Q2 2023 Everi Holdings Inc Earnings Call
Participants
Darren D. A. Simmons; Executive VP & FinTech Business Leader; Everi Holdings Inc.
Dean A. Ehrlich; Executive VP & Games Business Leader; Everi Holdings Inc.
Jennifer Hills; VP of IR; Everi Holdings Inc.
Mark F. Labay; Executive VP, CFO & Treasurer; Everi Holdings Inc.
Randy L. Taylor; President, CEO & Director; Everi Holdings Inc.
Barry Jonathan Jonas; Gaming Analyst ; Truist Securities, Inc., Research Division
Chad C. Beynon; Head of US Consumer, SVP and Senior Analyst; Macquarie Research
David Brian Katz; MD and Senior Equity Analyst of Gaming, Lodging & Leisure; Jefferies LLC, Research Division
Edward Lee Engel; Senior Research Analyst; ROTH MKM Partners, LLC, Research Division
George Frederick Sutton; Partner, Co-Director of Research & Senior Research Analyst; Craig-Hallum Capital Group LLC, Research Division
Jeffrey Austin Stantial; Associate ; Stifel, Nicolaus & Company, Incorporated, Research Division
John Kimbrough Davis; MD & Analyst; Raymond James & Associates, Inc., Research Division
Presentation
Operator
 Thank you for standing by, and welcome to the Everi Holdings Inc. Second Quarter 2023 Earnings Conference Call. (Operator Instructions) Following the prepared remarks, the call will be open for a question-and-answer session. As a reminder, this call is being recorded. Now let me turn the call over to Ms. Jennifer Hill, Vice President of Investor Relations.Â
Jennifer Hills
Thank you, operator. Let me begin with a reminder that our safe harbor disclaimer, which covers today's call and webcast contains forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those discussed on 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 everi.com. Because of the potential risks, you are cautioned not to place undue reliance on forward-looking statements. We do not intend and assume no obligation to update forward-looking statements, which are made only as of today, August 9, 2023.
We will refer to certain non-GAAP financial measures such as adjusted EBITDA, adjusted EPS, free cash flow and net 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 the Investors section of our website. This 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 Labay, Chief Financial Officer; Kate Lowenhar-Fisher, General Counsel; Dean Ehrlich, Games Business Leader; and Darren Simmons, Fintech business leader. Now I will turn the call over to Randy.
Randy L. Taylor
Thank you, Jennifer. Good morning, and thank you all for joining us. The quarter, we reported revenue of $208.7 million, adjusted EBITDA of $96.1 million and free cash flow of $47.7 million. This brings our year-to-date free cash flow to $87.7 million. During the second quarter, we used the free cash flow generated, along with cash from our balance sheet to acquire certain assets of Video King and to return $40 million to shareholders through share repurchase. Our fintech business continued its strong revenue growth with a 13% increase over the prior year period. Our games business revenue was relatively flat as compared to the prior year, primarily due to lower unit sales in Q2 of 2023.
Our unit sales in the quarter compared to a strong year for new openings and expansions in 2022. Our fintech business continued to perform well with strong double-digit revenue growth driven by growth in dollars delivered to the casino floor for our customers and the expansion of products and services to new and existing customers. This creates a greenfield of growth opportunity that we believe will provide a runway of high single-digit revenue growth for the full year and is driven by a healthy pipeline of existing signed orders across our diverse high recurring revenue product line, including payments, regtech, loyalty and mobile solutions.
As we reinvest for growth, we are executing on our multiyear strategy that centers around maximizing value to both the patron and the operator through our digital neighborhood of interconnected test funds, which we expect will grow our total addressable market. We are also expanding financial access services across attended self-service and mobile channels. We can now fully enable cashless across the casino floor without the need for spine and external cabs or through swap system integrations. By leveraging concierge, our mobile payment product we ticket our cashless purchase of a traditional gaming voucher and now quick transfer, which allows patrons to deposit their slot tickets directly back to their bank card, we extend cash at the tables, slots and our full-service kiosks.
