a portrait based cabinet with a 49 inch curved screen that includes a more integrated button panel and our most powerful CPU to date.
And it will be available for sale beginning in the fourth quarter. However, as we mentioned in our first quarter call. We are seeing slight near term headwind in the for sale category. These headwinds reflect a highly competitive dynamics of our industry in both video and mechanical games. For example, two of the largest suppliers of the history of success and mechanical reel segue.
And introduced new cabinets for the first time in many years.
With the continued great performance of our high <unk> and low Dina mechanical reel games, we expect to continue to be a leader in this segment our game content and cabinet roadmap for both video and mechanical games should provide longer term growth in all our games segments. Despite the increased competition.
Consistent with the first quarter of 2023 premium cabinets in our installed base continued to experience a slightly higher churn than we originally anticipated we expect to launch our new premium dynasty dynamics and P. C reserve cabinets.
Late in the third quarter.
The introduction of these two cabinets was accelerated and our hardware plan. So that we could introduce them. Both ahead of G suite and provide new cabinets premium cabinets our installed base.
Archie TUI game content will include the first new game themes developed by our studio in Australia.
And we believe this differentiated content will be a great addition to our portfolio of games in the U S.
With a tremendous number of new products in both cabinets and game themes. We're looking forward to another successful shelling hedgy chewy.
We will continue to utilize a portion of our strong free cash flow to make internal investments in game development, our fintech digital neighborhood and adjacent categories to set us up well for the future growth.
This strategy has returned a 30% year over year increase in digital game content revenues as we continue to scale that business. Our cash deployment has also allowed us to expand into bingo with our acquisition of video team continued our our expansion into historical Horseracing.
Propel our planned entrance into the distributed gaming markets in 2024 and support the expected launch of pie, our Omnichannel mobile gaming payments and loyalty platform.
On May one we closed our asset acquisition of video King, which provides an opportunity for every to leverage our sales force and relationships to grow the existing business and ultimately expand our gaming content into eight and additional platform.
The integration of these assets is well underway.
We have already begun to add new customers during the second quarter and we have seen increased interest from existing every customers and our new <unk> products. We expect to continue to integrate every products with those acquired from video king, including offering side games in the bidding on the bingo tablets.
Integrations into kiosk and ultimately the addition of our cashless wallet solutions to provide incremental growth opportunities.
Now, let me turn the call over to Mark who will provide more insight into our second quarter financials and current outlook for the remainder of the year.
Thanks, Randy let me begin by adding a little more color to our operating results.
We reported year over year quarterly revenue growth of 6% driven by a 13% growth in fintech revenues and a 1% growth in games.
<unk> continued to see a strong growth and financial access services revenue, which grew by $5 million or 9%.
We delivered nearly 11 7 billion and financial value to our customers and their patients, which is a 10% increase compared to the second quarter of last year.
Additionally, software and other revenues increased by 26% and hardware sales increased by 6% from the prior year.
Adjusted EBITDA for the Fintech segment increased 6% year over year to 38 million inclusive of the impact of higher cost of labor and increased R&D spending.
Within the games segment, adjusted EBITDA was $58 million compared with $59 million a year ago our.
Our installed base increased 348 units from last year's second quarter, but declined by 29% sequentially.
We believe any further declines in our installed base in the second half of the year will be less than 1% of the units installed as at the end of June .
Consolidated gross margin expanded by 100 basis points to 79, 1%, primarily due to a mix shift to higher margin gaming operations and financial access services from the lower margin gaming equipment and hardware sales.
Consolidated adjusted EBITDA rose, 2% year over year to $96 1 million.
Adjusted EBITDA as a percentage of revenues was 46% compared with 48% a year ago, reflecting higher payroll expenses and R&D spending as we continue to invest for future growth.
We expect adjusted EBITDA as a percentage of revenue to remain in the mid to high 40% range through the end of this year.
Our adjusted EPS was <unk> 41 in the second quarter compared to 48 cents a year ago.
Lower income tax provision at a decrease in our diluted shares outstanding primarily from our share repurchase activity, partially offset the impact from substantially higher net interest expense incurred during the quarter as a result of rising interest rates.
