Q3 2023 PlayAGS Inc Earnings Call
Speaker 1: The momentum is very real.
Speaker 1: With Spectre 43 continued to deliver exceptional performance, while Spectre 49, the second cabinet in our Spectre family, has jumped out to a strong start across all initial test sites.
Speaker 1: In addition to this success, I'm also excited about our entrance into the mechanical reel and jumbo market segment.
Speaker 1: with initial deployment schedule for the back half of 2024.
Speaker 1: with a complete portfolio of slot products capable of addressing the most in demand segments on operators' boards and a well-diversified portfolio of game content, I'm content we have the tools that our disposal will consistently grow our ship share in the quarters ahead.
Speaker 1: Momentum is equally evident in our premium game segment.
Speaker 1: where we just completed our 15th consecutive quarter of unit growth.
Speaker 1: Similar to slot sales, I believe we have the right hardware and game content momentum necessary to level up in this growing market segment, building on our current premium unit mix of 17%.
Speaker 1: Turning the tables.
Speaker 1: Our position as part of an innovator of choice continues to propel the business forward.
Speaker 1: On the topic of innovation, we recently introduced several new features and functionality for our Bonus Spin Extreme Progressive, which have the potential to broaden the product's appeal and allow us to build upon our existing BSX installation base of over 500 units.
Speaker 1: Additionally, our PacSaf Shuffler continues to prove efficient and effective with our footprint quickly approaching 300 units.
Speaker 1: Looking ahead, the continued momentum behind BSX impacts along with the new jurisdictional and product approvals is allowing us to accelerate our selling to under penetrated markets.
Speaker 1: Additionally, we have kicked off early stage development for a new multi-deck shuffler, which will allow us to attack the largest segment of the global shuffler market.
Speaker 1: Combined, we believe these opportunities put our table business on a compelling multi-year growth trajectory.
Speaker 1: Finally, our interactive segment has entered launch mode, as evidenced by our record Q3 performance. During the quarter, we launched our first game in the popular 3 Reel category. Mega Diamond, our most successful new game release to date, has outperformed our previous best release by nearly 40%.
Speaker 1: The strong performance propelled the title to the top of the charts in the October I-Lers report with another AGS game theme, capital gains taking second place.
Speaker 1: As I look to 2024 and beyond, I'm confident the strategic conditions for our interactive team should allow for.
Speaker 1: More consistent deliveries of AGS content into the online channel.
Speaker 1: Further diversification of our online content offerings into additional genres and more strategic and impactful interactions with our B2C partners, all of which will position us to deliver outside growth.
Speaker 1: While I'm encouraged by the recent success and consistent momentum building across all three of our operating segments, I'm even more ensued with how our improved operating performance has allowed us to deliver on two key strategic objectives, consistent free cash flow generation and delivery.
Speaker 2: As I previously mentioned, Free Cash flow in the quarter set a new company record, surpassing $10 million for the second consecutive quarter.
Speaker 2: Looking ahead, we remain focused on leveraging our organizational commitment to CapEx discipline and working capital efficiency to consistently generate quarterly free cash flow, with a target steadily improving our annual free cash flow conversion over time.
Speaker 2: Additionally, we intend to pair our improved pre-cash flow with continued adjusted EBITDA growth to further reduce our net leverage.
Speaker 2: While we continue to target year-end net leverage in the range of 3.25 to 3.5 times, we have our sights set on driving leverage into the mid-2s, at which point we believe we will be presented with opportunities to further unlock shareholder value.
Speaker 2: Inqu crying,
Speaker 1: I would like to thank our team members across the globe for their commitment, focus, and dedication.
Speaker 2: Your efforts have not only produced a run of record-setting financial performance, but also contribute to the development of the most diverse and compelling product lineup in our company's history.
Speaker 1: That said, I remain extremely excited about what lies ahead for the company and I look forward to sharing our progress with you on future calls. With that, I will turn the call over to Timo.
