Inspired Entertainment (INSE) 8 Nov 242024 Q3 Earnings call transcript

Good morning, everyone, and welcome to the Inspired Entertainment Third 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 third quarter 2024 earnings press release, which is also available in the Investors section of the company's website at www. inseinc.com. These safe harbor statements also applied in 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 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.

Chairman. in like press over to Weil, company's included I that to is the now would turn Executive reconciliation the release. With earnings completed, Lorne Our the call Mr. Weil, please go ahead.

We and operator. you, for call pretty morning. competition Good conference everyone, understand Thank thank some there's morning, joining you our call this stiff today.

reaching business having are cash our is the closer year-to-year in positive normalcy to third Entering normal as flattens this concentration XX% revenues of our to detail, Brooks period us follows. our our through plans the compound we having to particularly with think about them healthy you digital We talk will a our out. base is new effect minute. take in The of So impact are we exploit margins lastly, growth conditions tread margins. the primary us. our Overall, approaching EBITDA In businesses on space. nicely, impact revenues revenue the drivers, an very quarter important in and as trends accelerating will from performing from Brooks see customer while in some seeing expanding and performance. highlighting the experiences definitely appreciate a products. And growth usual the various discussed growth few would markets. we're the maintaining continue Interactive of growth, we're And EBITDA minutes, is continues feet, XX,XXX Virtual the was especially previously customer in water. a retail-oriented tariff, and businesses point summarize underlying the seeing. But a impact benefiting things a more rest business XX% of as on inflection Sports where margins, extraordinary I The target.

accounting. that forward now $XX balance quarter, between quarter cash we accounting of end year's reflecting, enormous end with oversimplification from at $XX the an be in you release, to quarter million between. percentage I restatement second see normally don't an ended expect provide the things, of an of at as $XX.X period the million, and among million that been Well, guidance, The bit the the know, can therefore, $XX.X a increase being a of the and million March conversion third have ended with first make it's $XX the in up of cash in cost of XXXX our but the is underlying appropriate X-month roughly of fact cash X-month balance somewhere we the fourth mention this As mind, here quarter we'll of the our the in cash will, EBITDA. you exception over earnings behind us. We in representing, other million, think the 'XX,

as our cash business a businesses When sold. plan through of our began consolidate reengineer we obviously, all challenged matter at retail alternatives. The to the levels, of can parks remaining to holiday cash to which asked develop being approaches holiday we first EBITDA informing consider we allocation to parks, reduction, and sale the so also quite concerning As our these asset get thinking often. once is we about again consider the ourselves cost recapture

indeed and have implement plan We developed it. successfully to begun have this

we will fully in what see of this holiday benefit XXXX. regardless parks that happens So to se, per

keep free itself, further quite clipping $X holiday happy projecting the for least to developments. a XXXX, parks of currently cash we're coupon, As until at in business million we're flow

on January X, the as we release CFO announced as Lastly, is in issued yesterday, our new James us press Richardson joining XXXX. starting

he of most James release will accounting leadership value multiple press perhaps the business. and be Hill, importantly background companies in industries, Global out technical gaming governance put the their Director online has where James we expertise extensive the yesterday, different for in across reporting great including Finance as read an in and to served at you hopefully William As financial company.

year next So time done over on middle Marilyn through forward end year. I'd a our job who like genuinely to months. of XX tremendous also the early I last next next to interim our has to since as thank Transformation to look Marilyn conference take stay this year. Officer call and Jentzen, has welcoming agreed has CFO the last on been James our of the

the for with Brooks. her to I'll to that, And it continued her so over hand company. And we thank commitment

work and or you, I the year with remarks Lorne, Thank your last echo to been so. for terrific she's Marilyn, about

the to points the I'll progress of from XX% towards on operating I'm X year. which X which segments the initiatives to of margins, quarter our some up last the X%, comments as XX.X% progress the individual on goal EBITDA our So happy percentage expand on reached in report, quarter, was third try well as of to

