PART I [ITEM 1. BUSINESS.](index=5&type=section&id=ITEM%201.%20BUSINESS.) Inspired Entertainment is a global B2B gaming technology company providing content, platforms, and services across four segments, with 73% of 2024 revenue from UK operations - Inspired Entertainment, Inc. is a global gaming technology company supplying content, platform, and services to licensed online and land-based lottery, betting, and gaming operators worldwide through a broad range of distribution channels, predominantly on a business-to-business basis[19](index=19&type=chunk) FY2024 Geographic Revenue Distribution | Region | Revenue Share | | :------------- | :------------ | | United Kingdom | 73% | | Greece | Remainder | | North America | Remainder | | Rest of World | Remainder | FY2024 Key Financials | Metric | Value | | :------------- | :------------ | | Total Revenue | $297.1 million | | Adjusted EBITDA | $100.1 million | - The company had approximately **1,600 employees**, with **1,420 full-time**, as of December 31, 2024[22](index=22&type=chunk) - Inspired's common stock is listed on the NASDAQ Capital Market under the symbol **INSE**[23](index=23&type=chunk) [Overview](index=5&type=section&id=Overview) This section provides a general overview of the company's business model, operational segments, and strategic focus [Our Products](index=5&type=section&id=Our%20Products) This section details the range of products offered by the company across its various segments, including gaming terminals, virtual sports, and interactive content [Gaming Segment](index=6&type=section&id=Gaming%20Segment) The Gaming segment supplies gaming terminals, software, and games to Licensed Betting Offices (LBOs), casinos, gaming halls, and adult gaming centers (AGCs), utilizing Server Based Gaming (SBG) technology - The Gaming segment supplies gaming terminals, software, and games to Licensed Betting Offices (LBOs), casinos, gaming halls, and adult gaming centers (AGCs), utilizing Server Based Gaming (SBG) technology[26](index=26&type=chunk) - As of December 31, 2024, the company had an installed base of **34,900 gaming terminals**, primarily operated under participation-based contracts[30](index=30&type=chunk) - Approximately **96% of service revenue** for the Gaming segment was recurring in 2024, derived under long-term contracts[30](index=30&type=chunk) Gaming Segment Financials (YoY) | Metric | 2024 (USD) | 2023 (USD) | Change (YoY) | | :------------- | :--------- | :--------- | :------------- | | Revenue | $110.6 million | $142.5 million | ↓ $31.9 million | | Adjusted EBITDA | $45.3 million | $42.8 million | ↑ $2.5 million | - Revenue in 2024 decreased primarily due to a **$27.1 million decline in product sales**, as the prior year included **$30.6 million of one-off low-margin sales** (6,400 LBO Vantage terminals)[31](index=31&type=chunk) [Virtual Sports Segment](index=6&type=section&id=Virtual%20Sports%20Segment) The Virtual Sports segment designs, develops, and distributes games for fixed-odds wagering on ultra-high definition simulations of sporting events across retail and online platforms - The Virtual Sports segment designs, develops, markets, and distributes games for fixed-odds wagering on ultra-high definition, computer-rendered simulations of sporting events, available in approximately **30,000 retail venues** and multiple online platforms across **20+ gaming jurisdictions**[32](index=32&type=chunk)[33](index=33&type=chunk) - Products are typically offered on a participation-based revenue model, where the company receives a share of gaming revenue, along with upfront software licensing and hosting fees[37](index=37&type=chunk) - Approximately **97% of total Virtual Sports segment revenue is recurring** under long-to-medium term contracts[37](index=37&type=chunk) Virtual Sports Segment Financials (YoY) | Metric | 2024 (USD) | 2023 (USD) | Change (YoY) | | :------------- | :--------- | :--------- | :------------- | | Revenue | $45.4 million | $56.2 million | ↓ $10.8 million | | Adjusted EBITDA | $36.0 million | $47.6 million | ↓ $11.6 million | - The revenue decline in 2024 was primarily due to a major customer in a particular geography pulling back on promotions with virtual sports customers, though diversification efforts are underway[38](index=38&type=chunk) [Interactive Segment](index=7&type=section&id=Interactive%20Segment) The Interactive segment provides unique interactive-only content and games hosted on remote gaming servers for online and mobile devices worldwide - The Interactive segment uses unique interactive-only content and offerings from other segments to create games hosted on remote gaming servers, enabling online gaming operators to use these games on online and mobile devices worldwide[39](index=39&type=chunk) - Its Virgo Remote Gaming System (RGS™) is integrated with over **300 websites** across regulated Europe and North American territories, including New Jersey, Michigan, Pennsylvania, Connecticut, Alberta, Ontario, and Quebec[40](index=40&type=chunk) - The company launched its **Hybrid Dealer® product in 2024**, a new category offering branded casino and gameshow content without live-dealer challenges[42](index=42&type=chunk) - Interactive products are typically offered on a participation basis, with approximately **100% of revenue being recurring** and derived under long-term contracts (standard 3-year duration)[43](index=43&type=chunk) Interactive Segment Financials (YoY) | Metric | 2024 (USD) | 2023 (USD) | Change (YoY) | | :------------- | :--------- | :--------- | :------------- | | Revenue | $39.3 million | $27.9 million | ↑ $11.4 million | | Adjusted EBITDA | $25.6 million | $15.4 million | ↑ $10.2 million | - EBITDA margins remain steady and growing due to low variable costs on incremental revenue, but face pressures from new taxes in regulated markets like Brazil and the UK[43](index=43&type=chunk) [Leisure Segment](index=8&type=section&id=Leisure%20Segment) The Leisure segment is a leading supplier and operator of 'pay to play' gaming and amusement machines in the UK, serving various venues - The Leisure segment is a supplier and one of the largest operators of 'pay to play' gaming and amusement machines in the UK, serving pubs, bingo halls, adult gaming centers, and holiday parks[44](index=44&type=chunk) - As of December 31, 2024, the segment supplied and operated over **10,000 gaming terminals** and **3,500 pool tables, prize vending, and jukeboxes**[44](index=44&type=chunk) - Revenue is generated primarily through participation-based contracts (percentage of gross revenue from machines) or rental agreements[47](index=47&type=chunk) - Approximately **97% of revenue is recurring** under long-term contracts[47](index=47&type=chunk) Leisure Segment Financials (YoY) | Metric | 2024 (USD) | 2023 (USD) | Change (YoY) | | :------------- | :--------- | :--------- | :------------- | | Revenue | $101.8 million | $96.3 million | ↑ $5.5 million | | Adjusted EBITDA | $23.3 million | $19.4 million | ↑ $3.9 million | [Our Strengths](index=8&type=section&id=Our%20Strengths) The company leverages its established