Scientific Games Corporation
Q1 2021 Earnings Call Transcript

Published: 10 May 2021

[Operator:]

Good afternoon. Welcome to Scientific Games 2021 First Quarter Investor Conference Call. All participants will be in listen-only mode. There will be an opportunity for questions later. Please note this event is being recorded. I'd now like turn the conference over to Jim Bombassei, Senior Vice President of Investor Relations for Scientific Games. Mr. Bombassei, you may begin.

[Jim Bombassei:]

Thank you, operator and good morning everyone. During today's call, we will discuss our first quarter 2021 results and operating performance, followed by a question-and-answer period. With me this afternoon are Barry Cottle and Mike Eklund.

[Barry Cottle:]

Thanks Jim. Good morning everyone, and thank you for joining us. We are extremely pleased with our progress this quarter, delivering another quarter of strong execution which enabled us to return to year-over-year growth on both, the top and bottom-line. We were able to achieve this, despite continued restrictions and closures, particularly in U.K. and Europe, building on the strong progress we made in 2020. These results speak to the strength of our portfolio of businesses, our execution and focus on delivering compelling content and solutions, all enabled by best-in-class technology and talent and in particular recognition to our talented team with their continued passion and dedication. I could not be more proud of what they've achieved thus far. And I'm excited about the foundation we are building for our success going forward. I also want to share with you the great progress we're making on the strategic review with our Board. But first, let me turn to the quarterly results. In the quarter, we are very pleased to deliver strong financial results, as well as key operational progress across our portfolio of businesses, demonstrated by double-digit growth at Lottery, Digital and SciPlay as well as continued gaming momentum in North America, enabling us to grow a very strong 35% in AEBITDA, year-over-year.

[Mike Eklund:]

