Q3 2023 Everi Holdings Inc Earnings Call
[music].
Good morning, and thank you for standing by and welcome to the every holdings 2023 third quarter earnings Conference call.
During todays presentation, all parties will be in a listen only mode. Following the prepared remarks, the call will open for 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.
Thank you operator, let me begin with a reminder, that our safe Harbor disclaimer, which covers this call and webcast contain forward looking statements that involve risks and uncertainties that could cause actual results to differ materially from those discussed in 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 <unk> Dot com.
The potential risks you are cautioned not to place undue reliance on forward looking statements. We do not intend has no obligation to update any forward looking statements, which are made only as of today November eight 2023.
We will refer to certain non-GAAP financial measures such as adjusted EBITDA, adjusted EPS and free cash flow and that cash position a 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 our investors section of our website.
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 Lie-by, Chief Financial Officer can't learn how Fisher General counsel Dinah or like.
As leader in 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 today.
For the quarter, we reported revenue of $206 6 million adjusted.
Adjusted EBITDA of $96 2 million and free cash flow of $34 3 billion.
This brings our year to date free cash flow to $122 1 billion.
During the third quarter, we returned $32 9 billion to shareholders through share repurchases, bringing the total share repurchases since the inception of our program to $150 million.
We have $106 million remaining on our current $108 million purchase authorization.
Our fintech business continued to deliver strong revenue growth and our financial access and software and other businesses.
Reached another record high for funds delivered two casino floors of over 11 9 billion.
While our daily same store sales growth has returned to the pre pandemic level of low to mid single digit year over year growth.
Continued to grow our revenues at a higher rate as a result of our ability to add new customers products and services.
During the recent global gaming show GTO, our Fintech business continued to highlight our strategy for our digital neighborhood.
Is focused on improving the patient experience and driving operator efficiencies.
So new and updated products across our diverse portfolio of payment solutions.
And loyalty products and our mobile offerings that demonstrated our unique position to capitalize on the convergence trends of gaming hospitality and online and our core customer footprint as well as extending our reach into venues and other adjacent business sectors.
Ah Gaslog wallet payment solution of a year or more.
Can you spot, which combines our digital capabilities and strong game content and allows an operator to offer on premise digital gaming.
We see strong interest in buying and are making progress on securing agreements with several operators.
We introduced our mobile beyond what a digital wallet the casino patrons to be able to use across multiple properties in jurisdictions and includes a comprehensive offering of our mobile wallet for cash actions chickadee gaming mobile ordering engagement loyalty rewards and other amenities.
We believe these new products together with our existing mobile products continue to gain traction with our customers.
We see additional fintech opportunity in 2024, including our plan to sell the smaller each ask kiosks in the North American distributed gaming markets in the first half of next year or.
Our mobile first initiatives utilize the assets that we acquire and then you guys can provide us the opportunity to grow our base of recurring revenues and expand our market into new adjacencies, including sports venues Entertainment retail hotel food and beverage by leveraging our payment and loyalty capabilities.
Our games business continued to experience near term headwinds in the third quarter we.
We expect a similar impact in Q4 of this year.
However, each we highlighted the cabinets, new content and new market opportunities for 2024 and beyond.
Starting in 2022 over a 24 month period, we will launch seven new cabinets that refresh our mechanical and video reel for sale and premium cabinets.
Cabinets incorporate newer components and technologies and complement our existing portfolio of Capex.
In addition to the new cabinets at <unk>, we showed a nabors portfolio of new games and are targeting release of 25, new themes. This quarter to support the launch of our new cabinets and over 80, new themes in 2024.
Importantly, this portfolio represents a diversity of content for our video offerings that.
Build and players favorite game features.
Additional never seen before innovative themes and our new every content that all in all targets, both the entertainment and the avid players.
Successfully launched two new cabinets at the end of Q3 player Classic reserve.
Dynasty dynamics Custer.
Customer response has been positive and as at the end of October.
We have placed nearly 50 of these cabinets into our installed base with another 200 expected to be placed by year end.
We look forward to the rollout of our new cabinets in Q4 and into the next year to drive growth in 2024.
As we move into 2024, we have additional opportunity to accelerate our growth by increasing our presence in the historical horseracing market.
During the video lottery terminal market in Illinois, the second quarter and expanding internationally, starting with Australia late in the year or early 2025.
Despite some recent challenges we continue to grow share at new casino openings and expansions, we estimate that our share would be more than 10% of the slot floor at new openings in the fourth quarter.
