Inspired Entertainment (INSE) 15 Apr 242023 Q4 Earnings call transcript

Good morning, everyone, and welcome to the Inspired Entertainment Fourth Quarter 2023 Conference Call. [Operator Instructions] Please note that today's event is being recorded. Please refer to the company's safe harbor statement that appears in the fourth quarter 2023 earnings press release, which is also available in the Investors section of the company's website at www.inseinc.com.

This 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 risks, expectations circumstances. uncertainties based are beliefs are to subject and statements management's or current and These changes in

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

for Thanks CEO, joining fourth you, get we CFO, to operator. as everybody. Thank make remarks this Q&A Corporate our the morning, call. to usual, conference are Marilyn of prepared available us answer Brooks, and Brooks the questions With Eric VP Good section. quarter Interim Carrera. Marilyn when Development, will are Jentzen; and morning and Pierce; Eric

a Since over last our fairly report. accordingly, weeks of be I'll it's make new progress developments driving in that the call, the will key balance there's In Brooks few been remarks to only a lot some depth And moment, our since my year. about the will talk a not brief.

full-year Full-year modestly no business, million of Interactive participate segments, year-to-year, grew Fourth given environment previous while feat, XXXX of in and $XX.X EBITDA in as Virtual million in from Sports maintaining of in. $XX.X to ahead by the that comprising from small XX% EBITDA million. EBITDA was the of XXXX margins XX% line $XX.X million we competitive consensus $XXX.X from our XXXX, digital with was quarter EBITDA overall and

filing the this on later we XXXX XX-K. here be will mention me Let morning,

later in by more release, detailed so available, will noon. press And the no I'm that guessing, who information beyond be wants what's probably than anyone

At the of the business, digital quarter. growth hitting the revenue in same throughout growth in moderated close year, Interactive Within over time, course cross Sports accelerated Virtual the paradoxically, some to The fourth XX% the somewhat there of interesting business currents. the were year.

apparent peak to XXXX. the with the the relative Sports quarter the think paradox businesses. has in EBITDA Virtual of was first this do X share of I of explanation The market

are In competing many segment, the Interactive there suppliers.

when increased commitment the and new very of management. no share, to there this to account by much content are steady increasing business even superior markets XXXX, is significant worldwide market grow the production was opportunity by So there and of new driven an case opening,

In is a product, for these talk will moment, Brooks Dealer expectations well. in about new performing more which including Hybrid dynamics extraordinarily detail, our

business considerably Conversely, our Sports is market higher. Virtual share the in

of excuse new grow markets, is grow opportunity the share somewhat volume So opening market market absent -- gain [ to the ] constrained. me, share to

the in New of new driven a is markets important climate, game-changing regulatory development turn a favorable are combination by content. and in

both an why Brooks NBA NFL Latin at North are point, of the will products the America games again, driven elaborate as markets inflection well think Here on sports as horizon. licensing by the and additional deals as new we in and such

a quarter, And up after few been slightly quarters. Sports having or ticking we're the for little a in flat first down seeing indeed, Virtual EBITDA

moment, our continue again, which, Lastly, Vantage is will I tailwinds well businesses America. earnings on to Brooks that North the should elaborate mention new cabinet, both from opportunities release, from in clear the perform new benefit from and a market in retail and

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

more recently our the have do, update of the on launched the usually I'll I detail little segments business, them into give as that And Lorne. you, bit some products and and an we'll also on for XXXX. go rolling out plans of a Thank across Okay.

growth America year-over-year revenue both was for the fourth across Overall, and XX% and U.K. nearly business continues excellent XX% showing quarter the up Interactive quarter-over-quarter. all Interactive Our strongly quarter-over-quarter. with North to our perform and geographies, up

Robbers a is quarter leading was for as titles of portfolio Christmas is becoming no seasonal content Cops a provider particularly with exception Wilds. of this known all 'n' games. Inspired Santa's and usually Money strong quarter quarter like our Interactive, holiday-themed with strong Big games, strong and Fourth Winter

are completed, our after QX As had XXXX last reporting week just continues, Interactive the we business our momentum history. week, strong already has we highest revenue the and our in in

first XXXX. presence strong to Our roadmap year, in be particularly expanding our forward Latin continues throughout we and the America very to the throughout half looking are and of Brazil

the that We're be our we're seeing Hybrid forward. Dealer segment progress reported will going early about part our with Interactive very product as encouraged of

only Jersey, we days GGR point, launched growth those only of at being in week. excellent each on seeing with Although with last and early and hit BetMGM metrics this players new and active are our product City Bonus highs New it's in turnover,

