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(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes  ☒  No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes  ☒  No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes ☐  No ☒

As of November 8, 2024, there were 86,246,581 shares of the registrant’s $0.001 par value per share common stock outstanding.

 

			Three Months Ended September 30,												Nine Months Ended September 30,
			2024						2023						2024						2023
Revenues
Games revenues
Gaming operations			$	67,158					$	78,400					$	211,716					$	231,490
Gaming equipment and systems			24,388						33,138						74,623						100,554
Games total revenues			91,546						111,538						286,339						332,044
FinTech revenues
Financial access services			58,494						57,158						173,446						169,032
Software and other			26,958						24,838						77,484						73,048
Hardware			10,853						13,066						31,118						41,665
FinTech total revenues			96,305						95,062						282,048						283,745
Total revenues			187,851						206,600						568,387						615,789
Costs and expenses
Games cost of revenues(1)
Gaming operations			12,674						10,363						32,025						25,557
Gaming equipment and systems			14,597						18,239						43,923						58,629
Games total cost of revenues			27,271						28,602						75,948						84,186
FinTech cost of revenues(1)
Financial access services			2,532						2,925						7,694						8,521
Software and other			3,586						1,484						10,203						4,830
Hardware			7,536						8,904						22,169						27,926
FinTech total cost of revenues			13,654						13,313						40,066						41,277
Operating expenses			72,745						61,014						212,726						181,596
Research and development			18,457						16,120						57,753						48,853
Depreciation			28,199						19,902						67,877						58,373
Amortization			16,096						15,202						47,775						43,739
Total costs and expenses			176,422						154,153						502,145						458,024
Operating income			11,429						52,447						66,242						157,765
Other expenses
Interest expense, net of interest income			18,623						19,925						56,060						58,031
Total other expenses			18,623						19,925						56,060						58,031
(Loss) income before income tax			(7,194)						32,522						10,182						99,734
Income tax (benefit) provision			(4,620)						5,879						(971)						17,629
Net (loss) income			(2,574)						26,643						11,153						82,105
Foreign currency translation gain (loss)			1,738						(1,602)						722						(1,670)
Comprehensive (loss) income			$	(836)					$	25,041					$	11,875					$	80,435

1.Exclusive of depreciation and amortization.

 

			At September 30,						At December 31,
			2024						2023
ASSETS
Current assets
Cash and cash equivalents			$	595,955					$	267,215
Settlement receivables			81,921						441,852
Trade and other receivables, net of allowances for credit losses of $5,367 and $5,210 at September 30, 2024 and December 31, 2023, respectively			102,030						107,933
Inventory			74,922						70,624
Prepaid expenses and other current assets			53,135						43,906
Total current assets			907,963						931,530
Non-current assets
Property and equipment, net			163,631						152,704
Goodwill			738,010						737,804
Other intangible assets, net			222,067						234,138
Other receivables			37,202						29,015
Deferred tax assets, net			595						598
Other assets			35,103						38,081
Total non-current assets			1,196,608						1,192,340
Total assets			$	2,104,571					$	2,123,870
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Settlement liabilities			$	635,491					$	662,967
Accounts payable and accrued expenses			215,415						215,530
Current portion of long-term debt			4,500						6,000
Total current liabilities			855,406						884,497
Non-current liabilities
Deferred tax liabilities, net			5,112						13,762
Long-term debt, less current portion			965,817						968,465
Other accrued expenses and liabilities			26,617						31,004
Total non-current liabilities			997,546						1,013,231
Total liabilities			1,852,952						1,897,728
Commitments and contingencies (Note 12)
Stockholders’ equity
Convertible preferred stock, $0.001 par value, 50,000 shares authorized and no shares outstanding at September 30, 2024 and December 31, 2023, respectively			—						—
Common stock, $0.001 par value, 500,000 shares authorized and 125,486 and 86,035 shares issued and outstanding at September 30, 2024, respectively, and 123,179 and 83,738 shares issued and outstanding at December 31, 2023, respectively			126						123
Additional paid-in capital			574,641						560,945
Retained earnings			73,884						62,731
Accumulated other comprehensive loss			(2,745)						(3,467)
Treasury stock, at cost, 39,451 and 39,441 shares at September 30, 2024 and December 31, 2023, respectively			(394,287)						(394,190)
Total stockholders’ equity			251,619						226,142
Total liabilities and stockholders’ equity			$	2,104,571					$	2,123,870

 

Everi Holdings Inc. (“Everi Holdings,” or “Everi”) is a holding company, the assets of which are the issued and outstanding shares of capital stock of each of Everi Payments Inc. (“Everi FinTech” or “FinTech”) and Everi Games Holding Inc., which owns all of the issued and outstanding shares of capital stock of Everi Games Inc. (“Everi Games” or “Games”). Unless otherwise indicated, the terms the “Company,” “we,” “us” and “our” refer to Everi Holdings together with its consolidated subsidiaries.

Everi develops and offers products and services that provide gaming entertainment, improve our customers’ patron engagement, and help our casino customers operate their businesses more efficiently. We develop and supply entertaining game content, gaming machines and gaming systems and services for land-based and iGaming operators. Everi is a provider of financial technology solutions that power casino floors, provide operational efficiencies, and help fulfill regulatory requirements. The Company also develops and supplies player loyalty tools and mobile-first applications that enhance patron engagement for our customers and venues in the casino, sports, entertainment and hospitality industries. In addition, the Company provides bingo solutions through its consoles, electronic gaming tablets and related systems.

Our Financial Statements included herein have been prepared by us pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Some of the information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) have been condensed or omitted pursuant to such rules and regulations, although we believe the disclosures are adequate to make the information presented not misleading. In the opinion of management, all adjustments (which include normal recurring adjustments) necessary for a fair statement of results for the interim periods have been made. The results for the three and nine months ended September 30, 2024 are not necessarily indicative of results to be expected for the full fiscal year. The Financial Statements should be read in conjunction with the consolidated financial statements and notes thereto included in the most recently filed Annual Report on Form 10-K for the year ended December 31, 2023 (the “Annual Report”).

Our restricted cash primarily consists of: (i) funds held in connection with certain customer agreements; (ii) funds held in connection with a sponsorship agreement; (iii) wide-area progressive (“WAP”)-related restricted funds; and (iv) financial access activities related to cash held on behalf of patrons and funds required to be held to cover underlying financial access service transactions. The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the Balance Sheets that sum to the total of the same such amounts shown in the Statements of Cash Flows for the nine months ended September 30, 2024 (in thousands).

The fair value of a financial instrument represents the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. Fair value estimates are made at a specific point in time, based upon relevant market information about the financial instrument.