Digital gaming business reported a 27% revenue growth and the performance of our bingo operations through the acquisition of the video key assets has exceeded our expectations for the quarter and year to date.
Now, let me turn the call over to Mark.
Thanks, Randy let me begin by adding a little more color on third quarter operating results.
We reported year over year quarterly revenue growth of 1% driven by a 4% growth in fintech revenues and partially offset by a 1% decline in games revenues.
<unk> continued to see solid growth in revenues from financial access services, which grew by 4 million or 7%.
Software and other revenues increased by 12% benefiting from both organic growth and the coffee contribution from <unk>, which was acquired in the fourth quarter of 2022.
Hardware sales decreased by 20% from the prior year. However, the prior year quarter had the benefit of increased sales to support more new openings and expansions than in the current year.
In terms of quarterly cadence for equipment sales and the Fintech side of the business.
Mind, you that these can be quite lumpy on a quarterly by quarter basis.
Long term, we continue to see opportunities for ongoing replacement sales of our financial access kiosks and increased market penetration for our loyalty and other and tech hardware.
Adjusted EBITDA for the Fintech segment increased 1% year over year to $39 8 million inclusive of the impact of higher cost of labor and increased R&D spending.
Within the games segment, adjusted EBITDA was $56 5 billion compared with $57 2 million a year ago.
Our installed base and daily win per unit decreased compared to both the prior year and the second quarter.
This was consistent with our expectations as we continue to transition to our next generation of cabinets.
In the fourth quarter, we expect our installed base to be down slightly and partially due to seasonal influences. We also expect daily win per unit to be down sequentially from the third quarter.
As our new cabinets gained traction in the market, we expect the declines in both the units in our installed base and our daily win per unit to moderate before returning to growth.
Gaming equipment sales were down $4 4 million from the prior year quarter, which reflects 392 fewer units sold.
Partially offsetting the equipment sales decline is $1 4 million in new equipment sales from our video King acquisition in May and $2 3 million in game theme by ups related to our recurring revenue portion of the H HR business.
The H HR platform provider has the right to buy out certain game teams under certain conditions.
When they exercised its right to receive an upfront payment to compensate us for our share of the loss future recurring revenue related to these game. Thanks.
Consolidated gross margin expanded by 110 basis points to 79, 7%, primarily due to revenue mix shift to higher margin gaming operations and financial access services revenues from lower margin gaming equipment and hardware sales.
Holiday didn't adjusted EBITDA of $96 2 million was essentially flat year over year to $96 6 million reported in the third quarter of the prior year.
Adjusted EBITDA as a percentage of revenues was 46, 6% compared with 47, 3% a year ago, primarily reflecting higher payroll expenses and other costs as we continue to invest for future growth.
We expect adjusted EBITDA as a percentage of revenue to remain in the mid 40% range in the fourth quarter.
Adjusted earnings per share was 44 cents in the third quarter, which was flat compared to the prior year.
Lower income tax provision and a decrease in our diluted shares outstanding.
<unk> from our share repurchase activity.
Which was offset by the impact of lower net income due to lower operating income and higher interest expense.
Net interest expense in the quarter was $40 million, an increase from 15 million in the prior year.
As a reminder, we have 400 million of outstanding unsecured notes at a fixed rate of 5%.
$587 million a term loan that has a variable rate of interest.
At the end of the quarter, our weighted average borrowing rate was approximately six 7%.
Also included in interest expense is attached you should see on our ATM vault cash arrangements.
Our estimated full year expense for our revolving cash is expected to be approximately $21 million compared to only $9 million in 2022.
We remain comfortable with our current level of debt and our cash interest costs.
We ended the third quarter with total net leverage at two and a half times trailing adjusted EBITDA, which remains in line with our two and a half to three times target.
Free cash flow generated in the quarter was $34 3 million compared with $44 9 million a year ago.
The decline was the result of $5 million of increased net cash interest costs and 5 million of higher capital expenditures related primarily to the discrete capital items, we discussed for 2023, including the New Assembly facility in Las Vegas, and other IP infrastructure investments.
We will continue to focus our capital allocation strategy on reinvesting in our business for growth.
This includes maintaining R&D spending on a consolidated basis.
The range of eight to eight 5% of revenues.
And as we transition to our next family of games and cabinets.
Increased capital investments in our installed base to drive future revenue growth.
While we are still working to finalize our views for 2024 overall, we currently do not expect any material increase in the total capital expenditures for the 'twenty to 'twenty three levels.