Our digital wallet continues to gain traction, and we work closely with our customers as they adopt digital and cashless capabilities to provide new financial access products and services to their patrons. The wallet data is compelling with the most mature installed properties showing that the wallet accounts for more than 10% of their overall cash to the floor and the majority of patrons using a wallet have shown a 2.5x increase in their number of transactions per visit and a 15% to 20% more dollars spent per visit. We have already added additional revenue-generating payment types, including Apple Pay, PayPal and Quick Transfer and expect this to grow as patron acceptance of the wallet increases. We remain bullish on the opportunities to grow our business with our recent acquisitions, including eCash, which would drive long-term growth in North American distributed gaming markets. Venue ties is also contributing to our ongoing mobile-first initiatives that will grow our base of recurring revenues and expand our market into sports, venues, entertainment, retail, hotel, food and beverage by leveraging our combined capabilities with payments and loyalty.
All of this will be on display at G2E demonstrating our gold standard digital ecosystem of mission-critical products and services. In our Games business, we are executing on our extensive new product road map. We are moving forward with the introduction of our next-generation family of new premium and for-sale cabinets over the next several quarters. At the end of the first quarter, we began selling the first cabinet in our next-generation family of cabinets, the Dynasty Vue. With this new for-sale cabinet and a growing portfolio of game teams, we expect sales of Dynasty Vue to continue to ramp and be an increasing contributor to our game sales in the future. Building on this foundation of additional hardware, we will introduce our next for-sale cabinet the Dynasty Vue and G2E in October. The Dynasty Vue is a portrait based cabinet with a 49-inch curve screen that includes a more integrated button panel and our most powerful CPU to date. This cabinet will be available for sale beginning in the fourth quarter. However, as we mentioned in our first quarter call, we are seeing slight near-term headwinds.
In the for sale category, these headwinds reflect the highly competitive dynamics of our industry in both video and mechanical games. For example, 2 of the largest suppliers of the history of success in the mechanical real segment and introduced new cabinets for the first time in many years. With the continued great performance of our high and low denom mechanical real games, we expect to continue to be a leader in this segment. Our game content and cabinet road map for both video and mechanical games should provide longer-term growth in all our game segments despite the increased competition. Consistent with the first quarter of 2023, premium cabinets in our installed base continue to experience a slightly higher churn than we originally anticipated. We expect to launch our new premium Dynasty dynamic and PC reserve cabinets late in the third quarter. The introduction of these 2 cabinets was accelerated in our hardware plans so that we could introduce them both ahead of G2E and provide new cabinets, premium cabinets for our installed base.
RG2E game content will include the first new game themes developed by our studio in Australia, and we believe this differentiated content will be a great addition to our portfolio of games in the U.S. with a tremendous number of new products in both cabinets and game themes, we are looking forward to another successful showing at G2E. We will continue to utilize a portion of our strong free cash flow to make internal investments in game development, our fintech digital neighborhood and adjacent categories to set us up well for the future growth. This strategy has returned a 30% year-over-year increase in digital game content revenues as we continue to scale that business. Our cash deployment has also allowed us to expand into Bingo with our acquisition and video King, continued our expansion in the historical horse racing, propel our planned entrance into the distributed gaming markets in 2024 and support the expected launch of Vi, our only channel mobile gaming payments and loyalty platform.
On May 1, we closed our asset acquisition of Video King, which provides an opportunity for Everi to leverage our sales force and relationships to grow the existing business and ultimately expand our gaming content into an additional platform. The integration of these assets is well underway. We have already begun to add new customers during the second quarter, and we have seen increased interest from existing Everi customers in our new bingo products. We expect to continue to integrate Everi products with those acquired from Video King, including offering side games and binge tablets, integrations into kiosks and ultimately, the addition of our cashless wallet solutions to provide incremental opportunities. Now let me turn the call over to Mark, who will provide more insight into our second quarter financials and current outlook for the remainder of the year.