Thanks, Barry and good morning, everyone. We appreciate all of you taking the time to join our call today. Before I jump into the financials, I want to quickly echo Barry's excitement and the optimism we all share at Scientific Games about our future and the tremendous opportunity we have in front of us to drive significant value for our customers, our employees and our shareholders. I'm extremely proud of our employees around the globe. Frankly, it was their energy and enthusiasm that was instrumental in achieving the strong operational and financial performance in the first quarter. Now let's turn to the quarterly results. There are four things I want to highlight for you this morning. First, our strong execution led to a return to growth on both the top and the bottom-line. Revenue grew 1%, importantly, marking the first increase in revenue since 2019. And AEBITDA grew an impressive 35% versus the prior year. Importantly, all four of our business units had double-digit AEBITDA growth in the quarter. Second, we continue to be laser-focused on managing our balance sheet. We generated free cash flow of $80 million in the quarter, which was a $25 million improvement year-over-year and represents a free cash flow conversion rate of 30%. This increased efficiency and cash flow is a clear priority for me and our teams around the world as we believe it is one of the best ways to deliver value for our shareholders. Third, we are making steady progress on our commitment to delever. As you heard Barry mention earlier, we paid down $250 million in debt year-to-date, including paying down $100 million in the quarter and $150 million in April. In fact since October, we have now paid down $361 million on the revolver and we expect to continue to make significant progress on this front going forward as the economy continues to reopen and we drive increased productivity in the business. And finally and fourth, we continue to be diligent in managing our cost base. We are on track for the $50 million in additional run rate savings we communicated to you last quarter. And as a reminder this is in addition to the $50 million of permanent savings we achieved last year. Now let's turn to the quarterly business unit results starting with Gaming. The Gaming team grew AEBITDA both year-over-year and sequentially up 13% and 3%, respectively. This was despite the continued restrictions and closures with the UK and Europe largely closed for the entirety of the quarter. The growth in AEBITDA benefited from a more favorable product mix and the cost actions we've taken as well as comparing against certain charges that impacted the prior year quarter. Gaming revenue declined 23% year-over-year due to our geographic and product mix. As you know, we have an industry-leading position in the UK and in Europe and in our Tables business both of those of which are experiencing a slower recovery. On a sequential basis, the revenue decline was largely the result of the declines in Europe and the UK that we just discussed and also in line and consistent with the guidance we provided last quarter. Digging into the quarterly performance, we are starting to see a strong recovery in the US market and we are well-positioned as we continue to place more Kascada units on casino floors and we will be launching the highly anticipated Mural cabinet shortly. We had no major casino openings or expansions in the quarter. We saw a very strong year-over-year coin-in at our gaming operations segment with about 84% of our North America installed base active. Looking ahead with the market opening back up especially in the US and the continued gains as we execute on our new strategy and product road map, we anticipate that in the second quarter gaming we'll see both year-over-year and sequential growth in both revenue and AEBITDA. With that let's turn to Lottery. The strength of the business accelerated yet again in the first quarter with revenue up 17% and AEBITDA up a very strong 53%. Growth was driven by a number of factors; first, record US industry instant sales and strong sales across Europe; second, above-market performance from our SGEP Lotteries; third, the elevated Powerball and Mega Millions Jackpots we all saw early in the quarter; and fourth, the continued strong iLottery performance. The margin improvement in the quarter was fueled largely by the strong top-line growth and our international joint ventures had a very good result in the quarter. While we anticipate continued strength at Lottery in the second quarter, it's hard to predict exactly how long the COVID tailwinds we've seen since the second half of 2020 will continue. Now on to SciPlay. The SciPlay team delivered another quarter of strong results building off the gains from last year. Revenue grew 28% and AEBITDA increased 32%. Impressively, the SciPlay team delivered sequential growth on the back of what was already a very strong fourth quarter. The performance was broad-based and again enabled by their live op strategy and payer focus and the overall strength of the evergreen franchises. Turning to Digital. They had a record quarter delivering $86 million of revenue and $29 million of AEBITDA, up 12% and 26% respectively. For those of you that may recall in Q1 of last year, we have disclosed two onetime items that made our comps coming into Q1 a little bit harder. If you normalize for these the sports platforms and iGaming revenues grew 35% year-over-year and 18% sequentially. That growth in performance was driven by the strong performance of our first-party content, our successful launch into Michigan and the strength in our UK and European businesses. On our segment KPI page that you'll find in our earnings release we have provided the normalized numbers for your reference. While Digital continues to benefit from the tailwinds in iGaming and Sports Betting, as well as our broad content offering, we anticipate there will be some impact on the business as restrictions and closures begin to ease. As we look to the second quarter, we will also increase our expenses related to the acceleration in the deployment of sportsbooks in the US. Now turning to our debt the balance sheet and cash flows. We continue to execute on our commitment to delever and maximize our free cash flow. We ended the quarter with $8.3 billion in net debt which is approximately $200 million lower than Q1 of 2020. Since October as we previously mentioned, we have paid down a total of $361 million on our revolver and we expect to make significant progress deleveraging going forward, given our increased productivity and as the macro environment improves. Our weighted average cost of debt at the end of the quarter was 5% which compares to 5.7% in Q1 of 2020. The 70-basis point improvement was due to LIBOR rates declining over the past year, as well as lower net debt. We ended the quarter with $1.3 billion of available liquidity which was $353 million higher than the first quarter last year. As you may recall we don't have any debt maturities due until 2024. Now moving to free cash flow. We generated an impressive $80 million of free cash flow for the quarter, up $25 million year-over-year which translated to a free cash flow conversion rate of 30% which was a 200-basis point improvement year-over-year. Again, a real credit to the focus and the hard work of our teams around the world. The growth in free cash flow was due to the strong growth in AEBITDA and partially offset by the timing of cash interest payments where we had three interest payments in Q1 of this year versus two in Q1 of last year. Wrapping up I continue to be extremely excited about the future of Scientific Games. I can tell you that when I took this role a year ago, I saw tremendous opportunity to deliver value and transform the company and it's great to see this starting to unfold. We are delivering strong results enabled by a high-performance winning culture and our talented teams around the world. We are executing on our strategies, building a strong foundation for our path forward. We are creating great content and leveraging it across the many platforms our players like to engage with, thus enhancing our returns. We are strengthening our balance sheet and are committed to meaningfully reducing leverage. We are investing in high-growth opportunities and we look to drive value. And we are well advanced on our strategic review and looking forward to updating you in the second quarter. Overall, I am very pleased with the progress we are making and the pace at which we are moving. I'm excited about the opportunity that lies ahead. With that I will be happy to take your questions. Operator can you open the line.