Any increased spending on customer equipment should offset the expected reduced spending for discrete items like the build out of our new warehouse in assembly facility in Las Vegas.
From 2018 to 2021, we experienced tremendous revenue growth as we launched that last family of cabinets into a premium footprint.
We believe our current and increased investments in a broader array of new cabinets at a deeper library of new game themes.
Result in improvements to our gaming operations and will provide increased revenue and adjusted EBITDA growth. We will continue to focus on driving market share gains with new and existing customers and expanding our product lines and geographies serviced to leverage our existing offerings.
But we will continue to evaluate tuck in acquisition opportunities that support our product development and growth objectives.
The near term with our share price far below what we would consider to be fairly valued we space to place a higher priority in our capital allocation towards returning excess cash flow to shareholders through share repurchases.
Moving onto our outlook for Fintech, we continue to expect to see high single digit revenue growth for the year.
For the games business based on the current headwinds and until our new cabinets and games had the opportunity to gain traction with the operators and their patrons.
We expect greater near term pressure on our unit sales decline in our installed base and daily win per unit.
We also expect reduced recurring revenue contributions from our HHR portfolio due to the third quarter game theme by us.
In total for games, we now expect revenues to be flat to down 1% for the full year.
On a consolidated basis, primarily as a result of our lowered outlook for the games business. We now expect consolidated adjusted EBITDA for the full year 2023 to be in line with the prior year.
Net income.
The east earnings per share.
Free cash flow and adjusted earnings per share are now expected to be at the lower end of the guidance range as provided in August during our second quarter earnings call.
We expect our lower operating income to be offset by lower net interest expense lower taxes and lower capital expenditures.
Our estimate for earnings per share and adjusted earnings per share are based on the shares outstanding at the end of the third quarter do not reflect any potential benefit from future share count reductions from any additional buyback activity.
As Randy highlighted we continue to execute on our roadmap for long term profitable growth in both our games and Fintech business.
We are excited to begin to see our recent investments in people and the new studios reach casino floors over the next several quarters.
We believe this combined with our expansion into the VLT market will drive a return to growth in games next year.
With that I'll now conclude our prepared remarks, and turn the call over to the operator for questions.
Yeah.
Thank you.
We will now be conducting a question and answer session.
If you would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line for questions. Kim You May Press Star two if you would like to remove your questions from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys one.
Moment, please while we poll for questions.
The first question comes from the line of Jeff sanctioned with Stifel. Please go ahead.
Hey, good morning, guys. Thanks for taking our questions.
Starting off here on the game ops business.
Right I think last call you talked to.
Targeting sequential growth in installations to resume sometime around year end potentially bleeding a bit into 2020 for Oh Gee to ease in the rearview mirror and you're starting to see installations ramp up for <unk>.
Some of the newer cabinets you just curious if that's still the right timeframe or just how are you thinking about that.
Given some of these incremental data points.
Sure Jeff.
I would say, we probably were a little more bullish where we would end the year probably thought we would be up I think at this point I think our installed base will be slightly down by the end of the year. There's a couple of factors in there. We do have some units that are out due to renovation and I'll come back in the first quarter.
But what we are seeing our newer cabinets a bit out in the field. So we put out about 50 of the newer cabinets in October.
And we have another 200 that we expect to install so overall I think we will see a slight decline in our installed base three through quarter end.
And we do but we do expect to start to grow next year, whether that'll be Q1, it's hard to say it'll just depend on how the new units and the new cabinets R. R.
On but the expectation is next year the installed base will start to grow again.
Okay, Great. That's helpful. Thanks, Great and then maybe sticking with the game's visits one for dean or Randy whoever wants to take this obviously a ton of focus last couple of quarters on the stepper category in particular coming out of the G. T. We curious if you have a sense of kind of overall category market wide sales have been.
Trending just given it does seem like we're coming into a bit of a refresh cycle.
For for Stepper, specifically and then from a ship share perspective, your expectation as we look out to 'twenty 'twenty four and 'twenty 'twenty five that you'll continue to sort up share. This this category evenly with a couple of different competitors or I guess in other words kind of what point does the performance of the of the contents.
Start to outweigh push from other operators to diversify hardware a bit let me know if that that makes that was kind of the way I break them out.
No I think it's I think it does Jeff and I'll take the first piece and then Dean can add on but look I think we're still very comfortable and very bullish on our mechanical products clearly two big competitors have refocused in on the mechanical area. So we think that there'll be more of a split I think.
