Gaming and financial technology provider Everi Holdings said the reopening of casinos across the US helped the business recover from the novel coronavirus (Covid-19) shut-down in Q3, though continued operating restrictions saw revenue remain below prior year levels.
Revenue for the three months to 30 September came to $112.1m, a significant improvement on the $38.7m generated in the Covid-19 hit second quarter, but still down 16.7% year-on-year.
Chief executive Michael Rumbolz said this growth, which ran through to earnings and net profit, demonstrated a “quicker than previously expected” recovery.
“Our operations strengthened throughout the third quarter, with better performance at the end of the quarter compared to earlier in the quarter,” he explained. “While the future impact of the pandemic remains uncertain, our improved results highlight the resilience and strength of our recurring-revenue streams.”
Revenue comprised $57.2m from games, down 17.5% year-on-year, and $54.9m from financial technology (fintech) down 15.9%.
The decline in gaming revenue, Everi explained, was largely down to lower electronic gaming sales, which the supplier said was down to operators conserving capital as part of their Covid-19 mitigation efforts.
As such gaming unit sales declined 48.0% to $10.2m, with 492 units sold at an average price of $18,209, compared to 1,040 units in the prior year period.
Gaming operations accounted for $47.0m of the total, including a $2.0m contribution from interactive gaming, which represented a 66.7% rise. Everi’s video lottery terminals operated by the New York Lottery contributed $1.1m, having only resumed operations from 9 September.
The decline in fintech revenue, meanwhile, was blamed on casino closures and capacity limits for reopened venues. Revenue for cash access services, such as debit and credit card services, accounted for the bulk of fintech’s contribution, at $34.0m, though this was down 21.3%.
Equipment sales declined to $6.2m, while revenue from information services increased to $14.6m, of which approximately 80% was recurring.
Turning to outgoings for the quarter, revenue related costs for both the gaming and fintech operations declined sharply year-on-year, falling to $10.0m and $5.6m respectively. Earnings before interest, tax, depreciation and amortisation (EBITDA) came to $59.8m, down 7.6% year-on-year but a vast improvement on the $3.3m generated in the second quarter.
In total, operating costs and expenses came to $92.4m, down 13.9%, leaving an operating profit of $19.7m, down 27.7%. After interest expenses, pre-tax profit fell from $8.0m in Q3 2019 to $833,000. Everi paid income taxes of $1.7m, resulting in a net loss for the quarter of $878,000, compared to a $9.3m profit in the prior year.
“I am extremely proud of the Everi team’s exceptional and selfless response to these challenging times,” Rumbolz said. “Our collective efforts have allowed us to discover new ways to collaborate and create exciting products that assist our customers in restoring and growing their businesses while continually moving Everi forward.”
Looking ahead, Rumbolz said he expected the fourth quarter net income and adjusted EBITDA to be comparable to the Q3 performance, barring any further Covid-19 disruption.
“We believe the strength of our product development and cost containment initiatives will support our goal of enhancing long-term stakeholder value,” he explained.
“Our focus on innovation across our portfolio of products and solutions, from exciting game development to innovative cashless funding solutions, remains a high priority.”
For the nine months to 30 September revenue is down 31.9% year-on-year at $264.1m, comprising a $135.4m contribution from gaming (down 34.3%) and $128.7m from fintech (down 29.3%).
After costs and expenses of $286.7m, Everi’s operating loss for the year to date came to $22.6m, and the business swung to an $82.8m loss after financial expenses and taxes.