Core Insights - Everi has entered a seven-year agreement with Churchill Downs Incorporated (CDI) to provide a range of FinTech solutions, including CashClub® services, across CDI's gaming properties [1][2] - The partnership aims to enhance financial technology capabilities, improve compliance with Title 31, and optimize operational efficiency for CDI [2] - The collaboration builds on existing relationships, leveraging Everi's BeOn™ Venue Platform and IGT's historical horse racing games [2][3] Company Overview - IGT is a leading global provider of gaming, digital, and financial technology solutions, formed from the merger of International Game Technology PLC's Gaming & Digital Business and Everi Holdings Inc. [4] - IGT's offerings include gaming machines, game content, iGaming, sports betting, cash access, and loyalty solutions, aimed at delivering integrated experiences across various environments [4] - Churchill Downs Incorporated has been a key player in entertainment for over 150 years, known for the Kentucky Derby and expanding into live and historical racing, online wagering, and regional casino gaming [5]

Company Performance - Everi Holdings reported quarterly earnings of $0.04 per share, missing the Zacks Consensus Estimate of $0.11 per share, and down from $0.05 per share a year ago, representing an earnings surprise of -63.64% [1] - The company posted revenues of $181.3 million for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 0.03%, but down from $189.35 million year-over-year [2] - Over the last four quarters, Everi Holdings has not surpassed consensus EPS estimates and has topped consensus revenue estimates only twice [2] Stock Outlook - Everi Holdings shares have increased by approximately 4.1% since the beginning of the year, contrasting with the S&P 500's decline of -3.8% [3] - The company's earnings outlook is crucial for investors, as it includes current consensus earnings expectations for upcoming quarters and any recent changes to these expectations [4] - The current consensus EPS estimate for the coming quarter is $0.09 on revenues of $184.85 million, and $0.24 on revenues of $743.07 million for the current fiscal year [7] Industry Context - The Business - Services industry, to which Everi Holdings belongs, is currently ranked in the top 18% of over 250 Zacks industries, indicating a favorable outlook compared to the bottom 50% [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact Everi Holdings' stock performance [5] - The estimate revisions trend for Everi Holdings is currently unfavorable, resulting in a Zacks Rank 4 (Sell) for the stock, indicating expected underperformance in the near future [6]

PART I: FINANCIAL INFORMATION [Item 1: Financial Statements](index=4&type=section&id=Item%201%3A%20Financial%20Statements) For the three months ended March 31, 2025, Everi Holdings Inc. reported total revenues of $181.3 million, a 4% decrease year-over-year, primarily driven by a 12% decline in the Games segment, partially offset by a 4% increase in the FinTech segment, with net income at $3.9 million and diluted EPS at $0.04, while cash and cash equivalents significantly increased to $712.5 million, amidst a proposed all-cash acquisition by Voyager Parent, LLC expected to close in mid-2025 Q1 2025 vs Q1 2024 Statement of Operations Highlights (In thousands, except EPS) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | **Total Revenues** | **$181,296** | **$189,346** | | Games Revenues | $85,726 | $97,122 | | FinTech Revenues | $95,570 | $92,224 | | Operating Income | $19,990 | $24,752 | | **Net Income** | **$3,923** | **$4,554** | | Diluted EPS | $0.04 | $0.05 | Balance Sheet Highlights (In thousands) | Metric | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $712,525 | $400,677 | | Total Assets | $2,204,060 | $1,921,909 | | Long-term debt, less current portion | $951,552 | $950,935 | | Total Liabilities | $1,939,860 | $1,665,973 | | Total Stockholders' Equity | $264,200 | $255,936 | Cash Flow Highlights (In thousands) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $342,252 | $55,126 | | Net cash used in investing activities | ($30,751) | ($42,676) | | Net cash provided by (used in) financing activities | $512 | ($9,951) | - The company operates through two business segments: **Games** (supplying gaming machines, systems, and content) and **FinTech** (providing financial access, loyalty, and compliance solutions for casinos)[19](index=19&type=chunk)[20](index=20&type=chunk) - On July 26, 2024, Everi entered into a definitive agreement to be acquired by Voyager Parent, LLC in an all-cash transaction at **$14.25 per share**, cross-conditioned with the acquisition of IGT's Gaming & Digital business and subject to regulatory approvals[45](index=45&type=chunk) [Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations](index=30&type=section&id=Item%202%3A%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes the 4% year-over-year revenue decline to a 12% decrease in the Games segment, caused by a reduction in the installed base and lower daily win per unit, partially offset by a 4% revenue increase in the FinTech segment driven by higher hardware sales and software solutions, while operating expenses decreased by 10% primarily due to reduced transaction costs related to the now-terminated 'Original Proposed Transaction' with IGT, maintaining strong liquidity with a net cash available position of $201.7 million as of March 31, 2025, with cash from operations expected to be sufficient for operating and debt servicing needs - Games revenues decreased by **$11.4 million (12%)** due to a reduction in daily win per unit and a decline in the average number of installed gaming units[119](index=119&type=chunk) - FinTech revenues increased