We got we received in a greater amount of our fair share in the last few years and now I think it's going to be closer to a split between those those three.
Main operators in that area. So we still feel very comfortable with mechanical and I would say.
Mechanicals only 20% to 30% of the market less realized that we're also focused on video and that's where.
We think is the that's the best area for us to grow, but we think we're going to continue to maintain a very nice share in mechanical and think that we'll continue to compete very well and in my view will be at the top of that but.
We'll see how that plays out dean anything to add.
I would just say that we continue to provide a pipeline of what we think are very compelling products.
If you look at the Eilers list.
And high denomination and even lower denomination in the mechanical side are we still dominated I mean, where half of the list. So that's telling me that our products continue to resonate and but we're most excited about is the stuff. That's also coming out that.
We feel put us in.
Good position to continue to move forward on the mechanical side.
Great. That's very helpful. Thank you both I'll pass it on.
Thanks, Jeff I appreciate it.
Thank you next question comes from the line of Barry Jonas with Securities. Please go ahead.
Hey, guys.
You've seen we've seen deconsolidation and the space between lottery and gaming how strong is the case they'll for games and fintech to be together.
Okay.
From our standpoint, we.
Ben We've had this combination since 2014, and it's done very well for the company. There are cost synergies. There are revenue synergies and these businesses are complementary. So we continue to believe in the combination of the two businesses.
However, we don't have an entrenched management if someone ever came to us with a eight eight offer us of one or the other side of the business that was compelling and we definitely look at it but I still don't believe the market really sees some of the things that we do with these two businesses with our our byproduct where now were utilized.
In.
Our digital assets and incorporating our cash access into a.
On Prem mobile product mobile gaming products.
And I think there are other synergies here. So I still believe right now that these two businesses together is right answer for every but we will continue to evaluate anything that comes our way.
Great. That's really helpful. And then you know I'm I'm somewhat excited about your international roadmap would love to kind of hear more about it and somewhat curious to get your views about how big international could be.
Relative to the domestic business in terms of revenue or EBITDA. Thanks.
Sure I'll start a little probably a little more color like where we are in the early stages. So I don't want to over state what what's out there, but clearly going into Australia, where there is the second largest market for gaming machines is going to be big for us, we just need a small piece of that market and if our content.
In cabinets resonate I think it'll be very positive for us.
It's more like at the end of 'twenty, four and into 'twenty, five, but I think it just adds to the other <unk>.
Markets and areas that we're going into you know VLT continuing to Hum.
The increase our Sheraton HHR and Australia, So I think all those things continue to.
Allow us to grow and show growth in 'twenty four 'twenty five so it's early but it's very promising from our standpoint.
Great alright, thanks, so much.
Thank you.
Thank you next question comes from the line of Chad Beynon with Macquarie. Please go ahead.
Good morning, Thanks for taking my question wanted to start with the Fintech for for Randy or Darren based on your guide revenues or are expected to grow high single digits. So really positive there on the financial access service transaction side that year over year growth was to.
Remains significantly higher than the market growth. So as we look into 'twenty for understanding that you're not giving guidance can you help us think about you know when either some of the acquisitions anniversary kind of how you're thinking about you know canvas business continue.
To grow at least mid single digits really good momentum right now just just want to understand you know.
How that how that can look over the next six to 12 months. Thanks.
Sure I'll I'll start again, and Darren can add look I still think we're extremely bullish.
Fintech.
Darren and that team has proven that even in a.
You go back to the pre pandemic in 2019, when we had low to mid single digit growth we grew faster than.
The overall I'll say same store.
<unk> growth because we have the other products and services that we have to sell and so we continue to do very very well on new business that comes up.
And so when you add that along with them.
The investments, we're making in loyalty and compliance.
And and now in Dubai and beyond I think that we always look at the Fintech businesses singles and doubles and Darren continues to.
Find ways to add revenue into the Fintech side of the business and we would expect to continue to grow and in 2024.
That's great and then can venue ties in and some of the non traditional gaming pieces of that will that start to be a bigger contributor in 'twenty four or are you still kind of planning the seeds on you know some of the items that you talked about Randy with you no relationship to the sports retail.
Our hotel is that more of a multi year opportunity or can we start to see that in in 'twenty four.
Well now turn it over to Darren, but I would just say that.
On Monday, we had made.
A major league team in the office.