[Operator:]

The first question comes from Barry Jonas with Truist Securities. Please go ahead. Mr. Jonas, your line is open. Please go ahead with your question.

[Barry Jonas:]

I will start, thanks a lot. So I wanted to start with Digital. Can you walk us through the next milestones for the FanDuel contracts and when you think we'll start to see a visible uplift in revenues? And then with that, also for Digital, how do you think you're positioned in the emerging Florida market given the new Seminole's compact? Thanks.

[Barry Cottle:]

Thanks Barry. Great questions and I'll take those. So, first FanDuel. We're very happy and excited about our partnership with FanDuel. Obviously, we're in early days of rolling it out. With the FanDuel states, we've now got four converted to our sports engine and we've got some more lined up between now and the start of the NFL season. So you'll see that progress. And along with the revenue as it starts to fold over the next several months our revenue, there is a combination of business models and participations. So we'll continue to grow as the journey continues. On the Seminole, I would say, obviously, it's exciting time frankly across digital sports and digital. As it relates to Florida, we're excited to see the momentum of escalation in Florida, New York, Arizona, et cetera. We have a great relationship with the Seminole at Hard Rock. We're live today with digital iGaming content and New Jersey and retail sports in Iowa and New Jersey. Obviously, we can't comment on specific deals, but we continue discussions with Hard Rock around other opportunities across the continuum of sports and iCasino. So, very exciting times right now in sports.

[Barry Jonas:]

Okay. Great. And then if I could just ask a quick follow-up. Look you've had some very strong talent join recently. I guess, you could start with Matt Wilson last year and several folks since. I guess just how much do you think the new team stamp is on products today? And maybe more specifically when does your new Chief Product Officer, Rich Schneider start and how long before you think we'll see an impact from him joining?

[Barry Cottle:]

Great. Yes. So, also another great question. Yes, I mean, the new team Matt and his team Siobhan and Toni and others all came in. They've been here now a little over a year. The impact has been phenomenal. Obviously, you've seen a regrouping of prioritization of the profit pools, regearing the road map affording, a global R&D strategy all pointed at the biggest markets you're seeing right now. Progress in those markets with three straight quarters of growth in the game -- North America game ops premium space. We've seen great products, the products that have come out of this team and that system with Kascada, which is an incredible new cabinet that is outpacing our other recent cabinet launches in a meaningful way with very high ratings on the floor at Eilers backed up by incredible content like in fact the three titles that we launched with Kascada, all are in the top new premium games on Eilers and then followed-up by the Mural cabinet that's coming out later this summer with again great content Willy Wonka and 88 Fortunes. And so all of that is just is a function of the team coming in and just making -- working with the talent that existed today and making an incredible move on the road map to address the key markets. And honestly, I'd say the unfortunate event that we had the noise of COVID that suppressed some of this, because as the markets start to recover, I think, you're really going to see the magic of what is coming out on that side of it. It's going to be something even more enhanced obviously with Rich. Rich is a great example of how we're continuing to lean in on content building great games. Right? And he's a very experienced industry leader. He started in July. We believe it's going to have an immediate impact to our products and the approach to the business and because he is a veteran, he knows what he's doing. He's the best in the business. So we're really excited about the impact he's going to have. And obviously, we've announced some other talent that's coming on board as well that's going to continue to augment it. And we've kind of said all along, we're simply the best studio talent and it's going to basically result in the best road map portfolio and development in the industry and really excited about the progress that we're making there.