by **$3.3 million (4%)**, primarily from higher sales of kiosks and loyalty units, along with growth in support-related software solutions[120](index=120&type=chunk) - Operating expenses fell by **$7.1 million (10%)**, mainly due to a **$10.6 million reduction** in transaction and related costs compared to the prior year, which included expenses for the original IGT merger proposal[124](index=124&type=chunk) - Depreciation expense increased by **$1.5 million**, including a **$1.0 million charge** from shortening the useful lives of certain end-of-life electronic gaming devices[105](index=105&type=chunk)[126](index=126&type=chunk) Liquidity Position (in thousands) | Metric | At March 31, 2025 | At December 31, 2024 | | :--- | :--- | :--- | | Net cash position | $76,710 | $49,804 | | Undrawn revolving credit facility | $125,000 | $125,000 | | **Net cash available** | **$201,710** | **$174,804** | - Cash flow from operating activities increased significantly to **$342.3 million** from **$55.1 million** in the prior-year period, primarily due to timing differences in settlement activities within the FinTech segment[140](index=140&type=chunk) [Item 3: Quantitative and Qualitative Disclosures About Market Risk](index=44&type=section&id=Item%203%3A%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risks are related to interest rate fluctuations stemming from its variable-rate senior secured term loan and commercial arrangements with third-party cash providers for its ATMs, while foreign currency exchange risk is considered immaterial and no hedges are currently used for interest rate exposure - A **100 basis point increase** in the applicable SOFR would result in an approximate **$5.6 million impact** on annual interest expense for the **$560.5 million Term Loan**[156](index=156&type=chunk) - For the third-party cash funding arrangements (**$258.4 million outstanding**), a **100 basis point increase** in the target federal funds rate would impact pre-tax income by approximately **$2.6 million** over a 12-month period[154](index=154&type=chunk) - The company's **$400 million senior unsecured notes** have a **fixed interest rate of 5.00%** and are not subject to interest rate fluctuation risk[68](index=68&type=chunk)[157](index=157&type=chunk) [Item 4: Controls and Procedures](index=44&type=section&id=Item%204%3A%20Controls%20and%20Procedures) Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were effective as of March 31, 2025, with no material changes in the company's internal control over financial reporting during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were **effective** as of the end of the period covered by the report[158](index=158&type=chunk) - No changes occurred during the quarter that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[159](index=159&type=chunk) PART II: OTHER INFORMATION [Item 1: Legal Proceedings](index=45&type=section&id=Item%201%3A%20Legal%20Proceedings) The company is involved in various legal proceedings, including ongoing antitrust litigation with NRT Technology Corp. and a contract dispute with Zenergy Systems, LLC, and following the proposed acquisition, three stockholder complaints were filed alleging omissions in the proxy statement, though one has been dismissed and the others were not served, with the company believing resolution of these claims will not have a material adverse impact - Ongoing litigation includes an antitrust case with NRT Technology Corp. scheduled for trial in **October 2025** and a breach of contract case with Zenergy Systems, LLC set for trial in **June 2025**[72](index=72&type=chunk)[73](index=73&type=chunk) - Three stockholder complaints were filed related to the Proposed Transaction, alleging inadequate disclosures, with one case voluntarily dismissed and the other two never served upon Everi[70](index=70&type=chunk)[146](index=146&type=chunk) [Item 1A: Risk Factors](index=45&type=section&id=Item%201A%3A%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the company's most recently filed Annual Report on Form 10-K - The risk factors included in the company's most recently filed Annual Report have not materially changed[161](index=161&type=chunk) [Item 2: Unregistered Sales of Equity Securities and Use of Proceeds](index=45&type=section&id=Item%202%3A%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) There were no unregistered sales of equity securities or use of proceeds to report for the period - None[162](index=162&type=chunk)

Core Viewpoint - Wall Street anticipates a year-over-year increase in earnings for Everi Holdings despite lower revenues, with a focus on how actual results compare to estimates impacting stock price [1][2]. Earnings Expectations - Everi Holdings is expected to report quarterly earnings of $0.11 per share, reflecting a year-over-year increase of +120%, while revenues are projected to be $181.25 million, a decrease of 4.3% from the previous year [3]. Estimate Revisions - The consensus EPS estimate has been revised down by 41.94% over the last 30 days, indicating a reassessment by analysts [4]. Earnings Surprise Prediction - The Zacks Earnings ESP model suggests that the Most Accurate Estimate aligns with the Zacks Consensus Estimate, resulting in an Earnings ESP of 0%, indicating no recent differing analyst views [10][11]. Historical Performance - Everi Holdings has not exceeded consensus EPS estimates in the last four quarters, with a notable -50% surprise in the last reported quarter [12][13]. Investment Considerations - The combination of a 0% Earnings ESP and a Zacks Rank of 4 suggests that Everi Holdings may not be a strong candidate for an earnings beat, highlighting the importance of considering other factors before making investment decisions [11][16].

