Casino gaming technology company Everi (NYSE:EVRI) reported results in line with analysts' expectations in Q1 CY2024, with revenue down 5.5% year on year to $189.3 million. It made a GAAP profit of $0.05 per share, down from its profit of $0.30 per share in the same quarter last year.

Is now the time to buy Everi? Find out in our full research report.

Everi (EVRI) Q1 CY2024 Highlights:

• Revenue: $189.3 million vs analyst estimates of $188.8 million (small beat)

• EPS: $0.05 vs analyst estimates of $0.16 (-$0.11 miss)

• Gross Margin (GAAP): 80.9%, in line with the same quarter last year

• Free Cash Flow of $13.96 million, down 29.6% from the previous quarter

• Market Capitalization: $678.2 million

Randy Taylor, Chief Executive Officer of Everi, said, "We are making progress on the steps necessary to complete our proposed merger with IGT's Global Gaming and PlayDigital businesses later this year or in early 2025. We are excited about the significant growth opportunities we believe this combination will unlock. This transaction will bring together a comprehensive and complementary product set focused on our customers and their diverse needs which we believe will deliver substantial long-term value to our shareholders."

Formed between the 2015 merger of Global Cash Access and Multimedia Games, Everi (NYSE:EVRI) is a producer of games and financial infrastructure for the casino and hospitality industries.

Gaming Solutions

Gaming solution companies operate in a dynamic and evolving market, and the digital transformation of the gaming industry presents significant opportunities for innovation and growth, whether it be immersive slot machine terminals or mobile sports betting. However, the gaming solution industry is not without its challenges. Regulatory compliance is a crucial consideration as companies must navigate a complex and often fragmented regulatory landscape across different jurisdictions. Changes in regulations can impact product offerings, operational practices, and market access, requiring companies to maintain flexibility and adaptability in their business strategies. Additionally, the competitive nature of the industry necessitates continuous investment in research and development to stay ahead of competitors and meet evolving consumer demands.

Sales Growth

Examining a company's long-term performance can provide clues about its business quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Everi's annualized revenue growth rate of 10.6% over the last five years was weak for a consumer discretionary business.

Within consumer discretionary, product cycles are short and revenue can be hit-driven due to rapidly changing trends. That's why we also follow short-term performance. Everi's recent history shows the business has slowed as its annualized revenue growth of 6.9% over the last two years is below its five-year trend.

We can better understand the company's revenue dynamics by analyzing its most important segment, Gaming. Over the last two years, Everi's Gaming revenue (slot machines, iGaming) averaged 4.4% year-on-year declines. This segment has lagged the company's overall sales.

This quarter, Everi reported a rather uninspiring 5.5% year-on-year revenue decline to $189.3 million of revenue, in line with Wall Street's estimates. Looking ahead, Wall Street expects sales to grow 3.2% over the next 12 months, an acceleration from this quarter.

Here at StockStory, we certainly understand the potential of thematic investing. Diverse winners from Microsoft (MSFT) to Alphabet (GOOG), Coca-Cola (KO) to Monster Beverage (MNST) could all have been identified as promising growth stories with a megatrend driving the growth. So, in that spirit, we’ve identified a relatively under-the-radar profitable growth stock benefitting from the rise of AI, available to you FREE via this link.

Cash Is King

If you've followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can't use accounting profits to pay the bills.

Over the last two years, Everi has shown strong cash profitability, giving it an edge over its competitors and the option to reinvest or return capital to investors while keeping cash on hand for emergencies. The company's free cash flow margin has averaged 18.2%, quite impressive for a consumer discretionary business.

Everi's free cash flow came in at $13.96 million in Q1, equivalent to a 7.4% margin and down 62.4% year on year.

Key Takeaways from Everi's Q1 Results

We struggled to find many strong positives in these results. Its Gaming revenue missed as the launch of its new gaming cabinet is progressing slower than anticipated, contributing to its worse-than-expected EPS and operating margin. On top of that, Everi lowered its full-year EBITDA guidance and now expects it to be down year on year as part of the Gaming segment headwinds. Overall, this was a bad quarter for Everi. The company is down 3% on the results and currently trades at $7.85 per share.

Everi may have had a tough quarter, but does that actually create an opportunity to invest right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.