Good day and welcome to the AGS Third Quarter 2019 Earnings Call and Webcast. All participants will be in a listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference over to Julia Boguslawski, EVP of Investor Relations. Please go ahead..

Thank you and good afternoon, everyone. Welcome to AGS' third quarter 2019 earnings conference call. With me today are David Lopez, CEO; and Kimo Akiona, CFO. We posted a slide presentation reviewing our key operational and financial highlights for the third quarter 2019, which can be found on our Investor Relations website investors.playags.com.

Today's call is to provide you with information regarding our Q3 2019 performance in addition to our financial outlook. This conference call includes forward-looking statements.

Any statement that refers to expectations, projections or other characterizations of future events, including financial projections or future market conditions, is a forward-looking statement based on assumptions today.

Actual results may differ materially from those expressed in these forward-looking statements and we make no obligation to update our disclosures.

For more information about factors that may cause actual results to differ materially from forward-looking statements, please refer to the earnings release that we issued today as well as risks described in our Annual Report on Form 10-K, particularly in the section of these documents titled Risk Factors.

Our commentary today will also include non-GAAP financial measures. We believe that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends.

These measures should not be considered in isolation from or as a substitute for financial information prepared in accordance with GAAP. Reconciliations between GAAP and non-GAAP metrics for our reported results can be found in our earnings release issued today. Please refer to our filings with the SEC for more information.

With that I'd like to turn the call over to our CEO, David Lopez..

Thank you, Julia, and thank you everyone for joining AGS's Q3 earnings call. For those using the slide deck, please turn to Slide 3. I'll start by providing a brief overview of the third quarter operational highlights and after a financial overview from Kimo I'll provide a few closing comments.

The third quarter was fueled by strong sales volume resulting in 1391 EGMs sold, the most in our Company's history.

Total revenue was a record $79.4 million, up 5% year-over-year, which was a result of continued demand for our Orion family of products, record performance from our table game segment and the Integrity acquisition completed in Q1 of this year.

Net loss of $5.5 million decreased year-over-year from net income of $4.3 million in the prior year period due to increases in depreciation and amortization as well as some tax expenses which Kimo will cover later. Adjusted EBITDA increased 10% year-over-year to $36.8 million, our highest EBITDA quarter-to-date.

Q3 recurring revenue of $52.5 million in the quarter was up 4% year-over-year and as we touched on during our last call and we'll provide an update in our prepared remarks today, EGM recurring revenue continues to be impacted by Oklahoma performance. With that I'll now provide an update on segment performance for the quarter.

Beginning with our EGM segment on Slide 4, revenue growth was fueled by sales of nearly 1400 units with the higher price Orion family of cabinets comprising most of the overall mix, driving year-over-year ASP growth of 2% to approximately $18,500.

57% of sold units were the Orion Portrait cabinet, highlighting the fact that it continues to be a major growth engine in the EGM segment with its performance supported by newer games like Rakin' Bacon! In the quarter we sold units at 89 properties across 24 states, plus Canada and Mexico achieving approximately 7% domestic ship share.

Canada, California and Florida were amongst the most significant markets for sales in the quarter in addition to solid placements in early entry markets such as Arizona, Nevada, Pennsylvania and Michigan.

We are pleased to have won 8% of the floor at the new Hard Rock, Sacramento property this quarter, a testament to our strong travel relationships and industry-leading game performance. The quarter was also bolstered by the sale of approximately 300 units of our new Orion Upright as well as 173 Orion Slants.

Nearly 350 of our EGM units sold in the quarter were to new and expansionary properties. We currently have 41 titles available for Upright and more than 30 launching in the next year with overall game performance in line with our expectations for this cabinet type.

Our sales effort this quarter was also enhanced by several changes to our sales organization, including our newly promoted Senior Vice President of Sales, Adam Whitehurst, who joined us from Scientific Games as well as five account executives brought on to enhance the overall reach of the team.

We reported a total EGM installed base of 27,392 units, up 13% year-over-year driven by the inclusion of 2500 units from the Integrity acquisition. The quarter also benefited from the opening of Golden Mazeand Megastar, two new properties in Oklahoma, which added roughly 300 recurring units to our domestic base.

Year-over-year, we added more than 370 recurring units in Mexico, driven by new cabinet deductions and expansion into new markets and casino properties. Kimo will cover RPD in greater detail, but as we discussed last quarter domestic RPD was impacted by the inclusion of Integrity units as well as other factors in our Oklahoma installed base.