[FORM 8-K Filing Information](index=1&type=section&id=FORM%208-K%20Filing%20Information) This section provides registrant identification, jurisdiction, filing date, and contact details for the Form 8-K [Registrant and Filing Details](index=1&type=section&id=Registrant%20and%20Filing%20Details) Provides basic identification details for the Form 8-K filing, including registrant, jurisdiction, and filing date - Registrant: **Everi Holdings Inc.**[1](index=1&type=chunk) - Jurisdiction of Incorporation: **Delaware**[1](index=1&type=chunk) - Date of Report: **April 29, 2025**[1](index=1&type=chunk) [Securities Registered](index=1&type=section&id=Securities%20Registered) Identifies securities registered under Section 12(b) of the Act, specifically Common Stock traded on the NYSE Securities Registered | Title of each class | Trading Symbol(s) | Name of each exchange on which registered | | :------------------ | :---------------- | :--------------------------------------- | | Common Stock, $0.001 par value | EVRI | New York Stock Exchange | [Item 2.02 Results of Operations and Financial Condition](index=2&type=section&id=Item%202.02%20Results%20of%20Operations%20and%20Financial%20Condition) Discloses preliminary unaudited Q1 2025 financial estimates, explicitly stating their non-filed status for Section 18 liability [Preliminary Financial Estimates Disclosure](index=2&type=section&id=Preliminary%20Financial%20Estimates%20Disclosure) Everi provides preliminary unaudited Q1 2025 financial estimates in Exhibit 99.1, not deemed 'filed' for Section 18 liability - **Everi Holdings Inc.** provided preliminary estimates of unaudited selected financial results as of March 31, 2025, and for the three months ended March 31, 2025[4](index=4&type=chunk) - The preliminary financial results are included in **Exhibit 99.1** to this Current Report on Form 8-K[4](index=4&type=chunk) - The information in Item 2.02 and Exhibit 99.1 is not deemed 'filed' for purposes of Section 18 of the Securities Exchange Act of 1934, limiting liability[5](index=5&type=chunk) [Item 7.01 Regulation FD Disclosure](index=2&type=section&id=Item%207.01%20Regulation%20FD%20Disclosure) Provides Regulation FD disclosure regarding a proposed transaction and the purpose of preliminary financial estimates [Proposed Transaction Overview](index=2&type=section&id=Proposed%20Transaction%20Overview) Reiterates definitive agreements for a Proposed Transaction involving Everi, IGT Gaming & Digital, and Apollo funds - On **July 26, 2024**, Everi entered into definitive agreements for a Proposed Transaction with International Game Technology PLC (IGT) and affiliates of Apollo Global Management, Inc[6](index=6&type=chunk) - The Proposed Transaction involves the simultaneous acquisition of Everi and IGT's Gaming & Digital business by a newly formed holding company (Newco) owned by Apollo-managed funds[6](index=6&type=chunk) [Purpose of Financial Disclosure](index=2&type=section&id=Purpose%20of%20Financial%20Disclosure) Preliminary Q1 2025 financial estimates support financing discussions for the Proposed Transaction, not deemed 'filed' for liability - The preliminary estimates of unaudited selected financial results are being disclosed in connection with the Buyer's anticipated discussions with prospective lenders for financing the Proposed Transaction[7](index=7&type=chunk) - The information in Item 7.01 and Exhibit 99.1 is not deemed 'filed' for purposes of Section 18 of the Exchange Act, limiting liability[8](index=8&type=chunk) [Forward-Looking Statements](index=2&type=section&id=Forward-Looking%20Statements) Provides a cautionary statement regarding forward-looking information, including Q1 2025 estimates, and associated risks [Disclaimer and Risk Factors](index=2&type=section&id=Disclaimer%20and%20Risk%20Factors) Warns that the report contains forward-looking statements with substantial risks and uncertainties, disclaiming update obligations - This Current Report contains forward-looking statements, including Everi's preliminary estimates of unaudited selected financial results for the three months ended **March 31, 2025**[9](index=9&type=chunk) - These forward-looking statements involve substantial risks and uncertainties that could significantly affect financial or operating results and cause actual results to differ materially[9](index=9&type=chunk) - Everi does not intend to update or revise any forward-looking statements as a result of new information or future events, except as required by law[9](index=9&type=chunk) [Item 9.01 Financial Statements and Exhibits](index=3&type=section&id=Item%209.01%20Financial%20Statements%20and%20Exhibits) Lists the exhibits filed with the Form 8-K, including preliminary financial disclosures and interactive data files [Exhibits List](index=3&type=section&id=Exhibits%20List) Lists Exhibit 99.1 (Disclosures with preliminary financial estimates) and Exhibit 104 (Cover Page Interactive Data File) Exhibits to Form 8-K | Exhibit Number | Description | | :------------- | :---------- | | 99.1 | Disclosures | | 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | [Signatures](index=4&type=section&id=Signatures) Confirms the report's authorization and signature by Everi Holdings Inc.'s Senior Vice President and Chief Accounting Officer [Report Authorization](index=4&type=section&id=Report%20Authorization) Confirms the report's authorization and signature by Everi Holdings Inc.'s Senior Vice President and Chief Accounting Officer - The report was signed on behalf of **Everi Holdings Inc.** by **Todd A. Valli**, Senior Vice President, Chief Accounting Officer[14](index=14&type=chunk) - Date of signature: **April 29, 2025**[14](index=14&type=chunk)