Interest expense in the quarter was $20 million, an increase of $12 million from the prior year quarter.
As a reminder, we have $400 million of outstanding unsecured notes at a fixed rate of 5% and 586 5 billion of term loan that has a variable interest rate.
Also included in interest expense as the cash usage fee on our ATM vault cash arrangements are.
Our estimated full year expense for our vault cash is expected to be approximately $20 million compared to only $9 million in 2022.
At the end of the quarter, our weighted average borrowing rate was approximately six 6%.
Based on our expectation for strong free cash flow, we remain comfortable with our current level of debt and our current cash interest costs.
We ended the second quarter with total net leverage at two five times trailing adjusted EBITDA, which remains in line with our two and a half to three times target range.
We expect to remain at or below this target throughout 2023.
Free cash flow generated in the quarter was $47 7 million compared with $49 8 million a year ago.
The decline was primarily the result of $7 million of increased net cash interest costs, partially offset by $6 million of lower capital expenditures.
Although Randy discussed our share repurchase activity in the quarter I would add that since we began repurchasing shares of our common stock in may of last year. We have acquired seven 7 million shares for approximately 124 million of total common stock.
These repurchases have more than offset new share issuances from employee equity incentive plan and that's been the primary driver of the $5 million share or 5% decline.
Our fully diluted shares outstanding in the second quarter.
We had 140 remaining available to repurchase under the 180 million authorized by the board in May.
We expect to maintain our current capital allocation strategy and continue to focus first on the direct investments in our business that generate long term growth opportunities.
Second we will seek acquisition opportunities that support our product development and growth objectives.
Finally, after making these investments we expect to.
Utilizing consistent approach towards share repurchases, returning a portion of the excess free cash flow to our shareholders.
Moving onto our outlook.
With an expectation for modest growth in the second half of 2023 above the $188 5 million of adjusted EBITDA generated for the first half.
We have revised our annual guidance.
Our revised expectation is for adjusted EBITDA of between $380 million to $386 million and free cash flow of between $147 million to $153 million.
This level of free cash flow remained strong at the midpoint implies we're currently trading at a free cash flow yield of approximately 12%.
Due to the increased benefit of certain discrete items related to the current year, we have reduced our expectation for the provision for income taxes on a GAAP basis to 18% to 20% of pretax income.
As a result of all these changes we have raised the range for net income and our outlook for adjusted EPS.
We now expect annual net income of between 90 and $106 million and adjusted EPS of $1 60 to $2 67 per diluted share.
This estimate is based on the shares outstanding at the end of the second quarter and does not reflect any potential benefit from future share count reductions due to additional share buyback activity.
And with that I will now conclude our prepared remarks and turn the call over to the operator for questions.
Thank you we will now be conducting a question and answer session.
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One moment, please while we poll for questions.
Thank you and our first question comes from the line of David Katz with Jefferies. Please proceed with your question.
Hi, Good morning, everyone. Good morning, everyone. It is it is still morning for free for me and for you.
If you could just give us a sense on the premium participation side.
Sort of where we are I know, we've talked about this say 90 days ago.
What we're going to see some new product as we get into <unk>.
<unk>.
And I just wanted to be clear that those are going to be relatively ready to hit the market and start to sell.
From that point on you help us understand how the sort of unit flow and win per day flow could conceivably roll with it meet your expectations.
Sure David.
So I think a couple of things. So we have two premium cabinets that are actually going to be out before <unk>.
So we expect to see some of those placed at the end of this quarter early fourth quarter and then we have two more premium cabinets coming out one in I think early in Q1 of 'twenty four and one in Q2 of 'twenty four.
And look we have the content and the roadmap to support dose.
So my first would be.
I think we.
We talked about the churn there is more churn from is it from my viewpoint, we only really lost 29 units in the quarter.
As Mark said in his opening comments, we think we may go back less than or around 1% as the worldwide installed base was at the end of the year. So to me it's important to hold our installed base, which I think we are doing our win per day is still above that 37, which is what we told you about or what we've talked about that appear to be where we'll be for the full.
A year, that's our expectation so yes.
