Global Cash Access Holdings Management Discusses Q2 2013 Results - Earnings Call Transcript

Aug. 6.13 | About: Everi Holdings (EVRI)

Global Cash Access Holdings (GCA) Q2 2013 Earnings Call August 6, 2013 5:00 PM ET

Executives

Julie Yusgart

David B. Lopez - Chief Executive Officer, President and Director

Mary Elizabeth Higgins - Chief Financial Officer, Principal Accounting Officer and Executive Vice President

Analysts

David Bain - Sterne Agee & Leach Inc., Research Division

Matthew J. Kempler - Sidoti & Company, LLC

George F. Sutton - Craig-Hallum Capital Group LLC, Research Division

Danny Moses - Seawolf Capital, Llc

Operator

Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to the Global Cash Access Holdings Incorporated Second Quarter 2013 Earnings Conference Call. [Operator Instructions] I would now like to turn the conference over to Ms. Julie Yusgart. Please go ahead, ma'am.

Julie Yusgart

Thank you, and welcome, everyone, to GCA's 2013 Second Quarter Conference Call. Joining me on today's call is President and Chief Executive Officer, David Lopez; and Vice President and Chief Financial Officer, Mary Beth Higgins. On today's call, David will be giving an overview on the company's progress, and then Mary Beth will provide a brief update on our financial performance for the second quarter and review our guidance for 2013.

Following these comments, we'll be happy to take questions.

A few important items before I turn it over to David. First, we have posted our earnings release to the Investor Relations section of our website at www.gcainc.com, for anyone who needs access to that information. Also during this call, if we use any non-GAAP financial measures for references, we will put up the appropriate GAAP financial reconciliation on our website. Finally, a replay of today's call will be posted on our website around 5:00 p.m. Pacific Time.

As we begin, let me remind everyone that today's discussion contains forward-looking statements based on the environment, as we currently see it, and are subject to a number of risks and uncertainties. These include, without limitation, statements regarding market and segment trends and conditions in the cash access kiosk and gaming industry for 2013 and future period; anticipated impact of less favorable pricing terms associated with several customer contract renewals in 2013; the anticipated impact of certain customers not renewing their contracts; flat to low industry growth; limited, significant or projected casino openings in 2013; significant projected increases in our kiosk sales and services business in 2013; continued investment with respect to the company's technology infrastructure and personnel; our product pipeline and ability to introduce new products and services; our current perspective on Internet and social gaming landscapes; our current perspective and belief about our strategic alliance with Scientific Games, the implemented changes to the rules and regulations regarding the interchange reimbursement structure for ATM transactions and other uncertainties regarding changes in network fees on our business; our projections and guidance regarding cash EPS, adjusted EBITDA and other financial metrics; regulatory approvals for new products; and our competitive position. Factors that could cause actual results to differ materially from those described in our forward-looking statements, we refer you to our SEC filings and the risk factors set forth herein.

With that, let me hand it over to David.

David B. Lopez

Thanks, Julie, and good afternoon, everyone. Thanks for joining us today to discuss Q2 2013 financial results and progress on our overall business. On today's call, we'll touch on the following topics: first, we will go over the second quarter results and reaffirm our guidance for the full year. We'll also have a couple of exciting amounts to discuss, first being Graton Casino in northern California and second, our agreement with Scientific Games.

As sales and product execution is a big focus of ours, we will spend some time discussing this and how it dovetails so nicely with our high-level goals at the company. Lastly, we will once again cover our plans for returning value to our shareholders.

Let's start at the high-level, where in the quarter we delivered revenue of $149.1 million, adjusted EBITDA of $19.1 million and cash EPS of $0.21. Once again, we're in line with our internal estimates for the first 6 months of the year, and then reviewing our futures in the overall sales pipeline, we remain comfortable with our full year guidance figures of adjusted EBITDA between $70 million and $74 million, and cash EPS between $0.74 and $0.83. In Q2, our top contributors were cash access, check services and other, which was primarily driven by kiosk sales.

Cash access segment revenue contribution were slightly ahead of plan for the quarter, bolstered by our international operations, which has shown demonstrable growth over the same period last year, primarily due to new business in the Greater European region where we have started services with over 40 locations during the past year. Not only is the revenue contribution in steady growth from our European operation encouraging, but the bottom line contribution is nice as we run an extremely efficient operation in the region. Our other segment increased significantly primarily due to kiosk sales and services, which we will touch on more specifically later in the call. The ATM segment results were very similar to the first quarter, impacted by a few factors that we expected, such as revenue reductions due to lower reverse interchange revenue; and loss volume to -- due to identified customer losses. Additionally, as we discussed last quarter, we continue to see a year-over-year decline in volume of transactions due to customers were drawing more funds at one-time, thus, reducing the number of ATM transactions overall.