And I would say when you guys continue to look and work into the the sports area. So I think it's just an area for growth, but theyre not I'll, let you kind of add on that one since you're a little closer to it.
Yes look I think.
As I've said, a few times now venue tied really complements our overall.
The product roadmap that we've actually been executing on now for a number of years. So I think you need to look at it as complimentary and the mobile solutions that we've got a you know that are that are really resonating with customers again, we got tremendous feedback at G. T. We just.
Just around our whole mobile strategy as it relates to you know how we're thinking about sports venues Entertainment and you know how our customers are seeing that convergence a that continues to trend.
You know with gaming.
Online sports and venues and so.
<unk>.
He said.
We continue to win new business win new customers.
Because of you know the deep product set that we have in our ability to execute and deliver on the value that we have across our ecosystem of products and services. So again still feel good about where we're at and into 'twenty four with the momentum that we've got here.
I appreciate it thanks Darren.
Thanks, Ed.
Thank you next question comes from the line of George Sutton.
Craig Hallum. Please go ahead.
Thank you Mark I wanted to ask you about cash flow and free cash flow into 2020 for understanding you're not giving guidance.
Guidance, but just generically as we look at the cash flow you're generating this year versus what you'll be positioned to do next year can you just give us a sense of any large puts and takes that we should be aware of.
Yeah, you know.
But I think we tried to.
And as you highlighted we're not going to give guidance I'll be careful not to suggest I'm, giving guidance right now, but we expect growth next year from where we are this year.
In terms of the EBITDA line of where we are but we all know what's happening with interest rates certainly we're exiting the year higher than we entered the year, so that could be a little bit of.
Negative depending on your views for views on how interest rates and how quickly they start coming down I think there's a belief they will start coming down or at least holding from these levels, though so that should be kind of consistent I think and from a capex perspective I tried to highlight that we really are investing in the business next year I think we've got a tremendous amount of new product.
You bet on the games side available too. So we think it can drive some nice compelling revenue growth for us as we move forward. So we'll lean in a little bit more into the customer equipment side is we have a lot of new products available to us to refresh that installed base and really drive revenue growth, but that growth in the the customer equipment is probably offset by the declines in terms of what we.
We're going to see in terms of those discrete items. You know, we'll have completed the build out of our new Las Vegas Assembly and warehouse facilities. Some of the discrete projects that we had mentioned at the beginning of the call those kind of things will be coming out of the numbers. So I suspect our capex number will be probably when we come out with guidance somewhere in the neighborhood of where we are today for 2023.
And we still believe from a cash tax perspective, we will still be at a pretty good spot from a cash tax perspective, I would suspect, we'll probably that much different than what we're planning this year in terms of cash taxes unless tax rules change so so.
It feels like we're in a.
Nice spot for growth on that line right now, but he got a hold off a reserve the rest that commentary until we kind of get the right kind of share some more views of before.
Great.
For Dean obviously, we've talked about this air pocket in terms of product availability and generations can you just make it simple for us in terms of what maybe the top three cabinet or content availability, you're really focused on when those are expected to be available what what should we be closely watch.
<unk> four.
So I'll go down the list of new cabinets that are coming out and the timing, it's probably the easiest thing. So our player Classic reserve launched at the end of September.
Dynasty dynamic also launched at the end of September So Randy talked about the 50 units that are currently out in the field and the 200 unit backlog. So those are the first to.
Guidance, the sole which is our new for sale portrait cabinet will launch in December, but it'll be a small amount of units towards the end of December and then really into 2024.
And then our soul sync, which is our premium version of our new portrait Cabinet will launch in early Q1.
So those are the that's that's the cadence of the four cabinets also to remind you that we really just launched view at the end of Q1 this year and a plethora of content really is coming out I would say towards the end of the year and to next year as well. So we will have to.
Video Cabinet said, which is obviously the biggest category of opportunity to position out into the commercial market. So.
But our commercial all markets.
So that's the strategy, which I hope that answers that for you. That's that's outstanding very helpful. Thank you.
Thank you next question comes from the line of John Davis with Raymond James. Please go ahead.
Hey, Good morning, guys just wanted to follow up a little bit on the free cash flow commentary, but specifically mark on Capex.
You would expect it to be kind of flattish next year, but if I recall, you had about $25 million of one time ish type products between $15 million for the.
The new manufacturing facility and $10 million or so for <unk>.
And ERP, if I recall correctly, but just maybe talk about some of the puts and takes just specifically on capex as we enter 2024.
Great way to get to talk about guidance.
