In an effort to evaluate performance and as a follow up to our YouTube, we compare how the quarter measured up to previous management commentary and guidance
- BETTER: BYI reported a solid quarter which exceeded Street expectations across almost all business lines. Margins on equipment sales were particularly impressive even without the one time 200bps customer benefit. Guidance was also better.
NA REPLACEMENT MARKET
- BETTER: NA replacement units were up YoY for the 7th consecutive quarter. BYI thinks they had 20%ish ship share in F2Q 2013 - much higher than F2Q 2012's share of 16%.
- PREVIOUSLY: “Our North America replacement units sales were up year-over-year reflecting what we believe is a refocus by operators in investing in their casino floors and an increase in ship-share resulting from our improved content.”
WAP INSTALL BASE
- SAME: Cash connection had 1,360 units (up 144 units from last Q). BYI reported 87% growth in the installed base of WAP games.
- PREVIOUSLY: “Cash Connection, which ended the quarter with 1,216 units, up 591 units from last quarter. Our ending WAP-installed base increased by 26% over the June quarter and 94% versus last year.”
BALLY MOBILE PROGRESS
- SAME: Bally's Cloud-based Mobile platform has grown to more than 6 million users.
- PREVIOUSLY: “Bally Mobile continues its strong momentum and has now grown to approximately 6 million users. Thanks to the measurable ROI, these mobile applications are generating for our customers, we are seeing significant growth, both in new customer acquisitions, which has grown by more than 50% year-over-year, and in the delivery of new features for existing customers.”
- SAME: BYI shipped 399 Illinois VGT units in F2Q 2013. All of BYI placements in IL have been for-sale so far
- PREVIOUSLY: “We shipped 175 VGT units to Illinois during this quarter and have signed deals for over 4,000 VGT units in this market. We expect the entire rollout to take about two years to complete. As the distribution channel has consolidated, we now expect a higher mix of these missions to be outright sales rather than on lease.”
INTERNATIONAL GAME SALES
- WORSE: International game sales once again came in below expectations at 787 units.
- PREVIOUSLY: “International game sales units during the quarter were at 743 units, below our expectations, due to various market conditions and product approval timeline delays. Game sales in international regions remain an important growth opportunity for us. We have multiple product development initiatives currently underway focused on these markets.”
- BETTER: Systems revenue increased QoQ as guided by IGT. Gross margins were better than expected. Part of the guidance raise was attributed to better visibility on the systems front. We continue to believe this segment is undervalued by investors.
- PREVIOUSLY: “The systems implementations in Canada and Africa are progressing well and we are gearing up for the significant implementations there during the coming months. This combined with growing opportunities for iVIEW DM lead us to be quite bullish on systems for many quarters to come. We expect our systems business to strengthen from this recently completed September quarter due to some of the visibility and some larger installs and also the September quarter can be seasonally slow for customers wanting to put a new system in during some peak season.”
OPERATING MARGIN OUTLOOK
- BETTER: operating margins rose to 24% vs 20% in the prior year period. SG&A declined to 28% of total revenues from 29% last year.
- PREVIOUSLY: “We have the belief that our overall operating margin can continue to increase as we leverage revenue growth and margin against what should be a lower percent of SG&A against revenue over time. So, over the mid-term or so, we would hope to be able to get a couple more points in operating leverage”