With great certainty we do understand the challenges we face in Oklahoma market and we are addressing them with specific and targeted countermeasures. Since the close of Q2 and throughout Q3, we have continued to analyze our footprint, the market and the competition which has led to our conclusion that the issues are clearly twofold.

First, as we indicated on our Q2 call, we did have some product rollout game performance in analytics issues that negatively impacted our RPD performance in the state.

Second is that it's clear that the influx of premium competitive product that entered this space in 2018 has continued to perform well and has taken Oklahoma two premium products share levels that rival some of the highest in the nation.

We said on the Q2 call we have added new resources to our analytics team and reorganized the group with a focus on obtaining higher quality data more frequently and applying more sophisticated business intelligence to make the most well-informed decisions, allowing us to respond swiftly to the more competitive market.

We have centralized our decision-making, continue to ensure the smartest uses of our capital and just as importantly, our product and sales teams are preparing for the launch of the most important measures we will deploy in the Oklahoma market, that being the launch of the premium Orion Rise cabinet along with the new larger portrait cabinet the Orion 49C, both of which will be launched next year.

To date we have touched more than 900 units in Oklahoma. Touches include any change we make to a unit, including game title changes, cabinet swaps or on floor relocations.

Most of our actions thus far have been title changes on specifically targeted lower performing units which requires de minimis CapEx and has helped stabilize performance on those optimized units.

Although we are moving quickly on these changes, it will take some time before there is a material impact on both the Oklahoma numbers and our overall domestic RPD. Our objective is to address nearly 1500 units by year-end and to be prudent in 2020 with our utilization of new higher earning premium products such as Orion Rise and Orion 49C.

The result of the Q3 Eilers-Fantini slot survey shown on Slide 6 highlights AGS's casino-owned game performance maintained its industry leading position for what is now the third year in a row.

Some highlights from the survey include Rakin' Bacon!, our hit title on Orion Portrait ranked sixth in Eilers Performance Report as a top indexing core game at two times house average, climbing five spots from the last quarter.

Rakin' Bacon! has a notable success with over 1600 installs as of today and remains a top growth driver for the Orion Portrait. Orion Slant continues to be a top-performing Slant cabinet for the second quarter in a row now improving to the number 1 Slant cabinet in the industry.

Fu Nan Fu Nu remained in the top 25 core games performing at 1.69 times house average.

Moving to the Philippines market launch, we currently have approximately 180 Alora video bingo test units in the field and are fulfilling orders from the current locations, after which we will pause, analyze overall performance and then address our next steps before adding additional units and investment. Moving on to our Table segment on Slide 12.

In the third quarter, we achieved record revenue of $2.9 million, up 39% year-over-year. Adjusted EBITDA of $1.4 million hit a major milestone in Q3 for Table, surpassing the $1 million mark, while growing 75% sequentially. Our footprint grew 17% year-over-year with an installed base of 3601 units.

The success of our Table progressives drove most of the year-over-year growth with 130 placements this quarter spread across Canada, Arizona, California and Nevada. We were pleased to get our first placements of progressives into Ontario, installing approximately 70 units at Falls View Casino.

And we have sensed adding units at multiple other properties in the province. As of Q3, our total progressives footprint is more than 1,200 units.

As our results over the several quarters have demonstrated both Stacks and Bonus Spin are arguably the most innovative high performing table progressives in the market with plenty of white space to continue to grow. We made numerous installs of our Dex S card shuffler in the quarter, adding 95 units to the footprint.

Dex is currently at properties such as Golden Nugget, Thunder Valley, River Wind and Highly [Indiscernible] to name a few. As of today we have installed more than 175 shufflers across 13 markets in the U.S. In the Interactive segment on Slide 13, we reported $1.2 million in revenue in the quarter, down 28% year-over-year.

The revenue decline is driven by our strategy of decreasing user acquisition marketing spend at B2B social and focusing our efforts on real money gaming or RMG. We successfully launched our RMG platform for the first time in New Jersey with Rush Street Interactive this quarter introducing for proven AGS titles to the market.

We also added seven new operators in the third quarter in addition to signing eight new suppliers on our Ashes games marketplace. We now have 13 operators live and more than 28 suppliers across the platform.

As we exit the year, we continue to expand with more operators and regulated markets around the globe, including New Jersey and potentially Pennsylvania before the close of 2020. With that, I will turn the call over to Kimo..