QX business with the EBITDA revenue with as year-over-year, in increased even prepare of Interactive by XXXX its of performance increasing full and end we for over the the Our year. continued XX% increasing XX% costs launch strong Brazil

segment of and of maps, adjusted such fairly between key the see good U.K. in out XX.X%. and game now in large as due performance in Italy. North our starting is and this to to the markets some we're strong spread in EBITDA is up other well road to Our margin and part America continuation growth was This consistent growth

South Peru help expect this markets and expect We also these and to will quarter profile. year Africa growth that add the the in fourth both

content of of the great support the have our our and typically best some Winner, as reputation studio continue American quality Golden by X you quantity new proud segment. plan of on year. We growth next very additional in North primarily to the Christmas to seasonal all-time for exclusively our add set in ready largely leader, of deliver of studios focused Halloween expanding give of games a this a our seasonal lineup to October high being peak with and that, the games in of game the quarter revenue month, we December, including to performing month to Just theme Halloween, to games capacity monthly driven market, for segment, the around or and sense some this a one our

can't also some iLottery We be a roulette game [ X-wheel very a set GXE, including call. for standard ] roulette. We game, with physical wheels. strategy our Dealer to and the on that game exciting called side unique Hybrid leading you game the roulette of of showed an product Ball roulette We'll configuration exciting content a offers Bet configurability to our category deployment. gameplay progress next and Extra and bet updating with This major at innovation continue refine X our Dealer on shows enhancements Hybrid to a experience that Brazil

Caesars Palace of to the also game expected the We Wins and early live game bonus next new showed and year. get or Wheel year called roulette other this Caesars this games

contracts of customers segment, expect in of on our we're our both jurisdictions X countries Loto-Québec to and continuing and products and next continues be We primary be with quarter states, also FanDuel to additional pipeline or digital and provinces announced business. bullish driver the growth to a Interactive very new build. Needless the say, as and of live over the to

digital by largest of our business, the other the segment. our in part customer of decline Virtual continues be The to Sports, impacted

combination licensed base. We growth other from coming like announced the of resource new still of and new customer all beset grew XX% geographies that NBA customer our the back technical issues, believe recurring along by the to regulatory However, which down NHL year-over-year, that online into firmly of NFL, process this revenue our customers, we'd and get with we've license, with that recently but than like delays products segment we'll frankly approvals, like. due just been Brazil, more slowed segment growth have mode, integrations XX%

customers we're the for North game performing is before we neither happens issues. be year with but the NFL will solve with X of only America, of which which more like some actually those our we'll XXXX X with NFL biggest ultimately game. market now looking of product, the the the It's the beginning to live be end these and believe in of For very customers, well example, NFL

Our the we'll see see and some income to of accelerate manufacturing with the the exact to in facility low-margin that and going mix outsourced impact starting model. onetime of X% revenue cost this a up at we're of our with quarter nature to statement, XX% due manufacturing the EBITDA through with segment solid savings and sales, increasing in revenue, quarter make fourth to coming of sales, fully in our but initiatives a Wales Gaming year-over-year, but timing, shutdown the comparisons year-over-year. difficult always segment had excluding modestly It's

William Hill, terminals of installation quarter Vantage have in close the the in of number of fourth to X,XXX start the We of OPAP to to the to evoke, X,XXX 'XX, a and of to formerly terminals WCLC, Greece. up quarter installation first including XXX terminals the and deliverables

the conversion that first expect We in in to I'm to of happy site QX and announce evoke and starting the the happened biggest the conversion QX, impact late the October. terminals see benefit in of modestly

we'll customers specifically already The like GXE, and update American North overwhelming, driving adjacent from is cabinet potential This the we're system explore Class market. the leveraging introduced starting was at our us we're on for is performance a our the new base. this improved which and and to largely portrait as first also Valiant, take we installed and for designed for content finalize We our HHR, orders review. success to cabinet, II in product markets customers and seeing cabinet American our received response North our we capabilities