Now let's talk about 2 recent announcements that are exciting for GCA, our customers and shareholders. First is the signing of Graton Resort & Casino in Northern California, which is managed by Station Casinos. In case you missed news last quarter, we announced the largest kiosk sale in the history of Global Cash Access. That sales force was also with Station Casinos. This new agreement with Graton is to provide cash access services, ATM and all kiosks for Northern California's newest full-amenity game resort. These 2 deals in back-to-back quarters are not just great for business, but is a positive indication that we've seized momentum in both the kiosk business and in the area of corporate relationships within the gaming payment space. Today, we also announced that we have entered into an agreement with Scientific Games International to provide payment services and integrated digital wall functionality for its U.S.-based Internet lottery clients. This agreement represents our first internet and e-wallet customer, but Scientific Games is much more than that. They're our true channel partner that operates in legal and live online space, where they can leverage their strong lottery presence to brands' business over the coming years. Although i-lottery is relatively young as compared to the traditional lottery business, we believe that Sci Games' positioning in the land-based market operating in 43 states and our market share in the scratch-off market of roughly 90% will lead to potential future business. We're truly excited about this new relationship, their aggressive team and their thought leadership they will bring to our partnership.

Let's talk about sales effectiveness to our product suite and how these relate to our high-level goals.

Single point of accountability is not just a marketing sales term. It's something our customers have been asking for over the last few years. Single point of accountability means that when our customers choose GCA's complete suite of cash management products and payment solutions, they will get continuity and product quality, customer service, sales interaction and executive relationships that will cover multiple products and touch points throughout the casino's payment ecosystem. Our ability to offer single point of accountability, along with the unquestionable strength of our kiosk product line in our core services has put us in a very good position for managing renewals and responding to our customers RFPs.

As we mentioned earlier in the call, our momentum in the kiosk business continues to build with our latest [indiscernible] Graton Casinos. This contract represents a lot to our senior GCA from a customer relations perspective. From a point of execution, our exchange kiosk business and of course, the increased contribution of our financial performance. The great news is that our successes in this area of the business are not singular and they go well beyond one account, which is evident when reviewing our contribution from the other segment, where kiosk revenues are recorded. In reviewing our pipeline for the remainder of the year, it's clear that it continues to be strong and is maintaining momentum.

On our previous earnings calls, I've been consistent about not discussing new products until they are released in the field and being tested by our customers. In some instances, we would wait even longer for strategic reasons. That said, we're very pleased to say that our first data trial, QuikTicket, has gone smoothly. As with any beta test, we're being diligent to measure activity, patron response and gather feedback from our casino management partners. The good news is that all of these indicators are positive as we have found that the transaction is well-understood by casino patrons and they are opting for the transaction without specific marketing push to make people aware of the functionality. Our next steps would be to fine tune the product to achieve broader approval and begin a controlled rollout in 2014. This product, which aims to reduce cash levels in the form of increased gain in velocity, will be yet another product that enhances our single point of accountability philosophy, in turn offering us greater leverage versus other providers in competitive bid situations.

In summary, I think it's important to pause here and take stock at where we are with this news. In short, we have scored yet another meaningful account in Graton Casino, where we're providing kiosks and cash access services. We have signed a meaningful agreement with Scientific Games for the iLottery space. And lastly, we've introduced via beta-test our long-awaited QuikTicket technology.

These are 3 important accomplishments and I believe they signify real progress towards our goal of being the most complete provider of cash management and payment solutions available to land-based and online gaming operators.

With that, I will turn it over to Mary Beth before I return with some final thoughts.

Mary Elizabeth Higgins

Thanks, David. Good afternoon, everyone. As David suggested, the second quarter of 2013 results still keep us on pace to meet our full year 2013 guidance expectations. Our cash EPS, which is defined as net income, plus equity compensation expense, plus deferred income tax expense, plus amortization, divided by diluted shares outstanding, was $0.21 and $0.40 for the 3 and 6 months ended June 30, 2013. Average diluted shares totaled $67 million and $67.4 million for the 3 and 6 months ended June 30.