presence across multiple product verticals, high recurring revenue, proprietary technology, and rapid Interactive business growth - The company has an established presence across multiple product verticals, including over **32,000 digital terminals in Gaming**, **11,000 gaming terminals in Leisure**, Virtual Sports products in **32 gaming jurisdictions**, and iGaming content to operators in over **250 websites**[50](index=50&type=chunk) - Recurring revenue represented **86% of total revenue for FY2024**, up from **79% in FY2023**, underpinned by long-term participation-based contracts[52](index=52&type=chunk) - As of December 31, 2024, the company held approximately **25 patents and 300 trademarks worldwide**, demonstrating its proprietary technology and content development capabilities[53](index=53&type=chunk)[110](index=110&type=chunk) - The Interactive business has expanded rapidly with a compound annual growth rate of approximately **53%** (functional currency at constant rate) between 2019 and 2024, driven by a content library of over **100 slot games**[55](index=55&type=chunk) [Our Strategy](index=11&type=section&id=Our%20Strategy) The company's strategy focuses on delivering innovative products, extending market positions, investing in content and technology, expanding into new markets, and pursuing targeted M&A - The company aims to deliver innovative products, extend market positions by developing new content across multiple distribution channels, and continually invest in content, technology, and delivery channels to grow existing customer revenue and penetrate new customers[62](index=62&type=chunk)[63](index=63&type=chunk)[64](index=64&type=chunk) - A key strategic focus is expanding into new markets, particularly **North and South American markets** (e.g., Brazil's newly regulated market) in Gaming, Virtual Sports, Lottery, and Interactive segments[65](index=65&type=chunk) - The company also pursues targeted mergers and acquisitions to strengthen and scale operations and expand its product portfolio and distribution footprint[66](index=66&type=chunk) [Industry Overview](index=12&type=section&id=Industry%20Overview) The global gaming and lottery industry is experiencing steady growth, with digital online and mobile sectors driving significant expansion - The global gaming and lottery industry grew at an estimated **4% compounded annual growth rate** from 2014 to 2024[67](index=67&type=chunk) - The digital online and mobile gaming and lottery sectors grew at an estimated **17% compounded annual growth rate** from 2014 to 2024[68](index=68&type=chunk) - The total global gaming and lottery industry is projected to grow an average of **6% per year** from 2024 to 2029, driven by mobile and online gaming[68](index=68&type=chunk) - Key influencers of digital adoption include government liberalization of gaming regulations, replacement of legacy analog machines with digital devices, and rapid adoption of gaming and lottery applications on smartphones and mobile devices[70](index=70&type=chunk)[71](index=71&type=chunk)[72](index=72&type=chunk) [Regulatory Framework](index=13&type=section&id=Regulatory%20Framework) The company operates in highly regulated jurisdictions, with Great Britain, Italy, and Greece historically contributing significant recurring revenue, requiring strict compliance with local gaming laws - The company conducts business in regulated jurisdictions, with Great Britain, Italy, and Greece historically contributing the most significant recurring revenue[75](index=75&type=chunk) - In Great Britain, activities are regulated by the Gambling Commission, requiring multi-category operating licenses for gaming machines, remote gambling, and software supply, with strict compliance to the Gambling Act 2005 and LCCP[76](index=76&type=chunk)[77](index=77&type=chunk)[81](index=81&type=chunk) - In Italy, gaming machine and remote gaming operations are regulated by L'Agenzia delle Dogane e dei Monopoli (ADM)[82](index=82&type=chunk)[85](index=85&type=chunk)[86](index=86&type=chunk) - In Greece, VLTs and Virtual Sports are regulated by the Hellenic Gaming Commission[88](index=88&type=chunk)[89](index=89&type=chunk)[90](index=90&type=chunk) [Gaming Regulation and Changes in Ownership](index=16&type=section&id=Gaming%20Regulation%20and%20Changes%20in%20Ownership) Gaming regulators require disclosure of ownership structure and material changes, with officers and beneficial owners subject to suitability investigations to maintain licenses - Gaming regulators require the company to disclose its ownership structure and material changes in shareholdings, which may be subject to special procedures or consents to maintain gaming licenses[91](index=91&type=chunk) - Officers, directors, key employees, and beneficial owners (typically **5% or more**) may be subject to suitability investigations; failure to qualify or comply can result in severance of relationships or mandatory stock redemption[92](index=92&type=chunk)[93](index=93&type=chunk)[171](index=171&type=chunk) [Content Development](index=16&type=section&id=Content%20Development) The company continuously invests in new product development across all segments, utilizing three game studios and releasing over 100 games annually, with a focus on market-specific adaptations - The company continually invests in new product development across its Gaming, Virtual Sports, Interactive, and Leisure segments, utilizing a full-stack game development structure with three game studios (Inspired, Astra, and Bell Fruit)[94](index=94&type=chunk) - Over **100 games are released annually** onto its proprietary gaming system, Interactive Remote Gaming Server (RGS), and to G2S clients globally, with a focus on building and adapting games for specific markets[94](index=94&type=chunk) - Virtual Sports products leverage award-winning assets and RGS to produce a 'Virtuals Sportsbook in a box product' (VPP), allowing customers to operate Virtual Sports without their own sportsbook[94](index=94&type=chunk) [Suppliers](index=16&type=section&id=Suppliers) The company manages principal supply arrangements for terminals, components, content, and labor, achieving cost savings through centralized purchases - Principal supply arrangements involve terminals, components, content provision, license holders, and outsourced labor[95](index=95&type=chunk) - The company works closely with key suppliers and has achieved significant cost savings through centralized purchases[95](index=95&type=chunk) [Customers](index=16&type=section&id=Customers) The customer base includes regulated operators of lotteries, sports bookmakers, gaming halls, casinos, pubs, and online platforms, with intellectual property rights protected by license agreements - The customer base includes regulated operators of lotteries, licensed sports bookmakers, gaming and bingo halls, casinos, pubs, adult gaming centers, holiday parks, and regulated online operators[96](index=96&type=chunk) - License agreements with customers include provisions to protect the company's intellectual property rights in its games and other