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Scientific Games Corp (NASDAQ:SGMS)
Q2 2018 Earnings Conference Call
Aug. 2, 2018, 8:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good day and welcome to the Scientific Games Second Quarter 2018 Conference Call. All participants will be in listen-only mode. (Operator Instructions) Please note, today's event is being recorded.

I would now like to turn the conference over to Robert Shore, Senior Director of Corporate Finance and Investor Relations. Please go ahead, sir.

Robert Shore -- Senior Director of Corporate Finance and Investor Relations

Thank you Rocko. Good morning, everyone. During today's call, we will discuss our second quarter 2018 results and operating performance, followed by a question-and-answer period. With me this morning are Barry Cottle and Mike Quartieri.

Our call today will contain statements that include forward-looking statements under the Private Securities Litigation Reform Act of 1995. These statements involve certain risks and uncertainties that cause actual results to differ materially from those discussed during the call. For information regarding the risks and uncertainties, please refer to our earnings release issued late yesterday, the materials related to the call posted on our website and our filings with the SEC, including our most recent annual report on Form 10-K filed on March 1, 2018, as well as subsequent reports filed with the SEC, including our second quarter 2018 Form 10-Q filed this morning.

We'll also discuss certain non-GAAP financial measures this morning. A description of each non-GAAP measure and a reconciliation of each non-GAAP measure to the most directly comparable GAAP measure can be found in our earnings press release, as well as in the Investors Section on our website. As a reminder, this conference call is being recorded. A replay of this webcast and accompanying materials will be archived in the Investors Section of our website at scientificgames.com.

Now, let me turn the call over to Barry.

Barry Cottle -- Chief Executive Officer and Director

Thanks, Bobby. Good morning and welcome everyone. On behalf of the entire Scientific Games team, we're pleased to report that our second quarter results marked our 11th consecutive quarter of year-over-year increases in revenue and consolidated AEBITDA. Revenue grew 10% and AEBITDA increased to $340 million with all of our businesses growing.

We also achieved significant milestones in the quarter, including gamings roll-out of the exclusive JAMES BOND franchise, with the introduction of four Bond games on three platforms. This marks the starting point for leveraging the omni-channel license across Gaming, Lottery, and Social: Lottery and Digital's successful collaborative launch of iLottery in Pennsylvania, Lottery's successful launch of sports betting in Delaware, Digital signing and launch this week of a sports betting partnership with Caesars in New Jersey and coming soon to Mississippi, and Social's worldwide launch of the MONOPOLY Slots Social mobile app, which is off to a great start and now extends the player favorite brand across all of our divisions. So as you can tell, we have exciting growth initiatives in each of our businesses and we're taking advantage of these opportunities.

Over the past 60 days, I've met with our employees, executives, and customers, listening, learning, and enhancing my understanding of the business. As a result of these meetings, I have great confidence that our momentum is building and I am excited for the opportunity to lead Scientific Games. My career has been in the forefront of technology, entertainment and distribution, building games and compelling gaming-related products and services with a consumer orientation. So I appreciate both the value of building game franchises that players love and the benefits of building platforms that enable rich features and experiences for players, which is the heart of what we do here at Scientific Games. It also taught me about the power of consumer data and leveraging it to take a very strategic ROI-driven approach to building products and road maps aimed at what the consumer wants, with a long-term differentiation from our competition, so that we can capture and maintain market-leading positions that are able to sustain healthy margins. And at Scientific Games, we are a market leader. And similarly , I expect us to lead and drive the market over the long term.

Now -- and since it's such a hot topic, I just wanted to spend a few minutes on sports betting. The US Supreme Court decision repealing PASPA was a watershed moment for our industry, opening up one of the largest untapped gaming markets in the world. Thanks to smart planning, investment and innovation and our acquisition of NYX, Scientific Games was perfectly positioned to provide current and future gaming and lottery customers with best-in-class products and services they wanted.

