INSE - Earnings call transcript Q1 2024 | Inspired Entertainment, Inc.

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Operator

Good morning, everyone, and welcome to the Inspired Entertainment First Quarter 2024 Conference Call. [Operator Instructions]. Please note, today's event is being recorded.

Please refer to the company's safe harbor statement that appears in the first quarter 2024 earnings press release which is also available in the Investors section of the company's website at www.inseinc.com. This safe harbor statement also applies to today's conference call as the company's management will be making certain statements that will be considered forward-looking under securities laws and rules of the SEC. on to current in risks, based and or circumstances. are subject are uncertainties statements the expectations management's beliefs These and changes

GAAP earnings press In will A that note release. is and both reconciliation the addition, measures. non-GAAP in the included financial please discuss company

to Weil, completed, over please would go conference I company's the that like to ahead. Weil, With the Executive turn now call Lorne Chairman. Mr.

A. Weil

call. you operator. for and joining Good quarter first you, Thank thank conference morning, our everybody,

who will Jentzen with prepared are who me Brooks Pierce as Marilyn Here a in as are moments and provide few Q&A. CEO, remarks Carrera, available well for Eric

Murphy's EBITDA, more As To well spent excess first had accounting in was in date, our of a conference which in our the in was accounting, second levels, course, the with the $XX or expenses have backlog the a dates that line, quarter. XXX% expenses but of we currently restatement, for at few of legal quarter weeks proportion is much the mildly below sales ago delivery moved audit law. cash. less previewed connection year. although had And half onetime other it and and first to we've the into of in significant of call, equipment put million year-end metaphor impacted We a record impacted meaningful

that to remarks by another Interactive for anticipating continue in second we revenue throughout recurring will continue significantly year. these strongly growth very Virtuals in will and driven and the new spend EBITDA QX, are quarter. recorded we of quarter, other see the The has second The especially by But as the pullback be introduction in let this impact new games of new a the strong steady to will quarter, in that the reason have been products. before experiencing preface well see we but in of are markets begun have developments, business course, NFL run to grow which important the its further some during for on no as we that which elaborating our have given growth markets. Similarly, new these and to the opening me saying and we growth confident a initiatives, we business quarter dramatic improvement resumption and further decelerate, NBA

significantly broader well Hybrid seeing and customer positive in some the we're single growth market, Vantage-driven the area, some fourth this of with the dealer largest the impact by gaming add show single growth in Dealer product, game XXXX, putting finishing one strong, In Very very initiatives we're customer sector quarter markets the base live be in the in with wheel, with live a in which many in again, for the launching point we summer. a the eventual EBITDA the a will a industry. which Hybrid augurs to steady one trajectory, of a view, around touches certainly believe in expansion possible year. Roulette world. is entire business will product significant more beginning the in Dealer category Roulette into lastly, online we're of the the game importantly, on gaming largest margin, and And we our from

and is an some possibility improvement, yet from and business, our a beyond, is our margin environments. different company-wide to business the of which several business points which whose currently our operational & but nutshell, plan service, margin our generate restructuring referenced the amusement year. generate mostly last other parts the impacting business the addressing will Brooks significant of Buster's. underway QX essentially holiday to are that that driven of arcade impact gaming a retail by entertainment-oriented of identical separate From this call, Dave leisure models businesses the family largely in conference through equipment, XXXX In but bingo pub, In to business, is again, expansion plan and motorway park think of

functional and content operations field perfectly to product platform development, benefits the potentially consolidation. service engineering, of server elements manufacturing, and So huge providing almost hosting overlap

EBITDA this then to from back give as which of take, we're As the business. on consolidation, year I perhaps the the we strong ago this first that complete into a platform increase alternatives begin light we we're us second holiday XX% a seeing or the strategic order very of to consider increase significant the the half will said give quarter to of, move confident, sequential from the of In that moment year. park can in for a foregoing,

