INSE - Earnings call transcript Q2 2024 | Inspired Entertainment, Inc.

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Operator

Good morning, everyone, and welcome to the Inspired Entertainment Second Quarter 2024 Conference Call.[Operator Instructions] 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. These statements are based on management's current expectations or beliefs and are subject to risks, uncertainties, and changes in circumstances.

In addition, please note that the company will discuss both GAAP and non-GAAP financial measures. A reconciliation is included in the earnings press release. With that completed, I would now like to turn the conference call over to Lorne Weil, the company's Executive Chairman.

A. Weil

for to thanks conference second and call. morning, tuning our in quarter Good

the XXXX, in are which customer share discuss new and of second which expand our we add in morning be component products. business Pierce; star moment. were of category, X grow once it of start on beyond. exciting will CEO, sequentially and new Brooks moment, base, of our of me quarter. revenue the was consensus will a the business much our outpacing of how new detail EBITDA are Joining I of we half up customers, portfolio. from this number year the this In hitting and will cylinders. ended Market our about world, and driven a the throughout new quarter Brooks driving forecast Brooks interactive interactive the fact In to and into to new well shared Corporate a as that discuss as initiative, grow show that the ahead second in initiatives to QX Eric pretty become and the EBITDA the we're again, geographies on thinking respectively, we XX% the first and overview then which we dealer geographies, VP Development, think call, about the The of the and our CFO launch is to Carrera. very an I'll Brooks by that quarter and turn again ahead, XX%, growth Harbir interesting broaden with all with and and try reflects will in first frame over the to XX% products far market. by importantly, of Jentzen; meaningfully would largest some growth Marilyn the second ahead conference at least by of we quarter, thought quarter XX.X% elaborate gains areas most

and XX% in terms conversion be business of cash ever to In I even performing of have all margins excess perform with in think higher. cash Sports years another profitability continues this. and my EBITDA our seen these I at flow, Virtual of business doing levels highest don't

of so optimization have impossible 'XX, events moment, press the the or the lengthy geographic upon product of to the strong largest part period the business. in part momentum a the quarter first Patty meaningful will recently in of to Hill William discussed were in been the sustained our anticipate of betting business year-to-year underlying and understand as deliver we product gaming cabinets the with strong of fourth core we see water, Following to of expansion, But Power shop this revenues There due impact expansion. operators, and 'XX and growth, now recent X we previously. both mentioned this of as in replicated second we have new half begin exercise, the and absence one-time of which year. quarter in EBITDA user expect base Betfred Brooks a along are it's first treading the to in that year to with growth many the this X our second a nearly in Vantage will half as begin geographic pattern showing X,XXX nonrecurring of revenue and we and see exceed in as release, elaborate

will throughout of XXXX. be the pumps, an Similarly, cascading cabinets sensing state driver motion growth the into an significantly is important a process revenue driver that and top-tier more well. EBITDA this as for important the replacement So injection entire of advantaged public

business plan on Lastly, of discuss our mention below to And in average Park Halide weeks. our should profitability more will that the the the well coming hopefully, way to we is rectify have I to fruition.

previously, to margins get plan. As the Brooks. this that, overall the component key of And hand into is it comfortably I'll mentioned our EBITDA over fares. to with our

Brooks Pierce

segment Thank the segment key with of XX%, we've and leverage leading growth ever and of its and half you, recorded. of and addition There week business and by end the XX% mature carried the X% into in bit the adjusted business adjusted the great August, consistent XXXX. our I'll XX% and EBITDA ability Lorne, second in is with highest in XXXX of games, of segments perspective revenue the sequential like gain drivers year-over-year and some increasing trajectory little a share to and being exists for the delivery are growth the U.K. that this on our The operating The revenue high-quality revenue continued the map through that year-over-year Interactive July history of performance, of content strong EBITDA being quarter-over-quarter the showing market individual customers, markets momentum to revenue growth business. several highest growth actually markets, in a road give first this more including color individual going and factors on are

games expect markets and go I'm just year. slots X West what the end share and and to what Pennsylvania, blended in in and XX% X% and mature both Street serve key we've geographies see component largest X.X% and and product success We to Connecticut quarter. for of reached by expect U.K. Virginia and but the XX% in like across to of recently So performance gains grew North roll market out game we the and from growth of and in we highest Jersey, encouraged ever in states in of serve of customers launched mechanic our Fan several representing market We QX have South all before is opportunities, years Delaware of U.K., North more above versus our the Michigan, the Brazil our New been in the live in We're more market of to of both in segment, We've this ago quadruple plumber the new slots America added performance and increase XXX% X% The innovation We the the runway key were table this in biggest QX, of ago, in in in key for game also the with share examples our exclusive still me plenty Africa. this QX market. introduced give talking and customers and introduced the our of a and now key with Duel games that some year in American due fanatics a market. with the content of first customers about. Rush content let to XX% parks growth progressive of group. very many