Core Viewpoint - Value investing remains a preferred strategy for identifying strong stocks, utilizing fundamental analysis and traditional valuation metrics to find undervalued stocks in the market [2][3] Company Summary: Everi (EVRI) - Everi currently holds a Zacks Rank of 2 (Buy) and has received an "A" grade in the Value category, indicating it is among the strongest value stocks available [3] - The company's price-to-book (P/B) ratio is 4.66, which is favorable compared to the industry average of 5.71. Over the past 52 weeks, EVRI's P/B ratio has fluctuated between 2.32 and 4.66, with a median of 4.51 [4] - Everi's price-to-cash flow (P/CF) ratio stands at 6.71, significantly lower than the industry average of 17.34. The P/CF ratio has ranged from 2.62 to 6.72 over the past year, with a median of 6.37 [5] - The metrics suggest that Everi is likely undervalued, and its strong earnings outlook positions it as one of the market's strongest value stocks [6]

Core Video Products and Innovations - Everi Holdings Inc. will showcase over 40 diverse games across seven hardware platforms at the IGA 2025, highlighting its commitment to the Native American gaming sector [1][2] - The company will present more than 10 new game themes on its Dynasty Sol™ video portrait cabinet, including titles like Leprechaun Fortunes™ and Fire Lion™ [3][4] FinTech Solutions - Everi's FinTech offerings will focus on mobile engagement and operational efficiency, featuring the BeOn™ Mobile Services Platform and a suite of financial access and loyalty solutions [5][6] - The BeOn™ Casino platform enhances player engagement by extending casino functionalities to mobile devices, integrating gamification, loyalty, and payments [6][8] Cashless Gaming Innovations - Everi's BeOn Pay2Game™ is a cashless payment solution that allows players to deposit funds directly from their bank accounts to slot machines, improving operational efficiency for casino operators [10] - The Vi® mobile gaming solution enables patrons to play popular Class II games beyond the casino floor, integrating Everi Digital games and compliance solutions [11][12] Regulatory Technology (RegTech) - Everi's RegTech solutions assist gaming operators in maintaining compliance with regulatory requirements, including AML compliance, with new integrations to enhance data management [13][15] - The introduction of "Form Manager" will help operators manage the tax form lifecycle, working alongside Everi Compliance and Jackpot Xpress® [14][15] Company Overview - Everi is a leading provider of gaming technology solutions, focusing on enhancing patron engagement and operational efficiency for land-based, iGaming, and bingo operators [16]

Company Performance - Everi Holdings (EVRI) has returned approximately 1.7% since the beginning of the calendar year, outperforming the average loss of 1% in the Business Services sector [4] - The Zacks Consensus Estimate for EVRI's full-year earnings has increased by 2.9% over the past quarter, indicating improved analyst sentiment and a stronger earnings outlook [3] Industry Context - Everi Holdings is part of the Business Services sector, which consists of 290 individual stocks and currently holds a Zacks Sector Rank of 9 [2] - Within the Business - Services industry, which includes 25 companies, Everi Holdings ranks 152 in the Zacks Industry Rank, slightly underperforming its industry average return of 2.9% this year [5] Comparison with Peers - Fluent (FLNT), another stock in the Business Services sector, has returned 2.4% year-to-date and has a consensus EPS estimate that increased by 13.9% over the past three months [4][5] - The Advertising and Marketing industry, to which Fluent belongs, has seen a decline of 8.3% this year, contrasting with the performance of Everi Holdings [6]

Core Viewpoint - The article emphasizes the importance of value investing and highlights Everi (EVRI) as a strong candidate for value investors due to its favorable valuation metrics and earnings outlook [2][3][6]. Valuation Metrics - Everi has a Price-to-Book (P/B) ratio of 4.70, which is attractive compared to the industry average of 5.14. The P/B ratio has fluctuated between 2.32 and 4.73 over the past 52 weeks, with a median of 4.46 [4]. - The Price-to-Cash Flow (P/CF) ratio for Everi is 6.61, significantly lower than the industry average of 13.87. This ratio has ranged from 2.62 to 6.65 in the past year, with a median of 5.75 [5]. Investment Outlook - Everi holds a Zacks Rank of 2 (Buy) and an "A" grade in the Value category, indicating it is among the strongest value stocks currently available in the market [3][6].