BetMGM with the MGM year the has have in and anxious and other year. later launch, in customers launch we're partner to then half both markets, great early and and the launch this this marketing the of been a out Caesars product compelling particularly Roulette a second more in with for the support with designed program and get of to

We X additional and North expect we and world the both unique Roulette as category games, develop around this to have be operators. America some features with in the stronger we product of the

as including in on the segment he of we we the that that seen things. of off the high of we're As due things mentioned, some part just half in of some discussed challenges Virtual its all-time of trajectory to moderating we've had XXXX, for large Lorne of first that some face the mentioned, -- call, the our those last

American is North market. the the the to key have Sports. a as as and We'll expect the will good customers to we -- well with that launched the expected, geographies with product expect throughout game it's customers back take And launches this growth mode. within resonating the NFL segment But customers. be additional Virtual We've we with performer going NFL players and number and additional that as football be of several growing strong is live product news year a game in

NBA multiple across retail ability Virtuals really their launch strong in already product business success [ OPAP's channels is in ] locations. than We'll our versus gross with Sports grew retail across grow XX% very OPAP turnover with have shown our a X,XXX to win channels. their by who of their Greece, archive in, and frankly, retail story XXXX OPAP Virtuals partner, true XXXX the Virtuals market. Virtual more mature a

XX% NBA in Greek, to biggest is behind fact this the throughout of product and sport that Greece, of marketing basketball their the the is up flourish in of Soccer expect And in now with Greece mix. market to a is, one we push big course, launch the NBA the XXXX. best players but

On game NBA rollout the the of the the to expect product expect our it hockey we side, NFL and and would year, looks alongside of and in end launch by we the amazing days, with strong closer this the early is as particularly in that strong North customers, American launch to We'll the Ontario, game but update becoming with be fall. already we on very a to in our product date get which Virtuals games, market.

expect that early come agreed over to strong doesn't a We're And and a soccer, development very this also extremely [ forward. stakeholders multiple for along by of are market in we've be going market excited should ] to XXX all be there spent key of rates that people in down Brazil very million passionate products A have us, so the Brazil. and for the recently a product time shown market, soccer very, lot often. in and our

year, that the the should we bullish on in and second back half products of in expect We're the by licenses, growth mode pipeline Sports. of be Virtual

we the And success operators largest drive market up of betting segments. of Vantage and low in approximately the our business [ pub cabinet Our our in converted of estate of growth seen from is double-digit the our and Vantage sector. highest-performing Leisure shop to the to cabinet to having our land-based are in into the ] both now XX% the continues pub the Vantage. U.K., X launch segment been Gaming in now We've

and gaming out to also of across in sales throughout in large expect We're a rolling adult be to strong these the segment Vantage seeing the pipeline center XXXX. U.K. operators verticals all

for strongest QX QX year, Our business. the part the of holiday busiest with business time the that and is gearing for up parks being quarters of the

go of recently throughout business to in the improve and our target business the to an a the drive base aspects progress we program our synergies savings increase that all a forward have we across our EBITDA the closer and XX% of and of year. margins reporting cost across find to as initiative on initiated dedicated to Lastly, team to internal look working

hand any before that, to opening With to Q&A. up it remarks I'll for Lorne closing back

open the Q&A, I Operator, for Brooks. it's think Thanks, please. program if you up fine

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

This is on Sobhany Ramin Barry. for

you the space? accounting here, rounding on in do we're corner the given M&A that have on any the Now here, years recent thoughts consolidation issues

Thoughts regarding our ... the M&A or

Yes. We're I -- guess -- both. your

First on in think maybe you about your the do and space? general, front what just

mean, I we're yes, obviously consolidation. seeing Well,

it's and And Some sometimes. the sense, M&A, themselves focus of makes if and to earnings know about it. mind things others. primary growth is we'll We're of business. now that consider make of sense right But other me thinking our kind it to in than to maximizing people's revenue hard potential seems but what's present more always our

is of of not what focused say, But top [ ], I list we're minute would M&A on. right this at the the

just a And follow-up. quick it. makes Got sense. That

As product far do you time? the the guess, product, would how any going growth NFL cannibalization NFL that, your material where is on you as to game? are far say as that the seeing segment be guys And you on And timeline? are Virtual think I over you existing as

and combine NFL our to football; frankly, Well, call game, as segment cannibalization, it's is like the but of the terms call Yes. it game to continuing overall, would it, grow. that we although American is NFLA football, so outperforming news colleagues good it, in

America, But terms market obviously predominant it But obviously, bigger again, because resonates going as we'll Virtual that's bigger is it's product. relative start we North the the football Sports and contributor of a into the being most. where soccer see in

talking example Maybe an my just more a than attraction in remarks that. NBA so some of as NFL, expanding perfect obviously, the has the I on markets, on bit that probably a was of in little NBA, Greece our about being the

frankly, as our -- in gains, expect to American get additional to our a products market, customers North yes, frankly, but we our basis. is worldwide accelerate for growth But on the licensed strategy

you which because focused sure is more Eagles and will I'm become great. things, is next the in I excited. year Philadelphia My to We're on Brazil, more global. season read trying same read NFL really their the And open

honestly, we kind So feel all of in content Virtual great the licensed about, Sports.