Thank you, David, and good afternoon everyone. Before I begin, I'd like to point you to Slide 17 which provides a comprehensive operational summary.

As David touched on earlier, net loss attributable to PlayAGS Inc of $5.5 million decreased year-over-year from net income of $4.3 million due to increased non-cash depreciation expense driven by an increased installed base and amortization expense from intangible assets acquired from Integrity, as well as increased tax expense.

Non-cash stock-based compensation expense also increased by $1.3 million. We expect quarterly non-cash stock-based compensation expense to be approximately $2.2 million going forward.

Total adjusted EBITDA and adjusted EBITDA margin in Q3 were $36.8 million and 46%, respectively, and were both up year-over-year due to increased revenue from our EGM and table product segments, and the continued optimization of user acquisition costs in our social interactive business.

Adjusted EBITDA margin improved year-over-year primarily due to improved operating results from our table products and interactive segments. Turning to our EGM segment, third quarter EGM sales increased 7% year-over-year to a record $26.4 million due to a 4% increase in sold units as well as a stronger mix of higher-priced cabinets.

About 45% of domestic sold units in the third quarter went to commercial customers and 55% were sold into early entry markets. In our domestic EGM gaming operations business, our installed base grew by approximately 2700 units year-over-year driven by the purchase of approximately 2500 EGMs from the Integrity acquisition in February of this year.

Normalized for the Integrity units, our domestic installed base increased by approximately 150 units or 1% despite the end of lease buyout of 700 VLTs over the past year.

Including the removal of these units, we were able to grow our installed base by placements in new openings and expansions, as well as growing our installed base with existing customers. Sequentially, we were up more than 300 units as a result of new casino openings in Oklahoma in the quarter that David mentioned earlier.

Domestic EGM revenue per day or RPD decreased by 8% to $25.08 compared to $27.14 in the prior year period. When normalized for the impact of EGMs purchased from Integrity, we estimate that domestic RPD was $26.55, down approximately 2%. The decrease is primarily due to product underperformance in Oklahoma, which David just discussed.

Slide 10 breaks out Oklahoma RPD and bifurcate Integrity performance from our legacy base. We grew recurring revenue by 11% year-over-year due to the Integrity acquisition along with growth of more than 1200 AGS incremental units.

Because our Oklahoma units yield on average an RPD that is lower than our domestic average RPD, these organic placements have the effect of pulling down our overall domestic RPD while still increasing both revenue and EBITDA. Sequentially, RPD declined mainly from seasonality in our Oklahoma business, which will also impact our fourth quarter.

Outside of the Oklahoma market and normalized for the Texas and VLT removals, domestic RPD increased 5% year-over-year, largely driven by growth in our recurring footprint in markets such as Washington, Wisconsin and Texas.

Our international RPD for the third quarter decreased by $0.53 or 6.2% as we grew our installed base in new markets and properties in Mexico that have lower yields than our average International RPD as well as the initial placements into the Philippines.

To a lesser extent, the effect of foreign currency impacted international RPD in the quarter as well. Now turning to table products, third quarter revenues increased by $800,000 driven largely by recurring revenue and bolstered by $400,000 in record sales revenue.

Notably, recurring revenue grew from increased progressive units on lease and to a lesser extent 130 shufflers on lease. Sales revenue in the quarter was driven by sales of the Dex S card shuffler as well as table signage.

In the third quarter adjusted EBITDA margin was 49% for tables as compared to 21% in the prior year period, driven by improved operating performance as well as the timing of product approval and development costs. Next quarter we believe table products adjusted EBITDA margin will be in the low 40% range.

Moving to our interactive segment, the decrease in revenue was driven primarily by a $730,000 decrease in social gaming revenue, consistent with our strategy to optimize user acquisition spend and offset by an increase of $260,000 in real money gaming revenue.

Interactive adjusted EBITDA loss was $447,000, which improved from a loss of $877,000 in the prior year period. The increase of $430,000 was primarily due to increased RMG revenue and decreased marketing and user acquisition costs.

Turning to operating expenses, adjusted SG&A expense of $13.5 million remained relatively flat in Q3 compared to the prior year with increases in headcount and related operating costs in our EGM and table products segment, offset by decreased end user acquisition costs in our interactive segment.

Adjusted R&D expense for Q3 was $7.9 million compared to $7.6 million for the prior year period and remained steady at 10% of revenue.