Part I [Business Overview](index=9&type=section&id=Item%201.%20Business.) Everi Holdings Inc. operates Games and FinTech segments, providing gaming machines, digital content, financial access, and compliance solutions, with a pending acquisition by Apollo to go private [Pending Proposed Transaction](index=9&type=section&id=Pending%20Proposed%20Transaction) Details the definitive agreement for Everi's acquisition by Apollo, including per-share cash consideration and delisting implications - On July 26, 2024, Everi entered into a definitive agreement to be acquired by Buyer, a holding company owned by funds managed by affiliates of Apollo, in an all-cash transaction, which also includes the acquisition of IGT's Gaming & Digital business[24](index=24&type=chunk) - Upon closing, Everi stockholders will receive **$14.25 per share in cash**, and the company's common stock will be delisted from the NYSE and deregistered[25](index=25&type=chunk) [Games Segment](index=11&type=section&id=Games%20Segment) Describes the Games segment's offerings, including gaming machines, VLT systems, and digital content, along with key operational metrics - The Games segment provides gaming machines (Class II, Class III, HHR) through leases or sales, central determinant systems for VLTs (notably in New York), B2B digital gaming content via its Remote Gaming Server (RGS), and bingo solutions[22](index=22&type=chunk)[30](index=30&type=chunk) - Key gaming machine products include the Player Classic series for mechanical reels and the Dynasty and Empire series for video reel games[39](index=39&type=chunk)[40](index=40&type=chunk)[41](index=41&type=chunk) Games Segment Key Metrics (as of Dec 31, 2024) | Metric | Value | | :--- | :--- | | Total Installed Base | 15,945 units | | Units outside Oklahoma | 9,554 (59.9%) | | Premium Game Installations | ~44.9% of total installed base | | VLTs on NY Central System | ~17,300 | [FinTech Segment](index=14&type=section&id=FinTech%20Segment) Outlines the FinTech segment's financial, loyalty, and compliance solutions, highlighting revenue streams and key digital platforms - The FinTech segment provides a suite of financial, loyalty, and compliance solutions, including cash access (ATM, POS), cashless funding (CashClub Wallet®), check warranty, fully integrated self-service kiosks, and AML compliance software (Everi Compliance)[23](index=23&type=chunk)[42](index=42&type=chunk)[44](index=44&type=chunk) - Revenue streams are categorized into Financial Access Services, Software and Other, and Hardware[43](index=43&type=chunk) - The CashClub Wallet® is a key digital payments platform for cashless funding of gaming and other entertainment experiences[56](index=56&type=chunk) - The company serves over **2,800 casinos and gaming properties**, primarily in the US, Canada, and Australia[67](index=67&type=chunk) [Human Capital](index=23&type=section&id=Human%20Capital) Provides an overview of Everi's employee base, segment distribution, and initiatives for employee engagement and recognition - As of December 31, 2024, Everi employed approximately **2,300 people**, with ~1,000 in the Games segment and ~1,300 in the FinTech segment, none of whom are part of a collective bargaining agreement[81](index=81&type=chunk) - The company focuses on employee engagement through annual surveys and town halls, and has received Top Workplace awards from 2020-2023, though it paused participation in 2024 to focus on internal improvements[84](index=84&type=chunk)[86](index=86&type=chunk) [Government Regulation](index=25&type=section&id=Government%20Regulation) Details the extensive regulatory environment governing Everi's operations, including gaming authority licenses, tribal gaming laws, and financial services regulations - The company is subject to extensive regulation by Gaming Authorities across various jurisdictions, requiring licenses, product approvals, and suitability determinations for key personnel and significant shareholders[97](index=97&type=chunk)[100](index=100&type=chunk)[101](index=101&type=chunk) - Tribal gaming is regulated under the Indian Gaming Regulatory Act (IGRA), which defines Class I, II, and III gaming, and the company provides devices for both Class II and Class III markets[103](index=103&type=chunk)[104](index=104&type=chunk) - The FinTech business is subject to numerous financial services regulations, including the Durbin Amendment, Bank Secrecy Act (for AML), Fair Credit Reporting Act (FCRA), state money transmission laws, and PCI Data Security Standards[108](index=108&type=chunk)[109](index=109&type=chunk)[115](index=115&type=chunk) [Risk Factors](index=34&type=section&id=Item%201A.%20Risk%20Factors.) The company faces material risks from consumer spending, competition, regulatory changes, the pending Apollo acquisition, cybersecurity, intellectual property, tribal gaming, FinTech chargebacks, and interest rate fluctuations [General Business and Industry Risks](index=34&type=section&id=Risks%20Related%20to%20Our%20Business) Identifies broad business risks including reliance on consumer discretionary spending, intellectual property protection, and the unforeseeable impacts of generative AI - Business is dependent on consumer discretionary spending for gaming, which can be impacted by economic downturns, inflation, and changes in consumer preferences[129](index=129&type=chunk)[130](index=130&type=chunk) - Success depends on developing and protecting intellectual property, and the company faces risks of infringement claims and costly litigation, particularly from larger competitors[131](index=131&type=chunk)[133](index=133&type=chunk) - The emergence of generative AI (GenAI) presents unforeseeable risks, including increased competition, new fraud vectors, and