I think there is positive that should come out of these new units that get placed in the fourth quarter late third quarter again, there won't be.
Two products and then the other products come out next year. So my expectation I think our expectation is towards the end of 'twenty, three and clearly a 24.
Turnaround is when we'll see win per day start to creep up and when we see.
The installed base go back to growth. So I think we've got a great.
Amount of new hardware coming out and I think the fact that we're holding and people are waiting for.
New content in the new cabinets is a good sign and.
Should show growth again towards the end of the year and into next year.
Got it understood.
And if I can just follow up quickly on the topic of leverage I know, there's there's been you did share a fair amount of commentary around capital allocation.
But.
As we look at sort of what your ideal leverage is or should be do you feel like that target level.
And this is not a leading question in any way.
Do you feel like that.
At that level I have you somewhere between two and two and a half turns is that the ideal place for you to set or any thoughts on whether you.
Could conceivably be lower or potentially higher for some reason.
Yes, I think.
We liked it between two and two five times could we go a little higher.
That bothers bothers I don't I don't really want to go above.
Much more than maybe two or three quarters, but but I like the two to two five times and so I think that's what we'll continue to shoot for and so I think we're in a good position from a leverage standpoint, David So I don't see really any change in that unless there is something.
Opportunistic that comes up.
Thanks very much.
Thanks, David.
Thank you. Our next question comes from the line of Barry Jones with tourists Securities. Please proceed with your question.
Thanks.
Good morning, everyone.
Cash access business same store trends sounded really solid despite flattish flattish CAGR growth across the market can you maybe just help us.
Help us better understand that relative to outperformance are you gaining market share and any color would be helpful.
I'll add a little bit and then darrington, Ken probably correct me, but I would say a couple of things. We do continue to win more than we lose Barry So that does help our overall growth in the in the cash access I would say we've been seeing on a same store is that low to mid single.
Growth in cash to the floor. So I think thats, probably more in line with <unk>, but from our standpoint, why we were performing better is I think a couple of things one just our ability to.
Win more than we lose and second of all just our ability.
So I think process more transactions with.
How we view our cash access.
Believe we have better products.
Better networking and it just allows us to put more cash to the floor.
In line, but we expect it to perform better than in the market.
Yes.
Perfect that's good.
Great and then just I was hoping to get a little more color on video King how the integration is progressing and also help us think about the contribution that's adding to the EBITDA guidance at least relative to what you were thinking last quarter. There is any change. Thanks.
Sure look I would say the integration is going really well.
Actually visited.
That acquisition and a couple of months ago.
I think it's a really tight group, they're well run.
We have someone separate from this team.
Gentlemen, named Tim Richards, who oversees that he was he was.
Keen on our part a big part of the.
The actual acquisition itself. So so far the integration has gone very well and we're actually seeing growth more than what we had expected or projected.
The acquisition.
Do you want to add anything on what we had.
And the guidance I'm not sure that how much we've provided.
I think well, we haven't really provided the excellence in the guidance or Andy, but we certainly I think as we've talked about the acquisition, we kind of framed out we think it could be about $7 million or so.
EBITDA contribution on an annualized basis for us and again, we think there's tremendous opportunities to take that core product and expanding our existing customer set and really see some nice growth in future periods as we get it integrated and get some of our other products laid it out.
Great. Thanks, so much guys.
Thanks Barry.
Thank you. Our next question comes from the line of Jeff Stan <unk> with Stifel. Please proceed with your question.
Hey, good morning, guys and thanks for taking my questions.
Starting off here on the slot sales side of things, which appears to be sort of the main incremental takeaway relative to when we last spoke Randy whoever wants to take this could you just maybe add some color on what specifically you see as driving some of the softness you are calling out for the back half are you seeing.
A slower ramp in dynasty view than you had previously modeled is it is it more of the competition Youre seeing in steppers is it just competition broadly speaking just any additional context help frame. This the shift in expectations would help thanks.
Sure Jeff.
Is it pretty much I would say well I'd say two things that probably not on one of them but.