Alright.
I'll, let I'll, let that look Jon I think again, we talked about having maybe a little bit more capex. This year is that kind of framed out in my prepared remarks, we think.
With what we've been spending so far this year that our capex in total is kind of coming down a little bit from where we had provided explicit guidance, maybe or an explicit update last quarter of like $142 million to $144 million for the full year or so so I think we'll spend a little bit less just because Q3 was a little lighter in terms of customer equipment, and we're getting new equipment.
And now we're starting to roll that out and we've probably been a little bit on some of the discrete items that we've spent what we project. This year, which was kind of in that 25 to 30 million dollar kind of range as what we kind of thought was there so youre getting a little bit of a total capex decline overall and where we are again as we move forward I really want to make sure.
Sure. It's important that we keep investing in the infrastructure of the footprint, but I'll also highlight that our R&D expense, where do we think is adequate for what we need to spend it is still a bit and he made the 5% range compared to revenue. So we think we're <unk>.
Investing enough in that but but from a capex perspective, I think you should expect to see kind of similar because the discrete items that we're saving this year.
Next year I expect will be made up for with the increased customer equipment spend as we refresh the installed base.
Okay.
Yeah, No that's perfect I appreciate the color there and then.
Maybe Randy or Mark you know as we think about kind of the guide down $8 million or so versus your prior guidance.
EBITDA for this year.
How much of that would you contribute to macro versus micro like the air pocket in kind of cabinets and content versus potentially lower G. G R or just general general macro conditions.
Look John it's hard to say.
Look we are still seeing reasonable growth in our.
We look to our our Fintech business, our cash access cash to the floor, but it is it is growing it's lowering down has been lowering each quarter, but still a I'll say a low single digit growth. So I think there is some impact from the macro name you've heard it from operators of probably a little bit more in the in the regional market.
Las Vegas still doing well.
But I think like ours is we're in a transition period and so we know that I'm.
Theres some theres some impact.
To us as we transition to.
The newer cabinets and the newer content and so it's.
Probably a little skewed more to that the macro but again right now macro seems to be holding in line. We hear from other operators and I think the big question will be how it how it does next year, but so far I would say that it's more from our standpoint. This transition getting those new cabinets getting that your content. So that we're set up well to grow in 2024.
Okay. Thanks, and then last quickly just want to clarify Mark's comments to a prior question I believe I heard you say Mark that you would expect EBITDA growth next year, just wanted to confirm that and you know even if the macro were to deteriorate further.
Do you think you can still grow EBITDA next year.
Yeah.
Oh look we haven't given guidance yet I, we always expect ourselves to grow on a year over year basis, and as I sit here today looking at the macro where it is today and without completing my.
Through 2024 roll up just yet I am expecting growth year over year I'm expecting to see us grow we we always strive to have.
Growth on an annual basis. So so I do see it growing yeah, John I'll answer that really is the answer is yes.
Thank you Randy.
<unk>.
Thanks, John.
Yeah.
Thank you next question comes from the line of Andrew Macias with Jefferies. Please go ahead.
Good morning, everyone and thanks for taking my question I just wanted to ask if we could get some color on R&D and whether it remains at a stable level or how to think about it moving forward. Thank you.
Sure.
Mark touched on it a little bit, but I'll just I'll just reiterate we still look to spend.
Yeah on the expense line.
Somewhere between eight and eight 5% of.
It's expense R&D expenses as a percentage of revenue. We think that number is in line with you know larger competitors, obviously from that from a pure dollar standpoint, they spend more than we do but we think that's an adequate amount to really support both businesses being fintech and games.
And that doesn't account for the amount that you capitalize.
So we feel good about that is what deans worked with throughout this year to kind of lineup is hardware.
Caught that he's got coming out and we stayed within that range. So I don't anticipate that range going up or down because I think we believe that one of our main.
Tenants in capital allocation is to continue to reinvest in the company and that really is that R&D line. They tried both fintech and games.
Okay, Great. That's all thank you.
Thank you.
Thank you.
There are no further questions at this time I would now like to turn the floor over to Randy Taylor for closing comments.
Well, we'd just like to thank everyone for joining us today and we appreciate your continued interest and we look forward to providing an update.
On our business and our outlook for 2024, and our fourth quarter year end call in March. Thank you very much.
Thank you. This concludes today's teleconference. You may disconnect. Your lines at this time. Thank you for your participation.
Okay.
Yeah.
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Yeah.
Yeah.
Uh huh.
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