content[96](index=96&type=chunk) [Customer Contracts – Gaming](index=16&type=section&id=Customer%20Contracts%20%E2%80%93%20Gaming) Gaming segment contracts involve supplying terminals and licensing software, primarily on a participation-driven model, with approximately 94% recurring service revenue under long-term contracts - Gaming segment contracts involve supplying gaming terminals and licensing gaming software and games, typically on an exclusive or non-exclusive basis[97](index=97&type=chunk) - Revenue is primarily generated as a percentage of income from terminals (participation-driven model), with approximately **94% of service revenue being recurring** and derived under long-term contracts (typically 3-5 years)[99](index=99&type=chunk) [Customer Contracts – Virtual Sports](index=17&type=section&id=Customer%20Contracts%20%E2%80%93%20Virtual%20Sports) Virtual Sports contracts involve licensing virtual sporting events, typically on a participation basis, with approximately 99% of total revenue recurring under long-term contracts - Virtual Sports contracts involve supplying licenses to operators for virtual sporting events, typically on a participation basis (royalty for a portion of gaming revenue), plus an upfront software license fee and a hosting fee[101](index=101&type=chunk) - The segment produces approximately **99% of total revenue on a recurring basis** under long-term contracts averaging three to four years, with a historical **100% renewal rate**[101](index=101&type=chunk) [Customer Contracts – Interactive](index=17&type=section&id=Customer%20Contracts%20%E2%80%93%20Interactive) Interactive segment contracts provide non-exclusive licenses for slot and casino content, primarily on a participation basis, with approximately 100% recurring revenue under long-term contracts - Interactive segment contracts generally involve providing a limited, non-exclusive license for slot and casino content, typically on a participation basis (percentage of net gaming revenue)[102](index=102&type=chunk)[103](index=103&type=chunk) - Approximately **100% of revenue** for the Interactive segment is recurring and derived under long-term contracts averaging three years, with a nearly **100% renewal rate** over the last three years[103](index=103&type=chunk) [Customer Contracts – Leisure](index=17&type=section&id=Customer%20Contracts%20%E2%80%93%20Leisure) Leisure segment contracts provide gaming and amusement terminals through participation or rental agreements, with approximately 100% recurring service revenue under long-term contracts - Leisure segment contracts involve providing gaming and amusement terminals, often through joint ventures or rental agreements, with revenue typically generated on a participation-basis or fixed weekly fee[104](index=104&type=chunk)[106](index=106&type=chunk) - Approximately **100% of service revenue** for the Leisure segment is recurring and derived under long-term contracts, usually between three and five years, with the majority of major contracts successfully renewed or extended[106](index=106&type=chunk) [Operations and Employees](index=18&type=section&id=Operations%20and%20Employees) The company's operations encompass game production, platform design, distribution, and maintenance, supported by approximately 1,600 employees as of December 31, 2024 - The company's operations include game production, platform and hardware design, testing, distribution, network management, terminal maintenance, and general administration[107](index=107&type=chunk) - As of December 31, 2024, the company had approximately **1,600 employees** (**1,420 full-time**), with about **470 dedicated to digital gaming platforms** and **920 to UK field operations**[108](index=108&type=chunk) [Intellectual Property](index=18&type=section&id=Intellectual%20Property) The company's intellectual property, primarily proprietary software, is protected by trade secrets, patents, and trademarks, supplemented by third-party licenses - The company's intellectual property primarily consists of proprietary software for its network and game design, protected by trade secrets, patents, and trademarks[109](index=109&type=chunk) - As of December 31, 2024, the company held approximately **25 patents and 300 trademarks worldwide**[110](index=110&type=chunk) - The company also relies on certain products and technologies licensed from third parties, with proprietary licenses typically limiting use to specific purposes and time periods[110](index=110&type=chunk) [Competition](index=18&type=section&id=Competition) The company operates in a highly competitive industry, facing numerous global businesses with greater resources, leading to intense price-based competition - The company operates in a highly competitive industry across its business segments, facing numerous worldwide businesses, many with substantially greater financial resources and operating scale[112](index=112&type=chunk) - Competition includes vertically integrated gaming machine and retail betting operations, and businesses operating in both regulated and unregulated sectors, leading to intense price-based competition[112](index=112&type=chunk) [Corporate Information](index=19&type=section&id=Corporate%20Information) The company maintains a website providing access to its Annual Report on Form 10-K, Quarterly Reports, Current Reports, and corporate governance documents - The company maintains a website at www.inseinc.com, where its Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and other corporate governance documents are available[113](index=113&type=chunk) [ITEM 1A. RISK FACTORS.](index=19&type=section&id=ITEM%201A.%20RISK%20FACTORS.) The company faces significant risks including material weaknesses in internal controls, customer and supplier reliance, intense competition, evolving regulations, cybersecurity threats, and capital-intensive operations - The company has identified **material weaknesses** in its disclosure controls and procedures and internal control over financial reporting, which could result in material misstatements if not remediated[117](index=117&type=chunk)[119](index=119&type=chunk) - The company relies on a relatively small number of customers for a significant portion of its sales, particularly in its Virtuals business, with the **top ten customers generating approximately 49% of total revenue in 2024**[120](index=120&type=chunk)[122](index=122&type=chunk) - The company operates in a highly competitive industry, facing numerous worldwide businesses with greater financial resources, and its success depends on its ability to effectively compete and renew long-term contracts[127](index=127&type=chunk)[129](index=129&type=chunk) - A major risk is the use of AI by malicious actors, which can imitate human players, exploit vulnerabilities, launch advanced cyberattacks, and undermine game integrity, leading to financial losses and reputational damage[137](index=137&type=chunk) - The company is subject to strict government regulations in its industries, including gaming taxes, levies, and parameters for stakes, prizes, and return to