In addition to our global operations, where, for example, our OpenBet platform processed 177 million wages in the UK alone during the World Cup. Over the last decade, we've grown and currently process over 80% of the Tier-1 customer bets in the UK. This week, we were pleased to announce that Caesars will be using our OpenBet platform for their land-based retail and digital systems in those states.

By choosing to launch with Scientific Games and OpenBet, casino operators position themselves perfectly to not only offer their customers the best sports betting platform in the world, but also ensure that they drive revenue growth organically within their businesses for their bottom lines. We look forward to announcing new partnerships as more states come online, so future customers can capitalize on and win in the US sports betting market, by going with the best solution available that provides the best player experience throughout a sporting event. We are confident that OpenBet will prove out in the US as, over time, operators will go with the most robust solution as the market grows.

Now, while sports betting is absolutely a major priority, we remain laser-focused on driving growth in our core businesses by bringing to market compelling new games and enhanced platform and system experiences that engage the player and bring value to our customers, and we're doing just that.

In our Gaming division, we've seen strong responses to both Bond and Ultimate Fire Link, which is our own IP that's performing great in the premium sector. Blazing 7s, the first-ever blackjack progresses to reach 600 placements. iView 4, which is a systems product that enables operators to deliver personalized experiences to their patrons on a cloud delivered service and ShuffleStar that features a variety of technological and ergonomic advances.

In our Lottery division, bringing Keno games to 9,400 lottery retailers in Pennsylvania, the incredibly smooth and successful launch of the state's new iLottery platform, which we believe will set an industry standard for other states as they look to new platforms for their lottery products, and SCiQ, the revolutionary new lottery retail product well received by retailers and currently in pilot.

In Social, beyond MONOPOLY, Bingo Showdown is significantly exceeding our expectations and our core games continue to grow. We must continue expanding our core business to strategic digital front as players mobilize, both platform and content across gaming, lottery, and sports and deliver digital solutions that players demand.

For example, in Pennsylvania, as of July 31, we've seen more than $40 million in iLottery play, and more than 125,000 unique users. In the first couple of months following the launch, these numbers indicate that the new iLottery products are well received and what players want. These numbers represent the most commercially successful iLottery launch for any US lottery.

As we move into the second half of the year and into 2019, we have the opportunity for greater upside in game-offs and International Spot sales, which we are taking initiatives to address, focusing on our top and bottom line and continuing to make strides in operational excellence, which will enable us to delever, invest smartly for our future, and maximize shareholder value.

Before I turn the call over to Mike, I just want to remind everyone listening on the call that the past few years we've made great progress, establishing operational efficiencies throughout the businesses. The operational efficiencies that are in place and the positive corporate culture will remain the same, which provides us a great platform to build on. We will continue to build on our strengths, deliver the best products and player experiences across land-based retail and digital, and provide a seamless solution for players in a way that Scientific Games can uniquely deliver. Our team is embarking on a path to create a culture of market-driven innovation, while simultaneously driving efficiencies that accelerate balance sheet improvements.

Now let Mike provide his review of the second quarter results.

Mike Quartieri -- Chief Financial Officer

Thanks, Barry. Good morning, everyone. As Barry noted, our results were solid. Consolidated revenue rose 10% and our AEBITDA increased 8%. We experienced growth in all four of our businesses. The strength was driven by our strong content and brands that can be leveraged throughout our businesses and our global diversified offerings.

Now, let me turn to our operating units. First, our Gaming business. Second quarter revenue grew by $13.5 million and AEBITDA increased by $9 million over the prior year. Our AEBITDA margin improved 50 basis points to 50.1%. Revenue from gaming machine sales increased $4 million or 3% in the second quarter. A continuing highlight we are seeing is in replacement units. In the US and Canada, replacement units continued the strength exhibited in the first quarter, as units increased 16% from the prior year on a tough comparison. We continue to expect strong demand for replacement shipments throughout 2018, driven by our innovative content portfolio and ongoing demand for the TwinStar J43 cabinet.