The carrying amount of cash and cash equivalents, short-term restricted cash, settlement receivables, short-term trade and other receivables, settlement liabilities, accounts payable, and accrued expenses approximate fair value due to the short-term maturities of these instruments. The fair value of the long-term trade and loans receivable is estimated by discounting expected future cash flows using current interest rates at which similar loans would be made to borrowers with similar credit ratings and remaining maturities, which represent Level 2 inputs. The fair value of long-term accounts payable is estimated by discounting the total obligation. As of September 30, 2024 and December 31, 2023, the fair value of trade and loans receivable approximated the carrying value due to contractual terms generally being slightly over 12 months. The fair value of our borrowings is estimated based on various inputs to determine a market price, such as: market demand and supply, size of tranche, maturity, and similar instruments trading in more active markets.

The estimated fair value and outstanding balances of our borrowings are as follows (in thousands):

The fair values of our borrowings were determined using Level 2 inputs based on quoted market prices for these securities.

Certain amounts in the accompanying Financial Statements have been reclassified to be consistent with the current year presentation. These reclassifications had no effect on net income for the prior periods.

None.

As of September 30, 2024, other than what has been described above, we do not anticipate recently issued accounting guidance to have a significant impact on our Financial Statements.

We evaluate the recognition of revenue based on the criteria set forth in Accounting Standards Codification (“ASC”) 606 — Revenue from Contracts with Customers and ASC 842 — Leases, as appropriate. We recognize revenue upon transferring control of goods or services to our customers in an amount that reflects the consideration we expect to receive in exchange for those goods or services. We enter into contracts with customers that include various performance obligations consisting of goods, services, or combinations of goods and services. Timing of the transfer of control varies based on the nature of the contract. We recognize revenue net of any sales and other taxes collected from customers, which are subsequently remitted to governmental authorities and are not included in revenues or operating expenses. We measure revenue based on the consideration specified in a contract with a customer and adjusted, as necessary.

Since our contracts may include multiple performance obligations, there is often a timing difference between cash collections and the satisfaction of such performance obligations and revenue recognition. Such arrangements are evaluated to determine whether contract assets and liabilities exist. We generally record contract assets when the timing of billing differs from when revenue is recognized due to contracts containing specific performance obligations that are required to be met prior to a customer being invoiced. We generally record contract liabilities when cash is collected in advance of us satisfying performance obligations, including those that are satisfied over a period of time. Balances of our contract assets and contract liabilities may fluctuate due to timing of cash collections.

The following table summarizes our contract assets and contract liabilities arising from contracts with customers (in thousands):

						2024						2023
Contract assets(1)
Balance, January 1						$	26,635					$	22,417
Balance, September 30						33,314						22,001
Increase (decrease)						$	6,679					$	(416)
Contract liabilities(2)
Balance, January 1						$	51,799					$	53,419
Balance, September 30						61,529						55,722
Increase						$	9,730					$	2,303

1.Contract assets are included within trade and other receivables, net and other receivables in our Balance Sheets.

2.Contract liabilities are included within accounts payable and accrued expenses and other accrued expenses and liabilities in our Balance Sheets.

We recognized approximately $32.5 million and $38.6 million in revenue that was included in the beginning contract liabilities balance during the nine months ended September 30, 2024 and 2023, respectively.

Our products and services include electronic gaming devices, such as Native American Class II offerings and other electronic bingo products, Class III slot machine offerings, HHR offerings, integrated electronic bingo gaming tablets, VLTs installed in the State of New York and similar technology in certain tribal jurisdictions, B2B digital online gaming activities, accounting and central determinant systems, and other back-office systems. We conduct our Games segment business based on results generated from the following major revenue streams: (i) Gaming Operations; and (ii) Gaming Equipment and Systems.

We recognize our Gaming Operations revenue based on criteria set forth in ASC 842 or ASC 606, as applicable. The amount of lease revenue included in our Gaming Operations revenues and recognized under ASC 842 was approximately $44.5 million and $136.1 million for the three and nine months ended September 30, 2024, respectively, and $52.7 million and $153.4 million for the three and nine months ended September 30, 2023, respectively.

Our FinTech products and services include solutions that we offer to gaming establishments to provide their patrons with financial access and funds-based services supporting digital, cashless and physical cash options across mobile, assisted and self-service channels along with related loyalty and marketing tools, and other information-related products and services. We also develop and offer mobile-first applications aimed at enhancing patron engagement for customers in the casino, sports, entertainment, and hospitality industries. In addition, our services operate as part of an end-to-end security suite to protect against cyber-related attacks, allowing us to maintain appropriate levels of security. These solutions include: access to cash and cashless funding at gaming facilities via ATM debit withdrawals, credit card financial access transactions, and POS debit card purchases at casino cages, kiosk and mobile POS devices; accounts for the CashClub Wallet, check warranty services, self-service loyalty and fully integrated kiosk maintenance services; self-service loyalty tools and promotion management software; compliance, audit, and data software; casino credit data and reporting services; marketing and promotional offering subscription-based services; and other ancillary offerings. We conduct our FinTech segment business based on results generated from the following major revenue streams: (i) Financial Access Services; (ii) Software and Other; and (iii) Hardware.

Hardware revenues are derived from the sale of our financial access and loyalty kiosks and related equipment and are accounted for under ASC 606, unless such transactions meet the definition of a sales type or direct financing lease, which are accounted for under ASC 842. We did not have any significant financial access kiosk and related equipment sales contracts accounted for under ASC 842 during the three and nine months ended September 30, 2024 and 2023.

Supplemental balance sheet information related to our operating leases is as follows (in thousands):

Supplemental cash flow information related to leases is as follows (in thousands):

Other information related to lease terms and discount rates is as follows:

						At September 30, 2024						At December 31, 2023
Weighted average remaining lease term (in years):
Operating leases						6.54						6.71
Weighted average discount rate:
Operating leases						6.26		%				6.08		%

Components of lease expense are as follows (in thousands):

Maturities of lease liabilities are summarized as follows as of September 30, 2024 (in thousands):

Supplemental balance sheet information related to our sales-type leases is as follows (in thousands):

We account for business combinations in accordance with ASC 805 — Business Combinations, which requires that the identifiable assets acquired and liabilities assumed be recorded at their estimated fair values on the acquisition date separately from goodwill, which is the excess of the fair value of the purchase price over the fair values of these identifiable assets and liabilities. We include the results of operations of an acquired business starting from the acquisition date.

On February 28, 2024, the Company entered into definitive agreements with, among others, International Game Technology PLC, a public limited company incorporated under the laws of England and Wales (“IGT”), pursuant to which IGT agreed to spin-off a newly created subsidiary, which will own IGT’s Gaming & Digital business (“IGT Gaming”), with the Company acquiring IGT Gaming in a series of transactions (the “Original Proposed Transaction”). Upon the closing of the Original Proposed Transaction, under the terms of the agreements, IGT shareholders were expected to own approximately 54% of the combined company, with the Company’s existing stockholders expected to own approximately 46% of the combined company.