Adjusted EBITDA, which excludes noncash stock compensation expense for the second quarter of 2013, was $19.1 million, a decrease of 11% from $21.4 million for the same period in 2012.

Same-store cash to the floor, our best indicator of industry trends, showed overall growth, increasing approximately 4.6% for the second quarter of 2013 over the same period in 2012. And although ATM cash for the floor is slightly up compared to the same quarter last year, absolute transaction volume is down about 1.1%, indicating a growth in the average transaction size.

On a segment basis, cash advance revenues, operating income and operating margin were $57.3 million; $15.6 million; and 27% for the second quarter and $116 million; $31.3 million; and 27% for the 6 months ended June 30. This was a 1% revenue increase from the prior year in both the quarter and year-to-date periods.

On a segment basis, ATM revenues, operating income and operating margin were $73 million; 60 -- $6.2 million; and 9% for the quarter, and $148.2 million; $13.2 million; and 9% for the 6 months ended June 30.

Revenue was down approximately 5% or $3.6 million from the second quarter of 2012 and 6% or $8.7 million from the 6 months ended June 30.

For these periods, $400,000 and $3.1 million, respectively, of that decrease was anticipated and was the result of the change in the amount of reverse interchange, which began in April of 2012. The remaining decrease in revenue was a result of lower transaction volumes that our same-store locations combined with lost business.

As a result of the revenue decrease, the ATM margin also decreased in Q2 and year-to-date '13. This decrease was a result of both the increases in surcharges enacted by casino customers to offset the revenue -- the reverse interchange passthrough from Q2 '12, as well as transaction volume decreases.

As a reminder, the casino gets the lion's share of the surcharge revenue. Therefore, any increase in that surcharge goes primarily to the casino and not GCA.

On a segment basis, check services revenue, operating income and operating margin were $5.5 million; $3.4 million; and 62%, and $11.4 million; $6.8 million; and 60%, respectively, for the 3 and 6 months ended June 30, 2013. Revenue was down 16% and 13%, respectively, from Q2 and year-to-date '12. However, operating margins increased from both the second quarter and year-to-date periods when compared to the same periods in '12. The decrease in revenue due to declining transactions, which includes lost business.

Our other segment includes primarily the result of kiosk sales and services and our central credit operations. On a segment basis, other revenues, operating income and operating margin were $13.3 million; $6.4 million; and 48% for the second quarter of '13, and $20.3 million; and $9.8 million; and 48% for the 6 months ended June 30.

Revenues were up approximately 75% and 51%, respectively, from Q2 and year-to-date 2012, primarily due to higher kiosk sales. Operating

income was up 68% and 42%, respectively, for the quarter and year-to-date periods when compared to the same period in 2012.

Corporate operating expenses were $17.9 million and $34.6 million, respectively, for the 3 and 6 months ended June 30, 2013, as compared to $17.1 million and $32.7 million, respectively, for the same period in 2012. This was primarily due to higher payroll and related costs and occupancy costs to support the growth in our infrastructure and our corporate office relocation.

Looking to our guidance for 2013, the companys' progressing well against our budget through June, and therefore, we reaffirm our guidance estimates that cash earnings per share will be approximately $0.74 and $0.83 on diluted shares of approximately 67.2 million, adjusted EBITDA is estimated to be between $70 million and $74 million.

As we indicated in our press release earlier this year, our outlook is based upon margin degradation from customer renewals in both '12 and '13; the anticipated impact from the loss of customers; a stable but low-single-digit growth in the U.S. casino industry, with limited casino openings in 2013; and the anticipated growth in our kiosk sales and services. On an operating expense basis, we anticipated slight increase in SG&A due to the relocation of our corporate headquarters, as well as continued investment with respect to the company's technology infrastructure and personnel.

Looking briefly to the balance sheet. As of June 30, 2013, our total borrowings outstanding were $112 million, and our leverage ratio was approximately 1.55x. It should be noted that we successfully amended our senior credit facility during the second quarter of 2013, reducing our interest rate from 7% to 4%, thus significantly lowering our interest costs. As of June 30, our cash balance stood at $65.4 million.

Our capital expenditures were $7.2 million for the 6 months ended June 30, 2013, and are still estimated to be between $14 million and $16 million for the year. This is primarily due to costs associated with the development of our arguing [ph] product, continued spending on the improvement of our base platform and base product improvements, as well as capital required in connection with our new corporate headquarters.