As we looked at the back half of the year a couple of things right. We had a really strong back half of the year in 2022 and that included a fair amount of of Steppers and as we went into Q1, we still had a very nice sheriffs of stepper sales Q2, we saw a decline in that and look we had always expected that there.
Would be some pressure on our mechanical cabinet sales.
And that happened in Q2, we think really operators are are digging that up more than they have in the past I think we probably.
<unk> got more than our fair share in the past, where they now have a product that I think operators are our sharing so the real impact from my from my standpoint is that we had expected.
A better.
Amount of of sale of steppers in the back half and now as we see Q2 wrapping up we expect that's going to be less I think the video product is ramping.
But and we had thought that that ramp would kind of offset the stepper.
Impact, but that's been a little bit more and so it's not quite offsetting it.
We know we have a new for sale coming at the end of this year. So I still think there is.
A lot of growth opportunity for us and I would say look our product.
And the mechanical is still doing very well.
We rank high in either in both high <unk> and low deny them. So.
We're happy with the product but.
<unk> it.
Ill say the amount of the.
The impact on our projections for the back half of the year really needed to be revised based on what we saw in Q2.
Okay. That's really helpful. Thanks, Randy and then.
Sticking on this theme, but shifting and thinking about things a little bit more strategically given what youre seeing some of these these incremental.
We'll call changes in an operator purchasing behavior, how they're spreading out.
Yeah.
They're purchasing between the different suppliers does this change your R&D strategy at all I guess, what I mean by that is does it make sense to start to invest a little bit more in in different categories than others as you or your view of the market continues to evolve and let me know if that makes sense.
No no you're spot on Jeff and it's where I think the game team had been and Dean can add a little bit, but clearly we know that our greenfield is in video and that's where we're putting our resources too.
We have we have a great share and a great product.
In the stepper side, and we do feel like we've got new cabinets and we've got we've got content to back that up so the R&D is focused on on the video because we think that's where we can make.
Most of our progress and growth I don't get anything else to add in there Deane no you covered it.
Okay, great. Thanks, that's really helpful. Thanks, Randy I'll pass it on.
Thanks, Jeff.
Thank you. Our next question is from Chad Beynon with Macquarie.
Macquarie. Please proceed with your question.
Good morning, Thanks for taking my question.
On the Fintech side, just a high level question, there's been some movement I guess in the last quarter and six months from from some of your competitors.
Just regarding how how are how big of a push there making into this space has anything changed in terms of how.
How do you view partnerships in the industry or kind of your outlook on what the Fintech business can be in the next two to three years as our acceptance takes further hold thanks.
Thanks, Chad I'll try to I think I can understand it look I would say, it's still competitive I know we've had a.
A couple of changes, where a competitor maybe being a little more aggressive, but I will say theres every deal that we go into because I listen on the calls with the Darrin Darrin I talked quite a bit its competitive whether they're a smaller provider or a bigger provider. So I think it will always be competitive but we go.
With our suite of products and our ability to provide more and in our view better product. So as I said earlier.
We win more than we lose and it really doesn't change our outlook on Fintech, we think it's a great business.
We think that cashless will continue to grow we think that while it will continue to grow and we think the overall omnichannel with our byproduct and just adding loyalty and payments to that and hopefully adding payments to bingo there as they are I think.
There are a number of other places that fintech can grow and so it really hasnt changed our I'll say, our bullishness on the Fintech side of the business.
I think.
Chad I think what I would just add a little bit as you.
What we've been working on as far as again, our overall sort of digital strategy, which includes cashless and and overall just a lot of mobile strategies.
We continue to create a tremendous amount of value in the diverse and robust product set that we have as we kind of mentioned in the call there and so it really gives us in my view a differentiated platform to offer to our customers because it's just not a one trick pony about an app that could do.
Transactions right.
Because the reality is it's how it's integrated across the ecosystem that becomes very important.
And for example, something like a video game. We obviously believe me we've got significant opportunities to to bring what I would say, it's our content into that platform, which is payments and loyalty and other things that that we believe will create again more tremendous value across what we provide to our customers because again.
Laura customers take with our products the greater the value in terms of what we're providing and so.
Long term with with Fintech again.