And with to over it Brooks. that, I'll hand

Brooks Pierce

more The Thank contributed key Okay. our Sports XX% I'll our several Sports changing with being ago. relatively Interactive And but in with and with same the accelerate -- try only Interactive are Lorne. we in EBITDA the the just to ironically to in to about of throughout But compared starting on The basis. relay we segment through minimum of drivers on functional key the and the more initiatives Interactive a on the from XX% you discussing first year. growth so but the basis combined most covered quarter, and for mix first to segment year. contribution continued plans to some the and that with up the call your being revenue in prior businesses, of the our EBITDA month Virtual up a topics digital than you, quarter year-end the flat expand of progress or Virtual remarks talked on XX% been currency have momentum launch year-over-year

very broad-based growth April week strategy in design across is the and last had. the team, numbers teams multiple Interactive being customers of geographies. This a as our tiers continue commercial to the grow the is we of our testimony on as and largest teams including revenue record well execution multiple ever phenomenal with game these second month with have week, rates, to Even highest just the and

about the the third early quarter, next Jersey our rapidly our game Just Hybrid launch market for to deliver first to business in particularly product ever. as confident second the in to to the the quarter in and and grew Dealer highest New beginning of levels Latin our game U.K. are and momentum of for thrive. example, the look an the of Roulette at second discussed then quarter the then the geographies, by expand we share We're by past expanding part We're end our excited of and in to this to continue to XX% XXXX in Caesars. America, we've in more are the our in second we'll customer, state and also

year-over-year. we've we seen and had few player impact been Virtuals these by As on customer the for this have modifying is as on their lining the support, growing to our Virtuals success archived just our retail at its an Virtual more quarters live here, to for online and with saw impacted footage a with growth in yesterday a few stabilization quarters footprint last proven business remainder and than has to over NBA last of went Sports, a OPAP key the actually XX% the strong business. silver retailer product today, has levels licensed value Virtuals focus with We There marketing them, on base business as year. OPAP grew with discussed the their look we've sustainable our last be and we very players however, of forward XX% strong

motion growth we're out NFL few to this how seeing roll there. But football and capture it's more customers, much game to our few and improved continue saw over last latest the honestly technology first from has shoot, latest our the I just We amazing years. clips

and drive and business. later and shoots growth as couple this a in Virtual said, operator primarily headwinds both products motion both revenue we're and for player perspective EBITDA full did will And confident to year, set key live will and the hockey due segment and the visual Sports customers. of standard football We a our items. are engagement this Inspired capture Gaming for they'll from be I

contract of providing a service that a that the we SSBTs First is that customer for to loss bring in-house. service has decided to were

customer our in mitigated we by key seeing the Second customers but a the growth are in rollout with will will of cabinet factor reaping double-digit year, is benefits be the of year-end other yet due our to be this a a with Vantage starting XXXX. fully not who's in that contributor sector. delayed and EBITDA realized QX hopeful We're significant this

Illinois deliver good terminals WCLC year-end, customers. to performance big to our improvement the we year, will and on improved subscriptions our game the the and sale that be performance a XXX which end announced by seeing in gaming will take-up the driver of by of are Valor we of We

most gearing of perform weekly are Vantage to Lastly, drive the the equipment QX and well and business And quarter that with is holiday QX. and of up revenue seasonally rentals. help growing improvement we our business in park part in Pubs is in for our year. lowest continues in U.K. backlog leisure the robust part AGC of as the and of to the peaking the throughout in sales the QX will by cabinet. leisure segment, rest QX of segment as is

are move year. base reach targeted of into Vantage we QX to installed installing second aggressively half We as the cabinets in our the

part those steps be works of of reduction of plans in our some and our XX% by flow later be being improved the target motorway business, cost in to to the the cash finally, but by services to the until to we the half the are half our that year margins of number we mentioned, and laser-focused to right Lorne reach necessary MSA will that the the And of U.K., we're actioned cost but extensive and impacting see business, by and Our implement now year. in to improve challenged in a not these second is but changes, the has of also EBITDA contribute will plan as contribute are margins, that implemented these hope year. footfall expected confident on road been degree second these offset benefit

that, over with for I'll it Lorne And to Q&A. back hand

A. Weil

Thanks, now Brooks. was you excellent program to That open an Operator, the can please. if Q&A, summary.