B. the with Next of Bain Riley. line David question comes from

XQ. in Should issue And you Sports view Lorne, from before congratulations behind a the mentioned absolute of XQ new One, content putting Virtual Virtual we kind for up to and seems. trough ramp it has Sports close maybe... back-half filing you, as level the ticked

if that think that of and quarter first quarter talked is basically, see, ] was forth, so out that up to quarter, dip and it [ plot and we've ticked ] kind third I the Yes, and the quarter, has definitely. and [ we you driving about is the has the previously what first what fourth ended down -- seems have in -- process

I'm We Now as considerably as going happening. quarter that, we it's the through to which upturn first peak. And comfortable accelerate. of said, that were like in least we're year, happened this the we would see the sooner, at we're but to said Brooks move -- have that was having the where behind pretty still at XXXX,

are now, right Dave. we where that's So

distributed because also Yes. customers the of kind on our But it exciting a to takes basis. time with products NBA. -- It is it's to not NFL and that get only And worldwide new

actually we've So not that's broadly second to about the customers, And more to that back, distributed really all Dave. the how when get opportunity by get year it the market, of talk the but driver. be way, our only had to we the should some why it of half welcome

like you elaborate get something and larger they cost akin potential Roulette Dealer half. clearly Awesome. that Brooks. seems Hybrid branding the exclusive an operators? it discussions in to opportunities in BetMGM. casino? live that savings few with Do off maybe opportunity guys And mentioned and appreciate with this from you back I the the operators Thanks, mid-tier that. know as the Can see you to involved the on go a with Caesars rolls BetMGM for and But live with see product. months I

interested the in it's Yes. I have. biggest a it's that pipeline very operators it's mean I that have mean, kind exactly they would want, is it are we interesting what as really at great because we of reasons look you question. for that the the

of for Thanks. Lorne lower-tier But why no, things. terms in this so-called, have frankly, to so-called, to always these I some of an live without parenthesis, It's in the mid-tier market said table is the that's I on the having in dealer -- get them opportunity right volume, from across know, and great operators, me parenthesis.

But fairly robust quickly this anyway, branding pretty can be easily so as inexpensively. is a yes, launched I and fairly well that standpoint, cost that, modified is from think pipeline be about standpoint, from pretty can a and because

So it really product, whole the does seeing. of and funnel the we're for Dealer -- that's open kind what to Hybrid

question of Chad Beynon line next comes from Macquarie. Your the with

importantly, with and could flow-through? Or when that be XX% scale? finished more extra getting businesses goal. 'XX could sorry, results. margin such there the or Can digital this the grow -- as you and high-margin hands-on margins on early that help think achieved? in on good of about Congrats more be a prepared comes Brooks, you I'm is Or in that steps kind benefits just in Lorne, touching of that scale finished versus will you something business the just your are this 'XX your remarks a us improve

-- let second let part, start the me first the to on and I'll maybe comment Sure. on I'll Well, then part. Lorne

grow -- margins getting really regard. wants the talk my that continues terms that in improve on remark kind going business EBITDA sure, I overall about XX%, of structure margins to to with of in that's roughly our mentioned, digital to we margins. But to just at look, mostly view segments. of of business all some cost side the our across up business really the after But of Lorne as bring So was maybe think and these the how the segments Lorne about the

consistently much where look is Gaming the of park the below the ] than parts and guess, holiday unacceptably a you overall rate the as of in you've average. it and businesses the Leisure at very got higher appreciably if way, around margin, average margins the that. operating business Well, been digital And The composition has [ XXs Yes. the the in then I average. the margin and, in business business

up. at a the alternatives and looking get of for with we're we So number how parks of how profitability holiday deal we can that

business. are both the where in talk the of productive underneath be holiday that way, park And we're up good the from bringing pushing will it lower with on the we've a ideas so we when I position to it by from in and first quarter high effectively, up by dealing weeks. up perhaps about that few pulling So got the some top report the a average digital margins very margin more think we

buybacks? there want how you're with Perfect. how thinking of rates? And affect be to net then to prolonged guess, now, about that you Is And right higher where respect the, given I then, goal? does a leverage, leverage period target

been I lot And And be we're zone. X, consistently place. I plan debt comfortably think we're with [ think always continue to the it's in under -- probably about is a ] X.X to our obviously, so better anxious buybacks. Well, talked We've to a we're buybacks. try