One of the acquisitions that we've made with <unk> last year again, we are really thinking about just not the gaming floor.
What were seeing from operators is trying to create value across their enterprise, which includes.
Stepping outside of that which is hotel retail food and beverage venues sports and sports relationships sports teams relationships lead relationships and so so that's our that is our long term strategy that we've been executing now for a few different years and so I think we really start to gain traction as we move forward and so.
That's been our goal and that's what we've been executing on and as Randy said.
I think we've got a significantly different end product that we've been investing for a long time it gives us the layout Walter.
Thanks, I appreciate that there and then on the I gaming business. Some nice sequential growth I know you guys have talked about launching in a bigger way into U K.
Which is the biggest market in the world currently for.
<unk> gaming anything you can talk about there in terms of partner signings or.
Titles are games that are kind of working in the market and how we should think about when you can have a bigger presence in this market and what it would mean to the financials in 'twenty four and beyond thanks.
Yeah look I think the one thing that I can add and I think we've talked about it we do have our UK license now, but you know integrating into the UK is a little different and how were doing here in the U S.
So I think we're on plan, but that plan really is probably late this year into next year, but I think once we get in the UK. It allows us then to expand outside of that and grow.
That digital business and we're still very excited about.
Getting outside of just the U S getting in the U K, but I would say we're on target on plan.
I'm very pleased with where we are right now on the digital side.
Yeah.
Thanks I appreciate it.
Thank you.
Thank you. Our next question comes from the line of Edward Engel with Roth Capital Partners. Please proceed with your question.
Hi, Thanks for taking my question, you've talked about some product releases in the first half of next year as well.
Were any of those originally expected to kind of happen in the second half of this year and then what it may be pushed back just a little bit.
I think we're talking about the premium products and no thats actually not the case, we actually pulled forward a couple of the cabinets into.
The third quarter of this year I think.
We anticipated.
Having to have new products, new cabinets for our installed base and I think the games team was set to.
Debut everything at <unk>, but given kind of the pressure or we pulled those up but the two bigger cabinets for next year really I think were planned in the first quarter and second quarter next year.
Our our goal is always to show at <unk>, what we can what we can put in the field prior to summer of next year. So.
You also have to have the content behind that and that's.
What we're working on.
Got it. Thanks, I just wanted to confirm that and then I guess kind of bigger picture I guess once we kind of get through this little air pocket of product releases kind of and then the second quarter.
And then when you move into next year and even beyond that or are we going to have a much more consistent kind of cadence of product releases.
That would be our intention most most definitely I mean.
Look it's.
I would say I'll start I'll stop there and Thats, our intention that we would have a much more <unk>.
<unk> cadence did not have so much much hardware at one time, but.
That's where we're at.
Great understood. Thank you.
Thank you.
Yeah.
Thank you. Our next question comes from the line of George Sutton with Craig Hallum. Please proceed with your question.
Thank you a question for Darren I admittedly I've never run a casino, but I think if you laid out the statistics that youre seeing with the mobile wallet, where youre getting a 15% to 20% spend lift.
With those customers I'm, just not sure why I wouldnt be aggressively adding a mobile wallet. So could you just walk through the thought process that you are hearing back as you're pitching this offering.
Look I think the data that we have is very compelling as we said in the prepared remarks, we talked about.
What some of the more mature properties that we have.
<unk> converted to cash flow and in fact.
The highest that we have is about 14% of the overall cash to the floor is gone to wallet. Those are the trends that we're seeing now and so.
I would say the conversations are great that we're having with our customers. We've got a terrific pipeline were expecting to add.
<unk> of properties and operators here through the end of this year so.
I don't know if theres any.
A real difficulty with the conversations it's just.
They are all sort of again.
Retrenching after coming out of.
Our 2000, 22021, and 2020 to sort of change in dynamics of their business and just sort of like getting a cadence and now making those investments for what they need to do and thinking very strategically about it which.
We've always said is important right. This is just not a one trick thing it needs to be part of an overall digital strategy. So.
I think the conversations are positive we've got a lot of projects in flight right now and.
I think we expect that to continue to ramp.