Operator

Instructions]. Jonas [Operator Securities. line Barry from the our of question Truist And first from comes

Barry Jonas

wondering if the start relative share on on to it Dealer. And to live you've possible been comparisons seen I'm communicated, performance. product. to Hybrid also Is more can give dealer you any or color the maybe any early wanted I

Brooks Pierce

Yes.

But think than and we mentioned also obviously, what Roulette from bigger Lorne early in we're you game growth and what about seen of as so driver the really probably a players and some that's relatively comps So as talking any is I is you following Lorne industry New we'll in engaged. with would off product. remarks, and the pretty I some hold steady think performance mentioned a we like plays is it on number know our much is do, both product more until stickiness spikes Michigan And some have But New have bit will I we terms of in days. Jersey. have market one looking we've little one Roulette days next more hopefully having obviously, big market in market the It's still mentioned, some the that of in where a where adding go of and of data, big is for game. then Jersey. players the very the the one

we call, on guess, in can as next more So give August, that some in maybe I we point. talk our

Barry Jonas

the But last then, then. just Do expect comments Lorne, increase Okay. about definitely you quarter, at do still full Great. being this same appreciate the way on point? And you year and talked sort sequential you comfortable really you curious, with QX. consensus. of feel We'll QX up the follow

A. Weil

that answer a and you me from it. can your draw different in Let slightly then reference way,

the comfortable So first as increase see typically that seasonally the the that, from third quarter. conceivably XX% a experience peak said ago, to We more second know the is second we're pretty quarter. a quarter from we'll I quarter

mentioned, tremendous So there's fourth will strong, than not and we largely I equipment the Brooks have quarter third of in mentioned, as backlog the second that that no reason to quarter. sales the is quarter. better a Generally, quarter but be the won't fourth think occur that growing as

million all where those from think I put is. if I comfortable with you together, down X you or about or million So it get X think you still consensus those pretty up can think in where the pieces we're to terms and

Operator

Group. question of next the comes Sigdahl Capital Our line Ryan from Craig-Hallum from

Ryan Sigdahl

Sports. Virtual on start to Want

trends QX? to you So you've EBITDA any up slightly sequentially, sequentially. longer change revenue of guess I then can historical through in the slightly term far seen thus structural that down segment? were you've seen kind talk from And margins any

Brooks Pierce

Yes.

So but X you we we're just very have the a the product in as to day think is America appeal North world. wide Ryan, across the fact, know, the of throughout kind early very going that days, with not in of in business, NBA

see as hopefully and well So obviously, then We'll the the happen business lining drivers coming obviously out geographies. the that NBA and going for the have is, this game we forward new in to new NFL. some the up the Brazil fall year. hockey is

return business. So we're Virtual growth Sports see the in to expecting

a In changed we terms week not second that with whatever can. weeks weeks, quarter, of we'll steady week. pretty in good report far happened state. But far, the dramatically But so of very thus into X we the quarter. anything to quarter the when Last be are X that's kind it's seeing on second we're

Ryan Sigdahl

we've about operator launches markets with of through and Group ComeOn potential you Virtual but world maybe as of seen you kind Sports Spain mentioned you about, But in but talked talk various follow-up recent can kind a just then there. in markets an not the as the Brazil, think around with And other Scandinavia. for