Speaker 3: Thank you, David, and good afternoon to all of you on the call. As in prior quarters, I will review a couple of highlights from our reported results and provide a perspective on how we see each of our business segments trending as we look ahead to the current quarter.
Speaker 3: I will also share some thoughts on our free cash flow outlook for the remainder of the year and close by addressing a few items related to our balance sheet.
Speaker 3: Turning first to our domestic EGM gaming operations business, third quarter revenue increased 6% year over year to approximately 49 million, far outpacing the modest decline in market wide domestic gross gaming revenue or GDR.
Speaker 3: Domestic EGM RPD improved 5% year over year, the $3257 topping the $30 level for the 10th consecutive quarter where a domestic EGM install base grew by over 160 units versus the prior year and increased sequentially for the sixth quarter in a row.
Speaker 3: The strategic initiatives driving the continued relative out performance in our Q3 domestic EGM recurring revenue were consistent with the past several quarters.
Speaker 3: First, we identified additional opportunities to thoughtfully expand our footprint of higher-earning premium recurring revenue units, achieving growth in our premium install base for the 15th consecutive quarter.
Speaker 3: Second, we leverage the expanded scale and scope of our EGM product portfolio, including our high-performing Spectra cabinet and increasingly diverse game content library, to further optimize our core EGM footprint.
Speaker 3: Finally, overall market level GDR trends remain relatively stable and consistent throughout the quarter.
Speaker 3: Looking ahead to Q4, at a high level, we believe our domestic EGM gaming operations business is once again positioned to outperform relative to broader domestic DDR trends.
Speaker 3: From a KPI perspective, we expect our year-end domestic EGM in dog-base to be up slightly versus Q3. As continued modest growth in our premium unit footprint, is partially offset by an anticipated seasonal increase in fourth quarter, convert to sale activity. As operators deploy, use it or lose it capital prior to year-end.
Speaker 3: As it relates to RPD, quarter to date GDR trends across our served market continue to prove relatively consistent with those witness over the past several quarters.
Speaker 3: That said, provided the domestic GGR environment maintains its resiliency throughout the duration of the quarter, we believe our unique set of company-specific yield optimization catalysts, including our growing premium unit footprint, high-performing Spectra cabinet, and diversified core content offering should allow us to deliver Q4 domestic RPD that is in line with the slightly ahead of the 3146 achieved in Q4 2022.
Speaker 3: Shifting to EGM sales, we sold 1,345 units globally in the third quarter, up by over 30% versus the prior year.
Speaker 3: sustained spectrum momentum supported by the continued strong performance of the cabinet's launch titles a more than 60% increase in the number of customers sold to
Speaker 3: Further penetration of the growing historical forest racing machine market and the ability to leverage a deeper and more diverse product portfolio and stable market level demand trends once again contributed to our outside unit sales growth in the quarter.
Speaker 3: As we look ahead to Q4, continue cell through a Spectra 43.
Speaker 3: The scheduled commercial launch of Spectra 49
Speaker 3: Further targeted broadening of our customer account penetration and a consistent market-wide purchasing demand climate should allow us to deliver global EGM unit sales that exceed two, three levels. There's no hackers.
Speaker 3: Moving on to EGM pricing, third quarter global ASP was approximately 19,400, up slightly versus the prior year.
Speaker 3: A greater mix of premium price spectra cabinet sales and continued implementation of our Price Integrity Initiative PACEDAR improved ASP performance versus the prior year.
Speaker 3: ASP declined modestly relative to the 20,700 achieved in Q2's 2023, consistent with the expectations laid out on our second quarter call.
Speaker 3: The quarterly sequential ASP cadence reflects a slight increase in international unit sales and the mix of domestic Orion family cabinet sales in the quarter.
Speaker 3: It is important to note that pricing on Spectra, which accounted for approximately 60% of our total third quarter unit sales mix, remain comfortably above the 20,000 level.
Speaker 3: Looking at Q4, supported by the strong pricing we continue to command for Spectra 43, the anticipated sale of initial Spectra 49 units, which are priced at a premium to 43, and the mix of non-Spectra family units within our sales pipeline, we believe ASP should return to around the $20,000 level.