player, which can change and adversely affect revenue or profitability[150](index=150&type=chunk)[161](index=161&type=chunk) - Its business is capital intensive, and the ability to retain customers and bid on new contracts may depend on funding significant upfront capital expenditures through cash from operations or additional financing[132](index=132&type=chunk)[189](index=189&type=chunk) [Summary of Risk Factors](index=19&type=section&id=Summary%20of%20Risk%20Factors) This section provides a high-level overview of the principal risks and uncertainties that could materially affect the company's business, financial condition, and results of operations [Risks Relating to Our Business and Industry](index=21&type=section&id=Risks%20Relating%20to%20Our%20Business%20and%20Industry) This section details specific risks inherent to the company's business model and the broader gaming industry, including operational, competitive, and technological challenges [Risks Relating to Our Status as a Public Company and Ownership of Our Common Stock](index=30&type=section&id=Risks%20Relating%20to%20Our%20Status%20as%20a%20Public%20Company%20and%20Ownership%20of%20Our%20Common%20Stock) This section outlines risks associated with the company's public listing and common stock ownership, including market volatility, regulatory compliance, and corporate governance matters [Risks Relating to Economic and Political Conditions](index=31&type=section&id=Risks%20Relating%20to%20Economic%20and%20Political%20Conditions) This section addresses risks stemming from macroeconomic factors and geopolitical events, such as inflation, interest rate fluctuations, and international trade policies, which could impact the company's global operations [ITEM 1B. UNRESOLVED STAFF COMMENTS.](index=42&type=section&id=ITEM%201B.%20UNRESOLVED%20STAFF%20COMMENTS.) The company reported that there are no unresolved staff comments from the SEC - There are no unresolved staff comments[229](index=229&type=chunk) [ITEM 1C. CYBERSECURITY.](index=42&type=section&id=ITEM%201C.%20CYBERSECURITY.) The company maintains a robust cybersecurity governance structure with a dedicated team, board oversight, and industry-aligned programs, continuously enhancing defenses despite a 2023 ransomware attack - The company maintains a cybersecurity governance structure involving a dedicated Information Security Team, an Information Security Governance Board (chaired by the Director of Information Security and comprising key executives), the Audit Committee, and the Board[230](index=230&type=chunk)[231](index=231&type=chunk) - Its cybersecurity program is risk-based, aligned with **ISO 27001 standards**, and includes periodic risk assessments, vulnerability scans, penetration tests, threat intelligence feeds, and external audits[232](index=232&type=chunk) - A ransomware attack occurred on **November 8, 2023**, impacting corporate IT systems but not product systems due to physical separation[134](index=134&type=chunk) - Company data, including personal data, was exfiltrated[134](index=134&type=chunk) - The company conducts mandatory annual cybersecurity training for all employees, supplemented by assessment initiatives like periodic phishing campaigns[234](index=234&type=chunk) [ITEM 2. PROPERTIES.](index=43&type=section&id=ITEM%202.%20PROPERTIES.) As of December 31, 2024, the company occupied approximately 300,000 square feet of leased space in the UK, 3,200 square feet in New York, and 17,000 square feet in Kochi, India - As of December 31, 2024, the company occupied approximately **300,000 square feet of leased space in the UK**, **3,200 square feet in New York**, and **17,000 square feet in Kochi, India**[236](index=236&type=chunk) - Primary locations include office spaces in Burton-on-Trent and Manchester (UK), warehousing across six UK Regional Distribution Centres, and administrative/workshop/warehousing facilities in Bridgend and Ashby de La Zouche (UK)[243](index=243&type=chunk) [ITEM 3. LEGAL PROCEEDINGS.](index=43&type=section&id=ITEM%203.%20LEGAL%20PROCEEDINGS.) The company received an SEC subpoena in March 2024 regarding restated financials, but the investigation concluded without enforcement action in January 2025, with other legal matters deemed immaterial - On **March 12, 2024**, the company received an SEC subpoena concerning its recently restated financial statements[236](index=236&type=chunk) - The SEC concluded its investigation on **January 28, 2025**, without recommending an enforcement action[236](index=236&type=chunk) - From time to time, the company is involved in legal matters arising in the ordinary course of business, which are not currently considered material[237](index=237&type=chunk) [ITEM 4. MINE SAFETY DISCLOSURES.](index=43&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES.) This item is not applicable to the company - This item is not applicable[238](index=238&type=chunk) PART II [ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.](index=43&type=section&id=ITEM%205.%20MARKET%20FOR%20REGISTRANT'S%20COMMON%20EQUITY,%20RELATED%20STOCKHOLDER%20MATTERS%20AND%20ISSUER%20PURCHASES%20OF%20EQUITY%20SECURITIES.) The company's common stock trades on Nasdaq under 'INSE', with 32 record holders as of March 2025, no unregistered sales or Q4 2024 repurchases, and no current intent to pay cash dividends - The company's common stock is listed and traded on the Nasdaq Capital Market under the symbol **INSE**[240](index=240&type=chunk) - As of **March 26, 2025**, there were **32 holders of record** of the company's common stock[241](index=241&type=chunk) - There were no share repurchase activities during the three months ended **December 31, 2024**[245](index=245&type=chunk) - The company does not currently expect to pay cash dividends on its common stock and has not paid cash dividends to date[215](index=215&type=chunk)[246](index=246&type=chunk) - Any future dividend payments are at the absolute discretion of the Board of Directors[246](index=246&type=chunk) [Market Information](index=43&type=section&id=Market%20Information) This section provides details on where the company's common stock is listed and traded [Holders](index=43&type=section&id=Holders) This section specifies the number of record holders of the company's common stock as of a particular date [Recent Sales of Unregistered Securities](index=43&type=section&id=Recent%20Sales%20of%20Unregistered%20Securities) This section reports on any sales of unregistered equity securities by the company during the reporting period [Purchases of Equity Securities by the Issuer and Affiliated Purchasers](index=45&type=section&id=Purchases%20of%20Equity%20Securities%20by%20the%20Issuer%20and%20Affiliated%20Purchasers) This section details any share repurchase activities undertaken by the company or its affiliated purchasers [Dividends](index=45&type=section&id=Dividends) This section outlines the company's dividend policy and any dividend payments made or planned [ITEM 6. Reserved](index=45&type=section&id=ITEM%206.%20Reserved) This item is reserved and contains no information [ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=45&type=section&id=ITEM%207.