On February 28, 2024, the Company and Ignite Rotate LLC, a subsidiary of IGT (“Spinco”), entered into a debt commitment letter and related letters with the lenders specified therein. On March 29, 2024, the Company and Spinco entered into an amended and restated debt commitment letter and related amended and restated letters (as amended, the “Commitment Letter”), pursuant to which the lenders committed to provide the Company and such subsidiary with up to $3.7 billion, together with a revolver of $0.8 billion, used to refinance the existing debt of the Company and its subsidiaries, and distribute funds to IGT, with the remainder to be used to pay the combined company’s fees, costs and expenses in connection with the Original Proposed Transaction, subject to the satisfaction of certain customary closing conditions including the consummation of the Original Proposed Transaction described above.

In connection with the Original Proposed Transaction, we incurred transaction costs of approximately $1.2 million and $16.2 million during the three and nine months ended September 30, 2024, respectively, which are included within Operating Expenses of our Statements of Operations.

On July 26, 2024, the Company entered into definitive agreements with, among others, IGT and Voyager Parent, LLC, a Delaware limited liability company (“Buyer”), whereby IGT Gaming and Everi will be simultaneously acquired by Buyer in an all-cash transaction (the “Proposed Transaction”). Following closing, IGT Gaming and Everi will be privately owned companies that are part of one combined enterprise and Everi’s common stock will be delisted from the New York Stock Exchange and deregistered under the Securities Exchange Act of 1934, as amended. Under the terms of the agreements, Everi stockholders will receive $14.25 per share in cash (subject to adjustment for any stock or interest split, division or subdivision of shares, stock dividend, reverse stock split, combination of shares, reclassification, recapitalization, or other similar transaction) and IGT will receive $4.1 billion of gross cash proceeds for IGT Gaming, subject to customary transaction adjustments in accordance with the definitive agreements. The acquisitions of IGT Gaming and Everi by Buyer are cross-conditioned. The transaction is subject to customary closing conditions, including the receipt of regulatory approvals and approval by Everi stockholders. In addition, on July 26, 2024, immediately prior to and in connection with the entry into the definitive agreements for the Proposed Transaction, each of the definitive agreements for the Original Proposed Transaction, including the Commitment Letter, was terminated by mutual consent of the respective parties thereto, effective immediately. There were no termination or other penalties surrounding the termination of such agreements.

Buyer has obtained equity financing commitments and debt financing commitments for the purpose of funding the Proposed Transaction and paying related fees and expenses. Certain funds managed by affiliates of Apollo Global Management, Inc. (the “Guarantors”) have committed to invest in Buyer an aggregate amount of up to $2.3 billion, subject to the terms and conditions set forth in the equity commitment letter, and have entered into a limited guarantee in favor of IGT and the Company, pursuant to which the Guarantors are guaranteeing certain obligations of Buyer in connection with the merger agreement relating to the Proposed Transaction, including the termination fee and certain other fees, indemnities, and expenses, subject to a maximum aggregate liability cap. In addition, certain debt financing sources have committed to lend an aggregate principal amount of up to $4.3 billion, together with a committed revolving credit facility in an aggregate principal amount of up to $0.8 billion, to Buyer for the purpose of funding the Proposed Transaction, subject to the terms and conditions set forth in the debt commitment letter and any related fee letter. In addition, De Agostini S.p.A., a società per azioni organization under the laws of Italy and the controlling shareholder of IGT (“De Agostini”), has entered into a letter agreement with an affiliate of Buyer, pursuant to which De Agostini will make a minority investment in an indirect parent of Buyer.

In connection with the Proposed Transaction, we incurred transaction costs of approximately $4.6 million and $5.4 million during the three and nine months ended September 30, 2024, respectively, and employee retention costs of approximately $2.4 million and $7.8 million during the three and nine months ended September 30, 2024, respectively, which are included within Operating Expenses of our Statements of Operations.

On March 1, 2022 (the “eCash Closing Date”), the Company acquired the stock of eCash Holdings Pty Limited (“eCash”). Under the terms of the stock purchase agreement, we paid the seller AUD$20 million (approximately USD$15 million) on the eCash Closing Date, additional consideration of AUD$5.0 million (USD$3.4 million) approximately one year following the eCash Closing Date and additional consideration of AUD$6.5 million (USD$4.2 million) approximately two years following the eCash Closing Date. In addition, we paid approximately AUD$8.7 million (USD$6.0 million) for the excess net working capital during the second quarter of 2022. We finalized our measurement period adjustments and recorded approximately $2.3 million primarily related to deferred taxes during the first quarter of 2023. The acquisition did not have a significant impact on our results of operations or financial condition.

On April 30, 2022 (the “Intuicode Closing Date”), the Company acquired the stock of Intuicode Gaming Corporation (“Intuicode”), a privately owned game development and engineering firm focused on HHR games. Under the terms of the stock purchase agreement, we paid the seller $12.5 million on the Intuicode Closing Date of the transaction, a net working capital payment of $1.6 million during the second quarter of 2022 and $6.4 million based on the achievement of a certain revenue target one year following the Intuicode Closing Date. In addition, we owe approximately $2.4 million as a final payment based on the achievement of a certain revenue target two years following the Intuicode Closing Date. We finalized our measurement period adjustments and recorded approximately $1.3 million primarily related to the final payment and deferred taxes during the second quarter of 2023.

During the second quarter of 2024, the contingent consideration performance period ended and we revised our final payment estimate. As a result, we recorded an adjustment of approximately $0.2 million, which was included within Operating Expenses of our Statements of Operations. The acquisition did not have a significant impact on our results of operations or financial condition.

The fair value of the contingent consideration was based on Level 3 inputs utilizing a discounted cash flow methodology. The estimates and assumptions included projected future revenues of the acquired business and a discount rate of approximately 5%. Contingent consideration to be paid is comprised of a short-term component that is recorded in accounts payable and accrued expenses in our Balance Sheets. The change in fair value of the contingent consideration during the period ended September 30, 2024 was not material.

On October 14, 2022 (the “Venuetize Closing Date”), the Company acquired certain strategic assets of Venuetize, Inc. (“Venuetize”), a privately owned innovator of mobile-first technologies that provide an advanced guest engagement and m-commerce platform for the sports, entertainment and hospitality industries. Under the terms of the asset purchase agreement, we paid the seller $18.2 million on the Venuetize Closing Date of the transaction and an immaterial amount twelve-months following the Venuetize Closing Date that was netted against a net working capital receivable of approximately $1.0 million. In addition, we expect to pay approximately $1.8 million in contingent consideration based upon the achievement of certain revenue targets on the twenty-four month and thirty-month anniversaries of the Venuetize Closing Date. We finalized our measurement period adjustments and recorded approximately $1.2 million primarily related to the net working capital receivable and deferred taxes during the fourth quarter of 2023. The acquisition did not have a significant impact on our results of operations or financial condition.