Again, not dissimilar to Tito Tito came into the market right and it wasn't an overnight success.
Ramped up over the years, we expect the exact same thing.
Hey, guys even.
As you recall the Tito data was was terrific in terms of what was.
It was helping performance and so again I think the same thing makes us compelling I think operators are adopting it.
The rate that they want to go to as far as their overall strategy, which is what they are all working on.
Great point quick question for Mark you mentioned from a buyback perspective, you would effectively use a portion of your free cash flow.
To do so I'm just curious are you.
Actually reactive to weakness in the stock I mean to the extent that we're seeing weakness today would that elevate your interest or or plans relative to the percentage of free cash flow.
We've always been pretty clear on our capital allocation strategy that the best investments are first and foremost investing and building out from within looking at strategic alternatives in terms of.
<unk> tuck ins, maybe to accelerate growth to get us into new markets and the third piece was was a share repurchase or returning capital to shareholders I still believe our stock price is very compelling where we are and we're a great investment in ourselves. So so obviously, we look for opportunistic buys of our own stock when the stock price.
It is lower we would you would expect us to be buying maybe a little bit more than that.
It rises will be a little bit less.
George I would just say you know.
The answer is yes.
Alright, thanks, guys.
Thanks, Dave.
Yeah.
Thank you and our next question comes from the line of John Davis with Raymond James. Please proceed with your question.
Hey, good morning, guys, Randy and Dan I, just want to touch on the install base for a second I think if we go back to last quarter. There was hope so you get back to growth in <unk> and it kind of seems that now the plan is.
More flattish just curious kind of what the change.
There and what kind of drove that kind of change in messaging and assuming that I have it right.
Well.
It's all semantics right John I think I tried to say towards the end of the fourth quarter because we.
We didn't know and we still don't know I would say I'll give you. An example, we have a customer that.
May take take some units offline because they're doing a renovation those didn't come out of your install base and then they come back in whats the churn we've seen a little bit more churn than we had anticipated John so thats one impact to it.
Second of all I think we're trying to be realistic as to the two new products that we have coming out and will they really turn that tide.
In fourth quarter fourth quarter seasonality wise, it's a little bit of a of a struggle as well so.
Not that I'm trying to be cute here I guess I'd say look we always thought that it would be towards the end of Q4 excuse me Q4 of this year, yes in 'twenty three and then really start to move positively in Q4 and in 2024. So.
So nobody is there is a.
I don't think so John .
No look.
I hate to say I am pleased with 29 unit pullback, but I am I think if we can continue to hold the installed base. That's what I'm most concerned about because I think if we can hold it and then get our new products out there it really sets us up well for next year, John So it's not a major change, but look it's probably pushing a little bit more.
224.
We will see some type of indication maybe in.
Towards the end of this year just to see if these new products are doing what we want them to do.
Okay. No that's helpful and then either mark or Darren it looks like the.
The yield and the Fintech. So if I just look at it.
Your cash access revenue over the volume process.
Been pretty stable, but it was up about four five basis points this quarter.
Does that cashless anything to call out there like is that sustainable I think it's back over 50 basis points for the first time in a while.
In the quarter, just curious anything to call out there.
Yes, I mean look I think we're continuing to see a little bit of.
A pickup in the signature based financial access transactions. So thank you for your credit card usage as opposed to Atms.
Our.
Per product basis, probably about much lower like for like transaction margin basis of them work.
The credit card picks up the little bit more flow through you get to the bottom line I wouldn't say, it's a material shift, but we are seeing kind of that shifts happening are kind of returning to those prepaid that make levels of outpatients that money, but.
That I wouldn't say, there's anything material I would call out for I appreciate it.
Okay, Alright, I appreciate it thanks guys.
Thanks, Jeff.
Thank you we have reached the end of our question and answer session and I would like to turn the floor back over to Mr. Randy Taylor for closing comments.
Just like to thank everybody for joining us today. We appreciate your interest in every and we look forward to providing you an update at our GTE in October as well as in the third quarter for our third quarter results. Thank you.
Thank you. This concludes today's teleconference. You may disconnect your lines at this time.
Thank you for your participation.
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