Moving on to our capital structure update slide, on Slide 14, total net debt, which is the principal amount of total debt less cash and cash equivalents was $523.3 million compared to $468.1 million at December 31, 2018.

Net debt as of September 30, 2019 increased by $55.2 million, primarily driven by the acquisition of Integrity, which closed in February of this year.

For the trailing 12-month period, our total net debt leverage ratio, which is the total net debt divided by adjusted EBITDA, increased from 3.4 times at December 31, 2018 to 3.7 times at September 30, 2019.

Capital expenditures were up $3.5 million or 21% year-over-year to approximately $19.6 million for the third quarter of 2019, primarily due to increases in growth CapEx which was $13.3 million.

Growth CapEx was impacted by new openings in the quarter, where we placed approximately 300 units and placements of progressive table games and Dex S card shufflers on lease. Intangible CapEx of $4.6 million in the quarter included placement fee payments of approximately $1 million.

$900,000 and $700,000 went to corporate CapEx and maintenance CapEx, respectively. With that, I will now turn the call back over to David for closing remarks..

Thank you, Kimo. Slide 7 shows that as of the third quarter we achieved 3.1% domestic market share in EGMs, up 500 basis points from Q3 of last year. This reflects steady growth, which is the result of placing more than 7200 sales and recurring units, including the Integrity acquisition and the domestic market in the trailing 12-month period.

We continue to make strides towards 5% market share and believe that our current slot portfolio along with our new core and premium products that we debuted at G2E will help us get there in the next several years.

At G2E last month we unveiled three new slot concepts and a new shuffler model, which demonstrated the breadth of our R&D teams' capabilities. This year represented the most new products launch in our Company's history.

At the show, our new Starwall LED merchandising display received the silver medal for Best Slot Product in the Annual Gaming and Technology Award and it also ranked fourth amongst the best new premium lease products in Eilers post G2E survey.

With a strong G2E showing and positive customer feedback, we believe that Starwall will be one of the growth drivers for a game ops performance in the second half of 2020. Additionally we debuted our large format premium cabinet, the Orion Rise, which will see initial installs into Class-2 properties in late Q4 or early January.

Rise along with Starwall are the first premium leased AGS product to be released since Big Red which we debuted in 2014. We believe that these two new premium products will not only lift performance in Oklahoma, but also enable us to grow our Class-3 recurring footprint.

Our new Orion 49C curve portrait cabinet received a very positive response at the show and will be launched in Q3 of 2020. Although it's early, demand is strong for 49C as portrait cabinets are the hottest and largest ship share category in the market, which should help us drive sales growth and other lease placements in the back half of 2020.

We also have high hopes for our new Tiger Lord Imperial ADA game on our Orion Portrait which also took fourth place in the Eilers post G2E surveys for best new core video real game.

This game shows the best of our new titles on Orion Portrait and highlights our ability to continue to launch attractive high quality content to support and grow our Orion Portrait footprint.

For tables, the highlight at G2E were Pax specialty game shuffler and our new Bonus Spin Xtreme progressive system, both which generated significant customer interest at the show and will help fuel growth in 2020.

There remains plenty of white space for progressives as we look to next year with British Columbia, Pennsylvania, Oklahoma and Nevada among the most promising markets for growth.

We believe that this G2E was a critical turning point for our table game segment as our robust, innovative and high performing product catalog, which now includes two shoppers demonstrated our ability to be a partner of choice for our customers.

Slide 15 shows our adjusted EBITDA guidance of $145 million to $150 million, which we remain on track to achieve by year-end. As for our CapEx guidance of $65 million to $69 million, we believe we will be on the high-end of that range as we capitalize on new placement opportunities along with targeted optimization with our Oklahoma install base.

As I mentioned earlier, we believe our substantial suite of new product launches will not only assist in improving game ops performance, but will also contribute to our long-term growth prospects.

With six game studios and 35% of our employees in R&D, we are well positioned to support our growing footprint as well as continue to expand our reach both domestically and beyond. Finally, I would like to thank our shareholders and our customers for their continued support as well as our employees for their dedicated contributions.

With that, we will move to the Q&A portion of the call..

Thank you. We will now begin the question-and-answer session. [Operator Instructions]And the first question today comes from David Katz of Jefferies. Please go ahead. Mr. Katz, your line is now open. The next question comes from Brad Boyer of Stifel. Please go ahead..