Speaker 3: Turning to our international UGM business, recurring revenue increased 25% year over year and improved sequentially for the 13th consecutive quarter.
Speaker 3: The continued strong performance of several established AZS franchise games throughout Mexico, further installed base optimization, stable macroeconomic trends, and favorable FX movements contributed to our improved recurring revenue performance in the quarter.
Speaker 3: International RPD increased by nearly 30% versus the prior year, or approximately 9% on a constant currency basis. So we're passing $9 for the first time.
Speaker 3: As we look ahead to Q4, we believe the compounding effect or benefit of install-based optimization, coupled with the resilient market-level revenue trends observed quarter to date, should allow us to deliver another quarter of outside international game ops revenue growth.
Speaker 3: Looking beyond ETMs, revenues within our table product segment topped $4 million for the third consecutive quarter, with equipment sales revenues surpassing $500,000 for the second quarter in a row.
Speaker 3: Our PAX-X S Shuffler footprint increased approximately 8% sequentially to over 290 units, while our bonus brand Xtreme progressive install base surpassed 500 units at quarter end.
Speaker 3: We also expanded the market penetration of our EDS Arsenal site license program in the quarter by executing our first site license with the casino operator in the Oregon market.
Speaker 3: supported by continued strong demand for PAC.
Speaker 3: A favorable customer response to the enhanced features and functionality recently added to our bonus Ben Extreme Progressive.
Speaker 3: targeted jurisdictional expansion opportunities and an accommodative new casino opening calendar. We believe we should be able to modestly improve upon our Q3 table revenue performance in the fourth quarter.
Speaker 3: Shifting Fanner Active, segment level revenues increase 20% year over year to record of just over 3 million.
Speaker 3: returns on the strategic investment into our real money gaming or RMG business initiated in the back half of 2022, continue to accelerate during the third quarter with RMG revenue advancing more than 20% on a quarterly sequential basis to a record of 2.8 million.
Speaker 3: The strong revenue growth also flow through to segment-level eva-da, which increased nearly 60% year-over-year to a little over 900,000, representing our 15th consecutive quarter of positive adjusted eva-da performance within the segment.
Speaker 3: Looking ahead to Q4, although we expect interactive revenues to be nicely higher versus the prior year, we believe the combination of a challenging 2-3 comparison with the quarter benefiting from our most successful RMG game launch to date and the anticipated timing of new content introduction could temporarily moderate the level of sequential revenue growth we are able to achieve.
Speaker 3: That said, as David indicated, we are increasingly confident to add in depth and diversity of our underdevelopment online content offering, along with our execution of more targeted and tactical business development initiatives put our interactive business on a multi-year path to consistent and sustainable outside growth in 2024 and beyond.
Speaker 3: Turning to margins, third quarter adjusted eva-dha margin was approximately 45%. Nicely ahead of the expectations articulated on our Q2 call and up 90 basis points versus the prior year.
Speaker 3: Operating leverage resulting from outside EGM segment revenue growth, a greater mix of higher margin Spectra family EGM unit sales, and accelerating returns on our tactical interactive investments all contributed to our improved margin performance in the quarter.
Speaker 3: Although season OG2E-related expenses are likely to contribute to modest sequential compression in our Q4 adjusted EBITDA margin, we expect to remain above the 44% level in the quarter. As we continue to target full year adjusted EBITDA margin in the range of 44 to 45%.
Speaker 3: Third-quarter capital expenditures total approximately 17 million, bringing our year-to-day capital spend to just under 47 million.
Speaker 3: We continue to expect for your capital expenditures inclusive of anticipated capitalized R&D to land in the range of 65 to 70 million. We continue to expect for your capital expenditures inclusive of anticipated capitalized R&D to land in the range of 65 to 70 million.
Speaker 3: Cash interest in the quarter was $13.5 million, increasing our year-to-date cash interest expense to approximately $39 million.