[Barry Jonas:]

That's great. Thanks and congrats on a nice quarter.

[Barry Cottle:]

Thank you.

[Operator:]

The next question comes from John DeCree with Union Gaming. Please go ahead.

[John DeCree:]

Good morning, everyone. Thanks for taking my questions. I have two. The first one on iGaming content, a lot of market share and a nice uptick in revenues. And given the gaming team that Barry was just talking about for land based that we're all very familiar with. Curious, if you could talk about maybe the integration of your iGaming content and your land-based content? I mean is there an opportunity to leverage your leading land-based content online? Do you have separate teams that do the digital content? And I guess the genesis of the question is, we've seen a lot of B2C suppliers your customers or would be customers looking to get some content in-house. So it's becoming very clear how important quality and even maybe quantity of content is on iGaming and your success I think evident of your ability. So curious if your land-based expertise is providing a lot of help on the digital side or is there synergies there. So just curious to get your thoughts on that?

[Barry Cottle:]

Yes. No, absolutely. Again, another great question. And I'll kind of like to start in reverse order versus -- obviously announcements and moves of people moving into building content for iCasino. Quite frankly, it's just -- all that does is it just reinforces our belief of the huge upside and market potential in iGaming today, if you think about it. It was a $15 billion plus TAM in the US alone in this marketplace in iGaming. And we're in such the early stages of this, right? I mean this is the tip of the iceberg. You got the great states live 41 coming on shortly and you have such unprecedented momentum in the space right now with both legislative -- on legislative front, but also on the player adoption front right? And so there's this huge market opportunity that's out there now. And there's space, right? There's space there for multiple players to be providing content. We are extremely confident that we are in quite frankly the enviable position as it relates to bringing content to iGaming today for exactly what you just described. I mean not only do we have the market-leading share today, the broadest content offering with 3000 games with OGS platform. But as you said, we have best-in-class, an old treasure chest of franchises and studio teams in gaming today building things like 88 Fortunes, Dancing Drums et cetera that can be deployed across land-based and digital and players love to play, but they play in casinos. I think we mentioned earlier that 30% of our $2.2 billion in global GGR comes from SG-owned content, contents that get developed in the land-based and people can play in digital. And we think as digital starts to progress across the United States that's going to become even more important is to have that player experience that they recognize the brand, they recognize the game plays, they love how the game plays, its features, its bonuses. And so our -- as we talked about in our strategic review, leaning into content, building great franchises and deploying those across land-based and digital puts us in a really, really nice position going forward to take advantage of that.

[John DeCree:]

That's great color, Barry. If I could shift gears quickly for a quick follow-up on slots specifically and we've seen casinos really across the country turned the corner over the last couple of months and hopefully, it's light at the end of the tunnel. Curious if your team has seen any change in behavior? We know that the casinos were keeping a tight watch on their wallets and their capital budgets. But we're hearing more and more recovery progressing, more focused on gaming particularly from regional casino operators and less on some of those non or less profitable amenities. So I'm not sure if they've started to look at reinvesting just yet if it's too soon, but since we last spoke just a couple of months ago, curious if you're seeing any behavior or getting any better visibility as to when your customers might start ramping up their capital spend on the casino floor?

[Mike Eklund:]

Yes. John this is Mike. I'll take that. There's a couple of things in there. It sounded like CapEx was one of them and then just overall performance in the gaming. On the CapEx side, as you said, it's just a little early to react to that yet. We don't have great clear guidance yet on how that's going to come through from the operators. They're still working through the budgets on their side. I would say this on CapEx, we've kind of seen the consensus out there that you all have on us for CapEx for the year. We think you guys are in the right ZIP code, but we're waiting on launching like everybody right now to see how that's going to play out. On the Gaming business, overall, I'd say this and I'll let Barry jump in and add some color on the back end as well. But as Barry said, we're just really pleased with the momentum in the Gaming business right now. We landed about where we thought we were going to land in Q1 and as we guided the market for Q1 as well. As you go into Q2 we see a lot of positive trends. We're at about 84% active units in North America right now. We see coin-in up 17% in April over what we saw in Q1. You heard in my prepared remarks that the international markets especially the UK and Europe were effectively closed for the entirety of the quarter. We expect those markets to start opening back up. And we think that bodes well for what Q2 should look like. As we said in our remarks we're right now anticipating and expecting the Gaming business to be up both sequentially and year-over-year in the second quarter and that's just on the back of all the good teams -- all the teamwork we have going on in the Gaming business right now. So, maybe on the product side, I'll let Barry jump into a little bit more of that because I think that's fueling a lot of it.