Mark F. Labay
Thanks, Randy. Let me begin by adding a little more color to our operating results. We reported year-over-year quarterly revenue growth of 6%, driven by a 13% growth in fintech revenues and a 1% growth in games. Fintech continued to see a strong growth in financial access services revenue, which grew by $5 million or 9%. We delivered nearly $11.7 billion in financial value to our customers and their patrons, which is a 10% increase compared to the second quarter of last year. Additionally, software and other revenues increased by 26%, and hardware sales increased by 6% for the prior year. Adjusted EBITDA for the fintech segment increased 6% year-over-year to $38 million, inclusive of the impact of higher cost of labor and increased R&D spending. Within the Games segment, adjusted EBITDA was $58 million compared with $59 million a year ago. Our installed base increased 348 units from last year's second quarter, but declined by 29 units sequentially. We believe any further declines in our installed base in the second half of the year will be less than 1% of the units installed as of the end of June.
Consolidated gross margin expanded by 100 basis points to 79.1%, primarily due to a mix shift to higher-margin, gaming operations and financial access services from the lower-margin gaming equipment and hardware sales. Consolidated adjusted EBITDA rose 2% year-over-year to $96.1 million. Adjusted EBITDA as a percentage of revenues was 46% compared with 48% a year ago, reflecting higher payroll expenses and R&D spending as we continue to invest for future growth. We expect adjusted EBITDA as a percentage of revenue to remain in the mid- to high 40% range through the end of this year. Our adjusted EPS was $0.41 in the second quarter compared to $0.48 a year ago. A lower income tax provision and a decrease in our diluted shares outstanding, primarily from our share repurchase activity, partially offset the impact from substantially higher net interest expense incurred during the quarter as a result of rising interest rates.
Interest expense in the quarter was $20 million, an increase of $12 million from the prior year quarter. As a reminder, we have $400 million of outstanding unsecured notes at a fixed rate of 5% and $586.5 billion of term loan that has a variable interest rate. Also included in interest expense is the cash usage fee on our ATM bulk cash arrangements. Our estimated full year expense for our vault cash is expected to be approximately $20 million compared to only $9 million in 2022. At the end of the quarter, our weighted average borrowing rate was approximately 6.6%. Based on our expectation for strong free cash flow, we remain comfortable with our current level of debt and our current cash interest costs. We ended the second quarter with total net leverage at 2.5x trailing adjusted EBITDA, which remains in line with our 2.5 to 3x target range. We expect to remain at or below this target throughout 2023.
Free cash flow generated in the quarter was $47.7 million compared with $49.8 million a year ago. The decline was primarily the result of $7 million of increased net cash interest costs, partially offset by $6 million of lower capital expenditures. Although Randy discussed our share repurchase activity in the quarter, I would add that since we began repurchasing shares of our common stock in May of last year, we have acquired 7.7 million shares or approximately $124 million of total common stock. These repurchases have more than offset new share issuances from our employee equity incentive plan and have been the primary driver of the $5 million share or 5% decline in our fully diluted shares outstanding in the second quarter. We have 140 remaining available to repurchase of the $180 million authorized by the Board in May. We expect to maintain our current capital allocation strategy and continue to focus first on the direct investments in our business to generate long-term growth opportunities. Second, we will seek acquisition opportunities that support our product development and growth objectives. Finally, after making these investments, we expect to utilize a consistent approach towards share repurchases, returning a portion of the excess free cash flow to our shareholders.
Moving on to our outlook. With an expectation for modest growth in the second half of 2023, above the $188.5 million of adjusted EBITDA generated for the first half, we have revised our annual guidance. Our revised debt expectation is for adjusted EBITDA of between $380 million to $386 million and free cash flow of between $147 million to $153 million. This level of free cash flow remains strong, and the midpoint implies we're currently trading at a free cash flow yield of approximately 12%. Due to the increased benefit of certain discrete items related to the current year, we have reduced our expectation for the provision for income taxes on a GAAP basis to 18% to 20% of pretax income. As a result of all these changes, we have raised the range for net income and our outlook for adjusted EPS. We now expect annual net income of between $98 million and $106 million and adjusted EPS of $1.62 to $1.67 per diluted share. This estimate is based on the shares outstanding at the end of the second quarter and does not reflect any potential benefit from future share count reductions due to additional share buyback activity.
With that, I'll now conclude our prepared remarks and turn the call over to our operator for questions.