The fair value of the contingent consideration was based on Level 3 inputs utilizing a discounted cash flow methodology. The estimates and assumptions included projected future revenues of the acquired business and a discount rate of approximately 7%. Contingent consideration to be paid is comprised of a short-term component that is recorded in accounts payable and accrued expenses in our Balance Sheets. The change in fair value of the contingent consideration during the period ended September 30, 2024 was not material.

On May 1, 2023 (the “Video King Closing Date”), the Company acquired certain strategic assets of VKGS LLC (“Video King”), a privately owned leading provider of integrated electronic bingo gaming tablets, video gaming content, instant win games and systems. Under the terms of the purchase agreement, we paid the seller approximately $61.0 million, inclusive of a net working capital payment on the Video King Closing Date. We also made an additional net working capital payment of $0.3 million post-closing, early in the third quarter of 2023. In addition, we paid the seller approximately $0.2 million related to an indemnity holdback post-closing, during the fourth quarter of 2024, which was scheduled for release on the eighteen-month anniversary of the Video King Closing Date. We finalized our measurement period adjustments and recorded an immaterial amount related to deferred taxes during the quarter ended March 31, 2024. The acquisition did not have a significant impact on our results of operations or financial condition.

The acquisition related to Video King occurred during fiscal 2023; therefore, it is included in our Financial Statements for the three and nine months ended September 30, 2024.

The unaudited pro forma financial data on a consolidated basis, including the historical operating results of the Company, assuming the Video King acquisition occurred on January 1, 2022, reflected revenue of approximately $206.6 million and $625.0 million and net income of approximately $26.6 million and $81.9 million for the three and nine months ended September 30, 2023, respectively.

The acquisitions related to eCash, Intuicode and Venuetize occurred during fiscal 2022; therefore, each are included in our Financial Statements for the three and nine months ended September 30, 2024 and 2023, respectively.

The unaudited pro forma results include increases to depreciation and amortization expense based on the purchased intangible assets and costs directly attributable to the acquisitions. The unaudited pro forma results do not purport to be indicative of results of operations as of the date hereof, for any period ended on the date hereof, or for any other future date or period; nor do they give effect to synergies, cost savings, fair market value adjustments and other changes expected as a result of the acquisitions.

We have commercial arrangements with third-party vendors to provide cash for certain of our fund dispensing devices. For the use of these funds, we pay a usage fee on either the average daily balance of funds utilized multiplied by a contractually defined usage rate or the amounts supplied multiplied by a contractually defined usage rate. These fund usage fees, reflected as interest expense within the Statements of Operations, were approximately $4.8 million and $14.4 million for the three and nine months ended September 30, 2024, respectively, and $5.1 million and $15.3 million for the three and nine months ended September 30, 2023, respectively. We are exposed to interest rate risk to the extent that the applicable rates increase.

Under these agreements, the currency supplied by third party vendors remain their sole property until the funds are dispensed. As these funds are not our assets, supplied cash is not reflected in our Balance Sheets.

Our primary commercial arrangement, the Contract Cash Solutions Agreement, as amended, is with Wells Fargo, N.A. (“Wells Fargo”). Wells Fargo provides us with cash up to $450 million with the ability to increase the amount permitted by the vault cash provider. The term of the agreement expires on December 1, 2026 and will automatically renew for additional one-year periods unless either party provides a ninety-day written notice of its intent not to renew. The outstanding balance of funds provided in connection with this arrangement were approximately $230.5 million and $388.5 million as of September 30, 2024 and December 31, 2023, respectively.

We are responsible for losses of cash in the fund dispensing devices under this agreement, and we self-insure for this type of risk. There were no material losses for the three and nine months ended September 30, 2024 and 2023, respectively.

Trade and other receivables represent short-term credit granted to customers and long-term loans receivable in connection with our Games and FinTech equipment and software, and compliance products. Trade and loans receivable generally do not require collateral.

The balance of trade and loans receivable consists of outstanding balances owed to us by gaming operators. Other receivables include income tax receivables and other miscellaneous receivables.

The balance of trade and other receivables consisted of the following (in thousands):

1.Refer to “Note 3 — Revenues” for a discussion on the contract assets.

The activity in our allowance for credit losses for the nine months ended September 30, 2024 and 2023 is as follows (in thousands):

Our inventory primarily consists of component parts as well as work-in-progress and finished goods. The cost of inventory includes cost of materials, labor, overhead and freight, and is accounted for using the first in, first out method. The inventory is stated at the lower of cost or net realizable value.

Inventory consisted of the following (in thousands):

During the third quarter of 2024, we identified certain component parts that were no longer expected to be utilized to manufacture, refurbish, or support certain of our end-of-life electronic gaming devices, as discussed in “Note 9 — Property and Equipment.” As a result, we increased our Games segment inventory reserves by approximately $3.5 million, of which $3.0 million was included within Gaming Operations Cost of Revenues and $0.5 million was included within Gaming Equipment and Systems Cost of Revenues of our Statements of Operations.

We also determined that the expected utility of certain firm purchase commitments in our Games segment had declined resulting in a charge of approximately $3.8 million, which was included within Operating Expenses of our Statements of Operations.

Property and equipment consist of the following (in thousands):

Depreciation expense related to property and equipment totaled approximately $28.2 million and $67.9 million for the three and nine months ended September 30, 2024, respectively, and $19.9 million and $58.4 million for the three and nine months ended September 30, 2023, respectively.

During the third quarter of 2024, we determined that certain returned, end-of-life electronic gaming devices reflected in our Games segment were not likely to be re-deployed, primarily due to increased demand for our newer gaming devices, together with uncertainty in light of the Proposed Transaction discussed in “Note 5 — Business Combinations.” As a result, we shortened the remaining useful lives of these returned, end-of-life, electronic gaming devices and recorded a charge of approximately $6.4 million, which was included within Depreciation Expense of our Statements of Operations.

Goodwill represents the excess of the purchase price over the identifiable tangible and intangible assets acquired plus liabilities assumed arising from business combinations. The balance of goodwill was approximately $738.0 million and $737.8 million at September 30, 2024 and December 31, 2023, respectively.

Other intangible assets consist of the following (in thousands):

Amortization expense related to other intangible assets was approximately $16.1 million and $47.8 million for the three and nine months ended September 30, 2024, respectively, and $15.2 million and $43.7 million for the three and nine months ended September 30, 2023, respectively.

The following table summarizes our indebtedness (in thousands):

Our senior secured credit facilities consist of: (i) a seven-year $600 million senior secured term loan due 2028 issued at 99.75% of par (the “Term Loan”); and (ii) a $125 million senior secured revolving credit facility due 2026, which was undrawn at closing (the “Revolver” and together with the Term Loan, the “Credit Facilities”). The Company, as borrower, entered into the credit agreement dated as of August 3, 2021, among the Company, the lenders party thereto and Jefferies Finance LLC, as administrative agent, collateral agent, swing line lender and a letter of credit issuer (the “Original Credit Agreement”).