Hey, thanks for taking the questions guys. First question is just around Oklahoma, David. I just want to see if you could expand upon sort of what you're seeing there today, if you're seeing any sign of the win per day start to inflect down there.

And then I guess just give us a sense of where your confident stands today, we're sort of digging out down there, so to speak, and I know you've kind of previously talked about sort of wanting to be able to sort of hit your stride there heading into tax season of 2020.

I guess, just an update there as far as if that's still sort of seems like an achievable goal..

Thanks, Brad. So inflection point is probably a good way to put it. We've been monitoring the market very closely, looking at it obviously week to week, month to month and from our perspective looking at revenue in the state and looking at RPD, we can sort of see that leveling off for that inflection point.

In order to bounce off back and to really see growth into the future, that's where our comes into some of the things we've talked about in the past and of course at G2E which is releasing some of our premium cabinets into the market. So, first, it will be the Rise cabinet.

Second, that will come in -- very likely be the curve or our 49C and then of course Starwall in for the remainder of the year. So that's where I think that we can see and we can feel our confidence. We've understood the problem very clearly. You heard what we said in our prepared remarks there.

We're seeing it level off, we're often asked that we've seen the bottom. We feel like we've seen it now and going forward, we see that our optimization has been effective and that the new products, especially premium products to compete in that market is a true requirement and that's what we're rolling out..

Thanks, that's helpful. And then, next question. I don't know if David or Kimo want to take this, but obviously when we think through, you guys have been kind of working on this optimization for a while, it's not a new concept, it's obviously a decent component of your CapEx each year.

But as I I hear you guys talk and some of the new product rollouts for next year are kind of going to be more in that non-premium space and I guess those games obviously carry a CapEx component to them.

So how should we be thinking about CapEx sort of as we go forward, it seems like there's some items that could be pushing CapEx higher into '20, is that the right way to think about it?.

I think of course there's puts and takes, right. But I think on average I would say that you'd have some small incremental grow over from this year, but I wouldn't say there'd be anything material. I think what could change that statement could be if some other premium rollout goes even better than planned something like Rise.

I think if that continues to exceed expectations as we roll it out, it could be something that we choose to hit the gas a little bit on, right, and then we would deploy some of our free cash flow for that.

So you might see CapEx go up, but -- I mean that -- I think if that occurs, that's a high-class problem to have because we do still view that that's the best use of our cash.

So, does that answer your question, Brad?.

Yeah, that's helpful, Kimo. Thank you. And then last one is just around the table business. Doing over $1 million of EBITDA in the quarter is quite exceptional.

I got your message around the margin differential in the fourth quarter, but I guess just again as we sort of look forward, do we kind of view this now as a or should we view this now as sort of a $1 million plus per quarter sort of EBITDA business, was there anything unique in the quarter.

I mean, most of the businesses is on lease, so it should be kind of sticky just -- kind of how should we think about that going forward? Thanks..

Sure. Thanks, Brad. I think going forward that's about where we're going to be and obviously we hope to grow that.

What we talked about at G2E and since then is that we really see that -- and not to be too repetitive with the prepared remarks, but we really see that the full product suite in tables has put us in a position in our our big customers and every singular customer out there to be sort of their provider of choice, right.

That's when we got into the shuffler business. After joining the table game business we want to be sort of one-stop shop for them. We wanted to be -- offer them everything they get somewhere else and that's the direction we're headed and I think that's what you're seeing what's leading to the current levels of EBITDA on a quarterly basis.

And of course, as you know, that business can be a whole lot bigger.

As far as in the quarter, there was a little bit of sort of one-time in there, but as we grow, that's why -- that's less of an issue or less of a factor, I should say, we'll have that from time to time within the quarters, but as we grow our recurring revenue portion of that business should put us right in that range and above over time..

The next question comes from Barry Jonas of SunTrust Robinson Humphrey. Please go ahead..

Hey, guys. Some of your competitors have talked about a renewed focus on Class-2 in Oklahoma recently.

I was just wondering if that maybe amplify some of those competitive issues you discussed in the opening remarks and how should we think about that as we think about your recovery in that market?.

Yeah, I think there's a -- I think Oklahoma is unique in so many different way, right, and we saw a couple of things last year that are really the factors that impacted.

When we talk about competition, there is one supplier or aggregator, if you will, in particular that everyone is very familiar with in Oklahoma that has picked up product lines or picked up the business lines entirely from a couple of big vendors.