Speaker 3: We believe the 13.5 million level serves as a good proxy for the fourth quarter.
Speaker 3: Third quarter free cash flow, defined as net operating cash flow plus proceeds from payments on customer notes receivable less CAPX, increased on both a year-over-year and quarterly sequential basis to just under $13 million.
Speaker 3: supported by our record operating performance.
Speaker 3: heightened focus on efficient and effective working capital management, and continued CAPEX deployment discipline.
Speaker 3: Looking ahead to Q4, we believe the strong demand we are currently seeing for our growing suite of EGM products could require us to source additional component inventory prior to year-end to ensure we are in a good position to fulfill Q1 demand in a timely fashion.
Speaker 3: While this does the potential to modestly impact our Q4 free-cast flow performance are continued operating momentum and further execution of our CAPEX efficiency initiatives will allow us to generate positive free-cast flow for the third consecutive quarter.
Speaker 3: Finally, net leverage at quarter N fell to 3.4 times compared to 3.8 times at the start of the year.
Speaker 3: Supported by the operating trends observed across the business through October , combined with our expectation to once again generate positive free test flow in Q4, we remain confident in our ability to exit 2023 with net leverage in the range of 3.25 times to 3.5 times.
Speaker 3: I would note the assumptions underpinning the midpoint of our targeted year-end net leverage range continue to contemplate a modest pullback in prevailing market-level conditions that we have not yet observed to date.
Speaker 3: That said, should broader DDR trends remain relatively consistent with the levels we are currently experiencing for the duration of the quarter, we would expect to exit 2023 net leverage in the bottom half of the range.
Speaker 3: Finally, I would like to reiterate our approach to deleveraging remains unchanged as we continue to target a combination of adjusted EBITDA growth and consistent free class flow generation.
Speaker 3: Operator, this concludes our prepared remarks. We would now like to open the line up for questions.
Speaker 1: Ultimately, the noteworthy top line trends I just described allowed us to deliver on the shortbread.
Speaker 4: Thank you. As a reminder, if you'd like to ask a question, please press star followed by one on your telephone keypad now. When preparing to ask your question, please ensure that your device is unmuted locally. Our first question today comes from Jordan Bender from JP Morgan. Jordan, your line is open, please go ahead.
Speaker 5: Hey, thanks for taking my question, Jordan from JMP.
Speaker 5: Kimo, on the last point there, you're talking about leverage, and you kind of made a reference to leverage falling to the mid-twos over time. As you look into next year, leverage falling, free cash flow continuing to build, is there kind of an updated view here on, you know, how the company views its strategic opportunities, you know, with a better balance sheet and maybe a little bit more of a certain environment? Thank you.
Speaker 3: Yeah, it's a good question and I think the strategic view is the same and I think the point of us emphasizing and putting that number out there as a North Star is really just to keep emphasizing how focused we are on deleveraging the business, right? And you look at, I think, the strides that we've made in the operating performance of the company.
Speaker 3: You know, we have a bunch of initiatives around working capital management in different areas. And I think you're starting to see the early days of us being able to, you know, consistently produce water-leaf free cash flow. So I think we put that number out there more, you know, not again, to change any kind of strategy or strategic view on the company, but more just to emphasize how focused we are on leveraging the business.
Speaker 5: Great. Then you talked about mechanical real. Can you just maybe talk about the roll out for that, and then maybe what that means for the overall mix of the company.
Speaker 1: So as far as rollout goes, like we said, sort of back half of the year, we'll probably be trying, trialing some of this in some test banks, perhaps a little bit before that. You know, as far as what it looks like for the company, and I think it's really,
Speaker 1: Just maybe focus back on G2E a little bit and pre-G2E is actually where we weren't actually demonstrating the product, but we gave them a sneak peek into that and our jumbo cabinet.
Speaker 2: And we look at the lineup that we have right now with Spectra and really coming off Orion and not really just hardware, but their belief in our content.