[Barry Cottle:]

Yes. And I'd just to say Mike did it really well. I mean we're really -- in terms of the trends outside of the territories Mike alluded to like the UK where we have such a lead market share and they've been impacted by COVID, we're actually not -- we're not seeing the trends -- we're seeing great trends. We're seeing the trends of coin-in is increasing active machines being turned on North America game ops premium growing. So, you got to remember 95% of our customers remains in tribal and regional. So -- and 80% of our business comes from slots. So, it's super important for their business. And so we're seeing good trends in that regard. And as I mentioned earlier on the call, we're really the -- if you look at the product success that we've had just recently -- with the recent products being brought out and with the combination of Kascada and Euro and those games with the recovery in the marketplace we're really setting ourselves up for growth in -- continued growth in Q2.

[John DeCree:]

Thanks guys. I appreciate all the color. Congratulations on the quarter.

[Barry Cottle:]

Thanks.

[Operator:]

The next question comes from Chad Beynon with Macquarie. Please go ahead.

[Chad Beynon:]

Good morning. Thanks for taking my question and congrats on the quarterly results. First, I wanted to focus on margins, particularly in the Gaming segment. It looks like OpEx continued to decline. You guys have talked about that some of the cost containment measures you've taken. Margins for the quarter in that segment were up to 44% despite product sales similar to what you were just talking about not really fully back to where we'd like to see it. So, I guess, my question is where can margins in this segment get to? And then as we look out just over the next couple of months should we expect a lot of cost to kind of come back to the business that could kind of temper our expectations in terms of this massive margin improvement? Thank you.

[Mike Eklund:]

Chad, it's Mike. I'll try that one. I guess the first thing that I'd do is I'd point you to the short-term parity measures that we put in place last year obviously on the back of COVID. I would call out that most of that short-term loss parity measures have come back into the business already. Those are already reflected in the Q1 results. So, what you see in Q1 is a pretty good benchmark of where we are. As the business starts to ramp which would be a great thing we'll obviously add back into variable cost as needed to meet that demand and we'll do it with a guiding principle of ensuring that OpEx continues to scale with revenue. There's obviously going to be some quarter-to-quarter volatility that always exists based on mix regionally by product, et cetera. But I think if you look at the Q1 number it's a pretty good indicator going forward of what we expect.

[Chad Beynon:]

Great, thank you. And then, I wanted to switch to SciPlay. I know that you mentioned you just soft launched Solitaire Pets, I believe, a month or so ago, and that will kind of get you into a bigger casual games genre. How are you thinking about growth in this segment or other segments that are tangential to your business given the balance sheet that you have on the side play side? Thanks.

[Barry Cottle:]

Yes, absolutely. We've been really pleased with the progress on SciPlay. And as you can see from their quarter as well, they're continuing to see incredible strength in the social casino space, which is $5 billion plus TAM. They've actually grew Q1, again, been in the market process -- it's a portfolio of games which has -- which is just great to see that continued progress coming out of the COVID tailwinds from last year. And now, they're attacking the $20-plus billion casual market with Solitaire Pets Adventure, which comes on the back of the Bingo game that we launched as well. So, it's still early on Solitaire Pets. We've just basically -- soft launch happened in late -- mid to late April but we're very encouraged by it. Obviously the methodology or playbook that we use for Bingo is so well is being applied to Solitaire. So it's not our "first time at the rodeo" in terms of launching a game like this. And we've got other diverse efforts that are helping us get into that category as well. So, I think again, it's -- very happy with where they are and very confident in their ability to enter the cattle space in a successful way.