dealer. So let's talk hybrid about

drop we're seeing Interestingly, report off the Jersey. than We terrific. slot this So that has are and Bona has state second seen our Interactive what dealer, the We've its active encouraged the starting what been New we the and with since We really in stakes stride which have results and turnover are been players hybrid with went is larger that live New more Michigan, player XX% that live and number games its great across whereas Michigan QX. turnover and increased markets, the in days, BetMGM we've since after to early the segment of by seeing. monthly although time. we're increased in launch. supporting players this full time over and with we'll period, Jersey, and Jersey, average In proves BetMGM XX% tend we're it's said seeing repeat placement doubled seeing both saw sticky in hit and highest site. in after base it's play going we think New in that's in great higher days launch Jersey City, most Michigan the players We're in still spectrum the active very appeals a New product early the marketing over is is in but significantly than results in with of on to in broad and has than launch

technology successful As on over discussed we've we only our of quarters. some branded about wheel be multiple customers Roulette bespoke roulette games more zero couple in roulette and [ through launched the excited to can next and the we're than calls, the games, versions we'll We world previous game, created roulette double area be launching even North and with ] game, be rest that U.K., a we dealer game of fully super expect game hybrid a the to and be the an side America a this unique deploy. generic of

rest be will a will of about Interactive We and these part expect meaningful XXXX segment that getting that live to XXXX. believe the contributor products company and be of this in the the customers

of latest digital of of our performance the in and customer the and to versus attracting We to in and a and potential business, out headwinds continued We the have including roll this QX Sports perhaps of we small the and live and plan year Virtual same of our EBITDA launched half Sports our NFL. on our largest of game bullish in we've year second customers a as this markets The terms We expect additional America stream type half some with some single even Betano throughout other Brazil remain see a the other of and North and these number content, turnover source soccer. very markets seen customers with the of seen levels with this in NBA with with the going with recently We to U.K. dip different segment and in see past. uptake new eSports improve in see delays to primarily positive contribution. and of products that approaching first QX than in some both on would revenue that player a plan Virtual virtual performance. to have the

Moving to the land-based over businesses.

as as this that So betting We in the significant by Vantage other from improve Vantage a X the be Evoque, performance of QX the complete long-term installing events segment signing approximately We'll the in we've the their XXXX. QX uplift formerly and our deployed with being way deal seen Hill. in XXXX. of terminals X,XXX meaningful combination the Gaming starting April new new customers with to the in of will the expect our U.K. included William the business partner, install believe U.K. across structure segment in well largest X in shops and terminals a service agreement of

terminals expect XXX in in of event Second in markets This Alberta, validates our the into with of a we was rigid evaluation is a customer big province, completion and going the GXS the converted and Canadian position second we competitive sale that to so successful a AGLC be meaningful quarter. AGLC performance-based think Canada forward. our

at that We indexing the base went since also that in deployed deployment have in it of customers believe our we market, key the part a with content there. a subscription-based on content markets. Illinois strategy have performance new highest in We that's growth in levels view our basis large is to due sustainable VLT and installed validates seen recurring our to live we

and and is rolling cabinet pub been it in of highest over-performing segment customers the as slan our a business. segment final [ cabinets in the period, proving be strong September. of has in business, some with the We're we're in betting midst of Finally, bookings large original out some more terminals part with of with a headwinds, sector Greece, and of to with the the mix well business. pubs to our customer performance seasonal in The the their to some OPAP, leisure We're is in performer seeing parks across in the advantaged replace of cabinet. cabinets the Vantage as particularly newly top] developed large but facing as just August holiday the this discussions shop