Speaker 1: I think they're looking at the greater AGS portfolio and really saying, hey, this is a big step up. So, I think they're looking at the greater AGS portfolio and really saying, hey, this is a big step up.
Speaker 1: big step function up for this company moving forward. And it just allows us to use all these tools in the toolbox for our guys to sell in a more comprehensive fashion. So having in the past only been, as we use the term, one swim lane, now we're in multiple, we're in four or five swim lanes. And this just gives our team really a fantastic opportunity to go out there and compete with the best of the best. So we feel great about the mechanical real. We feel, you know.
Fantastic about jumbo and of course our entire lineup at G2E that was shown that was on the floor But it does come down to content and that's where we have our most you know That's where we're absolutely most confident the contact the gain the math itself
Thank you very much.
Thank you. Our next question today comes from David Katz from Jefferies. David, your line is open. Go ahead.
Good afternoon.
This is a general question, but we're finding a lot of debate around whether your customers as operators, how they behave in circumstances where revenue may slow down a little bit or profits may get compressed a little bit on top cops.
You know, what is your experience, Dave and Kimo, with respect to that? You know, how do they behave, broadly speaking?
Yeah, yeah. I think that, you know, this is a nice, like a bit of a debate that we all have sort of examined.
Perhaps since, you know, I don't want to say the end of COVID because I just had COVID last week. But it's something that we all sort of been talking about for a couple of years now. And I think it's just as it depends on the regions. You know, regionals might do one thing, Vegas Strip, you know, type destination will be another thing. And then there's always tribal and Canada. And, you know, I think for us, we know that we can put them in the segments.
Some of those will be much more conservative, David. And then I think that there's others that sort of are in the middle. And then I'll just be specific, tribal and Canada tend to.
You know, carry the day they continue, they usually tend to be very consistent and at times even aggressive because their businesses, they seem to really hum. Almost under, I don't want to say any circumstances, but. And in a mild pullback, they tend to do very well and they continue to. To be aggressive through those those times. I don't know if that's. You know, helpful, but I think we that's how we break it down in the 3. Areas there, which all all told probably amounts to a fair bit of stability. David.
Right. And so just to make sure I'm not paraphrasing incorrectly, when operators are making decisions about whether to renovate this or that or extend this or that, those should be treated in most cases as a discrete decision set versus how many slots we're going to buy and why. Yeah.
That's yeah, I mean, if you're talking about, you know, it's interesting if you're talking about cap X on spend on property specifically. Well, across the entire property and not specifically response, I'd say that if you put us up against those, a lot of operators post coven during coven. May have just looked at things a little differently and said, hey, if we're going to spend money.
Let's invest on the casino floor.
where we want to be competitive against our operational competitors in the region or on the strip or any of the like. And I think that manufacturers, slot machines, table equipment, etc., have gotten a bit of a nod over maybe some new carpet or some other, I'll call it, not as an operator and not as an expert there, non-revenue generating capex investments. So I do think, like specific to this question, this comment you just made about paraphrasing it, I think that we get the nod on a bunch of that stuff as capex can tighten.
Thank you. That's perfect. Appreciate it.
Thanks, David.
Thank you. Our next question this evening comes from JustBanchialConciful. Jeff, your line is open. Please go ahead.
Hey, good afternoon, guys. Thanks for taking our questions.
they started out here on the egm business the domestic game office all about flat quarter on quarter if i'm hearing you right i think the narrative it sounds like
You know, some of your optimization efforts, you know, used to be called pruning kind of offset the gross ads for, for Curve Premium and for Spectra 43. Is that a fair way to kind of characterize Q3 trends? And then if so, as we looked at 2024, should we expect overall similar, albeit lumpy levels of, of kind of optimization? Is this more of a tapering trend? Uh, just any thoughts there would help as we think about the outlook for net growth in the domestic installed base. Thanks.
Hey, thanks. So Q3 is probably a little bit different.
than what you mentioned there. Maybe not so much on the optimization front.
In the second half of the year here,
And in Q3, we saw it right towards the end of the quarter. I'd call it some opportunistic.
converting to sales by customers.
that their budgets reset at the end of Q3.