Shipments for new casino opening and expansions in the United States and Canada totaled 913 units in the quarter, driven by the two casino openings in the Northeast, the Hard Rock Atlantic City and MGM Springfield in Massachusetts. Last year, there were no major casino openings during the period. And I would remind everyone that last year's third quarter results included 251 units for new casino openings and of the normal seasonal sequential slowdown from Q2 to Q3. There are no shipments for corresponding new casino opens expected in this year's third quarter. International shipments totaled 2,492 units compared to 3,411 shipped a year ago. This year did not include any new international openings.

Year-over-year, our average selling price for the quarter was $17,699, up 1%, largely reflecting a favorable mix of products, in particular the TwinStar J43 cabinet. In Gaming operations, revenue was down 10% year-over-year or $18.5 million, of which $6.5 million was the result of the new revenue recognition accounting for WAP jackpot expense. For comparison purposes, jackpot expense was $5 million and treated as a cost of services in the prior year. Again, this change in classification has no impact on operating income, AEBITDA or cash flow.

On a quarter sequential basis, our installed base of WAP and premium participation units was stable, while the average daily revenue increased by $0.30 per unit. We are pleased with the success of our newer cabinets, including the TwinStar V75 and the TwinStar J43 iReels. We continue to replace our older units with newer products throughout North America. We have recently launched James Bond in Florida and New Jersey with strong initial play levels and are continuing to roll out James Bond content on the TwinStar J43 iReels and V75 and the Blade three-reel mechanical cabinet. And as of last week, we began rolling out our James Bond content on the Gamefield 2.0 cabinet in New Jersey.

Revenue from our other participation units was down $1 million on a quarter sequential basis. The installed base was up 80 units quarter-over-quarter. We placed an additional 369 units in degrees, bringing our footprint to over 2,900 units. Last quarter reflected the expiration of certain UK units previously under contract with Ladbrokes Coral when they merged. As a condition of the merger, they were required to exit certain of their retail shops. This mix shift of installed base with additional Greece and less higher yielding UK units has impacted our yields.

Table products revenue increased $11 million year-over-year, or 22%, led by strong global sales of utility products, primarily in Macau and the US openings. Gaming systems revenue increased $17 million year-over-year or 26%. The growth is primarily related to increased hardware sales for shipments of our innovative iVIEW 4 player interface display units, coupled with the ongoing installations through casinos in the provinces of Alberta and Ontario. iVIEW 4 sales continue to be very strong. They were still in their early innings of the replacement cycle of the existing 325,000 placements of prior versions of the iVIEW. We will continue to roll out our new system to additional casinos in Alberta and Ontario throughout Q4 2018 and 2019. As we've mentioned previously, we recognize revenue when the system goes live, the timing of which can vary quarter-to-quarter. We expect system installs to be stronger in Q4 than in Q3. In the normal follow-on course, we would expect the maintenance revenue associated with those contracts will grow throughout 2018 and 2019 and on into 2020.

Turning to Lottery, our second quarter revenue increased $5 million or 2% and AEBITDA was up $4 million or 4% from the year-ago quarter. This was a record quarter on AEBITDA for the Lottery group. During the quarter, we were awarded the primary instant contract for the State of New Mexico. Within the Lottery business, our services revenues increased $6 million or 12% year-over-year. The growth in services revenue was largely driven by organic growth domestically. We are pleased to announce that we went live with our current systems technology in Kansas at the end of July as well.

Just to wrap up the Lottery segment, I'd like to provide an update on Pennsylvania. The existing RFP was pulled back for some technical changes. It is our understanding the state will rerelease the RFP in the near term. We are proud of our partnership enrolled in supporting the lottery and introducing new products, including launching iLottery in Keno, which Barry previously commented on.

Turning to our Social segment. Revenue continued to grow strongly. Revenue increased 9% year-over-year to $100 million and AEBITDA increased 15% to $25 million. On a quarter sequential basis, our second quarter revenue was up 2.3% compared to the first quarter, as we were negatively impacted by the data privacy policy changes implemented by Facebook. We believe these issues are behind us and expect our social apps to resume their growth trend. We continue to leverage our existing gaming content library to the social casino player to drive revenue growth. In the second quarter, we successfully launched MONOPOLY Slots globally. The game reflects several new innovative styles of play, features that combine slot play with city building. The unique features have driven time on device and results have exceeded our expectations.