potential IP ownership issues[138](index=138&type=chunk) [Games Business Risks](index=37&type=section&id=Risks%20Related%20to%20Our%20Games%20Business) Highlights specific risks to the Games segment, including tribal gaming market uncertainties, short-term contract renewals, and shifts in gaming machine preferences - A significant portion of revenue comes from tribal customers, making the company vulnerable to legal and regulatory uncertainties in tribal markets, including the ability to enforce contracts due to sovereign immunity[144](index=144&type=chunk) - Most leased gaming device contracts are short-term, creating a risk of non-renewal or renewal on less favorable terms[139](index=139&type=chunk) - As of Dec 31, 2024, the company operated over **10,036 Class II units**, and a shift by tribal customers from Class II to Class III gaming could result in a loss of placements[140](index=140&type=chunk)[141](index=141&type=chunk) [FinTech Business Risks](index=39&type=section&id=Risks%20Related%20to%20Our%20FinTech%20Business) Addresses risks unique to the FinTech segment, such as high chargeback levels, patron willingness to pay convenience fees, and ATM cash security - High levels of chargebacks from fraudulent or disputed transactions could lead to fines from card associations and materially harm the Financial Access business[147](index=147&type=chunk) - The business depends on patrons' willingness to pay convenience fees, and a decline in this willingness or the availability of lower-cost alternatives could reduce demand[148](index=148&type=chunk) - A significant amount of cash is maintained in ATMs, which is subject to loss from theft, natural disasters, or other events, and insurance may be insufficient[149](index=149&type=chunk) [Proposed Transaction Risks](index=39&type=section&id=Pending%20Proposed%20Transaction) Details uncertainties and potential adverse impacts associated with the pending Apollo acquisition, including employee relations, transaction costs, and termination fees - The pending acquisition by Apollo creates uncertainty that could adversely impact relationships with employees, customers, and suppliers, and divert management attention[150](index=150&type=chunk) - Failure to complete the transaction could result in significant costs, a negative impact on the stock price, and business disruption, with a potential termination fee of **$65 million** payable by Everi under certain circumstances[154](index=154&type=chunk)[163](index=163&type=chunk) - The company has already incurred and will continue to incur significant transaction costs, regardless of whether the deal is completed[157](index=157&type=chunk)[162](index=162&type=chunk) [Capital Structure and Financial Risks](index=44&type=section&id=Risks%20Related%20to%20Our%20Capital%20Structure) Covers financial risks related to the company's debt agreements, including restrictive covenants and the adverse impact of rising variable interest rates - Debt agreements contain restrictive covenants that may limit operational and financial flexibility[167](index=167&type=chunk) - A material increase in market interest rates (like SOFR) would adversely affect results, as all indebtedness under the Senior Credit Facilities is at variable rates[169](index=169&type=chunk) [Regulatory and Compliance Risks](index=49&type=section&id=Risks%20Related%20to%20Regulation%20of%20Our%20Business) Outlines extensive regulatory and compliance challenges, including gaming and financial services laws, data privacy, and card association rules - The business is subject to extensive and changing governmental gaming and financial services laws, and failure to comply could result in fines, license revocation, or other adverse actions[185](index=185&type=chunk) - Unauthorized disclosure of cardholder or patron data could lead to costly fines, penalties, and legal claims under various data privacy laws like GLBA and CCPA[181](index=181&type=chunk)[182](index=182&type=chunk) - The business is subject to the rules of card associations (VISA, MasterCard) and EFT networks, and changes to these rules or interchange rates could negatively impact revenues and costs[188](index=188&type=chunk)[191](index=191&type=chunk) [Cybersecurity](index=53&type=section&id=Item%201C.%20Cybersecurity) Everi integrates cybersecurity into its risk management, overseen by the Board, employing monitoring and testing programs, with no material incidents reported - The Board of Directors has primary responsibility for overseeing cybersecurity risk, receiving quarterly briefings from the CISO and CIO[203](index=203&type=chunk)[204](index=204&type=chunk) - The company's cybersecurity strategy includes monitoring, incident response testing (including table-top exercises), vulnerability management, and employee training[200](index=200&type=chunk) - As of the date of the report, the company states it has not experienced a cybersecurity incident that has had or is reasonably likely to have a material effect on its business, operations, or financial condition[202](index=202&type=chunk) Part II [Market for Common Equity, Dividends, and Share Repurchases](index=56&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity,%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities.) Everi's common stock trades on NYSE; the company has not paid dividends and canceled a $180 million share repurchase program after $100 million was executed - The company has not declared or paid any cash dividends and does not intend to in the near future, prioritizing debt repayment and business growth[212](index=212&type=chunk) - A share repurchase program authorized for up to **$180.0 million** on May 3, 2023, was canceled on May 2, 2024, with the company having repurchased **$100.0 million** of