And as they understand the state very well, managing more units within the state than anywhere else, I think they saw that putting high-end premium products into the state could sort of create a little bit of a competitive advantage or even a vacuum where they can really suck in more of that RPD or win per day on a daily basis, right.

And so what it just really shown us and has been instructive is that, you know, we talked about -- last time we introduced a premium cabinet, and especially a premium lease-only cabinet, it was sometime in 2014. It's 2019 and we're now rolling into our first one which will be Rise.

When we talk about the curve, the curve is not a premium lease-only product, but for Oklahoma it will feel a lot like that, it will feel like a very high-end premium product and then there will be Starwall.

So, I think those factors that they're talking about now with some people focusing on it, I think the focus already there through that aggregator, right. And I think that's affected us through today. And we know what we need to do. So we're focused on our optimization.

We're focused on our analytics and we're certainly focused on and going to be very prudent with our roll out of those three new products in 2020, of course, very excited about it too..

Got it, okay. And then next question is on the guide, just -- maybe just some of the puts and takes between the high and low-end especially thinking seasonality Q4 and Q3. Thanks..

Thanks, Barry. Yes, so there is a little bit of seasonality there in Q4 as we've always seen before. So as far as puts and takes, obviously unit sales is one of the puts and takes and we clearly can see that. You see here in Q3, we talked about in the script, we had some Canada in there. We had some tribal in there.

We had some expansion in openings type stuff in there. In addition to that, our interactive business serves as a put and take. And then of course it goes without saying, it's been the topic to zero, right, our game ops business and in particular in Oklahoma serves as a considerable put and take in that range that we have provided.

I don't know if -- Kimo, do you have anything in addition to that..

No, that covers it..

Okay. And then just last one. Last quarter you talked about one of the issues being potential softness from certain corporate customers carrying into the back half of the year.

Did you see that in Q3 or do you think things have returned to normal there?.

I mean, I don't know how much has changed there. I know that for us, we sell across -- if you look, yes, we sort of slice it pretty thin.

If you look at our sales units in the quarter, yes, we had some -- a good sale to try -- we again Canada but outside of that we're spreading our units across a great number of properties, and that's the way sort of Q3 is one, and that's the we win most of our quarters and what sort of rolls up to sort of our average on a quarterly basis.

So factors is it there, it's probably there. I think that as we always say, good products, good games. You got to power through it and I think that's once again when we did within the quarter..

Great, thanks so much guys..

Thanks, Barry..

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

Hey guys, thanks for taking my question.

I wanted to specifically focus on your gaming EBITDA margins, which have been volatile in the year, given your Integrity acquisition and also just the mix in any given quarter of sales and lease games, but can you kind of help us think about where this should trend given the integration of Integrity, how you're thinking about additional sales with new units in the fourth quarter and beyond.

Have we kind of found a bottom in terms of gaming margins? I know that you gave consolidated margins, but just wanted to hone in on the gaming piece. Thank you..

Yeah, I think if you look at Q3, Chad. I think that's probably about where we settled, right. I think if I'm looking at same number you are, gaining margin was about 47% or so. I think that's probably what you should expect on a go-forward basis..

Okay. Great. And then David, I believe you've opened a few new studios in the past couple of quarters and I think at G2E you noted some of the product that came out of there.

Do you think you have the right amount of studios personnel at this point to deliver the demand that you were earning from your customers for the next 12 to 18 months?.

I mean, where we're at right now, if you were to ask me, I would say we're in good position. If you ask our Head of R&D, I mean he considers gaming studios like home runs more or better, right. So I think that we're in great position.

I think that we have the right number of studios for the footprint we have today as our Head of Development would say if we spring forward like we've done a couple of times and sort of, we have some explosive growth at times, that's when we need to be anticipatory there and get out there and open another studio to make sure that we can fulfill the needs of our growth.

So yes, for the moment, we're in good shape and I think that if you even look at today the games that are in the market and we talked about this at G2E, we've got about five studios. You're probably looking at games that are live right now from two, maybe three studios.

So the full power of the organization from an R&D perspective will start to be felt in that Q1, Q2 period and that's why we are excited about the games that will be coming out that we showed at G2E, but to be approved and launched in next year..

Great, thank you very much. Appreciate it..

Thanks..

Showing no further questions, this concludes our question-and-answer session. The conference is now also concluded. Thank you for attending today's presentation and you may now disconnect your lines..