In Digital, we've generated $67 million in revenue and $13 million in AEBITDA. The integration of NYX is continuing to progress. In addition to our exciting partnership with Caesars, we successfully launched our gaming content across seven new client sites and signed eight new customers on our OGS platform during Q2.

Turning to cash flow, we reported $102.5 million in cash from operations. Working capital was a use of $61 million, principally related to the timing of interest payments, resulting from the February 2018 refinancing. Additionally, we have the opportunity to further reduce interest costs and extend maturities later in the year when the 10% notes, due 2022, become callable on December 1. We are continuously monitoring the capital markets for the best opportunity to generate future cash interest savings.

From a CapEx perspective, we are now expecting our full-year 2018 to be within the range of $360 million to $390 million. The increase from prior year relates to ongoing acceleration of our installed base of participation games, including planned investments associated with our new seven-year contract with Ladbrokes Coral, additional planned investments in Digital around iLottery and US sports betting, the Lottery system installations in Maryland and Kansas, and the addition of Keno terminals in Pennsylvania.

On (technical difficulty) cabinet it's important to note that it's completely variable. We don't manufacture the cabinet until we have an order in place with the operator. While this year includes past usage related to our LNS concession payments, refinancing costs and higher CapEx spend, we expect strong free cash flow in 2019 and beyond.

In summary, our commitment remains firmly focused on continuous improvement, capitalizing on smart opportunities to grow our business and generating free cash flow to strengthen our balance sheet.

And with that , we'd like to open up the line for questions. Operator?

Questions and Answers:

Operator

(Operator Instructions) Today's first question comes from John DeCree of Union Gaming. Please go ahead.

John DeCree -- Union Gaming -- Analyst

Good morning everyone and congratulations Barry, on your first call as CEO. Wanted to start high level. Barry, you talked a little bit in your prepared remarks about your background, and as we think about the evolution of Scientific Games over the last several years, Gavin was the gaming bureau and Kevin was the cost control. When you think about your background and your vision for Scientific Games, could you talk a little bit about maybe your management style and kind of what you see kind of being your focus going forward from here?

Barry Cottle -- Chief Executive Officer and Director

First of all, both Gavin and Kevin were excellent executives that helped put Scientific Games in the great position that they're in today and I think a combination of both of what they bring, which is an understanding of the gaming industry, and knowing the market, the players, and the customers is incredibly important, as is the financial discipline that the organization needs to build on. And so, both are strong pillars in how I plan on working going forward as well. I think it's extremely important to be customer-focused, market-focused, as well as have the financial discipline. And that financial discipline will remain in place here. With Mike Q here as my right-hand man and I really plan to make sure that this happens.

I think in terms of -- I guess, it's a great question. I would describe myself as, I am a product strategy guy, and more directly a game guy. I absolutely love and appreciate games and gaming enabling platforms. And ultimately when -- we need to build products that people love and our customers want to distribute and carry for us. So to that end, our plan is still, I would say, a greater focus on building great games and betting products that our players love and the platforms and systems that enable those player experiences, because in the end, Scientific Games is a product company and it's important that our solutions deliver on these promises and that we can leverage these games and franchises across all of our business units.

And if you think about it, as we plan and build products, the key to great products is a combination of art and science. The art is designing engaging games and features and experiences that are fun. The science is using data to understand where the biggest opportunity in the market is. What players want, prioritizing your reach, sources and the capital more strategically on the near-term opportunities with the highest ROI as we look to drive our core businesses forward. It's a term that I like to call and I use a lot internally as data-driven road-mapping. It's prioritizing our initiatives, opportunities and the products and services that we build and innovate, because, essentially, cutting costs gets you the resources to spend, but data-driven road-mapping directs those funds and resources to spend toward the highest opportunities. We did this (inaudible) over the last few years and we doubled our EBITDA in two years.