We have repurchased approximately 1 million shares and 1.7 million shares of common stock for cash of $7 million and $11.7 million, respectively, under the share repurchase program during the 3 and 6 months ended June 30, 2013.

Now, I'd like to turn the call back over to David for some closing remarks.

David B. Lopez

Thanks, Mary Beth. Looking back at my first year at GCA, it's been incredibly exciting with some great surprises. We are now creating some real momentum and beginning to produce some meaningful results.

Momentum is key in our business, and its momentum that is so obvious to me when measuring progress with our customer relationships, which has been great, while observing the focus of our sales and product management teams, which, again, is impressive. And finally, while measuring overall product development and delivery, where we've made meaningful strides.

With our focus on single point of accountability, we are leveraging all of this momentum with our -- and with our had work internationally to help the overall business produce predictable results. With new products like QuikTicket beginning to get exposure, as we begin our i-gaming journey by signing with Sci Games, we are better positioning ourselves for growth, not just from a product perspective, but also from the perspective of providing stable level of cash flow moving forward.

It is this cash flow that has allowed us to delever and also repurchase 1.7 million shares of stock in the first half of this year.

No less important is that our cash flow allows us to explore additional growth drivers, regardless of the past, be it internal investment in product, geographical expansion, like we've seen in Europe, or an acquisition that will further propel us towards our objective of being the most complete provider of cash management and payment solutions available to land-based and online gaming operators.

Once again, I cannot be more pleased in my first year here. I'm equally pleased with the performance this quarter and I'm encouraged with the momentum that the GCA team has created in the first 6 months of the fiscal year, which has positioned us well for success looking forward. So stay tuned as we believe there's more to come.

With that, I'll turn it back to the operator for some questions.

Question-and-Answer Session

Operator

[Operator Instructions] Our first question is from the line of David Bain with Sterne Agee.

David Bain - Sterne Agee & Leach Inc., Research Division

First, congrats on the Graton contract, and also if we can talk about that for a second. I understand it's a 4Q opening, so ongoing revenue mostly impacts '14. But I believe it's going to be a top 10 customer, I'm wondering why the kiosk sales in 4Q wouldn't impact guidance and if there's any item, the refi, if there's something else that maybe fell off during the quarter, or is this kind of a conservative outlook at this point?

David B. Lopez

No. Remember our guidance is a range, David. And thank you, by the way for our -- the congrats on the deal. It was hard-earned. So I think that guidance starts with a range, and we're still comfortable with that range. And every year, I think that we're looking at a guidance range we've done a pretty good job with so far, year-to-date. We've expected some things to happen, but there's also -- there's puts and takes along the way. We've been projecting to you guys and sharing with you guys what's happened in the ATM space. So we're comfortable with the guidance. No need to make a change at this point. But obviously, looking forward to some good positive momentum.

David Bain - Sterne Agee & Leach Inc., Research Division

Okay, great. Also then also congrats with the Sci Games contract, and I know like Lottery is online now in Illinois and I'm wondering if you can provide any insights into, I guess, one, why you think Sci Games made the switch from their former partner, any kind of feel for that. And then any kind of color you can give us around timing and economics as this begins to ramp?

David B. Lopez

I think I'll start with, I really don't know why they made any switch. I would always hope that they just look at GCA and say that we're a great partner. Looking at the volume we do in land-based casinos and the commitment we've made through our partnership with Live Gamer and everything else we're doing in the brick-and-mortar space that we're just a trusted entity. So I'd like to believe that, that's the reason why. I don't want to speak for them, though.

As far as contribution and 2013, I think that we won't see much in 2013, David. I think that we might see some activity, but I would think that most of what we see will come in 2014.

David Bain - Sterne Agee & Leach Inc., Research Division

Okay. And then just last one for me. If you could discuss the recent court decision, eliminating limits on debit transactions. And I understand this can go in different directions as it relates to the cap. But if you could give us an idea as to impact you should it go one way or another or any kind of thoughts in general will be helpful.

David B. Lopez

That's Mary Beth's favorite topic, so I'll turn it over to her.

