What: Shares of Global Cash Access Holdings (NYSE:EVRI) are down nearly 16% after the company reported weaker-than-expected second-quarter results and lowered guidance for the remainder of the year.
So what: Global Cash Access met expectations on revenue but missed earnings expectations by a penny per share, but a slight miss can be forgiven; it's the guidance that the market is focusing on today.
On the conference call, CFO Randy Taylor opened his prepared remarks with revised guidance for the rest of the year, noting that the company now expects full-year adjusted EBITDA of $200 million to $205 million, down from $218 million to $228 million.
This implies second-half adjusted EBITDA of $97 million to $102 million, down from $103 million in the first half of 2015.
Now what: The company expects its adjusted EBITDA to fall largely due to its investment in rebranding and some additional research and development expenses in its gaming unit. In addition, it agreed to sell PokerTek, a designer and builder of electronic poker and blackjack games, which it described as "not core to the games segment" on the conference call. The sale of the business will invariably create a drag on gaming revenue when the transaction closes.
The new guidance includes the assumption of double-digit revenue growth in games and single-digit growth in payments. It's worth noting that games failed to produce double-digit growth this quarter (revenue grew 9%), while payments clocked revenue growth of 5%.
Given the change in guidance, which is predicated on goals that weren't met this quarter, the market understandably questions whether the company can meet its new expectations for the second half of 2015.
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