On June 23, 2023, the Company entered into the first amendment (the “Amendment”) to the Original Credit Agreement (as amended, the “Amended Credit Agreement”), among Everi, as borrower, the lenders party thereto and Jefferies Finance LLC, as administrative agent, collateral agent, swing line lender and letter of credit issuer. Under the Amended Credit Agreement, the Secured Overnight Financing Rate (“SOFR”) replaced the Eurodollar Rate for all purposes under the Original Credit Agreement and under any other Loan Document (as defined therein) on July 1, 2023, when the ICE Benchmark Administration ceased to provide all available tenors of the Eurodollar Rate. In connection with such implementation of SOFR, the Company and Jefferies Finance LLC agreed to make conforming changes to the relevant provisions of the Original Credit Agreement, as reflected in the Amended Credit Agreement.

On November 2, 2023, the Company entered into the second amendment (the “Second Amendment”), effective November 9, 2023, to the Original Credit Agreement and the Amended Credit Agreement (as amended, the “Credit Agreement”), among Everi, as borrower, the lenders party thereto and Jefferies Finance LLC, as administrative agent, collateral agent, swing line lender and letter of credit issuer. Under the Amended Credit Agreement, capitalized terms not otherwise defined in this Second Amendment have the same meanings as specified in the Original Credit Agreement or the Amended Credit Agreement, as the context may require; and pursuant to the Amended Credit Agreement, the borrower and the administrative agent jointly identified certain obvious errors of a technical nature in the Amended Credit Agreement and have agreed to amend the Amended Credit Agreement to correct such errors.

The interest rate per annum applicable to the Credit Facilities will be, at the Company’s option, either the SOFR, inclusive of the credit spread adjustment (“CSA”) with a 0.50% floor plus a margin of 2.50%, or the base rate plus a margin of 1.50%. In addition, the CSA is recorded as interest expense that varies for the applicable interest period, with an adjustment of 0.1% for interest periods of one month, an adjustment of 0.3% for interest periods of two months and an adjustment of 0.4% for interest periods of three months. Our Revolver remained fully undrawn as of September 30, 2024.

The weighted average interest rate on the Term Loan was 7.92% and 7.94% for the three and nine months ended September 30, 2024, respectively.

Our senior unsecured notes issued in 2021 (the “2021 Unsecured Notes”) had an outstanding balance of $400.0 million as of September 30, 2024 that accrues interest at a rate of 5.00% per annum and is payable semi-annually in arrears on each January 15 and July 15.

We were in compliance with the covenants and terms of the Credit Facilities and the 2021 Unsecured Notes as of September 30, 2024.

We are involved in various legal proceedings in the ordinary course of our business. In addition, following the announcement of the Proposed Transaction, three purported stockholders of Everi filed complaints alleging that the definitive proxy statement for the Special Meeting of Everi stockholders omitted or misstated material information with respect to the Proposed Transaction and seeking supplemental disclosures and other equitable and legal relief. The complaints are entitled Clancy v. Everi Holdings Inc., et al., No. 1:24-cv-07255-AS (S.D.N.Y. filed Sept. 25, 2024), Marino v. Everi Holdings Inc., et al., No. tc241024-69 (N.Y. S. Ct. filed Oct. 24, 2024) and Miller v. Everi Holdings Inc., et al., docket no. unassigned (N.Y. S. Ct. filed Oct. 25, 2024) (the “Complaints”). Thirteen other purported stockholders of Everi have sent demand letters to the Company making allegations and demands similar to those in the Complaints. It is possible that other complaints will be filed or demand letters received. While we believe resolution of the claims brought against us, both individually and in the aggregate, will not have a material adverse impact on our financial condition or results of operations, litigation of this nature is inherently unpredictable. Our views on these legal proceedings, including those described below, may change in the future. We intend to vigorously defend against these actions, and ultimately believe that we should prevail.

We evaluate matters and record an accrual for legal contingencies when it is both probable that a liability has been incurred and the amount or range of the loss may be reasonably estimated. We evaluate legal contingencies at least quarterly and, as appropriate, establish new accruals or adjust existing accruals to reflect: (i) the facts and circumstances known to us at the time, including information regarding negotiations, settlements, rulings, and other relevant events and developments; (ii) the advice and analyses of counsel; and (iii) the assumptions and judgment of management. Legal costs associated with such proceedings are expensed as incurred. Due to the inherent uncertainty of legal proceedings as a result of the procedural, factual, and legal issues involved, the outcomes of our legal contingencies could result in losses in excess of amounts we have accrued.

NRT Technology Corp., et al. v. Everi Holdings Inc., et al. is a civil action filed on April 30, 2019 against Everi Holdings and Everi FinTech in the United States District Court for the District of Delaware by NRT Technology Corp. and NRT Technology, Inc., alleging monopolization of the market for unmanned, integrated kiosks in violation of federal antitrust laws, fraudulent procurement of patents on functionality related to such unmanned, integrated kiosks and sham litigation related to prior litigation brought by Everi FinTech (operating as Global Cash Access Inc.) against the plaintiff entities. The plaintiffs are seeking compensatory damages, treble damages, and injunctive and declaratory relief. Discovery is closed. The court removed the case from the September trial calendar and requested briefs from the parties on relevant legal issues. Briefing was completed in December 2022. The parties are awaiting further guidance from the court. Due to the current stage of the litigation, we are unable to estimate the probability of the outcome of this matter or reasonably estimate the range of possible damages, if any.

Zenergy Systems, LLC v. Everi Payments Inc. is a civil action filed on May 29, 2020, against Everi FinTech in the United States District Court for the District of Nevada, Clark County by Zenergy Systems, LLC (“Zenergy”), alleging breach of contract, breach of a non-disclosure agreement, conversion, breach of the covenant of good faith and fair dealing, and breach of a confidential relationship related to a contract with Everi FinTech that expired in November 2019. The plaintiff is seeking compensatory and punitive damages. Everi FinTech has counterclaimed against Zenergy alleging breach of contract, breach of implied covenant of good faith and fair dealing, and for declaratory relief. The parties participated in mediation on March 21, 2023. No settlement was reached at mediation. The parties filed a joint motion to set a firm trial date which the court granted. The case is on the court's May 28, 2025 trial calendar. Due to the current stage of the litigation, we are unable to estimate the probability of the outcome of this matter or reasonably estimate the range of possible damages, if any.

Mary Parrish v. Everi Holdings Inc., et al. is a civil action filed on December 28, 2021, against Everi Holdings and Everi FinTech in the District Court of Nevada, Clark County by Mary Parrish alleging violation of the Fair and Accurate Credit Transactions Act (FACTA) amendment to the Fair Credit Reporting Act (FCRA). Plaintiff's complaint alleges she received a printed receipt for cash access services performed at an Everi Payments' ATM which displayed more than four (4) digits of the account number. Plaintiff seeks statutory damages, punitive damages, injunctive relief, attorneys' fees, and other relief. Everi filed a Petition for Removal to the United States District Court, District of Nevada. On May 4, 2023, the United States District Court entered an order remanding the case to the District Court of Nevada, Clark County. On August 16, 2024, a settlement conference was held wherein the parties reached a resolution. The court entered an order of dismissal on September 11, 2024. This matter is now closed.