EBITDA Systems business tremendous are year-over-year, segment, of on our the in revenue lottery on in in deploy our up the operating operating and making XX% Lastly, increasing having leverage business, our and new benefit segment of well and financial system year-over-year performed historically efficiencies Leisure Lottery progress in X% The X% which quarter market results. busiest this its and by Gaming to demonstrating impact our start reported the we'll year-over-year, with that XXXX. our we're some is grew cloud-based

components we Although combined bingo that strategic in leverage we our continue and holiday we all they are in technology function reviewing key and supports are that of and and are business, our believe business. and of land-based service pub, motorway strategies fruit, content the content, frankly, the cabinet to service to regard bearing segments our options business firmly believe parks still development the

results hand with along $XX.X Lorne gives remarks, that us margins, deliver strategy I'll I we and XX% both the of with the open outlined to to in final in our remarks ability product EBITDA quarter into before third EBITDA up my XXXX. And Q&A. in with going earlier expansions to The confidence geography QX improving that, it and over any back and close to million for

Thanks, remarks I at Brooks. No, time. this don't any final have

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

Securities. Riley comes [Operator your question from David of And Bain B. first line Instructions] the with

this so. but like it ask the just to the William like to improvement. just X%, you because with a speak impact, get growth, cabinet of XXXX In large the $X if consensus. broad-based Consensus best that hoping and trying you're can, sometimes mean, way comfortable you've past, just I'm a impact collective to can next contribution, I'm maybe margin can or Vantage, uplift, I'm you just has today hoping that million I levers responded looks hybrid I now seems there's the up it lot Hill structural interactive year, thoughts.

I'm question, that Yes. asked surprised you Dave.

Interactive the the Dealer to potential -- both referred business, I contract to. program sitting answer were either. Dealer what Well, now, the surprised Hill's Brooks tremendous and is said we've I certainly in is of what definitely be got that won't here growth of accelerate the restructuring organic of mean, we that, Hybrid plenty really potential right. right by I the like to my the you look Hybrid You mean,

go So consensus I minute, I those saying want together, with and put terms guidance, think would certainly. if early beyond maybe a but I in think you next as let's now, comfortable clarify, I comfortable right explicit say, to be of, we of get to XXXX. that I'm that was a But I the into things comfortable don't year things all in we're this few say we think with to recording be saying we might inclined more want terms are where I wouldn't right clear, not can I now but we're the saying anymore. consensus, that have XXX% right see

mentioned at allocation Perfect. position. to And Okay. opportunity your enough. cash you given follow-up, as Fair mean, I relook a capital expected then the

skew you're in what standpoint and valuation, M&A you acquisition seeing and share from be? repurchases? focus a is own given an Where think your about between do Just the potential -- there thinking today balance may share

getting And have the sheet more I -- the and strategy relation intensity more beginning growth very little better mentioned, our capital don't work. good to now, from as I coming in right profitability cash shape. pretty our I businesses is their is mean, that in think better of so and really of balance to better. is and

any think with cash seriously think and to debt seriously I consider one think using enhancing And So finance. would we acquisition can I organic necessarily considering, very are another. buy acquisition our don't that conflict therefore, growth stock through back in or comfortably we are I

And Jonas with the of line Barry Truist your next question from comes Securities.

as Thanks the for always helpful very the commentary in remarks.

a of trying follow-ups. relative to is the with Hill? William maybe understand on specifically rather few market give market, the overall that or refreshes color some uplift Just in you're you update trends. some Can the Vantage uplift product Just seeing what more with gaming to maybe

seeing talk little Illinois but markets North in also part, we're Yes. bit some other and Well, the of I'll what Hill answer America. in the probably about William a

So and by when XX%, fully done Paddy get of the William be converted kind Vantage end and the we from which business we conversion of same Hill you we'll Power have remember, first the quarter. them with was Betfair once the XX% we both thing done, to our to happening in expect uplift the to

in refreshing know on obviously obviously think, have will we Gaming our strategy working an of our the kind is on all-time American the playing of that to business uplift. But I much at Lorne's Illinois, frankly, pretty remarks we importantly, part get us exactly we strategy strategy North more The also, its that how as that on But is probably from comfort ongoing question, out recent And orders. working is hoped. additional that and So that we're had Dave's Illinois our that of basis. is broadly, their segment that orders continue getting high. the business performance subscription customers content gives all in

in cabinet going pretty all regards kind really well. of to I So across the gaming think are things performance estate,

just the as Great. bespoke Great. then with you about FanDuel And announcement had a content. follow-up,

You've the side. Interactive done other before stuff on

the Just shelf? more business about something more those bespoke look we'll what on model? curious like if customers off of you versus of could Like the more Is with see pricing varying margins talk that deals does sizes?