John DeCree -- Union Gaming -- Analyst

Great Barry, I appreciate that. Hopefully you can double EBITDA from here across the platform, which would be wonderful, but we won't hold you to that just yet. One other question I wanted to bring up. You've talked a bit about the sports betting OpenBet platform and you recently announced a partnership with Caesars, one of the largest kind of market access partners in the US. And wanted to know if you could talk a little bit more detail about how Scientific Games is kind of positioning itself. There has been a number of various partnerships and strategies that land-based casinos are taking when they look for a partner in sports betting. So if you could talk a little bit about your strategy and positioning that would be helpful. That's all from me. Thank you.

Barry Cottle -- Chief Executive Officer and Director

Absolutely, and thanks for your question and it's a great question. It actually is very related to the first question, in the sense of great product wins and really focusing on delivering the best product and experience. At Scientific Games, we spent a lot of time examining the sports market. We looked at what happened over the last decade at sports betting and across international markets and we recognized that the best product will win, not the first to get out of PR announcement or first to do, whatever. It is simply building a product that players want to bet, have a great UI/UX experience, speed to bet, cash in, cash out, dependable; that is ultimately what's going to win. We saw that happen over time in the UK and other markets internationally. We did diligence on everyone in the market and we chose NYX OpenBet and that's ultimately how we have looked at our product versus others in the marketplace.

We believe we have the most robust and proven sports solution in the market; speed, quality, it's scaled, proven, customizable with high standards of compliance. It's the best equipped by far to enable B2C operators to win long-term across multiple markets. It's a sports betting solution with all the bells and whistles. If an operator wants fast, glitch-free gaming, in-game betting for maximum player engagement, we believe we have that number one platform. And as we've proven with Caesars, we can stand up and operationalize the customer very quickly. With the best product in the market, higher standards of compliance that won't fall down when the Super Bowl comes around. I mentioned a couple of these stats in the script, but during the World Cup, our platform processed over 177 million bets in the UK alone. One of our customers saw peak levels of 18,000 bets per minute. And during the Grand National, the number of sports bets placed for a single sports operator peaked about 20,000 with over 220 million account transactions, handled over three days in the vestibule (ph). These are the type of scale, quite frankly, that we see that are higher than an online retailer would see on Black Friday. So that is really how -- that's what we believe that we have in the marketplace and how we're positioned against the others.

John DeCree -- Union Gaming -- Analyst

Great Barry, appreciate all the color. Thanks for the questions and again congratulations on the CEO move.

Barry Cottle -- Chief Executive Officer and Director

Thank you. Thank you very much.

Operator

And our next question today comes from Mike Malouf of Craig-Hallum Capital. Please go ahead.

Mike Malouf -- Craig-Hallum Capital -- Analyst

Great. Thanks guys. I'm just kind of following it up a little bit more on the sports betting question. You talked a little bit about being the most robust platform and certainly those numbers that you're talking about in Europe are pretty amazing. Is there maybe a two-step process that you see happening here in the US where perhaps a rush to market, someone might take a less robust product for a year or two, see how it rolls out, see what the participation in the betting activity is, and then perhaps switch to a much more permanent robust solution, and so perhaps, you really get the second wave of benefit, but perhaps maybe not the first. Some of the CEO perspective on that. Thanks.

Barry Cottle -- Chief Executive Officer and Director

Yes, that's a great question. And again, we're not privy to the exact terms of the deals being cut out there. But I think you're seeing -- I think that's a good perspective. I think there's a lot of activity. You do see activity out there of people that are wanting to get out, as you said, touch the market, see what happens in either a New Jersey or a Mississippi and then put themselves in a position where they can make longer term decisions, but get out and be able to take a bet before the kick-off of the NFL in particular. And again, I think that's why I feel we're extremely well positioned. One, is we can move fast to set up an operator, at number two, we believe that we have a long-term solution in the marketplace and what people are going to see is once the market does open up and you see the various products out there, we believe we are going to provide an incredible experience out in the marketplace.