Brooks Pierce

in Yes. Virtual particularly is the Sports in I -- see these they're soccer of as Latin or going because would soccer and that Columbias along some no you're you a to market, market. we as the that Virtual But again, I of iGaming where well. the most you has of you doubt speaking. fact of a think the and hope. expansion on depending Brazil, product come America, Sports know, mean regulated the where because That's crazy one should with predominant markets, Perus, of there's size the And as the the world the obviously, in football population is think

bullish This of us the So in for time. we're America, on it year to had to is up all last kind of think North I North that. -- on have And or America. we of I kind clearly, mentioned call up put the shut still

seeing we're more as that's and to some customer out And customers of that North that confident helping big so early players. to America this appeal with get a will coming us feel Ontario more data we in

Operator

Our from Bender the Citizens next line Jordan JMP. from comes question of

Jordan Bender

opportunity expand or that to market slot this. seeing cycles do you here some guys to the the Does this the want talk could we're about typically, here I when market. consolidation go we U.S. disruption in bring like in supplier U.S. share that in consolidation bring some for the through maybe gain

Brooks Pierce

I mean, we're -- I mean, some space think where Yes. happening. in not certainly the I of the disruption is

which we're that's look their guess in that II that or then me with to we but at that in XXX% X or be the is a Class gave subsequently VLT and product technology a took couldn't able WCLC working ago, So III faith have I us of in Jordan, X the not to from the would that. affirmation that say capital, us is markets. be later, validation the and new set of to our to supplier we again an once we HHR got years do they I skill the not going because Class leap years as it certainly is way

So that's VLT is, we focus But the other where our those think resonate doubt. markets. the No regulated in would content markets? GXS, that all Sure. we that have do

Jordan Bender

XX%. the on of And margin your then goal Great. follow-up,

more just you some talk controls? about the of mix get Now it is kind can your that a there is on through of underway, growth are line? processes are just of of kind cost Or more you between -- those this revenue how

Brooks Pierce

it's I both. think mean, Yes, I

shouldn't ways we increase functional we to this think his we in Lorne comment I improve take and alluded remarks, the that there's as on point. at kind of big there's overlap. there's to have -- think that a it's efficiency probably is But some and actions very

so accelerate so improvement outsource to going of and that's we'll another that's the manufacturing see press that come that. in the we're something And fully we'll publicly and the forward. out yet going try obviously benefit in U.K. take It's that that

-- they're a then businesses of digital business. driver revenue number know, the growing, side, obviously the margin about because initiatives. the part lot a we cost highest talk And as it of So fastest on the you'll is

do, just remarks, the And margins. Lorne we but think gaming it's to his margin. But that in a continues have will think of we going on we as that and expand, as revenue, our expand mentioned initiatives I increase both the a to side, also at couple drive higher

margins. and why targeting in these always So bit these as that's you things XX% of But of take things, those a do, just all comfortable the they time. of take totality little we're

Operator

Riley from comes Bain the question next Securities. of line B. David from Our

David Bain

holiday to hoping what in to discussed we discussing, leisure and with -- the that back that and were Obviously, I'm an Brooks. I seem was guess of what can particular changes park idea you the segment potentially EBITDA was you beyond than segment some go synergistic that less I trying rest. indicate just to And you of get leisure. that within revenue is from

Brooks Pierce

that experts. to don't look we that break at out. have our accounting know I I

Unknown Executive

we out parks that's We at break our concerned this of and most level be in that revenue break the revenue from KPIs, we're willing in stage. -- to holiday our probably the sort

David Bain

very margin? But obviously, can correct? lower I assume it's it's And seasonal,

A. Weil

lower Much margin.

David Bain

now. And the different helpful. And yesterday somewhat Any are in back the about, to what we're new public? sure the then we kind than of M&A, with regard multiples M&A that I around announcement Jordan you've Okay. That's asked I'm private seeing thoughts guess digested to M&A? by seeing

A. Weil

they I it the multiple stock a premium been. have least, the at was or turn think, think a a AGS and was where XX% turns I I and half was -- Well, higher recent think price which announcement, the than X over

to closed buying There it most is I was EBITDA. close. So about are has Yes, -- significant instances, of Aristocrat probably think acquisition Neo the XXx of data which the that's that point. for was at and other finally least one

but Now is difference know, I more you that I a but a the obviously, -- like Neo retail is than getting a think AGS there what probably which terrific is business. as for, essentially they're digital company, multiple, bought is And equipment different think significantly AGS the is XXX% XX% business.