In addition, we have commitments with respect to certain lease obligations discussed in “Note 4 — Leases,” installment payments under our purchase agreements discussed in “Note 5 — Business Combinations,” and debt obligations discussed in “Note 11 — Long-Term Debt.”

13. STOCKHOLDERS’ EQUITY

On May 3, 2023, our Board of Directors authorized and approved a share repurchase program in an amount not to exceed $180 million, pursuant to which we were authorized to purchase outstanding Company common stock in open market or privately negotiated transactions over a period of eighteen (18) months through November 3, 2024, in accordance with Company and regulatory policies and trading plans established in accordance with Rules 10b5-1 and 10b-18 of the Securities Exchange Act of 1934, as amended.

On May 2, 2024, the Board of Directors canceled the share repurchase program. As of May 2, 2024, the Company had repurchased $100.0 million of Company common stock under the $180 million authorized share repurchase program.

No shares were repurchased during the three and nine months ended September 30, 2024, and 2.4 million and 5.1 million shares were repurchased during the three and nine months ended September 30, 2023, respectively.

The weighted average number of common stock outstanding used in the computation of basic and diluted (loss) earnings per share is as follows (in thousands):

1.We were in a net loss position for the three months ended September 30, 2024; therefore, no potential dilution from the application of the treasury stock method was applicable for the period. The potential dilution excludes the weighted average effect of equity awards to purchase approximately 0.9 million shares that were anti-dilutive under the treasury stock method for the three months ended September 30, 2024. There were 0.8 million shares that were anti-dilutive under the treasury stock method for the nine months ended September 30, 2024 and 0.6 million and 0.2 million shares that were anti-dilutive under the treasury stock method for the three and nine months ended September 30, 2023, respectively.

Generally, we grant the following types of awards: (i) restricted stock units with either time- or performance-based criteria; and (ii) time-based options. We estimate forfeiture amounts based on historical patterns.

A summary of award activity is as follows (in thousands):

There were approximately 4.5 million awards of our common stock available for future equity grants under our existing equity incentive plan at September 30, 2024, which included 3.6 million additional shares approved by our stockholders during the second quarter of 2024.

The income tax benefit for the three months ended September 30, 2024 reflected an effective income tax rate of 64.2%, which was greater than the statutory federal rate of 21.0%, primarily due to a research credit, the benefit from equity award activities and the 2023 federal return-to-provision adjustments recorded in the current reporting period, partially offset by a valuation allowance on certain deferred tax assets. The income tax benefit for the nine months ended September 30, 2024 reflected an effective income tax rate of negative 9.5%, which was less than the statutory federal rate of 21.0%, primarily due to a research credit and the 2023 federal return-to-provision adjustments recorded in the current reporting period, partially offset by state taxes and a valuation allowance on certain deferred tax assets. The income tax provision for the three and nine months ended September 30, 2023 reflected an effective income tax rate of 18.1% and 17.7%, respectively, which was less than the statutory federal rate of 21.0%, respectively, primarily due to a research credit and the benefit from equity award activities, partially offset by state taxes and compensation deduction limitations.

We have analyzed our positions in the federal, state and foreign jurisdictions where we are required to file income tax returns, as well as the open tax years in these jurisdictions. As of September 30, 2024, we recorded approximately $5.2 million of unrecognized tax benefits, all of which would impact our effective tax rate, if recognized. We do not anticipate that our unrecognized tax benefits will materially change within the next 12 months.

Operating segments are components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision-making group (the “CODM”). Our CODM consists of the Chief Executive Officer and the Chief Financial Officer. Our CODM determined that our operating segments for conducting business are: (i) Games and (ii) FinTech. Our CODM allocates resources and measures profitability based on our operating segments, which are managed and reviewed separately, as each represents products and services that can be sold separately to our customers. Our segments are monitored by management for performance against our internal forecasts. We have reported our financial performance based on our segments in both the current and prior periods. Refer to “Note 1 — Business” for additional information regarding our operating segments.

Corporate overhead expenses have been allocated to the segments either through specific identification or based on a reasonable methodology. In addition, we record depreciation and amortization expenses to the business segments.

Our business is predominantly domestic with no specific regional concentrations that were material to our results of operations or financial condition, and no significant assets in foreign locations.

The following tables present segment information (in thousands)*:

1.Includes the accretion of contract rights of approximately $2.3 million and $7.0 million for each of the three and nine months ended September 30, 2024 and 2023, respectively.

2.Excludes depreciation and amortization.

3.Includes approximately $3.5 million of additional inventory reserves, of which $3.0 million was included within Gaming Operations Cost of Revenues and $0.5 million was included within Gaming Equipment and Systems Cost of Revenues, for the three and nine months ended September 30, 2024, respectively.

4.Includes approximately $2.1 million and $2.8 million of transaction costs related to the Proposed Transaction for the three and nine months ended September 30, 2024, respectively.

5.Includes approximately $1.2 million and $15.8 million of transaction costs related to the Original Proposed Transaction for the three and nine months ended September 30, 2024, respectively, and approximately $1.4 million for the three and nine months ended September 30, 2023, respectively.

6.Includes approximately $1.3 million and $4.0 million of employee retention costs for the Proposed Transaction for the three and nine months ended September 30, 2024, respectively.

7.Includes approximately $1.4 million and $2.1 million of severance costs related to the realignment of certain employee functions within the Games business for the three and nine months ended September 30, 2024, respectively, and approximately $0.4 million for the nine months ended September 30, 2023.

8.Includes approximately $6.4 million of depreciation charges for certain end-of-life electronic gaming devices returned from our install base for the three and nine months ended September 30, 2024, respectively.

9.Includes approximately $3.8 million of accrued charges for the decline in expected utility of certain firm purchase commitments for the three and nine months ended September 30, 2024, respectively.

10.Includes approximately $0.1 million in other professional fees and expenses primarily associated with litigation and other non-recurring legal matters for the three and nine months ended September 30, 2024, respectively, and approximately $0.1 million and $0.4 million of other legal fees and professional expenses associated with the Video King asset acquisition for the three and nine months ended September 30, 2023.

11.Includes approximately $0.3 million and $0.5 million of office and warehouse consolidation expenses for the three and nine months ended September 30, 2023, respectively.

1.Excludes depreciation and amortization.

2.Includes approximately $2.5 million and $2.6 million of transaction costs related to the Proposed Transaction for the three and nine months ended September 30, 2024, respectively.

3.Includes approximately $0.4 million of transaction costs related to the Original Proposed Transaction for the nine months ended September 30, 2024 and approximately $0.2 million for the three and nine months ended September 30, 2023, respectively.