its common stock under this program by the cancellation date[213](index=213&type=chunk)[214](index=214&type=chunk) Share Repurchase History | Year Ended Dec 31 | Shares Repurchased (millions) | Average Price per Share | Total Cost (millions) | | :--- | :--- | :--- | :--- | | 2024 | 0 | N/A | $0 | | 2023 | 7.5 | $13.40 | $100.0 | | 2022 | 5.0 | $16.93 | $84.3 | [Management's Discussion and Analysis (MD&A)](index=57&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations.) MD&A highlights a significant 2024 profitability decline due to lower Games revenue and acquisition costs, while liquidity remains sufficient despite macroeconomic volatility and competition [Results of Operations](index=65&type=section&id=Results%20of%20Operations) Provides a detailed analysis of consolidated and segment-level financial performance for 2024, 2023, and 2022, highlighting revenue, operating income, and key operational metrics Consolidated Results of Operations (2024 vs. 2023) | Metric (in thousands) | 2024 | 2023 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | **Total Revenues** | **$757,903** | **$807,821** | **($49,918)** | **(6)%** | | Games Revenues | $378,921 | $429,154 | ($50,233) | (12)% | | FinTech Revenues | $378,982 | $378,667 | $315 | 0% | | **Operating Income** | **$89,185** | **$179,284** | **($90,099)** | **(50)%** | | **Net Income** | **$15,016** | **$83,997** | **($68,981)** | **(82)%** | - The **50% decrease in 2024 operating income** was primarily due to lower Games revenues and increased operating expenses, including **$34.9 million** in transaction costs for the proposed merger, a **$7.5 million** charge for accelerated depreciation of end-of-life gaming devices, and a **$3.8 million** charge for purchase commitments[227](index=227&type=chunk)[230](index=230&type=chunk)[247](index=247&type=chunk)[250](index=250&type=chunk) Key Operating Metrics (2024 vs. 2023) | Metric | 2024 | 2023 | % Change | | :--- | :--- | :--- | :--- | | Gaming Daily Win Per Unit | $33.78 | $36.63 | (8)% | | Gaming Units Sold | 4,250 | 5,635 | (25)% | | FinTech Total Value Processed (billions) | $50.7 | $47.0 | 8% | Consolidated Results of Operations (2023 vs. 2022) | Metric (in thousands) | 2023 | 2022 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | **Total Revenues** | **$807,821** | **$782,519** | **$25,302** | **3%** | | Games Revenues | $429,154 | $436,426 | ($7,272) | (2)% | | FinTech Revenues | $378,667 | $346,093 | $32,574 | 9% | | **Operating Income** | **$179,284** | **$213,352** | **($34,068)** | **(16)%** | | **Net Income** | **$83,997** | **$120,489** | **($36,492)** | **(30)%** | - The **16% decrease in 2023 operating income** was driven by a **$11.7 million impairment charge** on an intangible asset from the Intuicode acquisition and higher operating expenses related to payroll and a new manufacturing facility[230](index=230&type=chunk)[268](index=268&type=chunk) [Liquidity and Capital Resources](index=76&type=section&id=Liquidity%20and%20Capital%20Resources) Assesses the company's financial position, cash flows, capital expenditures, and contractual obligations, indicating sufficient liquidity Financial Position (as of Dec 31, in thousands) | Metric | 2024 | 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $400,677 | $267,215 | | Total borrowings | $950,935 | $974,465 | | Undrawn revolving credit facility | $125,000 | $125,000 | | Net cash available (Non-GAAP) | $174,804 | $171,100 | - Net cash provided by operating activities increased to **$318.4 million** in 2024 from **$292.2 million** in 2023, primarily due to changes in settlement-related working capital[290](index=290&type=chunk) - Capital expenditures totaled **$156.4 million** in 2024, up from **$145.1 million** in 2023, with the majority allocated to the Games segment[296](index=296&type=chunk) Contractual Obligations Summary (as of Dec 31, 2024, in thousands) | Obligation Type | Total | 2025 | 2026-2027 | Thereafter | | :--- | :--- | :--- | :--- | :--- | | Debt obligations | $960,500 | $0 | $0 | $960,500 | | Estimated interest obligations | $238,685 | $58,587 | $116,971 | $63,127 | | Lease obligations | $37,416 | $9,219 | $10,002 | $18,195 | | Purchase obligations | $106,454 | $71,844 | $33,485 | $1,125 | [Critical Accounting Policies and Estimates](index=74&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) Discusses key accounting policies and estimates requiring significant management judgment, particularly for business combinations and goodwill impairment - Key estimates involve valuing assets and liabilities in business combinations, which requires significant judgment on future cash flows and discount rates[277](index=277&type=chunk)[278](index=278&type=chunk) - Goodwill impairment testing is a critical estimate, and for the 2024 test, the company used a market approach, identifying Central Credit Services and Games reporting units as at risk, with fair values exceeding carrying values by only **1.4%** and **0.4%**, respectively[283](index=283&type=chunk)[284](index=284&type=chunk)[286](index=286&type=chunk) [Market Risk Disclosures](index=80&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk.) The company faces market risk primarily from interest rate fluctuations on variable-rate debt and ATM cash funding, with a 100 basis point SOFR increase impacting interest expense by $5.6 million annually - The company is exposed to interest rate risk on its variable-rate debt, and based on the **$560.5 million** outstanding on the Term Loan, a **100 basis point increase** in the applicable SOFR would increase annual interest expense by approximately **$5.6 million**[310](index=310&type=chunk) - The company is also exposed to interest rate risk on its ATM cash funding agreements, where