Moving side be We've continue discussed our with in U.K., end we facility $X in savings are of year manufacturer to consolidating shared down to close annualized our reductions margins. approximately headquarters operating cost of little the by facility fully the expect we'll to to into operating generate our and logistics also million in the the cost with which that our efficiencies our and savings. to bit terms over manufacturing, a quarter move the we call, facilities and contract make of meaningful first towards shutting Wales Midlands a plans our and completed progress good outsourced in we improving to

some areas business. excited and performance up we've with William are into in of the reduce and Lastly, in only we half about will that momentum by initiatives obviously, year, moving leveraged purchase second dealer. of across QX we the very our not deployed from particularly XX%, costs good second across And business, with HX, number think but being saw including XXXX. benefit interactive, in quarter EBITDA of Overall, the to the Hill power the a we're the strongly hybrid that

with So hand it final now up opening to remarks for that, to Lorne back Q&A. I'll before

A. Weil

at don't really this I Brooks. remarks time. Thanks, any have further

So the open program you please operator, could Q&A. if to

Operator

begin now Instructions]. question-and-answer will We the session. [Operator

with line comes of Jonas question Barry the first from Securities. The Truist

Barry Jonas

on how the right and gaming see tech Really happening to space positioning thoughts get Inspired's curious M&A specifically ] here. your you take now. [ in privates

A. Weil

business on and the M&A growing we performance initiatives creation that on other we just about of private at talked acquisition and I continue, as as kind But take not and focus the run is really business. we're worrying to ourselves. and is positioning our for obviously, look the can well activity now, and to Brooks focus about the possibly of Our than

Barry Jonas

outlined next into of share And allocation But curious year. initiatives then capital exciting obviously, about how you're a you've repurchases. lot here thinking specifically

A. Weil

Obviously, is do. almost back something buying is our laughably and stock Yes. Well. undervalued, we stock to want we think

more by by I we on all balance that we to significantly we close been think mess second. liquidity that whole sheet now the has God have $XX done the we have million restatement cash with. know But our something than impacted probably are thank this

now, allocation on think say prudence I our rebuilding right focus would So to capital cash.

forecast our coming performing internal we're because part are period. the businesses strongest see we the as into fourth and even balances of third latter quarter, in is cash very, increase Our into get quarter, we'll maybe very the a in beautifully the our significant

forecasts going cash back think, it get the share without that would latter question, as to focus of then is capital way we the are our I builds the allocation year, our So into part and if shift indicating to our repurchase.

Operator

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

Jordan Bender

much with see the how currently launched help in working operators with us with the to Can frame companies you more agreements you that have Gaming quarter. or do not content several during customers you're runway Nice you market? U.S.

Brooks Pierce

my all honest, be and Jordan, over now when those not we're to remarks we're XXX% a lot mentioned X that many, not There's too that I in Connecticut big customers markets. left that Not of small other Yes. live in the in with. and XX% are relatively

we've We something been about for has of a get this quite the markets. So to talked wanted while. coverage the

close So we're being there. to pretty

the the Now the Brazil, that about obviously, get talk operators like to their doesn't thing are licensing of geographies, kind of line. do in we'll new obviously, some where same particularly need the And in where live. starting we be. cover to it that done we being we're is pretty to goes we've close States, as market want But which in all states, the yes, to of that

Jordan Bender

or kind question, think And been least update from Is what Greece for maybe headwind kind market in I follow-up, and consumer the a at of there but in was XQ. just of you're the of there a market-related terms a company, a any perspective? it seeing has then

Brooks Pierce

Yes.

in the I of a of headwind Greek the #X in think seen Greece, little We're by has for softening a it has kind everybody everybody. but bit still performance market. been

to installing the I things of be we that equipment talked in was about expect new Greece. One some

new competitors in. put actually our already of Some have some equipment

will in been kind maybe lead, our this some even we next the Greece a little share of biggest new X driver. probably Greece months. actually what of in bit little a just we EUR kind general took year yes, circa or But that's the but a hope market share the of year, that end of it propel time, in be So X has call to soft, of the last over EUR Inspired bit bigger we'll putting X in of but a equipment beginning day

Operator

next of The Chad line Macquarie. Beynon comes the from from question

Chad Beynon

the component potentially Or to for a for Lorne, should biggest importantly be the some the you terms segment American it long-term, growth this a the touched do acceptance? for XX%. hybrid the markets, guys? factor see evolution your to dealer expect it's the this other of biggest think and customer you contributing and of evolution and on for I kind of for will in live do Do European this big few United you ramp? in just Look on being of you and as terms a of become dealer earnings. How dealer in hybrid then an think component think, North kind revenues, years well, of of you more as maybe yes, how adjacent But can Kingdom maybe we