Question and Answer Session
Operator
perator Instructions) Our first question comes from the line of David Katz with Jefferies.
David Brian Katz
If you could just give us a sense on the premium participation side, where we are. I know we've talked about this, say, 90 days ago. We're going to see some new product as we get into G2E. I just want to be clear that those are going to be relatively ready to hit the market and start to sell from that point on. Help us understand how the unit flow and win per day flow could conceivably roll if it meets your expectations.
Randy L. Taylor
Sure, David. So I think a couple of things. So we have 2 premium cabinets that are actually going to be out before G2E so we expect to see some of those places at the end of this quarter, early fourth quarter. Then we have 2 more premium cabinets coming out, one in, I think, early in Q1 of '24 and 1 in Q2 of '24. Look, we have the content and the road map to support those. So my first would be, I think we talked about the churn. There's more churn. From my viewpoint, we only really lost 29 units in the quarter. As Mark said in his opening comments, we think we may go back less than or around 1% as of where our installed base was at the end of the year. To me, it's important to hold our installed base, which I think we are doing. Our win per day is still above that 37%, which is what we told you about or what we've talked about, and that appears to be where we'll be for the full year, that's our expectation.
I think there's positive as you come out of these new units that get placed in the fourth quarter, late third quarter. Again, that's just 2 products, and then the other products come out next year. So my expectation, I think our expectation is that towards the end of '23 and clearly, a '24 turnaround is when we'll see win per day start to creep up and when we'll see the installed base go back to growth. I think we've got a great amount of new hardware coming out and I think the fact that we're holding and people are waiting for new content to the new cabinets is a good sign and should show growth again towards the end of the year and into next year.
David Brian Katz
If I can just follow up quickly on the topic of leverage. I know you did share a fair amount of commentary around capital allocation but as we look at what your ideal leverage is or should be, do you feel like that target level is, and this is not a leading question in any way. Do you feel like that level I have you somewhere between 2 and 2.5 turns, is that the ideal place for you to sit? Or any thoughts on whether you could considerably be lower or potentially higher for some reason?
Randy L. Taylor
 Yes, I think we like it between 2 and 2.5x. Could we go a little higher? I don't need that others, I don't really want to go above much more than maybe 2 and 3 quarters, but I like the 2 to 2.5x and so I think that's what we'll continue to shoot for. I think we're in a good position from a leverage standpoint, David. I don't see really any change in that unless there's something opportunistic that comes up.
Operator
Our next question comes from the line of Barry Jonas with Truist Securities.
Barry Jonathan Jonas
Cash access business same-store trends sounded really solid despite flattish GGR growth across the market. Can you maybe just help us better understand that relative outperformance? Are you gaining market share? Any color would be helpful.
Randy L. Taylor
I'll add a little bit, and then Darren can probably correct me, but I would say a couple of things. We do continue to win more than we lose, Venuetize does help our overall growth in the cash access. I would say we've been seeing on a same-store is that low to mid-single-digit growth in cash the floor. I think that's probably more in line with GGR. But from our standpoint, why we were performing better is, I think a couple of things. One, just our ability to win more than we lose and second of all, it's our ability to think process more transactions with how we do our cash access. It's just we believe we have better products, better at networking and it just allows us to put more cash to the floor. I think it's in line, but we expect it to perform better than in the market.
Barry Jonathan Jonas
That's perfect really. That's good. Great. I was hoping to get a little more color on video King, how the integration is progressing and also help us think about the contribution adding to EBITDA guidance at least relative to what you were thinking last quarter, there's unchanged.
Randy L. Taylor
 Sure. Look, I would say the integration is going really well. It's actually visited that acquisition a couple of months ago. I think it's a really tight group. They're well run. We have someone from this team is my name Tim Richard, who oversees that. He was keen on a big part of the actual acquisition itself. So far, the integration has gone very well, and we're actually seeing growth more than what we expected or projected at the acquisition. Mark, do you want to add anything on what we had in the guide. I'm not sure that how much we've provided.