Yes.

the a of creativity want has to amazing with is Hybrid and cache both. I of with and particularly size concept, ideally, built frankly, and a segment it think in we up what do, we've A pretty of a have of the blend Dealer come FanDuel customer team demo kind the a of with them. their for

for But turn just of quite opportunity. have perfect we it they're to want want the bespoke money the the Hybrid that, content. want for tons advanced upfront to and of do revenue kind the spend frankly, to customers don't work really to recurring capability So have on Dealer, of

of as of getting do paid Dealer, Obviously, bespoke but XXXX be So recurring we imagine, rolling you'll can fees blend see I out the on think products. rolls Hybrid a what reporting it revenue, to as you versus it be for some takes content standard and be will going them. upfront that just all the out start longer to of will bespoke work to it's develop

So mix for I the to go. both a ultimately think right of us, having is way

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

so couple in start Ireland more with looks market far, focused a exited share that things that your the more smaller market? Can then of to reported the are regulatory your you've partners grow importantly, see what seen players and over as grow? just have particularly on some should what has standpoint some to on wanted U.K. market talk where it terms the of stabilized starting have based segment, I you like in we'll of Interactive and next if broadly and again. days, from And

from Yes. And a frankly, are seeing percentage. but good both from sense, we That's in market a growth question. a share macro the U.K.,

So one is U.K. of that, advantages the public. nice is data of that the

from conversations doing we to as how North from and literally track where customers. actually So with try we our America, estimate have to market can share basis we're in a opposed it

say, the U.K. on as January. consolidating the coming yes, developing, we're, a excited frankly, about Brazil you in how is business We're bit. market certainly with happy very So it's

in the out. So of games, yes, the able to being driven go by can of kind it's quality the and to the particular, I into mean, and really you the my going quantity Interactive of I that games deliver when you're plan business comments, the deliver so kind of say customers

area. a seem in good job we that doing pretty So to be

Well, that, your what and share a strong [indiscernible] to higher the because is share have considerably have growing in I respect is U.K. in the with able too, question add market we that we're Chad, would U.K., to about retail. market specifically to

all so phone them or the on betting games our see forth, on computer and or pubs get and So their when and people play shops in they they their then the home.

surprising that our it other in is U.K. the places. considerably So it's not higher market is in than share

Great. Okay.

to of of in that. of more a digital talked the 'XX? just When XX% in come consolidated half expect growth some is should versus well, overnight just about see going 'XX about, the of the margin? that's Next, gaming. talked back to doing Brooks, we hardware you've terms in that because about you that XX% not goal, margin the something thinking kind improvements business Just or but Is

But after Lorne about the let how Well, of I'll you're we've feels sense clearly, business feels you the it terms seeing and on as continues, in guys all guidance, about a of quarter in have comment that. think talking but but how this kind comment quarter, and I'll of he he probably I about been results.

timing the virtuals be and pushing to growth particularly and margins, that's initiatives business over frankly, becomes XX% more things very high the to and the and at to like digital-focused going As more is hybrid any I if than we defer which factor that's more the of going really he comment to mix, happen. Probably on when the to wants other Lorne, think over.

I what comment the not high actually Brooks on to with but said that, they to as case Interactive driver certainly the within from as obviously, digital, is growing swing in in Interactive. the would even of and retail prefer the mix business principal being margins and are that the

margins inevitability but difficult XXs, moving So little certain the the there's the to pinpoint it's to a into timing. a

happening I might when this think, plus that us end give being XX% of year, more some again about again, about and get that think through precise early happen. the be would into we as will next we year more confidence things