4.Includes approximately $1.1 million and $3.8 million of employee retention costs for the Proposed Transaction for the three and nine months ended September 30, 2024, respectively.

5.Includes approximately $0.1 million and $0.2 million of severance costs related to the realignment of certain employee functions within the FinTech business for the three and nine months ended September 30, 2024, respectively, and approximately $0.1 million and $1.0 million for the three and nine months ended September 30, 2023, respectively.

6.Includes approximately $0.2 million and $0.5 million in other professional fees and expenses primarily associated with litigation and other non-recurring legal matters for the three and nine months ended September 30, 2024, respectively. We recorded a benefit of approximately $0.2 million against other legal fees and expenses associated with insurance recoveries from litigation matters for the three and nine months ended September 30, 2023, and $0.1 million of legal fees for debt amendment costs in the nine months ended September 30, 2023.

Major Customers. No single customer accounted for more than 10% of our revenues for the three and nine months ended September 30, 2024 and 2023, respectively. Our five largest customers accounted for approximately 13.6% and 13.1% of our revenues for the three and nine months ended September 30, 2024, respectively, and 14.0% and 12.3% for the three and nine months ended September 30, 2023, respectively.

As of the filing date, we had not identified, and were not aware of, any subsequent events for the period.

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations contains “forward-looking” statements as defined in the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements are neither historical facts nor assurances of future performance, but instead are based only on our current beliefs, expectations, and assumptions regarding the future of our business, plans and strategies, projections, anticipated events and trends, the economy, and other future conditions, including the Proposed Transaction (defined below) as of the date on which this report is filed. Forward-looking statements often, but do not always, contain words such as “expect,” “anticipate,” “aim to,” “designed to,” “intend,” “plan,” “believe,” “goal,” “target,” “future,” “assume,” “estimate,” “indication,” “seek,” “project,” “may,” “can,” “could,” “should,” “favorably positioned,” or “will” and other words and terms of similar meaning. Readers are cautioned not to place undue reliance on the forward-looking statements contained herein, which are based only on information currently available to us and only as of the date hereof. We undertake no obligation to update or publicly revise any forward-looking statements as a result of new information, future developments or otherwise.

Forward-looking statements are subject to inherent risks, uncertainties, and changes in circumstances that are often difficult to predict and many of which are beyond our control, including, but not limited to, statements regarding trends, developments, and uncertainties impacting our business, including our ability to withstand: macro-economic impacts on consumer discretionary spending, interest rates and interest expense; global supply chain disruption; inflationary impact on supply chain costs; inflationary impact on labor costs and retention; equity incentive activity and compensation expense; our ability to maintain revenue, earnings, and cash flow momentum or lack thereof; changes in global market, business and regulatory conditions whether as a result of a pandemic, or other economic or geopolitical developments around the world, including availability of discretionary spending income of casino patrons as well as expectations for the closing or re-opening of casinos; product and technological innovations that address customer needs in a new and evolving operating environment or disrupt the industry, such as generative artificial intelligence; to enhance shareholder value in the long-term; trends in gaming operator and patron usage of our products; benefits realized by using our products and services; benefits and/or costs associated with mergers, acquisitions, and/or strategic alliances; the Proposed Transaction, including the anticipated timing of the closing of the Proposed Transaction and the anticipated delisting and deregistration of Everi’s common stock; product development, including the benefits from the release of new products, new product features, product enhancements, or product extensions; regulatory approvals and changes; gaming, financial regulatory, legal, card association, and statutory compliance and changes; the implementation of new or amended card association and payment network rules or interpretations; consumer collection activities; competition (including consolidations); tax liabilities; borrowings and debt repayments; goodwill impairment charges; international expansion or lack thereof; resolution of litigation (including litigation in connection with the Proposed Transaction) or government investigations; our share repurchase and dividend policy; new customer contracts and contract renewals or lack thereof; and financial performance and results of operations (including revenue, expenses, margins, earnings, cash flow, and capital expenditures).

Our actual results and financial condition may differ materially from those indicated in forward-looking statements, and important factors that could cause them to do so include, but are not limited to, the following: our ability to generate profits in the future and to create incremental value for shareholders; our ability to withstand economic slowdowns, inflationary and other economic factors that pressure discretionary consumer spending; our ability to execute on mergers, acquisitions, and/or strategic alliances, including our ability to integrate and operate such acquisitions or alliances consistent with our forecasts in order to achieve future growth; our ability to execute on key initiatives and deliver ongoing improvements; expectations regarding growth for the Company’s installed base and daily win per unit; expectations regarding placement fee agreements; inaccuracies in underlying operating assumptions; our ability to withstand direct and indirect impacts of a pandemic outbreak, or other public health crises of uncertain duration on our business and the businesses of our customers and suppliers, including as a result of actions taken in response to governments, regulators, markets and individual consumers; changes in global market, business, and regulatory conditions arising as a result of economic, geopolitical and other developments around the world, including a global pandemic, increased conflict and political turmoil, capital market disruptions and instability of financial institutions, climate change or currently unexpected crises or natural disasters; our leverage and the related covenants that restrict our operations; our ability to comply with our debt covenants and our ability to generate sufficient cash to service all of our indebtedness, fund working capital, and capital expenditures; our ability to withstand the loss of revenue during the closure of our customers’ facilities; our ability to maintain our current customers; our ability to replace revenue associated with terminated contracts or margin degradation from contract renewals; expectations regarding customers’ preferences and demands for future product and service offerings; our ability to successfully introduce new products and services, including third-party licensed content; gaming operator and patron preferences; failure to control product development costs and create successful new products; the overall growth or contraction of the gaming industry; anticipated sales performance; our ability to prevent, mitigate, or timely recover from cybersecurity breaches, attacks, compromises and other security vulnerabilities; national and international economic and industry conditions, including the prospect of a shutdown of the U.S. federal government; changes in gaming regulatory, financial regulatory, legal, card association, and statutory requirements; the impact of evolving legal and regulatory requirements, including emerging environmental, social and governance requirements; regulatory and licensing difficulties, competitive pressures and changes in the competitive environment; operational limitations; changes to tax laws; uncertainty of litigation outcomes; interest rate fluctuations; business prospects; unanticipated expenses or capital needs; the possibility that the conditions to the consummation of the Proposed Transaction will not for any reason be satisfied (including the failure to obtain necessary regulatory and stockholder approvals) in the anticipated timeframe or at all; risks related to the ability to realize the anticipated benefits of the Proposed Transaction; negative effects of the announcement or failure to consummate the Proposed Transaction on the market price of the capital stock of Everi and on Everi’s operating results, including that Everi’s stock price may decline significantly if the Proposed Transaction is not consummated; the occurrence of any event, change, or other circumstance that could give rise to the termination of the merger agreement for the Proposed Transaction, which in certain circumstances may require Everi to pay a termination fee; significant transaction costs, fees, expenses, and charges in connection with the Proposed Transaction; operating costs, customer loss, and business disruption (including, without limitation, difficulties in maintaining employee, customer, or other business, contractual, or operating relationships following the announcement or closing of the Proposed Transaction and the diversion of Everi management’s attention from its ongoing business); failure to consummate or delay in consummating the Proposed Transaction for any reason; technological obsolescence and our ability to adapt to evolving technologies, including generative artificial intelligence; employee hiring, turnover and retention; our ability to comply with regulatory requirements under the Payment Card Industry Data Security Standards and maintain our certified status; and those other risks and uncertainties discussed in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Item 1A. Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2023 (the “Annual Report”) and “Item 1A. Risk Factors” of this Quarterly Report on Form 10-Q. Given these risks and uncertainties, there can be no assurance that the forward-looking information contained in this Quarterly Report on Form 10-Q will in fact transpire or prove to be accurate.