Mark F. Labay
I think we haven't really provided any explosion in the guidance, Randy, but we certainly I think as we've talked about the acquisition, we framed out at we think it about $7 million or so EBITDA contribution on an annualized basis for us. Again, we think there's tremendous opportunities to take that core product and expand in our existing customer set and really see some nice growth in future periods as we get it integrated and get some of our other product player in.Â
Operator
Our next question comes from the line of Jeff Stanchel with Stifel.
Jeffrey Austin Stantial
Starting off here on the slot sales side of things, which appears to be the main incremental takeaway relative to when we last. Randy, ever wants to take this. Could you just maybe add some color on what specifically you see us driving some of the softness you're calling out for the back half? Are you seeing a slower ramp in Dynasty Vue than you had previously modeled? Is it more of the competition you're seeing in steppers? Is it just competition broadly speaking? Just any additional context to help frame the shift and expectations would help.
Randy L. Taylor
 Sure, Jeff. I mean I think you've nailed it pretty much Well, I'd say 2 things, probably not on one one. As we look at the back half of the year, a couple of things, right? We had a really strong back half of the year in 2022, and that included a fair amount of steppers. And as we went into Q1, we still had a very nice share of stepper sales. Q2, we saw a decline in that and look, we had always expected that there would be some pressure on our mechanical cabinet sales, and that happened in Q2. We think really operators are digging that up more than they have in the past. I think we probably got more than our fair share in the past, but they now have a product that I think operators are sharing. So the real impact from my standpoint is that we had expected a better amount of sale of steppers in the back half and now as we see Q2 wrapping up, we expect that's going to be less. I think the video product is ramping, and we thought that that ramp would offset the stepper impact, but that's been a little bit more, and so it's not quite offsetting it. We know we have a new for sale coming at the end of this year so I still think there's a lot of growth opportunity for us. I would say, look, our product and the mechanical is still doing very well. I mean we rank high in both high denom and low denom. So we're happy with the product, but it's the, I'll say the amount of impact on our projections for the back half of the year really needed to be revised based on what we saw in Q2.
Jeffrey Austin Stantial
 Okay. That's really helpful. Then sticking on this theme shifting and thinking about things a little bit more strategically, given what you're seeing, some of these incremental, we'll call it changes in operator purchasing behavior, how they're spreading out, how they're purchasing between the different supplies, does this change your R&D strategy at all? I guess what I mean by that is, does it make sense to start to invest a little bit more in different categories than others as your view of the market continues to evolve? Let me know if that makes sense.
Randy L. Taylor
 No, you're spot on, Jeff, and it's where I think the Game team has been, I mean, Dean can add a little bit but clearly, we know that our greenfield is in video. That's where we're putting our resources to. We have a great share and a great product in the stepper side. We do feel like we've got new cabinets and we've got content to back that up. So the R&D is focused on the video because we think that's where we can make most of our progress and growth. I don't know if you have anything else to add on there, Dean.
Dean A. Ehrlich
No, you covered it.
Operator
Our next question is from Chad Beynon with Macquarie.
Chad C. Beynon
On the fintech side, just a high-level question. There's been some movement, I guess, in the last quarter and 6 months from some of your competitors just regarding how big of a push they're making into this space. Has anything changed in terms of how you view partnerships in the industry or your outlook on what the fintech business can be in the next 2 to 3 years as acceptance takes further hold?
Randy L. Taylor
I think I can understand it. Look, I would say it's still competitive. I know we've had a couple of changes where competitor may be being a little more aggressive but I will say there's every deal that we go into because I listened on the calls with Darren and Darren and I thought quite a bit, it's competitive. Whether they're a smaller provider or a bigger provider. I think it will always be competitive, but we go with our suite of products and our ability to provide more and in our view be products. So as I said earlier, we generally win more than we lose, and it really doesn't change our outlook on fintech. We think it's a great business. We think the cashless will continue to grow. We think that Wallet it will continue to grow and we think the overall omnichannel with our byproduct and just adding loyalty and payment to that and hopefully adding payments to bingo. I think there are a number of other places that fintech can grow and so it really hasn't changed our I'll say, bullishness on the fintech side of the business.