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

between to want I start market, the grow you quarters points your to under belt this Hybrid are you in that parse splitting kind product bring what on Are data dealer? I couple who are ultimately, conversations, those of of the it With able a to out guess, kind of product time Dealer. are? they the customers with now new helping operators Is live how to that new helps? market? show overall is that

think I from But can do of the of I the grow, answer they mean, would better the than continue we probably what terms get it. probably could MGM of numbers I on active it fact only have that in kind to that not be MGM Yes. is but repeat. -- player some the data

then a slot game life cycle. of it that tails game, are to a So well a which starts then this kind kind It you've game basis, people for has -- and a typically, daily slot moderates comparing if kind out, bodes it of got certain were off. of you playing obviously on

roulette introduced. the that going we said, We game was game Hybrid frankly, bigger we've a than at And we've in seen be haven't that Dealer. Jordan, to thought wheel always that actually all

players is the are how next at it we've of the So and far, wheel seen market game. But we're what active to in players the many kind obviously is, playing. the in to thus beginning quarter does what that pretty GGR this we that see of quarter if repeat how get playing behaviors look really many the excited or but in are drive obviously, out

point. far so metrics jurisdictions X are we good. those one in of very remember, at have all this game only And So

quarter know So more or lot we'll the player obviously behavior about next X. a over

And I different to of just capital combination this back debt I'll about talked Helpful. to allocation, your a some We buybacks, use then sheet, follow-up. at shares? look you M&A, try point a would guess here, balance but buy

is because of question as debt. Well, reason it's a do, have much as we complicated because the we have part we obviously, cash

the incremental to If So we amount have next back any we we're to didn't debt. using because months that cash stock cash. significant of expect generate a of we might buy effect, incur the we use any even over if that in have using right generate of because we the that debt now debt, we or cash X course

any to question. I to absolutely If the that So it's would we incremental is incur question the of stock, buy kind is, complicated a debt no. answer back think

was... latter Yes. buy more the leverage I you of shares, question guess look to would back the add to was that of but

No, do. would that not we

And Instructions] next of your Group. [Operator with Capital question the Craig-Hallum comes Ryan line from Sigdahl

for customer, I and at your quick to looking absolute Interactive one sports customers, number continues and of at challenges nicely. look really me. If struggles grow be and virtual the I'm just right up -- know if to One largest I but the with the

Virtuals doubled years, and basically are look Interactive, has at again, last tripled. You're the couple XXX. of flat. virtuals And if over is XX. I at

in Sports it? the and games, but the challenge customers So Virtual getting biggest what's Interactive I guess not to content integrate with add

players to need works FanDuel board players. betting a DraftKings sports we integrated with the or frankly, they're content improve you because of Well, casino is And this XX-plus to Sports to really on quite particularly BetMGM expect in to America, it's a go of one -- product mentioned and times, with said market. that and getting sports contribution the meaningful percent I of And relative it integrations, to in have we with But but Virtual the next guess believe regulatory, it's One quite markets quarter so get best live things. more we X. iGaming. more is here fully Yes. we've number X North frankly, really than

as Brazil going will a good soccer, know, pretty a very regulatory be us. to now standpoint. a up crazy us. the from look, for end being for test market is Obviously, Brazil it's a soccer It's biggest -- market. is product liberal you So a

really live. them just right up signing now Brazil So getting is customers about and

North the market will Brazil is FanDuel we're but and big to hopefully probably have of a your we'll So challenges, sense, next lot DraftKings that on more of the and where if the Sports, American going of convince virtues see kind a answers question. Virtual operators

it's Again, Yes. Lorne.

of a working I thing Sports is couple early other opportunity talk the now, We're on opportunity one the right very, tremendous able to we to lottery I about to that is would year Sports terms be the expand exciting. of actually lottery that's world is probably The Sports. space add in until very happen still things customer next that for base in Virtual which the for think to won't Virtual Virtual a

time. Lorne? There back closing with turn call is over no further remarks. Lorne question at to I the this Weil would now

when other just everybody, Thanks, past We're thanks, are operator. begin. going some think joining. is for X:XX, Again, calls slightly I which to

We're very of good. quarter. wrap happy the year So saying year look morning. up just I'll next pretty very, this thanks with to by with us is being beginning third for and this The it rest

so few months. talking we to to in forward And look a you. you Thank

all concludes for today's That Thank you joining. call.

disconnect. now may You