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) This section analyzes the company's financial condition and operations for FY2024 vs. 2023, highlighting revenue changes, net income increase due to tax benefits, segment results, and non-GAAP measures - The company's results are affected by changes in foreign currency exchange rates, primarily between its functional currency (GBP) and reporting currency (USD)[258](index=258&type=chunk) - The average GBP:USD rate was **1.28 in 2024**, compared to **1.25 in 2023**[258](index=258&type=chunk) - The company uses non-GAAP financial measures, including EBITDA and Adjusted EBITDA, to analyze operating performance and provide expanded insight into the business[257](index=257&type=chunk)[349](index=349&type=chunk) [Forward-Looking Statements](index=45&type=section&id=Forward-Looking%20Statements) This section contains forward-looking statements regarding business strategy, operations, and financial condition, which are subject to inherent risks and uncertainties - This section contains forward-looking statements regarding business strategy, plans, objectives, future operations, results, financial condition, beliefs, and intentions, which are subject to risks and uncertainties[248](index=248&type=chunk) [Seasonality](index=45&type=section&id=Seasonality) The company's operating results fluctuate due to seasonal trends, with player activity in holiday parks generally higher in Q2 and Q3 - The company's results of operations fluctuate due to seasonal trends; for example, player activity in holiday parks is generally higher in the spring and summer (Q2 and Q3) and slower in Q1 and Q4[249](index=249&type=chunk) [Revenue](index=46&type=section&id=Revenue) Revenue is generated through participation, fixed rental fees, product sales, and software license fees, with participation revenue typically based on a share of customers' gaming revenue - Revenue is generated in four principal ways: participation basis, fixed rental fee basis, product sales, and software license fees[250](index=250&type=chunk) - Participation revenue typically involves a share of customers' gaming revenue (net win or handle)[250](index=250&type=chunk) [Geographic Range](index=46&type=section&id=Geographic%20Range) This section details the company's geographic revenue and non-current asset distribution, highlighting the UK as the largest contributor Geographic Revenue Distribution (YoY) | Region | 2024 Revenue Share | 2023 Revenue Share | | :------------- | :----------------- | :----------------- | | UK | 73% | 78% | | Greece | 7% | 8% | | Rest of World | 20% | 14% | Geographic Non-Current Assets (excl. goodwill) Distribution (YoY) | Region | 2024 Asset Share | 2023 Asset Share | | :------------- | :----------------- | :----------------- | | UK | 80% | 70% | | Greece | 7% | 12% | | Rest of World | 13% | 18% | [Foreign Exchange](index=46&type=section&id=Foreign%20Exchange) The British Pound is the functional currency for most operations, with the U.S. dollar as the reporting currency, leading to currency impacts calculated based on average exchange rates - The British Pound (GBP) is the functional currency for the largest portion of the business, while the U.S. dollar (USD) is the reporting currency[254](index=254&type=chunk) - Results are translated using average rates for P&L and spot rates for period-end balances[254](index=254&type=chunk) - Currency impacts are calculated as the difference between current and prior-period average GBP:USD rates applied to current activity, with the remaining difference referred to as functional currency at constant rate[256](index=256&type=chunk) [Non-GAAP Financial Measures](index=46&type=section&id=Non-GAAP%20Financial%20Measures) The company utilizes non-GAAP financial measures like EBITDA and Adjusted EBITDA to analyze operating performance and provide expanded insight into business drivers - The company uses non-GAAP financial measures, including EBITDA and Adjusted EBITDA, to analyze operating performance and manage the business, believing they provide expanded insight into operating drivers[257](index=257&type=chunk)[349](index=349&type=chunk) [Results of Operations](index=46&type=section&id=Results%20of%20Operations) This section provides a detailed analysis of the company's financial performance, including revenue, expenses, and net income, for the reporting period [Key Events](index=47&type=section&id=Key%20Events) Key events in 2024 included major terminal orders, new Virtual Sports partnerships, Interactive segment expansion, manufacturing outsourcing, and new Leisure segment contracts - In 2024, William Hill committed to leasing **5,000 new Vantage® terminals**, and OPAP in Greece ordered **4,000 new VLTs**, with deployments expected in 2025[262](index=262&type=chunk) - The Virtual Sports segment established partnerships with the **NBA, NFL, and NHL** for unique products featuring official players and teams[263](index=263&type=chunk) - The Interactive segment went live with **41 new operators**, including bet365 in New Jersey, and launched its Hybrid Dealer product category[264](index=264&type=chunk) - The company outsourced manufacturing to Trio and exited its Bridgend facility as part of a strategic reorganization to optimize cost structure and enhance production efficiency[266](index=266&type=chunk) - New multi-year contracts were secured in the Leisure segment with Parkdean Resorts (**64 sites**) and Away Resorts (**19 sites**) for amusement and gaming machines[268](index=268&type=chunk) [Overall Company Results](index=48&type=section&id=Overall%20Company%20Results) Overall company results for 2024 show a 10% revenue decrease primarily from lower Gaming product sales, but a significant 826% increase in net income due to an income tax benefit Consolidated Financial Performance (YoY, functional currency at constant rate) | Metric | 2024 (USD) | 2023 (USD) | Variance (USD) | Variance (%) | | :------------------------------------------------ | :--------- | :--------- | :------------- | :----------- | | Total Revenue | $297.1 | $322.9 | ($33.1) | (10)% | | Cost of Sales (excl. D&A) | ($92.3) | ($128.6) | $38.6 | (30)% | | Non-staff SG&A | ($51.0) | ($44.3) | ($5.4) | 12% | | Stock-based compensation | ($7.6) | ($11.2) | $3.7 | (33)% | | Depreciation and amortization | ($43.3) | ($39.6) | ($2.6) | 7% | | Other SG&A | ($18.6) | ($9.6) | ($8.5) | 89% | | Net Operating Income | $30.7 | $38.9 | ($8.8) | (22)% | | Net Income | $64.8 | $6.9 | $57.0 | 826% | - Total revenue decreased by **$33.1 million (10%)** on a functional currency (at constant rate) basis, primarily due to a **$27.1 million decrease in Gaming product sales** (no low-margin sales in 2024 vs. **$30.6 million in 2023**)[272](index=272&type=chunk)[273](index=273&type=chunk) - Net income increased significantly to **$64.8 million** from **$6.9 million** in the prior year, driven primarily by a **$67.3 million increase in income tax income** due to the reversal of the majority of the company's valuation allowance on its deferred tax