Darren D. A. Simmons
Chad, I think what I would just add a little bit is what we've been working on as far as, again, our overall sort of digital strategy, which includes cashless and overall, just a lot of mobile strategies, we continue to create a tremendous amount of value in the diverse and robust product set that we have, as we mentioned in the call there and so it really gives us, in my view, a differentiated platform to offer to our customers because it's just not a one-trick pony about an app that could do transactions, right? Because the reality is, it's how it's integrated across the ecosystem that becomes very important. For example, something like a video game, we obviously believe that we've got significant opportunities to bring what I would say is our content into that platform, which is payment and loyalty and other things that we believe will create again more tremendous value across what we provide to our customers because, again, the more customers take with our products, the greater the value in terms of what we're providing. Long term, with fintech, again, one of the acquisitions that we made with Venuetize last year, again, we are really thinking about just not the gaming floor because what we're seeing from operators is trying to create value just across their enterprise, which includes stepping outside of that, which is hotel, retail, food and beverage, the venues, sports, sports relationships, sports teams relationships lead relationships. That is our long-term strategy that we've been executing now for a few different years. I think we really start to gain traction in that as we move forward. That's been our goal, and that's what we've been executing on. As Randy said, I think we've got a significantly different new product that we've been invested in for a long time, and it gives us the layup long term.
Chad C. Beynon
Then on the iGaming business, some nice sequential growth. I know you guys have talked about launching in a bigger way into U.K., which is the biggest market in the world currently for iGaming. Anything you can talk about there in terms of partner signings or titles or games that are working in the market and how we should think about when you can have a bigger presence in this market and what it would mean to financials in '24 and beyond.
Darren D. A. Simmons
Look, I think the one thing that I can add, and I think we've talked about it. We do have our U.K. license now, but integrating in the U.K. is a little different than how we're doing here in the U.S. So I think we're on plan, but that plan really is probably late this year into next year but I think once we get in the U.K., it allows us then to expand outside of that and grow that digital business. We are still very excited about getting outside just the U.S., getting in the U.K., but I would say we're on target, on plan and I'm very pleased with where we are right now on the digital side.
Operator
Our next question comes from the line of Edward Engel with ROTH Capital Partners.
Edward Lee Engel
You've talked about some product releases in the first half of next year as well. Were any of those originally expected to happen in the second half of this year and then would it maybe push back just a little bit?
Randy L. Taylor
 I think we're talking about the premium products and no, that's really not the case. We actually pulled forward a couple of the cabinets into the third quarter of this year. I think we anticipated having to have new cabinets for our installed base. I think the games team was set to debut everything at G2E, but given the pressure when we pull those up but the 2 bigger cabinets for next year, really, I think, were planned in the first quarter and second quarter of next year. Our goal is always to show at G2E what we can put in the field prior to summer of the next year. You also have to have the content behind that, and that's what we're working on.
Edward Lee Engel
Then I guess bigger picture, I guess, once we get through this little air pocket of product releases in the second quarter, I think when you move into next year and even beyond that, are we going to have a much more consistent cadence of product releases?
Randy L. Taylor
That would be our intention, most definitely. I mean, look, I would say, I'll stop there. That's our intention that we would have a much more consistent cadence and not have so much hardware at one time, but that's where we're at.
Operator
Our next question comes from the line of George Sutton with Craig-Hallum.
George Frederick Sutton
A question for Darren. I admittedly have never run a casino, but I think if you laid out the statistics that you're seeing with the mobile wallet where you're getting a 15% to 20% spend lift with those customers. I'm just not sure why I wouldn't be aggressively adding a mobile wallet. Can you just walk through the thought process that you're hearing back as you're pitching this offering?
Darren D. A. Simmons
Look, I think the data that we have is very compelling. As we said in the prepared remarks, we talked about what some of the more mature properties that we have converted to cash flows and in fact, I think the highest that we have is about 14% of the overall cash to the floor has gone to wallet. Those are the trends that we're seeing now. I would say the conversations are great that we're having with our customers. We've got a terrific pipeline. We're expecting to a number of properties and operators here through the end of this year. I don't know if there's any real difficulty with the conversation. They're all again, retrenching after coming out of our 2020, 2021 and 2022 change in dynamics of their business and just by getting a cadence and now making those investments for what they need to do and thinking very strategically about it, which we've always said is important, right? This is just not a one trick thing. It needs to be part of an overall digital strategy. I think the conversations are positive. We've got a lot of projects in flight right now, and I think we expect that to continue to ramp. Again, not dissimilar to the (inaudible)Â TITO and into the market, right? It wasn't an overnight success, it just ramped up over years. We expect the exact same thing because even if you recall, the TITO data was terrific. I mean, in terms of how with helping performance and so again, I think the same thing makes it compelling and I think operators are adopting it at the rate that they want to go to as part of their overall strategy, which is what they're all working on.
