Inspired Entertainment (INSE) 8 Nov 24 2024 Q3 Earnings call transcript

Inspired Entertainment held its third quarter earnings call for 2024, revealing a positive outlook for the company amidst a period of growth and strategic shifts. The call was led by Lorne Weil, the Executive Chairman, and Brooks Pierce, the President and Chief Operating Officer.

Financial Performance and Outlook

The company reported a year-to-year EBITDA growth of 13% and EBITDA margins reaching closer to the targeted 40%. The third quarter ended with a cash balance of $36.5 million, up from $23.5 million at the end of the second quarter. This increase in cash, along with the company's strategic focus on digital growth, positions Inspired Entertainment well for future opportunities.

Digital Growth and Strategic Shifts

The Interactive business continues to be a significant driver of growth, with revenues increasing by 40% and EBITDA by 47% year-over-year. The company's expansion into Brazil and the addition of new markets such as Peru and South Africa are expected to further bolster this growth. The digital space, particularly iLottery content, is a key focus area, with the company aiming to refine its strategy and expand its reach.

The Virtual Sports segment, while facing challenges due to the decline of its largest customer, is expected to recover with the launch of new licensed products and entry into new markets like Brazil. The company's strategy to expand into the lottery space with virtual sports is an exciting development, potentially opening up new revenue streams.

Operational Highlights

The Gaming segment, which includes the Vantage terminal contract with William Hill, is showing promising signs of growth, with revenue excluding low-margin sales up by 4%. The company's introduction of the new Valiant cabinet at G2E was met with overwhelming response, indicating strong demand for its products in the North American market. The Lottery Systems business also grew by 8%, underscoring the company's strength in the lottery sector.

Strategic Initiatives and Future Plans

Inspired Entertainment is actively pursuing strategic initiatives to enhance its operational efficiency and financial performance. The company's plan to reengineer its retail businesses in response to the sale of its holiday parks business is a proactive step to recapture EBITDA and maintain financial stability. The appointment of James Richardson as the new CFO is a significant move, bringing in valuable expertise and leadership to the company.

Investor Interactions and Market Impact

The earnings call saw several analysts engaging with the management team, asking questions about the company's growth prospects, market trends, and strategic initiatives. These interactions provided valuable insights into the concerns and priorities of key stakeholders, highlighting the importance of transparency and communication in maintaining investor confidence.

Overall, Inspired Entertainment's third quarter earnings call painted a picture of a company on the rise, with a clear focus on digital growth, operational efficiency, and strategic expansion. The company's strong financial performance, coupled with its strategic initiatives and positive outlook, bodes well for its future growth and success.