For us, our Q3, the end of their calendar, the end of their fiscal year is the end of the Q3 calendar year. So some of them, let's say, had some extra cap backs that may fall under the term use it or lose it. And I would say, although I don't love convert to sales, we're honored that they're selecting our product because that means our product presents value and buying at that point in time. So I think what you're seeing there is a bit of outside of the normal cadence of convert to sales, mostly opportunistically by that user lose it type capital that's available.
And you did ask like, hey, you know, I'd say rather, we'll be consistent in the way that we approach. I don't like to use the term pruning, but optimization. We'll continue to optimize. We have an install base that rivals many operators.
Many regional operators don't even have as many slots as we have out there in game ops. So, you know, obviously it's our responsibility to keep that up and I think that will be rather consistent. And bearing in mind when we say being good custodians of CapEx.
We have a little bit more latitude when we have games like we've had on Spectre 43 and now what we're seeing on Spectre 49 and even some new games that I mentioned on Orion Curve, which is a little bit of an older cabinet, we have a little bit more latitude because with the game performance being higher, it's, I'd say, easier to be good custodians of the effects or the cash of our investors. So I think overall relatively consistent, but some, I'll call it better opportunities.
Okay, great. That's helpful. Thank you, David. Then turning to capital allocation, looks like you added to the quarter with about 44 million cash on hand. Kimo, do you have a number in mind for minimum cash, giving your R&D initiatives and some of the macro uncertainty that we continue to deal with? I guess approach differently, should we have a rough time frame in mind for when to expect free cash flow to start to be allocated to pay down on your term loan? Thanks.
I think as far as like a minimum cash level, we're you know, we're pretty comfortable where we are now. You know, we've never never given you like an exact number, right? I think we're pretty comfortable where we are now. I think again, like, just being focused on on building the cash position as we move forward. Which gives us like more flexibility, right? So I think, you know, is there an exact number where we'll make that decision? I think I wouldn't give you that number now and, you know, we'll see where. And as we put the decision making in the sausage maker, right? Figure out when the, when is the right time to start paying down that I think was more exciting, right? Is as we.
build the cash position, we continue to execute and head down this path of where we're going. What's more exciting, I think, is when we get to an event where we can perhaps reprice or refinance our debt structure, right? And maybe obviously target lowering or cash interest expense. So that's something that we're pretty focused on executing on something like that at this point.
Okay, great. Thanks very much. A nice quarter.
Thanks.
Thank you. Our next question comes from Barry Jonas from TUIS. Barry, your line is open. Please proceed with your question.
Hey, guys. This is Ramin Sabani on for Barry. Thanks for taking our questions.
There's been some regulatory noise in Mexico around a potential ban of slot machines. Can you talk about what you've heard on this and what you see as the likelihood of this happening?...
Yeah, we we hear about stuff like this. We think we see this periodically in Mexico. And I think I'm what am I coming up on 26 years in gaming. And, you know, this is not the 1st time. It's come around is something that has been talked about. I think sometimes it's used as. A little bit of political saber rattling prior to elections. Nothing that we consider to be a serious. Conversation we're pretty dialed into it. Needless to say. And there's a lot of.
You know, there's a lot of interested operating parties down there that are very big companies that have not indicated that anything like this would be serious.
Got it. Thanks for that. And then just taking a step back, in the past you've guided to an adjusted EBITDA margin range of around 45 to 47 percent. Do you see a path to returning to margins at that level at some point? And if so, what would that path look like?.
I mean, you know again not not ready to throw out a target in the future for you But you know, I'll say that we are you know, as a leadership team right and across the company We are focused on incrementally improving, you know, you could that margin consolidated So I think you know, you're starting to see that now Obviously, there's a lot of puts and takes right and there's a lot of different Variables that go into that but again not ready to put out a target But you know, we're intent on on improving the margin as we move forward and I think you know We have the different tools in the toolbox to do that
You know, like some of the premium initiatives that David talked about, I think some of the new products that we're rolling out. I think you can see some of the initiatives we've already been working on. We're already gaining some. Call it SGA leverage, you know, as we move through this year.