Mary Elizabeth Higgins

Well, I mean, obviously, there is 0, really, guidance about direction. But what I would say about this is, one, it's going to take quite a while for everyone to mash this out because whatever the Fed decides to do, likely, it's going to end up getting appealed by either the financial institution side or the merchant side, that they don't think small is tight enough. And I would also say, all good news, good news for us, certainly will reduce our debit cost yet again. But, keep in mind, for us, I mean, for the average retailer, the drop from variable to fixed was meaningful, and I mean, meaningful. For us, the drop from variable to fixed was phenomenal. So the drop from a fixed number to a fixed number is going to be a transaction. So whether it's $0.01 or $0.07, it's still penny to transaction as opposed to the first drop, which was significantly bigger than that. So, hey, happiness? We're happy about it, but we're not going to predict when and how big it is. It's good momentum for pressure in all of the card deals. So we're happy.

Operator

Our next question is from the line of Matthew Kempler with Sidoti & Company.

Matthew J. Kempler - Sidoti & Company, LLC

So first of all, I was just wondering for those who are not familiar with the site, could you educate us a little bit on the iLottery market?

David B. Lopez

Well, iLottery, essentially, I think, if you look at it like you just heard the last guy that called in is active in 2 jurisdictions right now. As I said in my quote, it -- or in my prepared remarks, it's relatively young. The lottery business in the United States is huge. Sci Games, as I said again in the prepared remarks, 48 states, they are working in right now. They have the lion's share of the scratch-off market. And as lotteries in each state, begin to legalize iLottery, the scratch-off market, in particular, I think will translate well to the online space. So it's early. It is early, like I said, but I think that the size of the land-based market is enormous. And I think that Sci Games is just a wonderful partner, and we are delighted to be doing business with them, especially considering their market share.

Matthew J. Kempler - Sidoti & Company, LLC

Okay. And are there any other similar type of legal markets that you're pursuing right now?

David B. Lopez

Well, traditional i-gaming obviously, will be a pursuit. But as you see, traditional i-gaming right now isn't moving at a blistering pace. We believe that it will move along and it then evolve and then we'll get to a point where we'll see a move much quicker than it is right now. But I think that, that's preparation readiness in all the different providers within the channel for i-gaming, has to be a -- licensable and be ready. So I think that's what we're looking at is all the entities that want to get online, they need to make sure that they're working with reputable partners, or it could cost their license or something to that effect.

Mary Elizabeth Higgins

And that -- there's something that was -- there's something we talked about in the last call, but couldn't get too aggressive about it, trying to explain to you, but they're using the whole e-wallet ecosystem. It's a very complicated multi-tiered wallet. And for the lottery system and it's, as opposed to what's happening in the Internet-gaming space, at least here in Nevada, where you have maybe an ACH, and they you have to go cash in at the casino case. And it's sort of a band-aid, sort of interim product before the i-gaming space evolves into what it will be. This space, the iLottery space, already exists, and it's got all the legal hurdles covered. So it's capable of using the complexity of what we really got into this for. And so, for us, it's -- it couldn't be a better partner. They are -- they -- we think they get it. They think we get it. And they are so forward-thinking and ready for whatever other challenges are presented, and they are really a big fan of the platform. So from us, it's just a huge, huge step in the right direction.

Matthew J. Kempler - Sidoti & Company, LLC

Great. And then on the kiosk side, the strength that we saw on the second quarter, was that primarily one customer or multiple casinos that have been upgrading? And can you just help us a little bit with your thoughts around linearity. Do we have a deployment backlog at this point? And maybe on the pipeline side, what you're thinking.

David B. Lopez

I think, as far as the leverage goes, we've done a very good job delivering. I don't want to say that we've had any sort of backlog where we've been challenged to actually deliver to any of our customers. Linearity, it's going to be lumpy. When you look at the size of some of these deals, it can provide a little bit of lumpiness. But as you can see, we've been pretty consistent with the delivery of this product. This is a lot of customers. This is not one customer where we're delivering a high volume of products to you and then we don't deliver anything to any other customer. I think that this all goes back to G2E of, what was it, in 2012, when we were showing the products and the level of interest with every customer that brought -- was brought into the booth was very high. And to the credit to our guys in the field, we've got sales and relationship managers in the field. They've been able to deliver the goods on these deals and then on our kiosk teams side, they been able to deliver. So no, we haven't had a backlog. It is multiple customers and it'll continue to be so along the way. Yes, there will be a little bit of lumpiness when you throw in a big deal here and there, but it's a high quantity of deals that we're getting done.

Mary Elizabeth Higgins

And I just might remind you too is when you have a big deal, like the station seal, that's for all property. Those are never delivered in any one -- they're staggard for their protection and for ours, because they've got to do IT set up and all of those things. So most of those large deals are delivered over time.