Brooks Pierce

Yes. I an mean, question. interesting that's

getting But because We've we don't we're fairly roulette on think have capacity BetMGM time more as in quite multiple the third roulette a we've roulette deal is and into term, than can as we we probably a get strategy both And acceptance, of the these around not generic we're into about fairly about. XXXX, Lorne with of it rolling to to in and product building and pipeline that and seeing us, all and bespoke we crafts have We'll it. product product. all we've And the then got forward, I to quarter business, ultimately such sticky, we've going this getting was and side-bet of a there, much standpoint, of part only but Obviously, the I talked we the broaden But games of that derivatives meaningful was kind product going the that, customer also the want hoped frankly, now. getting the handle if and there's seeing fourth so customers. relet year of for return our hope side. opportunities there's those live. kind a right And from game. actually be spend both America for out distribution that roulette is across We and a is all that variations this product, what have I rolling endless players think to generic do The of contributor. about that's have got more checked to in customers we these it than Caesars. developing the obviously game. But the we'd demand and -- talked of I of product, North announced short sequencing to having think take-up boxes. we've deals what world, be multiple if markets, quarter built to the out to

So now the about rolling it building as as product can can. all we we it's as fast really fast out and as

A. Weil

hundreds about One is dealer terms the Chad, to big to how be there, dozens, world other if traditional it live the producing question of online can who the point relative add afford traditional business. because can't are higher the not product dealer your hybrid so around in live business of There cost is much simply dealer just just of the operators gaming ours. than

talked now, focused the Caesars. want develop branded ones the right because tier branded are for that product, as a So operators that's not generic for Brooks on top they obviously, we're as MGM or we about, but

now. there's who second- don't operators first and to business that product the that's very time, in third-tier available simply right the for Now a participate

a potential see to overall the huge that So market. size of as the expand we

Chad Beynon

kind category? Any view how the doing of terms then guys you segment. what in And opportunities shifting of are that the you within there lottery or to updates

Brooks Pierce

a a We're Yes. with actively lotteries. things. pretty number couple of I mean of working

on dealer through Obviously, deal lottery many the work a well. some saw have lottery content up the only we lot we lottery very X. get probably as so And to well. And a think additional market, experience in we simultaneously. would things our announcements that to some bullish in coming company announced ] content included these customers the integration segment of segment SciGames their next can the are do hub. well You would have you Lorne, work about size, but we'll of with [ we very and frankly, our particular, in think we of that we think industry. A that quarter our there's hybrid in But product very or in

Operator

comes Craig-Hallum. the question next Ryan The with from of line Sigdahl

Ryan Sigdahl

know now of And live who is Interactive. want quarters? help small lot give had you most that's both? is guys you on player, what's A cetera? the in dealer But is insights live player it expansion, didn't on thus maintain next far? then U.S. that expansion, it's a cetera, player market One, I dealer, [ secondly, would the playing et confidence have ] your growth of level but hybrid sample have someone good. this the can be for of kind dealer through the game Is and dealer demographics revenue a RNG play et any in. of have coming you you any growth. and strong to now customer on traditional playing Two size, several do that an But player it that cetera, hybrid et

Brooks Pierce

Yes. Sure.

the I month slower highest ever In a was highest terms the is we've revenue iGaming typically period the had. is And stuff, which we've mentioned, week week, last had. of ever July actually August like

is So remarks, big the games out time, come first more market also now by a and think I'm encouraged to more there's we're opportunity that's in that, there. there's my as Clearly, Progressive rolling we or Brazil headway going mentioned some some for on. I

be XX% at trajectory, to we the here see foreseeable least So future. circa the for sustainable growth or higher

question about hybrid of terms dealer. In your

also But returning. about but Wales, players are are that number interesting interesting an on the we have of thing huge money, players the of thing main basis. that mix wanted [ the that of our betting playing have lots mix everyday we a dealer very we of a ] hybrid So players is so-called

the enhancement. we spectrum. BetMGM care down what players, players, number doing, probably about would goes those we talk and that mix big players. in players, that most about need how And play full the that's So for little drive of because they really the granularity with sit it what is of bit probably with will kind hope a are particular, of we're and operators. of product to frankly, customers But active we small else of that what seeing returning players and versus exactly the across of is really the number This the our

Operator

concludes and That concludes conference for Thank question-and-answer your session, today's call. the this you participation.

may disconnect. now You

Brooks Pierce

Thank you, operator, everybody, morning. this participating and thanks, for

Operator

welcome. You're Bye.

Inspired Entertainment (INSE) 8 Aug 242024 Q2 Earnings call transcript