This Quarterly Report on Form 10-Q should be read in conjunction with our Annual Report and with the information included in our other press releases, reports, and other filings with the Securities and Exchange Commission (“SEC”). Understanding the information contained in these filings is important in order to fully understand our reported financial results and our business outlook for future periods.

Everi develops and offers products and services that provide gaming entertainment, improve our customers’ patron engagement, and help our casino customers operate their businesses more efficiently. We develop and supply entertaining game content, gaming machines and gaming systems and services for land-based and iGaming operators. Everi is a leading innovator and provider of trusted financial technology solutions that power casino floors, improve operational efficiencies, and help fulfill regulatory requirements. The Company also develops and supplies player loyalty tools and mobile-first applications that enhance patron engagement for our customers and venues in the casino, sports, entertainment, and hospitality industries. In addition, the Company provides bingo solutions through its consoles, electronic gaming tablets and related systems.

Our Financial Statements included in this report reflect the following additional items impacting the comparability of results of operations and financial condition:

•During the third quarter of 2024, we determined that certain returned, end-of-life electronic gaming devices reflected in our Games segment were not likely to be re-deployed, primarily due to increased competition and demand for newer machines, together with uncertainty in light of the Proposed Transaction discussed in “Note 5 — Business Combinations” included in Part I, Item 1: Financial Statements of this Quarterly Report on Form 10-Q. As a result, we shortened the remaining useful lives of these returned, end-of-life, electronic gaming devices and recorded a charge of approximately $6.4 million, which was included within Depreciation Expense of our Statements of Operations.

•During the third quarter of 2024, we identified certain component parts that were no longer expected to be utilized to manufacture, refurbish, or support certain of our end-of-life electronic gaming devices, as discussed in “Note 9 — Property and Equipment” included in Part I, Item 1: Financial Statements of this Quarterly Report on Form 10-Q. As a result, we increased our Games segment inventory reserves by approximately $3.5 million, of which $3.0 million was included within Gaming Operations Cost of Revenues and $0.5 million was included within Gaming Equipment and Systems Cost of Revenues of our Statements of Operations.

•During the third quarter of 2024, we determined that the expected utility of certain firm purchase commitments in our Games segment had declined resulting in a charge of approximately $3.8 million, which was included within Operating Expenses of our Statements of Operations. For additional information, see “Note 8 — Inventory” included in Part I, Item 1: Financial Statements of this Quarterly Report on Form 10-Q.

•During the third quarter of 2024, the Company entered into definitive agreements with International Game Technology PLC, a public limited company incorporated under the laws of England and Wales (“IGT”), Ignite Rotate LLC, a Delaware limited liability company and a direct wholly owned subsidiary of IGT (“Spinco”), Voyager Parent, LLC, a Delaware limited liability company (“Buyer”), and Voyager Merger Sub, Inc., a Delaware corporation and a direct wholly owned subsidiary of Buyer (“Buyer Sub” and together with Buyer, the “Buyer Parties” and each, a “Buyer Party”), whereby IGT’s Gaming & Digital business (“IGT Gaming”) and Everi will be simultaneously acquired by Buyer, a newly formed holding company owned by funds managed by affiliates of Apollo Global Management, Inc. (“Apollo”), in an all-cash transaction (the “Proposed Transaction”). In connection with the Proposed Transaction, we incurred transaction costs of approximately $4.6 million and $5.4 million during the three and nine months ended September 30, 2024, respectively, and employee retention costs of approximately $2.4 million and $7.8 million during the three and nine months ended September 30, 2024, respectively. For additional information, see “Note 5 — Business Combinations” included in Part I, Item 1: Financial Statements of this Quarterly Report on Form 10-Q.

•During the first quarter of 2024, we entered into definitive agreements with, among others, IGT pursuant to which IGT agreed to spin-off a newly created subsidiary, which would own IGT Gaming, with the Company acquiring IGT Gaming in a series of transactions (the “Original Proposed Transaction”). In connection with the Original Proposed Transaction, we incurred transaction costs of approximately $1.2 million and $16.2 million during the three and nine months ended September 30, 2024, respectively. On July 26, 2024, each of the definitive agreements for the Original Proposed Transaction was terminated by mutual consent of the respective parties thereto, effective immediately. For additional information, see “Note 5 — Business Combinations” included in Part I, Item 1: Financial Statements of this Quarterly Report on Form 10-Q.

•During the second quarter of 2023, we acquired certain strategic assets of VKGS LLC (“Video King”), a privately owned provider of integrated electronic bingo gaming tablets, video gaming content, instant win games and systems. Under the terms of the purchase agreement, we paid the seller approximately $61.3 million, inclusive of a net working capital payment. The acquisition did not have a significant impact on our financial condition or results of operations as of and for the period ended September 30, 2024. For additional information, see “Note 5 — Business Combinations” included in Part I, Item 1: Financial Statements of this Quarterly Report on Form 10-Q.

Below we have identified a development that could have a material impact on our business:

•Following the closing of the Proposed Transaction, IGT Gaming and Everi will be privately owned companies that are part of one combined enterprise and Everi’s common stock will be delisted from the New York Stock Exchange and deregistered under the Securities Exchange Act of 1934, as amended. Under the terms of the agreements, Everi stockholders will receive $14.25 per share in cash (subject to adjustment for any stock or interest split, division or subdivision of shares, stock dividend, reverse stock split, combination of shares, reclassification, recapitalization, or other similar transaction) and IGT will receive $4.1 billion of gross cash proceeds for IGT Gaming, subject to customary transaction adjustments in accordance with the definitive agreements (such sale of IGT Gaming, the “Equity Sale”). The acquisitions of IGT Gaming and Everi by Buyer are cross-conditioned. The transaction is subject to customary closing conditions, including the receipt of regulatory approvals and approval by Everi stockholders.

We report our financial performance within two operating segments: (i) Games; and (ii) FinTech. For additional information on our segments, including information about certain items impacting the comparability of segment results, see “Note 1 — Business”, “Note 3 — Revenues” and “Note 17 — Segment Information” included in Part I, Item 1: Financial Statements of this Quarterly Report on Form 10-Q.