David B. Lopez

Yes. They usually straddle a quarter when they're that big. As Mary Beth said, it's not -- it usually is not due to the fact that we can't produce a kiosk and deliver it, and said, this is -- for some -- for these bigger companies, this is quite a project. This is a good number of units. So we are very happy with how things have gone, and we're very happy with our ability to deliver to our customers.

Matthew J. Kempler - Sidoti & Company, LLC

Okay. And then just regarding the core, at this point, it's more than half way through 2013. Have we still -- are we still in the middle of negotiations for any 2013 contracts, or have we gotten past that point here?

David B. Lopez

I think that this is -- I hate to sort of give you the same answer we always do because we're always in negotiations. There's a percentage of the business that we're working through consistently, all year long, every year and it never really stops. That said, from what's going on in 2013, and we will go all the way into 2014, we're very proactive in approaching our customers. We get out in front of these things before an RFP comes to us, and we make sure that we have -- we've counted it before. We have 6 to 8 touch points between us and every customer that we have so we can ensure the best chances of winning those RFPs.

Operator

[Operator Instructions] Our next question is from the line of George Sutton with Craig-Hallum.

George F. Sutton - Craig-Hallum Capital Group LLC, Research Division

So David, you had mentioned demonstrable growth in the U.K. and that you're now at 40 locations. I know that's been a focus for you. Can you give us a sense of how significant the opportunity there might be, and then also if you could discuss some of your other international opportunities?

David B. Lopez

Yes. Well, we -- right now, that's sort of a European number. It's the broader European market. And keep in mind, those 40-plus locations, and I think it's somewhere around 47 locations that we've installed into over the last year, are the boutique-type casinos. These are not -- they're not the Bellagio and they're not Caesar's Palace, right? They're not enormous casinos. We think that we continue to see some growth in that market, and there's various areas within Europe that we know that we can expand into. We just have to be patient and make sure that we do it right. Internationally, we keep hacking away at Asia to do the best we can, and we think that we have our methods and approaches to get into these markets and it just takes time to execute, much like it did in Europe. It doesn't happen overnight. But as our strategy plays out and as we saw it play out in the European market, it's been successful, and we believe we will see the same thing over time in Asia.

George F. Sutton - Craig-Hallum Capital Group LLC, Research Division

Now last quarter you mentioned that kiosk opportunities were fairly significant in the international market. Has that been some of the success we've seen from the kiosk side?

David B. Lopez

It's a mixed bag, obviously. There's some international in there. And obviously, we're doing a -- we're announcing domestic business with you. And obviously, we are working very hard in the international market, but it's not all U.S. And going forward throughout the rest of the year, it won't all be U.S.

George F. Sutton - Craig-Hallum Capital Group LLC, Research Division

Okay. You mentioned that the cash flow flexibility that you have now and discussed potentially, acquisitions, international expansion, et cetera. Can you just give us a sense of where you may be the most focused?

David B. Lopez

Probably, a little early for that. And I think it's just something that we want to be careful with. We don't want to talk about anything too soon. Obviously, we're gaming and payments company. So as I've said on previous calls, we've got a lot of options. We really do. And with our capital position and the cash flow that we project over the next year, we know that we're capable of doing some things. But we want to keep our options open. I don't want to sit here and tell you, oh, we're so uber focused in this one area and then we make a decision and it happened to be a great opportunity in a different area. So I think that, as I've always said, we're in a business right now. We're online. We're going online, and that is -- we're in the brick-and-mortar business. We're not just offering payment solutions, but we're doing -- I call it cash management through the kiosk business. And we've got some great partners that we're working with. So as we continue to really improve our business through those areas and release our new products, I think some of these other opportunities will become very obvious, then maybe we've already seen some of that are becoming obvious. So we look forward to sharing more with you in the future, George.

George F. Sutton - Craig-Hallum Capital Group LLC, Research Division

Lastly, if I could, relative to the Graton win. Did you -- did that give you any good information about the competitive landscape that you could share?