But that, the in take goal primary having the have is said we our of full to advantage opportunities businesses.

that. going to are jeopardize do to not We anything

think about I our So would want that business we to is earlier absolutely last certainly I profile back the making sure first, the then it buybacks, and going developing I order to question think where M&A, rank be and put M&A. credit

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

give update MGM, start. other in namely you're I of couple on I the today. to with to the ] can stay U.S.? betXXX just an But big BetRivers, [ pipeline on the operators, want other Live you think curious, Sports But majors the Virtual

those is And then each Kambi it that all operators had of BXB for Or into that, guess of you integration [ deal Kambi's option secondly [ with an individually? to be on ] opt-in an ], I customers? will

Yes.

it -- folks terms ] in we'll getting up ] all the between first. to their Kambi we'll Yes, available it on effort their combined part our have integration and Virtual of obviously, folks will Sports. sign of the to Kambi answer with will make kind customers, let [ of So customers for a kind be their that -- [ me but have

in very of kind that's So its stages. early

-- asking know terms you having I we're that obviously North -- could you're that. -- not best have we exactly in those. you comment probably always of what can in On other the as operators active America. imagine, discussions with we It's just on But

So of something can that we talk kind until that just we'll is -- about. park

machine. double-digit similar, pubs? that you the from you Do as of forward, underlying kind Vantage, that that's you low guess, player then ] I per that's sustainable? expand enough. the an anything And if see you to standpoint revenue how trend elaborate, uplift will better? Fair nice worse, metric going the right think Or into [ can think play

interesting our because now. numbers It's to kind that so asked has showing shop biggest week, some from Yes. Vantage and I Lorne X of betting out X last was X just you of that for quarters operators, been

numbers. So perfect plenty and that -- [ than were both time one week to of show there's a And right have higher case, that the just kind operators slightly ] case, of been in of it numbers other in. example last was on bed the

And in the customer hope product it's and kind to or that that that we well have beginning next the out will we big obviously fact bodes rolling doing So either business, of later obviously been us. year of the for Vantage out, still the a be has months X X for to year.

forward how rolling we see at be kind go thus aggressive by segment, the pub we on to XX% and the rest cabinets And the year, it's of continue rest of through year. out the be the to will as pub then contributor We're in as driven far. we'll you'll a number Vantage want really of the convert to segment. the go a which Vantage segment, of And pub we obviously to through

I Very kind willing you but good. do to to have, that? comment, you're question if up your not behind expect you're guiding, And I of confidence Last know be EBITDA year-over-year?

ask question. to had You that

policy always feel give a -- me well, was guidance. that. I we about do to about like It's not JFK, let this our -- been I But say don't. So to

the full-year now I XXXX. think we're where up with which is, I So is, comfortable consensus think, from right modestly

now, more weighted we're it and But back the year I somewhat year. to at of in will where less from of looking front be somewhat the think things end the end the

quarter The have main in to my in are was it below up, we're that now we're as Virtuals quarter, that I while not quite the it decline run the and mentioned in still the it's remarks, the to issues first obviously pleased click course of its first seems back XXXX. business temporary in where seeing beginning insignificantly

some of going get it's that So the see second to that stuff, of Virtuals time initiatives lot of Brooks take whole year. we'll us talked And the in range in accelerating. a for half to the about

backlog we're tremendous have product really ever sales, -- we building in And seen. as a as strong we've

last again, probably fourth new Canada until signed quarter. Western order Lottery, significant very we which Just be won't in we days, shipping the a couple of from the

lingering in got we accounting the and restatement first and relating to some so -- unusual So forth. stuff the still quarter,

-- latter heavily part shift together strongly combination end from of year, of Virtuals bit hope related from very-strong little but a lag -- the fine I equipment the that's sales just early picking of of with see the the So with that's year up we'll the consensus, to I the the we're the the of part I full-year of to think a to backlog I sufficient. think the think reiterate, year. in early back

Weil the that, With back for remarks. any Lorne hand closing I'll to call

you, Thank you, joining. thank again, operator. everyone, And for

I look will I the -- there of Just filed plenty first there. as our morning. back guess, to who sometime would schedule. anybody be quarter mean And a be And reminder, be to forward our -- dig stuff deeper, on we're this we XX-K in now normal wants will

look it then. normally first So in forward quarter would guess, will what I you to May-ish. be to And be, talking we our

thanks. So

today's may and all does meeting. That disconnect. conclude joining, for Thank you you now