We can expect to continue next year. R&D is really the 1 that we're intent on continuing to call it spend at the similar rate that we do today.
That's the 1 that will be will be ongoing, but, you know, again, intent on improving margin and to go forward. Not ready to quite give you a target just yet.
Thanks so much. Appreciate it.
Thank you.
Thank you Barry. As a reminder if you'd like to ask a question please press star followed by one on your telephone keypad. Our next question comes from Chad Benyon from Macquarie. Chad please go ahead your line is open.
Thank you. Evening. Thanks for taking my question. Wanted to ask about interactive 20% year-over-year growth, which was the strongest growth within the segments. Kimo, you talked about Q4 maybe slightly lower growth than that, but really just wanted to have you guys expand a little bit in terms of what's working. Is it more titles, new markets? I know Pennsylvania, Michigan, and New Jersey are the big markets, but at what point would you consider moving into some of the bigger non-North American?
markets given your pipeline. Thanks.
I mean, when I'm just going to be a little more specific when you speak of non North American markets. What do you specific, like, what would you refer to that as before I go answering a question that I don't understand.
Thank you.
I'm sorry for after your other big eye gaming markets like the United Kingdom, okay
United Kingdom. I mean...
You know, we do business, we do business in Europe at this time. I think that most of our opportunities still lies within North America. And I think, you know, if you look at Eilers and you look at our success with game titles. And you look at sort of what we've done, maybe over the last year or 2. Um, and how we're just posting up on Eilers right now in the top 5 for some of our game content. I think chat for us, it's making sure that we're in every jurisdiction with every customer that we can be in in North America. Continue to do what we're doing in Europe because we are still doing it there. Right? But.
Tatum
rollout of new titles.
And that's where we've made some of our investment. And, you know, there's a little bit of a nugget that we had in the prepared remarks there about, you know, we're going to offer new content through those investments that we've made. So, A, we can put more content out with a better cadence. And then B,
You know, we'll be in a situation where we can offer new game types.
We'll get into those game types maybe on another call, but there's some of the most popular ones, even as simple as we released our first three-real game, Mega Diamond. So three-real games are very popular, as you know. We released our very first one, and it's the best game that we've ever released by a huge margin. So that's what we're excited about. It's all about content for us. We think that content cadence, and really just taking a team that we have a lot of confidence in from our R&D team, to our commercialization team and our leadership there. We're just very comfortable and very confident in what they're capable of doing.
Okay, thanks. And then secondly, I wanted to ask about just EGM sales within your diet. On the fourth quarter, you talked about Q4 sales, higher than Q3, so that would effectively put you over the 5,000 ship share number 423, which is up over 25% year-over-year, and it's, I believe, the highest in your history. Is this kind of a new baseline foundation in terms of sales given your market share gaining story? And how should we think about the seasonality if what we're seeing in 23 should be kind of how we should think about seasonality going forward. Thanks.
Yeah, I mean, I have to dive in specifically on the seasonality that we're seeing. I think it always can move a little bit there, Chad. But, you know, I think that we've got, I'll sort of lean a little bit back on the prepared remarks.
That with what we showed it at G to E, you know with the things that we didn't show physically But we gave previews of it pre G to E and the content that we've been rolling out that we have the kind of momentum that we know we can look forward to sort of continued better days as far as not just our Install base game ops RPD etc But you know as far as game sales goes and our ability to sell into let's say those additional swim lanes
So we're feeling good about where we're at and some of your calculations are right there. And as we move into 2024, again, we're very confident with the lineup that we showed at G2E and the stuff that we're going to roll out in the back half of the year. Do you have anything to add to that? Yeah, Chad, the only thing I would say to add is that from a seasonality perspective,
We've grown our EGM unit sales sequentially for 10 of the last 11 quarters.
I think it really speaks to the momentum that we see behind the product.