So for two. multiples the that those difference account in between would

the I couple but there particularly that last the the I have independent M&A in think deal, were hasn't retail they like there multiples business -- Neo have like those been AGS what mean, to the been acquisitions area companies. were yes, mean, I digital those double be in when over there companies years, and -- or But several the generally of much tended generally

So I general think of this is state the of sort affairs.

for it's AGS very, the of I the a worth, acquisition buyer I or investment. -- view what very Just is think and the going private my the to clever, very successful going have own is think is

Operator

our Instructions]. the Macquarie. Chad Beynon question And line comes [Operator next from of from

Chad Beynon

markets U.K? change then you that about the of Are Any in to business, in in On the of this change any I gains in market world, seeing last about terms opportunities talked even Interactive you secondly, talk about in your about white the stands maybe kind Interactive. Interactive? some or grow know the in in you but tell know biggest able talked us the implementations kind of the month. I talked share Virtuals nice more how to And share where you it of one just paper UK&I. market you're

Brooks Pierce

talked X kind it's information, market it's of answer -- maybe we the share track public we've time parts. can I'll because in about that. since of your first Well, of we kind kind our really in question U.K. Yes. this Yes, the

grown substantially but ever few we're roughly highest fact at last pretty we're the that the years, levels over still So have and our X%.

we as North us much headroom X% in market interestingly, there's but there's, share data I and between North somewhere our continued think grow think for So America, to is public America in X%. not again,

us, being our is margin can provide And share for huge line. able to share So America time increased you kind market imagine, XXX% a bottom on consistently of is almost to falling the as market in to good games increase the North opportunity.

on to focused on market a having and in American we're we clearly, develop. about So talked we've dedicated business, as well, studio which the that past we'll North comment as the

the think we share. small growing of consistently is So kind market at even year-over-year, plenty XX% business have we though such of we a have because headroom still just

if in the in it as add yet allotment of our the some paper, a to single we determined. kind number the terms they of operating would paper probably In there'll into deployments the very to opportunity white the of of machines, equipment of see increase still biggest think white that the BX But big is because model. BX to the that's machines been we thing the be backlog be already increased in baked is U.K. terminal rest But

that white than think there's don't real in the would see that that, I other we have much that that So any paper impact.

Chad Beynon

that accounting talked second QX. the Okay. Lorne, Could about in sorry, believe outside you And any I Perfect. of quarter more -- call, hit items at terms impact you please? the we of and then on you the expect the in on should that again, the for I'm quantified

A. Weil

million. I QX, million I episode. said think I -- on. the about $XX was $X actually been it it's think whole did I comment don't since yes,

Brooks Pierce

a below the but Said was some... line, bunch

A. Weil

the $X what spent we million first is quarter. in

Chad Beynon

QX behind And or to in Okay. expect QX? us? Or is anything this

Marilyn Jentzen

some around but much our expect million have additional and it. material as of weaknesses, we but to charges, that's legal efforts $X I we'll then those less than continue think remediation costs, that we less some would the much additional be but

Operator

for questions remarks. back more Weil this I closing no to are the There over time. conference Lorne turn at will now

A. Weil

thanks, Again, operator. joining. for Thanks, everyone,

I is is of think the it where through year. where see company progressing we not clearly and balance first the the of now quarter the indicative right

the be will second end the very by with think to one first are. we just of improved those quarters going get I think be that third pleased quarter. the happens. I But And quarters the where year, time it's and we're inevitably the dramatically we from of quarters the beyond and to

X So thanks joining, again months. for you in and to speak again we'll

Operator

Thank that and concludes Ladies gentlemen, joining. all you for call. today's

disconnect. now may You

Inspired Entertainment (INSE) 10 May 242024 Q1 Earnings call transcript