George Frederick Sutton
 A quick question for Mark. You mentioned from a buyback perspective, you would effectively use a portion of your free cash flow to do so. I'm just curious, are you potentially reactive to weakness in the stock? I mean, to the extent that we're seeing weakness today, would that elevate your interest or plans relative to the percentage of free cash flow?
Mark F. Labay
We've always been pretty clear on our capital allocation strategy that the best investments are first and foremost, investing in building off and within, looking at strategic alternatives in terms of acquisitions tube to accelerate growth, get us in the new markets. The third kind of piece was the share repurchase or returning capital to shareholders. I still believe our stock price is very compelling where we are, and we're a great investment in ourselves. Obviously, we look for opportunistic buys of our own stock and when the stock price is lower, you would expect us to be buying maybe a little bit more and if it rises will be a little bit less.
Randy L. Taylor
 Yes, George, I would just say the answer is yes.
Operator
Our next question comes from the line of John Davis with Raymond James.
John Kimbrough Davis
Randy and Dean, I just want to touch on the installed base for a second. I think if we go back to last quarter, there was hope that you get back to growth in 4Q and it seems that now the plan is more flattish. Just curious what the change there? And what drove that kind of change in messaging assuming that I have it right?
Randy L. Taylor
Well, it's all semantics, right, John. I think I tried to say towards the end of the fourth quarter because we didn't know, and we still don't know. I'll give you an example. We have a customer that may take some units offline because they're doing a renovation. Those didn't come out of your installed base and then they come back in. What's the churn. We've seen a little bit more churn than we had anticipated on. So that's one impact to it. Second of all, I think we're trying to be realistic as to the 2 new products that we have coming out and will they really turn that tide in fourth quarter. Fourth quarter seasonality wise is a little bit of a struggle as well. Not that I'm trying to be cute here. I just would say, look, we always thought that it would be towards the end of Q4 of this year, yes, in '23, and then really start to move positively in Q4 in 2024. So it's. I don't think so John. No, look, I hate to say I'm pleased with 29-unit pullback, but I am. I think if we can continue to hold the installed base, that's what I'm most concerned about because I think if we can hold it and then get our new products out there, it really sets us up well for next year, John. So it's not a major change, but look, it's probably pushing a little bit more into '24. Still hopeful we'll see some type of indication maybe towards the end of this year just to see if these new products are doing what we want them to do.
John Kimbrough Davis
Then either Mark or Darren, it looks like the yield and the fintech if I just look at your cash access revenue over the volume process, it's been pretty stable, but it was up about 4.5 basis points this quarter. Is that cashless? Anything to call out there? Is that sustainable? I think it's back over 50 basis points for the first time in a while in the quarter. Just curious any cap there.
Mark F. Labay
I mean, look, I think we're continuing to see a little bit of a pickup in the signature-based financial access transactions. If you think of your credit card usage as opposed to ATMs, ATMs are on a per product basis, probably a much lower like-for-like transaction or margin basis. So the faster the credit card picks up the little bit more flow through you get to the bottom line. I would say it's a material shift, but we are seeing that shift happening or returning to those pre-pandemic levels of our patrons send money. But other than that, I wouldn't say there's anything material I would call out for shift.
Operator
We have reached the end of our question-and-answer session. I would like to turn the floor back over to Mr. Randy Taylor for closing comments.
Randy L. Taylor
Just like to thank everybody for joining us today. We appreciate your interest in Everi, and we look forward to providing you an update at our G2E in October as well as in the third quarter for our third quarter results. Thank you.
Operator
Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.