Mike Malouf -- Craig-Hallum Capital -- Analyst

Okay great. And then just a quick follow-up on your CapEx. You raised the CapEx guidance that you'd be doing. As you look out into 2019, do you think that sort of the level will be similar to that or do you think it can come down from this, is this more of a peak cycle here? And then could you just maybe just drill down just a little bit on what the increase, again, is focused in on? I know you kind of rattled it up pretty quickly.

Barry Cottle -- Chief Executive Officer and Director

Yes, sure. So, a couple things. What's driving the increase this year, then I'll come back to your first question about what we think for next year. So, in this year, you did have carryover in Lottery systems from the Maryland contract. Remember that was challenged back when it was issued and we finally went live this year. So you had CapEx associated with Maryland. And as we just launched the Kansas system just in the last couple of days. So you have two installs for systems this year for Lottery. New business opportunity that presented itself was installing the 9,400 Keno terminals in Pennsylvania. You also have the new opportunities presenting itself with iLottery and sports betting and we're making the planned investments that we needed to with there. We did sign a new seven-year contract with Ladbrokes Coral, which will be very similar to the seven-year agreement, where we put in fresh new equipment this year, and then that equipment will sit out there for the next seven years and generate revenues for us. And then we have the continued refresh of our leased gaming machine.

So this year is a higher year than what we've seen in the past, which is also contributing to the free cash flow shortage that we're seeing at this point, but that's pretty much planned for us for this year. When you're looking into next year, the expectation for next year is the wild card is going to be what happens with Pennsylvania. If we're successful in winning the RFP that will be a sizable amount of CapEx that will be spent over the 2019 period. But that would be the only unusual item this (ph) year, unlike the items that we have here with iLottery, sports betting, the two systems and Ladbrokes combined.

Mike Malouf -- Craig-Hallum Capital -- Analyst

Okay, that's very helpful. Thanks a lot for taking my questions.

Barry Cottle -- Chief Executive Officer and Director

You are welcome.

Operator

(Operator Instructions) Today's next question comes from David Katz at Jefferies. Please go ahead.

Erik Hellquist -- Jefferies -- Analyst

Hi everybody, good morning. This is Erik Hellquist on for David, how are you doing today?

Barry Cottle -- Chief Executive Officer and Director

Good.

Erik Hellquist -- Jefferies -- Analyst

Yes. So, sorry to follow on about sports betting, but I just want to touch on the partnership with Caesars and as it relates to OpenBet. Just wanted to see how you guys are viewing the rollout of sports betting there and kind of what you could expect to earn from a profitability standpoint, either for that partnership or I guess is representative of others. And particularly, like how many properties do you think you sort of near in these partnerships to generate meaningful cash flow?

Barry Cottle -- Chief Executive Officer and Director

Yes, so first of all, Caesars is a huge win for us, they are amazing partner with app player base and numerous properties. We've already launched in two of their properties in New Jersey and scheduled for Mississippi in an upcoming date that we haven't disclosed. And I think in terms of -- we are not disclosing, obviously, what the economics or financials of the deals are with them. But we believe that, again, partnering with a player like Caesars with the great brand, market access that they have and the resources they have in the marketplace, we're excited to partner with them and we believe, obviously, sports betting has a lot of kind of, pent-up demand in the marketplace due to -- they're already first here. So we're excited about the possibilities, but we haven't disclosed any kind of particular financials about this contract, in particular, or kind of forward-looking economics.

Erik Hellquist -- Jefferies -- Analyst

Okay. Yes, and just going back to more high level then. So we've seen a lot of these kind of partnerships. Can you just tell me how to -- kind of how investors can think about these sorts of partnerships going forward as it relates to the market?

Mike Quartieri -- Chief Financial Officer

Yes, I think -- this is Mike. I think the best way to look at it is, when you look at just the overall structures of the deal, it's going to take some time for the gaming operators to ramp up the revenue side of the business. As that ramps up, our fee structure will be based on a percentage of revenues. So, it really becomes a focus on how quickly can the markets ramp up. When you look at it on a holistic basis, by the end of this year, you're only going to have about five to six states operational and some of the larger states when you're looking at something like a California or a Texas, they're still early, early in the legislative stage at this point. So, I think it's going to take some time for it to ramp up. I think the tell-tale sign is going to be when the NFL season starts. People are going to be able to track the actual daily activities at that point in time and I think that's going to be a clear indicator for everyone, not only just within the states with that popularity, but also for future states as they come online.

