New Global Cash Access CEO Ram Chary, who took over the company in January, is shaking things up, shifting the company’s focus to full cash-management solutions for gaming establishments as opposed to sales of individual products.
Chary replaced David Lopez, who resigned effective Jan. 27 as president and CEO and as a member of the company’s board “to pursue a new career opportunity.” Loss of some gaming business, including Mohegan Sun last year, may have contributed to the leadership change. Chary most recently was executive vice president of global commercial services at Fidelity National Information Services Inc.
During a conference call with analysts to discuss the company’s first quarter earnings, Chary described his strategy for the company, which is to move away from talking about individual products.
“As innovations like QuikTicket, TableXchange and CashClub make their way from beta to market, we will integrate them into broader multiyear solution offerings that are consistent with our position as a long-term strategic partner for our clients,” he said. “We are shifting to combine those into a more meaningful solution sale that will allow our capabilities to be fully showcased within our customers’ footprint.”
The creation of an integrated kiosk, which serves as a standalone product supporting multiple services, is part of the beginning of that shift, Chary said. “That will get us away from the short-term hardware sale into a more sustainable, longer-term revenue flow against that solution,” he said.
As such, the company should not be as susceptible to competition as it was in providing commoditized solutions. And with the kiosk providing a differentiated value to clients, Global Cash Access can command a premium in the market, Chary said.
“As we move to solution sales, we are uniquely positioned relative to any possible competitor from providing an integrated solution that no one else can provide,” he said. “And I think that will translate into inherent value for our clients, and that value for our clients will translate into better results for us.”
During the first quarter, Global Cash Access generated revenues of $150.6 million, up 2.6 percent from $146.8 million during the same period ended Mach 31 last year. Net income was up 23 percent, to $7.5 million from $6.1 million, according to the company’s 8K regulator filing.
On the call with analysts, Randy Taylor, Global Cash Access chief financial officer, noted a dip in ATM revenues caused by lower transaction volumes at same-store locations, combined with lost business, including Mohegan Sun at the end of Q1 2013. Check services also declined because of a decline in same-store transaction volume. Conversely, Other revenue increased, primarily due to higher kiosk sales, he said.
“Same-store cash to the floor, our best indicator of industry trends, increased approximately 1 percent for the first quarter of 2014 as compared to the same period the prior year, primarily due to bot credit and debit cad transactions in the cash-access segment, Taylor said. “Combined credit and debit cash to the floor was up 7 percent for Q1 2014.”
Broken out, cash-advance revenues were up 5.6 percent, to $62 million from $58.7 million. ATM revenues fell 2.7 percent, to $73.3 million from $75.3 million. Check services revenue was down 10.2 percent, to $5.3 million from $5.9 million, and other revenues rose 41.4 percent, to $9.9 million from $7 million.
In terms of dollar amounts processed during the quarter, Cash advances totaled $1.3 billion, up 8.3 percent from $1.2 billion; ATM volume dipped 2.9 percent, to $3.3 billion from $3.4 billion, and check-warranty volume remained steady at $300 million.
In terms of transactions completed, Global Cash Access handled 2.3 million cash advances, unchanged from a year earlier, while ATM transactions fell 5.6 percent, to 16.8 million from 17.8 million. Check-warranty volume fell 10 percent, to 900,000 from 1 million.