[Chad Beynon:]

Thanks, Barry. Thanks Mike.

[Operator:]

The next question comes from Ryan Sigdahl with Craig-Hallum Capital Group. Please go ahead.

[Ryan Sigdahl:]

Good morning. Thanks for taking the questions. On the slide deck, you say 24% iGaming market share. Just to be clear is this market share of GGR or is that 24% of Games out there? One of your competitors provided a similar data point. I think that was number of games but can you clarify that please?

[Barry Cottle:]

Yes, we're making that calculation off of GGR.

[Ryan Sigdahl:]

Thank you. And then, can you remind us the amount of NOLs the company has? And then are there any restrictions on those, or could those potentially -- or I assume those will be used to shelter any gains on potential divestitures?

[Barry Cottle:]

Yes. The number is 1.2. I mean there's nothing overly restrictive that we see today.

[Ryan Sigdahl:]

Great, thanks guys. I’ll hop back in the queue.

[Operator:]

The next question comes from David Katz with Jefferies. Please go ahead.

[David Katz:]

Hi. Good morning, everyone. Thanks for taking my question. I wanted to focus on the Lottery and just get some incremental impressions for -- from two perspectives. Number one, there's a fair amount of discussion around iLotteries. And if you could talk about your views on it your positioning within it, et cetera, et cetera. And the other is that we have a lot of debate around lotteries globally and the degree to which there are other public entities that trade in a completely different context than you do. And I'd just love to hear your impressions about your positioning globally within lottery. And we don't want to necessarily talk about how other companies trade in valuations et cetera, but give us the tools to make a detailed evaluation about that ourselves? Thank you.

[Barry Cottle:]

Thanks. This is Barry. I'll take the first part of that and then Mike can jump in. Let's start first with the iLottery. Again I think there's incredible opportunity in iLottery right now and we're extremely excited about it. Number one, it starts with the fact that again there's just an enormous TAM out there of $11 billion in the U.S. alone and we're in such the early stage the early innings of this thing where it's only live in a few states and I think we expect 10 states over the next few years. So again another one of these opportunities for us where there's just a huge TAM out there untapped and with tremendous momentum coming off the heels of COVID. And we're in an enviable position as it relates to iLottery. We've got -- probably we've launched one the most successful or the most successful iLottery launch to date in Pennsylvania. We've got a great product and solution. We actually provide iLottery globally. It's about 21 lotteries you mentioned international worldwide. And so we've got a great solution and we're sitting on the cusp of an incredible market opportunity as it relates to iLottery, so we feel like we're in a great position to win. And the other key advantage for us here is as you alluded to on a global scale we provide lottery across all the top lotteries worldwide in every continent and our relationships with the WLA and other lotteries 43 of 45 states and nine of the top 10, just puts us in a great position. We're already there. We already have a relationship and iLottery is just an extension of that business for us. And so we're super excited about it.

[Mike Eklund:]