Erik Hellquist -- Jefferies -- Analyst

Okay, great. Thanks for all the color guys. Congrats on the quarter.

Barry Cottle -- Chief Executive Officer and Director

Thank you.

Operator

And our next question comes from Brian McGill of Telsey Advisory. Please go ahead.

Brian McGill -- Telsey Advisory -- Analyst

Yes, thanks for taking my questions. I just have a couple. So on OpenBet, some of your European competitors stated 15 or even 20 times EBITDA. And what I was wondering is maybe longer term, I know you just bought it, but would you think of spinning it out to generate liquidity?

Barry Cottle -- Chief Executive Officer and Director

No, that's not being contemplated at this point in time. We've (inaudible) focus on growing that business and maximizing the value of it for our shareholders.

Brian McGill -- Telsey Advisory -- Analyst

Okay. And then when you say the additional contracts, I mean, should we think about it like you would only want to go after Caesars-size companies or could you do operators with three or four properties or on a number of major Tribal properties or how do you think about the additional contracts when you say that?

Mike Quartieri -- Chief Financial Officer

No, we're actually set up and have the flexibility. We are structured such that we can accommodate a wide range of partners and sizes and approaches to the marketplace. So right now, we're in discussions with casino operators of all sizes.

Brian McGill -- Telsey Advisory -- Analyst

Okay, good. And then just turning subjects here. I guess with the new games coming out on the participation basis on WAP yield, I mean does like James Bond we finally start to see that WAP yield stabilize?

Barry Cottle -- Chief Executive Officer and Director

Yes. If you look at it, James Bond is in their early stages. We've only launched about 14 games as of the end of the period, and as I commented in my prepared remarks, it was literally Friday that we went live in New Jersey on the new Gamefield 2.0 cabinet. So, early indications are that the level of play is strong. We're pleased with that, but it's still early to tell. But we would start seeing the true impact of Bond-licensed games in Q3. It really will have an impact.

Brian McGill -- Telsey Advisory -- Analyst

Okay, good. And then last one, just on international, should -- I guess without new openings, which you kind of reference, should we think about going forward, kind of in the same range of, I guess, low-2000s on shipments a quarter, is that kind of the right run rate without major new openings?

Barry Cottle -- Chief Executive Officer and Director

Yes, I would agree. I think it's going to be low-to-mid 2,000s, is about the right range for units shipped.

Brian McGill -- Telsey Advisory -- Analyst

Okay. Awesome, thank you.

Barry Cottle -- Chief Executive Officer and Director

Thank you.

Operator

(Operator Instructions) This concludes today's question-and-answer session. I'd like to turn the conference back over to the management team for any final remarks.

Barry Cottle -- Chief Executive Officer and Director

Thank you very much. Thanks for joining us today everyone. As you can see, our second quarter results are strong and with continued growth from every business segment, our momentum is continuing. That said, we are not complacent and are excited about the number of opportunities to drive continued innovation and success with exciting products and services. Look forward to speaking to you next quarter. Hopefully we'll be seeing a lot of you sooner at G2E in early October. Thanks very much.

Operator

Thank you, sir. Today's conference has now concluded and we thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful day.

Barry Cottle -- Chief Executive Officer and Director

Thank you.

Duration: 37 minutes

Call participants:

Robert Shore -- Senior Director of Corporate Finance and Investor Relations

Barry Cottle -- Chief Executive Officer and Director

Mike Quartieri -- Chief Financial Officer

John DeCree -- Union Gaming -- Analyst

Mike Malouf -- Craig-Hallum Capital -- Analyst

Erik Hellquist -- Jefferies -- Analyst

Brian McGill -- Telsey Advisory -- Analyst

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