a **100 basis point increase** in the target federal funds rate would impact pre-tax income by approximately **$3.8 million annually**, based on the **$379.3 million** of funds provided by a third-party vendor[308](index=308&type=chunk) [Financial Statements and Supplementary Data](index=81&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data.) This section presents audited consolidated financial statements for 2022-2024, independent auditor reports, and detailed notes on the pending merger, revenue, debt, goodwill, and segment performance [Report of Independent Registered Public Accounting Firm](index=82&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) Identifies independent auditors for each fiscal year and highlights critical audit matters related to revenue recognition and goodwill impairment assessment - PricewaterhouseCoopers LLP served as the auditor for the fiscal year 2024, Ernst & Young LLP for 2023, and BDO USA, LLP for 2022[316](index=316&type=chunk)[335](index=335&type=chunk)[339](index=339&type=chunk) - For the 2024 audit, PwC identified two Critical Audit Matters: (1) Revenue Recognition for Funds Advanced and Funds Dispensed revenues due to high transaction volume and complex net revenue calculations, and (2) the Goodwill Impairment Assessment for the Games reporting unit due to significant management judgment in selecting market multiples[326](index=326&type=chunk)[329](index=329&type=chunk) [Consolidated Financial Statements](index=88&type=section&id=Consolidated%20Financial%20Statements) Presents the company's consolidated statements of operations and balance sheets, providing key financial highlights for the reported fiscal years Consolidated Statement of Operations Highlights (in thousands) | Line Item | 2024 | 2023 | 2022 | | :--- | :--- | :--- | :--- | | Total Revenues | $757,903 | $807,821 | $782,519 | | Operating Income | $89,185 | $179,284 | $213,352 | | Net Income | $15,016 | $83,997 | $120,489 | | Diluted EPS | $0.17 | $0.91 | $1.24 | Consolidated Balance Sheet Highlights (as of Dec 31, in thousands) | Line Item | 2024 | 2023 | | :--- | :--- | :--- | | Total Assets | $1,921,909 | $2,123,870 | | Total Liabilities | $1,665,973 | $1,897,728 | | Total Stockholders' Equity | $255,936 | $226,142 | [Notes to Consolidated Financial Statements](index=95&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Provides detailed disclosures on significant accounting policies, business combinations, debt structure, goodwill, contingencies, and segment performance - **Note 5 (Business Combinations):** Details the pending acquisition by Apollo for **$14.25/share** and the termination of a previous merger agreement with IGT, with transaction costs of **$16.2 million** incurred for the terminated deal and costs of **$6.4 million** (transaction) and **$12.3 million** (retention) incurred for the current proposed transaction in 2024[455](index=455&type=chunk)[456](index=456&type=chunk)[459](index=459&type=chunk) - **Note 11 (Goodwill):** Goodwill balance was **$736.5 million** at year-end 2024, and in 2023, an impairment loss of **$11.7 million** was recorded for the customer relationships intangible asset related to the Intuicode acquisition[493](index=493&type=chunk)[501](index=501&type=chunk) - **Note 13 (Long-Term Debt):** Total debt outstanding was **$960.5 million** as of Dec 31, 2024, consisting of a **$560.5 million** variable-rate Term Loan and **$400 million** in 5.00% fixed-rate Senior Unsecured Notes, with the company in compliance with all debt covenants[507](index=507&type=chunk)[519](index=519&type=chunk) - **Note 14 (Contingencies):** The company is defending against two key legal proceedings: an antitrust lawsuit from NRT Technology Corp. and a breach of contract suit from Zenergy Systems, LLC, with uncertain outcomes[524](index=524&type=chunk)[525](index=525&type=chunk) Segment Operating (Loss) Income (Note 19, in thousands) | Segment | 2024 | 2023 | 2022 | | :--- | :--- | :--- | :--- | | Games | ($11,193) | $60,693 | $107,636 | | FinTech | $100,378 | $118,591 | $105,716 | | **Total Operating Income** | **$89,185** | **$179,284** | **$213,352** | [Controls and Procedures](index=148&type=section&id=Item%209A.%20Controls%20and%20Procedures.) Management concluded that the company's disclosure controls and internal control over financial reporting were effective as of December 31, 2024, with independent auditor attestation - Management concluded that the company's disclosure controls and procedures were effective as of December 31, 2024[586](index=586&type=chunk) - Management's assessment concluded that internal control over financial reporting was effective as of December 31, 2024, attested to by the independent auditor, PricewaterhouseCoopers, LLP[587](index=587&type=chunk)[588](index=588&type=chunk) Part III [Directors, Executive Compensation, and Corporate Governance](index=151&type=section&id=Items%2010-14) Information for Items 10-14, covering directors, executive compensation, and corporate governance, is incorporated by reference from the 2025 Proxy Statement - The information for Items 10, 11, 12, 13, and 14 is incorporated by reference from the company's 2025 Proxy Statement[596](index=596&type=chunk)[597](index=597&type=chunk)[598](index=598&type=chunk)[599](index=599&type=chunk)[600](index=600&type=chunk) Part IV [Exhibits and Financial Statement Schedules](index=152&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules.) This section lists all financial statements, schedules, and exhibits filed with the Annual Report on Form 10-K, including key merger and debt agreements - This section provides an index of all financial statements and exhibits filed with the 10-K report[603](index=603&type=chunk)[604](index=604&type=chunk)