David B. Lopez

Well, it gave me great information about the competitive landscape, but I'm hesitant to share. But I think we learned something on every deal that we win. I'd say that we certainly learned something on the deals that we don't win as well. But we certainly learned a lot, and I think that, I don't mean to just echo the prepared remarks, but what we have learned for sure is that with the product suite that we have and the fact that we have the single point of accountability that customers have been asking for and now we're certainly delivering it over the past year, and our kiosk business is, I think it's an understatement to say that it's hit its stride, I think that's the biggest thing we're learning, is that, that single point of accountability makes it much easier and a much more comfortable decision for our casino partners to choose GCA. Not only are we leaders within the market, but we have such a broad portfolio that it's hard for them to say "Geez, why do I want to deal with 2 or 3 or more vendors when I can just -- I can have GCA be a single point of contact?" And sometimes, they even say, "I don't want to talk to anyone, but one person, and then I want a back up number, just in case." And they love that. That's something they really enjoy, is that they can get treatment from one person and then they also know they can get right on up through the system, to the CEO and the CFO if they want to chat with us.

Operator

Our next question is a follow-up question from the line of David Bain with Sterne Agee.

David Bain - Sterne Agee & Leach Inc., Research Division

Great, I had to hop back on and ask about QuikTicket. Just any kind of data points you could give us with respect to customer impact at this point? Did it work to increase coin in? Can you give us maybe a broad idea of percentage of patrons that actually chose Ticket over cash, anything that kind of show where you're at, at this point of view would be really helpful.

David B. Lopez

So I will admit, David. I was shocked that you didn't bring up QuikTicket in your first round of questioning. So I'm glad you called back in. I would have been terribly, like, surprised. I think it's been -- QuikTicket's been interesting. When you release a product like this, and I view it as we're blazing a trail. It's something that's relatively new to this business. Obviously, tickets are not new, but the way that we're doing this QuikTicket product is new. And we're blazing the trail. So there's a lot of learning to -- have happened here. From a customer, from a patron perspective, from a GCA perspective. We've got tons of data points. Loads of them, David. And actually, they're all encouraging data points. As I've said earlier, we -- there's no model standing alongside a kiosk thing. This is how we use the product. There's no customer service agent having to explain that this is what QuikTicket is and here is how you access it. I think that we are very good at screen flows. We do a good job at presenting the product to the customer. And we haven't done any on-screen marketing or any flyers in the casino yet, any posters of any kind to explain the product, and people are opting for it. And that's a great start. So we have loads of data, none of -- I mean, most of it would just being numbers, if I would share it on the call right now. But we'll keep charging along here and at some point we'll be able to share great numbers. But I think we'll get it in, in a handful of casinos so we can give you a broader base of numbers across more casinos.

Operator

Our next question is from the line of Danny Moses with Seawolf Capital.

Danny Moses - Seawolf Capital, Llc

Congrats on the 2 wins. Just a quick question on the Sci Games contract. When I think about certain states, lottery is running the entire Internet gaming program, Delaware as an example. With SGMS buying WMS, with that deal closing later this year, does that get you into the WMS? And when I think about iLottery, can I make an assumption that you'll also be in there bidding for online gaming as well in non-lottery things?

David B. Lopez

No. I wouldn't -- our agreement just doesn't give us any lockups there, Danny. It's a separate deal. And right now, being that, that isn't -- hasn't all come to fruition, although I see where you're going with this. And obviously, we can be hopeful. Our job is to go out there and perform in this iLottery space. And as I've said to the team, we had to overwhelm everyone with the job that we do to create opportunities in every other area of i-gaming, right? So if somewhere on the other side of the wall sets the guidance in charge of i-gaming and is involved in what is now the WMS entity, let's overwhelm them with service and being accountable and doing a great job and just really doing what GCA does well. So I see where you're going with it. It's not -- that's not something that we just lock up in this deal. This is an iLottery deal. But I certainly see the direction that you're heading with it, and we've got to go out there and do a great job and win that business at some point, too.

Danny Moses - Seawolf Capital, Llc

Okay. And I would assume you're still also pursuing other avenues within online gaming down the road?

David B. Lopez

Of course. No, this isn't the only thing that we'll do. I mean, the traditional i-gaming space, we're pursuing it. We're obviously very excited about what could be there. But obviously, it's still moving a bit slow.

Operator

At this time, there are no further questions. I'd like to turn the call back to management for closing remarks.

David B. Lopez

Thanks. I appreciate everybody calling in today. And we look forward to next quarter with you guys.

Operator

Ladies and gentlemen, that does conclude the Global Cash Access Holdings Incorporated Second Quarter 2013 Earnings Conference Call. We thank you for your participation. You may now disconnect.

Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.

THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.

If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!