David this is Mike. I'll jump in on the back of what Barry said on the Lottery business. I mean, we could not be more pleased with the Lottery business performance and what the team members there around the world are doing. Clearly they accelerated again in Q1, which was great to see with 17% top line growth, 53% bottom line growth. We're seeing that momentum carry over into Q2 so far. I mean that's a global statement, it's not just a U.S. statement. There's, obviously, been some industry tailwinds that started in the second half of last year and they continue now. It's hard to predict exactly how long those are going to last and exactly what the lasting behavior changes may be coming out of the back of that. But what we see today is a business that's just hitting on all cylinders performing very, very well. hatever happens with the COVID tailwinds, what I would say about that business in general again this is a global statement, we see secular tailwinds for that business. We're absolutely a clear industry leader with a market-leading position in that business and we see a lot of growth opportunities within the existing portfolio of that lottery business. On the industry tailwind side, again, Barry said it tremendous enormous TAM for that business worldwide. The U.S. lotteries have grown 29 consecutive years in a row. You've got iLottery and Sports Betting as Barry talked about that are nascent with these big TAMs sitting behind them. We're expecting at least the 23% CAGR next three to five years on the iLottery side, probably 43% on the sports betting side. And as you said or you add there's 180 lotteries around the world and we sit behind a lot of those, right? If you drop down into our leadership, we've got this extraordinarily high customer base. 24 of the top 25 global lotteries are Scientific Games. We got 44 lotteries in the U.S. We've got -- going back to the content, portion of the conversation that we've been having today. We've got 87 of the top 100 best-selling games. And we really like our chances in this space. We've got an unrivaled understanding of the go-to-market plans, the patent of proprietary game planning, price structures and inventory management. And the team has just done a great job over the years of building a great robust business. And now on the path forward, we think there's growth left, right the industry tailwinds that we talked about, using our SGEP value prop, to migrate operators and customers, real chance to leverage our leadership and citizen to introduce the iLottery and sports betting into our existing high-quality customer base, right? Gain share in systems and then, use our experience as a turnkey solution provider for B2C international opportunities, where there's a large TAM sitting out there waiting for us. And so, right now we're pretty bullish on the lottery business. Lottery business is performing well. And we're excited about the path forward, and all the opportunities that lie ahead.

[Barry Jonas:]

Thank you very much.

[Barry Cottle:]

Operator, we have time for one more question.

[Operator:]

Thank you. And that will come from Jeff Stantial with Stifel. Please go ahead.

[Jeff Stantial:]

Hi. Great Thanks. Good morning everyone. Thanks for squeezing me in here and congrats for the nice quarter. So my first question, I believe, you've had your cashless technology down the field for a short period of time here, with the Seminole Tribe. Any thoughts on how that's performing? And any color on, how you think that ROI band for the Seminoles and future partners might playout for them, would be helpful as well. And if you could also talk to kind of what the pace of discussions have been like, with potential partners for these technologies? And how you kind of see that rollout progressing this year and longer term? And should we expect it to kind of accelerate into the back half of the year? Thanks.

[Barry Cottle:]

Absolutely. Thanks Jeff, I really appreciate that question. And look, we're really pleased where we are. Since, we last spoke, the signs actually gone live. We've connected about 13,000 machines. Obviously, it's early in the journey. We have seven additional partner deployments in the next 12 months lined-up. So again, this is one of those, tip of the iceberg of, I think, something that has a tremendous amount of momentum across the industry. And we're sitting in a great position coming off the heels of patent deal with IGT. And the fact that -- you got to remember as we talked about last time, it really comes down to having the technology and has to be able to deploy a best-in-class solution. And it has -- you're solving for the last mile right? And so with our systems business with 525,000 interconnected slots, out of the marketplace, we can take that product across the larger addressable universe. So we're really excited about it. Obviously, it's still very early in the journey, but we are seeing strong demand. And we're rolling it out. And refining the product and we're really happy where we are. In terms of the revenue potential, it's a combination of hardware, software some recurring revenue et cetera. There's good ROI good -- and we won't go into specifics of what that looks like. But it's -- we're very pleased with where we are.

[Jim Bombassei:]

With that, I'll turn it over to Barry for some concluding remarks.

[Barry Cottle:]

Thanks everyone for joining us on today's call. We are very excited about the progress we're making, and how we're executing both strategically and operationally. Our strong results demonstrate the strength of our content and franchises, engaging players wherever they want to play. Our strategic review and resulting plan is well progressed. And we look forward to sharing with you, how we will unlock tremendous value through our core strategic pillars, optimizing the platform, capitalizing on high-growth opportunities and significantly delevering. And with that, I want to thank you for your support.

[Jim Bombassei:]

Thanks everyone, for joining our first quarter call. Now I'll turn it back over to the operator.

[Operator:]

Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.