assets[281](index=281&type=chunk) [Revenue (for the twelve-months ended December 31, 2024, compared to the twelve-months ended December 31, 2023)](index=49&type=section&id=Revenue%20(for%20the%20twelve-months%20ended%20December%2031,%202024,%20compared%20to%20the%20twelve-months%20ended%20December%2031,%202023)) Revenue analysis reveals a decline in Gaming and Virtual Sports, offset by growth in Interactive and Leisure segments for the twelve months ended December 31, 2024 - Gaming revenue declined by **$34.0 million**, predominantly due to a **$27.1 million decrease in product sales** (no low-margin sales in 2024 vs. **$30.6 million in 2023**) and a **$6.9 million decrease in service revenue**[273](index=273&type=chunk) - Virtual Sports revenue declined by **$12.0 million**, with **$10.9 million of the reduction from online sales**[273](index=273&type=chunk) - Interactive revenue grew by **$10.6 million** due to growth in UK and North American markets[273](index=273&type=chunk) - Leisure revenue grew by **$3.0 million**, predominantly from Holiday Parks and Pubs sectors[273](index=273&type=chunk) [Cost of Sales, excluding depreciation and amortization](index=50&type=section&id=Cost%20of%20Sales,%20excluding%20depreciation%20and%20amortization) Cost of sales, excluding depreciation and amortization, decreased by $38.6 million (30%) in 2024, driven by lower low-margin product sales and reduced service costs - Cost of sales, excluding depreciation and amortization, decreased by **$38.6 million (30%)** for the twelve-month period ended December 31, 2024, driven by a **$6.7 million decrease in cost of service** and a **$31.9 million decrease in cost of product**, predominantly due to lower low-margin product sales[275](index=275&type=chunk) [Non-staff related selling, general and administrative expenses](index=50&type=section&id=Non-staf%20related%20selling,%20general%20and%20administrative%20expenses) Non-staff related SG&A expenses increased by $5.4 million (12%) in 2024, primarily due to higher storage, IT, facility, and audit costs - Non-staff related selling, general and administrative expenses increased by **$5.4 million (12%)** in 2024, primarily due to increases in storage and distribution (**$1.6 million**), IT (**$1.1 million**), facility costs (**$1.0 million**), and audit and accountancy costs (**$1.1 million**)[276](index=276&type=chunk) [Stock-based compensation](index=50&type=section&id=Stock-based%20compensation) Stock-based compensation expenses decreased to $7.6 million in 2024 from $11.2 million in 2023 - Stock-based compensation expenses decreased to **$7.6 million in 2024** from **$11.2 million in 2023**[277](index=277&type=chunk) [Depreciation and amortization](index=50&type=section&id=Depreciation%20and%20amortization) Depreciation and amortization increased by $2.6 million in 2024, driven by software and machine assets in Virtuals, Interactive, and Leisure, partially offset by Gaming - Depreciation and amortization increased by **$2.6 million in 2024**, driven by increases in Virtuals (**$2.1 million**) and Interactive (**$1.7 million**) for software development and intangible assets, and Leisure (**$0.9 million**) for machine assets, partially offset by reductions in Gaming (**$2.2 million**) as machine assets reached full depreciation[278](index=278&type=chunk) [Other selling, general and administrative expenses](index=50&type=section&id=Other%20selling,%20general%20and%20administrative%20expenses) Other selling, general and administrative expenses increased by $8.5 million (89%) in 2024, primarily due to costs associated with financial statement restatement and restructuring - Other selling, general and administrative expenses increased by **$8.5 million (89%) in 2024**, primarily due to costs associated with the restatement of previously issued financial statements and restructuring costs[279](index=279&type=chunk) [Net operating income](index=50&type=section&id=Net%20operating%20income) Net operating income decreased by $8.8 million (22%) to $30.7 million in 2024, influenced by increased SG&A and depreciation, partially offset by gross margin improvement - Net operating income decreased by **$8.8 million (22%) to $30.7 million in 2024**, driven by increases in non-staff related SG&A, depreciation and amortization, and other SG&A, partially offset by an increase in gross margin and reduced stock-based compensation[280](index=280&type=chunk) [Net Income](index=50&type=section&id=Net%20Income) Net income for 2024 significantly increased to $64.8 million from $6.9 million in 2023, primarily due to a $67.3 million income tax benefit - Net income for 2024 was **$64.8 million**, a significant increase from **$6.9 million in 2023**, primarily due to a **$67.3 million increase in income tax income** from the reversal of the majority of the valuation allowance on deferred tax assets[281](index=281&type=chunk) [Deferred Tax](index=50&type=section&id=Deferred%20Tax) The company has not recognized deferred tax liabilities for unremitted earnings considered indefinitely reinvested in foreign subsidiaries - The company has not recognized deferred tax liabilities for unremitted earnings considered indefinitely reinvested in foreign subsidiaries[282](index=282&type=chunk) [Segment Results (for the twelve months ended December 31, 2024, compared to the twelve months ended December 31, 2023)](index=50&type=section&id=Segment%20Results%20(for%20the%20twelve%20months%20ended%20December%2031,%202024,%20compared%20to%20the%20twelve%20months%20ended%20December%2031,%202023)) This section provides a detailed breakdown of the financial performance for each of the company's operating segments, comparing results for 2024 and 2023 [Gaming](index=50&type=section&id=Gaming) This section focuses on the financial and operational performance of the Gaming segment, including key indicators and revenue analysis [Gaming, Key Performance Indicators](index=51&type=section&id=Gaming,%20Key%20Performance%20Indicators) Gaming KPIs show a slight increase in installed base, stable customer net win per unit, and a significant decrease in machine sales for 2024 Gaming Key Performance Indicators (YoY) | Metric | Dec 31, 2024 | Dec 31, 2023 | Change (%) | | :------------------------------------------ | :----------- | :----------- | :--------- | | End of period installed base ( of terminals) | 34,916 | 34,500 | 1.2% | | Participation - Average installed base ( of terminals) | 29,897 | 30,305 | (1.3)% | | Fixed Rental - Average installed base ( of terminals) | 4,971 | 4,290 | 15.9% | | Customer Net Win per unit per day (£) | 70.8 | 70.6 | 0.3% | | Inspired Blended Participation Rate | 5.4% | 5.6% | (0.2)% | | Number of Machine sales | 3,118 | 9,741 | (68.0)% | | Average selling price per terminal (£) | 8,044 | 5,866 | 37.1% | [Gaming, Recurring Revenue](index=53&type=section&id=Gaming,%20Recurring%20Revenue) Gaming recurring revenue decreased by £10.5 million (16%) in 2024, and its percentage of total gaming revenue (excluding low margin sales) also declined Gaming Recurring Revenue (YoY, in £ millions) | Metric | 2024 | 2023 | Change (£) | Change (%) | | :------------------------------------------ | :--- | :--- | :--------- | :--------- | | Total Gaming Revenue | £86.7 | £114.0 | (£27.3) | (24)% | | Gaming Participation Revenue | £41.7 | £44.3 | (£2.6) | (6)% | | Other Fixed Fee Recurring Revenue | £9.1 | £16.3 | (£7.2) | (44)% | | Total Gaming Recurring Revenue | £53.7 | £64.2 | (£10.5) | (16)% | | Gaming Recurring Revenue as % of Total Gaming Revenue | 62% | 56% | 6% | | - Gaming Recurring Revenue as a percentage of Total Gaming Revenue (excluding Low Margin Sales) decreased from **72% in 2023 to 62% in 2024**[302](index=302&type=chunk) [Gaming, Service Revenue by Region](index=53&type=section&id=Gaming,%20Service%20Revenue%20by%20Region) Gaming service revenue decreased by $4.9 million (6%) in 2024, primarily due to declines in Greece and UK LBO, partially offset by growth in Other UK Gaming Service Revenue by Region (YoY, in millions USD) | Region | 2024 | 2023 | Change (USD) | Change (%) | | :---------------- | :--- | :--- | :----------- | :--------- | | UK LBO | $34.5 | $37.0 | ($2.5) | (7)% | | UK Other | $16.1 | $13.9 | $2.2 | 16% | | Italy | $1.7 | $2.8 | ($1.1) | (39)% | | Greece | $15.2 | $18.7 | ($3.5) | (19)% | | Rest of the World | $1.8 | $2.1 | ($0.3) | (14)% | | Lotteries | $5.4 | $5.2 | $0.2 | 4% | | **Total Service Revenue** | **$74.7** | **$79.6** | **($4.9)** | **(6)%** | [Gaming, Results of Operations](index=54&type=section&id=Gaming,%20Results%20of%20Operations) This section analyzes the Gaming segment's revenue and operating income performance, detailing the factors contributing to changes in financial results [Gaming Revenue](index=55&type=section&id=Gaming%20Revenue) Gaming revenue decreased by $34.0 million (24%) in 2024, driven by declines in both service and product revenue, with product sales significantly impacted by the absence of prior year's low-margin sales - Gaming revenue decreased by **$34.0 million (24%) in 2024**, driven by a **$6.9 million decrease in Service revenue** and a **$27.1 million decrease in Product revenue**[313](index=313&type=chunk) - The decrease in Service revenue was due to declines in Greece (**$3.8 million**) and the UK market (**$3.4 million**), partially offset by growth in Other UK (**$1.8 million**) from one-off license sales[314](index=314&type=chunk) - The Product revenue decrease was primarily due to lower product sales (**$27.1 million**) as the prior year included **$30.6 million of Low Margin sales**, partially offset by **$12.8 million in revenue growth in North America**[315](index=315&type=chunk) [Gaming Operating / Net Income](index=55&type=section&id=Gaming%20Operating%20/%20Net%20Income) Gaming net operating income increased by $0.9 million in 2024, primarily due to improved gross margin and reduced depreciation, despite increased SG&A and restructuring costs - Net operating income for the Gaming segment increased by **$0.9 million in 2024**, primarily due to a **$2.2 million increase in gross margin** (revenue decrease offset by a larger decrease in cost of sales due to lower Low Margin sales) and a **$2.3 million decrease in depreciation and amortization**[316](index=316&type=chunk) - This increase was partially offset by a **$0.8 million increase in non-staff related SG&A** and a **$3.6 million increase in other SG&A** relating to restructuring costs for the closure of the Bridgend manufacturing facility[316](index=316&type=chunk) [Virtual Sports](index=55&type=section&id=Virtual%20Sports) This section details the financial and operational performance of the Virtual Sports segment, including key performance indicators and revenue analysis [Virtual Sports, Key Performance Indicators](index=56&type=section&id=Virtual%20Sports,%20Key%20Performance%20Indicators) Virtual Sports KPIs show a slight increase in live customers but a significant decline in total revenue, particularly from online virtuals, for 2024 Virtual Sports Key Performance Indicators (YoY, in £ millions) | Metric | Dec 31, 2024 | Dec 31, 2023 | Change (£) | Change (%) | | :-------------------------------- | :----------- | :----------- | :--------- | :--------- | | No. of Live Customers (end of period) | 58 | 56 | 2 | 3.6% | | Average No. of Live Customers | 56 | 57 | (1) | (1.8)% | | Total Revenue | £35.6 | £45.3 | (£9.7) | (21.4)% | | Total Revenue - Retail | £9.2 | £10.2 | (£1.0) | (9.8)% | | Total Revenue - Online Virtuals | £26.4 | £35.2 | (£8.8) | (25.0)% | [Virtual Sports, Recurring Revenue](index=56&type=section&id=Virtual%20Sports,%20Recurring%20Revenue) Virtual Sports recurring revenue decreased by £10.0 million (22.4%) in 2024, with both retail and online segments contributing to the decline Virtual Sports Recurring Revenue (YoY, in £ millions) | Metric | 2024 | 2023 | Change (£) | Change (%) | | :------------------------------------------ | :--- | :--- | :--------- | :--------- | | Total Virtual Sports Revenue | £35.6 | £45.3 | (£9.7) | (21.4)% | | Recurring Revenue - Retail Virtuals | £9.0 | £9.9 | (£0.9) | (9.1)% | | Recurring Revenue - Online Virtuals | £25.6 | £34.6 | (£9.0) | (26.0)% | | Total Virtual Sports Recurring Revenue | £34.7 | £44.7 | (£10.0) | (22.4)% | | Recurring Revenue as % of Total Virtual Sports Revenue | 97.5% | 98.7% | (1.2)% | | [Virtual Sports, Results of Operations](index=57&type=section&id=Virtual%20Sports,%20Results%20of%20Operations) This section analyzes the Virtual Sports segment's revenue and operating income performance, detailing the factors contributing to changes in financial results [Virtual Sports revenue](index=57&type=section&id=Virtual%20Sports%20revenue) Virtual Sports revenue decreased by $12.0 million (21%) in 2024, primarily due to a major customer optimizing its customer base - Virtual Sports revenue decreased by **$12.0 million (21%) in 2024**, driven by a major customer optimizing its customer base[326](index=326&type=chunk) [Virtual Sports operating income](index=57&type=section&id=Virtual%20Sports%20operating%20income) Virtual Sports net operating income decreased by $14.5 million in 2024, primarily due to reduced gross margin and increased depreciation for software development - Net operating income for Virtual Sports decreased by **$14.5 million in 2024**, primarily due to a **$12.3 million decrease in gross margin** and a **$2.2 million increase in depreciation and amortization** for software development and intangible assets[327](index=327&type=chunk) [Interactive](index=57&type=section&id=Interactive) This section details the financial and operational performance of the Interactive segment, including key performance indicators and revenue analysis [Interactive, Key Performance Indicators](index=58&type=section&id=Interactive,%20Key%20Performance%20Indicators) Interactive KPIs show significant growth in live customers, available games, and total revenue for 2024, reflecting strong segment expansion Interactive Key Performance Indicators (YoY, in £ millions) | Metric | Dec 31, 2024 | Dec 31, 2023 | Change | Change (%) | | :-------------------------------- | :----------- | :----------- | :----- | :--------- | | No. of Live Customers (end of period) | 175 | 149 | 26 | 17.4% | | Average No. of Live Customers | 167 | 142 | 25 | 17.6% | | No. of Games available (end of period) | 323 | 290 | 33 | 11.4% | | Average No. of Live Games | 292 | 259 | 33 | 12.7% | | Total Revenue | £30.8 | £22.4 | £8.4 | 37.5% | [Interactive revenue](index=59&type=section&id=Interactive%20revenue) Interactive revenue increased by $10.6 million (38%) in 2024, driven by recurring revenue growth in the UK, North America, and Europe due to new content and promotions - Interactive revenue increased by **$10.6 million (38%) in 2024**, driven by recurring revenue growth in the UK, North America, and mainland Europe due to new content launches and increased promotional activity with tier-one customers[338](index=338&type=chunk) [Interactive operating income](index=59&type=section&id=Interactive%20operating%20income) Interactive operating income increased by $8.6 million in 2024, driven by higher gross margin, partially offset by increased SG&A and depreciation - Operating income for Interactive increased by **$8.6 million in 2024**, driven by increased gross margin, partially offset by increases in staff-related SG&A (**$0.3 million**), non-staff related SG&A (**$0.3 million**), and depreciation and amortization (**$1.7 million**)[339](index=339&type=chunk) [Leisure](index=59&type=section&id=Leisure) This section details the financial and operational performance of the Leisure segment, including key performance indicators and revenue analysis [Leisure Revenue](index=61&type=section&id=Leisure%20Revenue) Leisure revenue increased by $3.0 million (3%) in 2024, primarily due to service revenue growth from Holiday Parks and Pubs sectors - Leisure revenue increased by **$3.0 million (3%) in 2024**, primarily due to a **$2.6 million increase in service revenue**[347](index=347&type=chunk) - This service revenue growth was driven by Holiday Parks (**$1.4 million**, due to new locations and higher bookings) and Pubs (**$1.0 million**, due to the roll out of Vantage machines)[347](index=347&type=chunk) [Leisure Operating Income](index=61&type=section&id=Leisure%20Operating%20Income) Leisure operating income increased by $2.9 million in 2024, primarily due to higher gross margin, partially offset by increased non-staff related SG&A - Operating income for Leisure increased by **$2.9 million in 2024**, primarily due to an increase in gross margin, partially offset by a **$1.4 million increase in non-staff related SG&A** (fleet expenses, facility expenses, storage, and distribution costs)[348](index=348&type=chunk) [Non-GAAP Financial Measures](index=62&type=section&id=Non-GAAP%20Financial%20Measures) This section defines non-GAAP financial measures like EBITDA, Adjusted EBITDA, and Adjusted Revenue, used to analyze operating performance and exclude low-margin sales - EBITDA is defined as net income (loss) excluding depreciation and amortization, interest expense, interest income, and income tax expense[350](index=350&type=chunk) - Adjusted EBITDA further excludes stock-based compensation, changes in earnout liabilities, legacy business income/expenditure, restructuring costs, merger and acquisition costs, and non-ordinary course gains or losses[351](index=351&type=chunk) - Adjusted Revenue (Revenue Excluding Low Margin Gaming Hardware Sales) is defined as revenue excluding Gaming hardware sales that are sold at low margin to secure longer-term recurring revenue streams[353](index=353&type=chunk) Adjusted EBITDA by Segment (FY2024 vs FY2023, in millions USD) | Segment | 2024 Adjusted EBITDA | 2023 Adjusted EBITDA | | :-------------- | :------------------- | :------------------- | | Gaming | $45.3 | $42.8 | | Virtual Sports | $36.1 | $47.6 | | Interactive | $25.6 | $15.4 | | Leisure | $23.3 | $19.4 | | Corporate | ($30.2) | ($26.0) | | **Total** | **$100.1** | **$99.2** | Adjusted Revenue (YoY, in millions USD) | Metric | 2024 | 2023 | | :--------------- | :--- | :--- | | Net revenue | $297.1 | $322.9 | | Less Low Margin Gaming Sales | - | ($30.6) | | **Adjusted Revenue** | **$297.1** | **$292.3** | [ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=72&type=section&id=ITEM%207A.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) The company's primary market risks stem from foreign currency exchange rate fluctuations, particularly GBP, Euro, and USD, with limited interest rate risk due to fixed-rate borrowings - The company's external borrowings of **£235.0 million ($294.4 million)** are at a fixed rate, meaning movements in rates like LIBOR do not impact current borrowings, limiting interest rate risk[399](index=399&type=chunk) - Operations in various countries expose the company to foreign currency exchange rate fluctuations, particularly between GBP, Euro, and USD, affecting revenue and expenses[400](index=400&type=chunk) - A hypothetical **10% weakening of GBP against the US Dollar** would unfavorably change trading operational results by approximately **$6.56 million** and result in unfavorable translation adjustments of approximately **$4.4 million** in other comprehensive loss[403](index=403&type=chunk) [Interest Rate Risk](index=72&type=section&id=Interest%20Rate%20Risk) This section discusses the company's exposure to fluctuations in interest rates and how it manages this risk, particularly concerning its borrowings [Foreign Currency Exchange Rate Risk](index=72&type=section&id=Foreign%20Currency%20Exchange%20Rate%20Risk) This section addresses the company's exposure to foreign currency exchange rate fluctuations due to its international operations and how these movements impact financial results [ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.](index=73&type=section&id=ITEM%208.%20FINANCIAL%20STATEMENTS%20AND%20SUPPLEMENTARY%20DATA.) This section presents the company's audited consolidated financial statements for 2024, 2023, and 2022, including balance sheets, statements of operations, stockholders' deficit, cash flows, and extensive notes - Marcum LLP issued an unqualified opinion on the consolidated financial statements but an adverse opinion on the effectiveness of internal control over financial reporting due to material weaknesses[408](index=408&type=chunk)[409](index=409&type=chunk) [Report of Independent Registered Public Accounting Firm](index=74&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) This section contains the independent auditor's report on the company's consolidated financial statements and internal control over financial reporting [Critical Audit Matters](index=74&type=section&id=Critical%20Audit%20Matters) Critical audit matters include revenue recognition due to complex customer contracts and software development costs due to management judgment in capitalization criteria - Auditing revenue recognition was identified as a critical audit matter due to significant management judgment in evaluating customer contracts with multiple promised goods and services and identifying the correct transaction price[415](index=415&type=chunk) - Auditing software development costs was identified as a critical audit matter due to the judgment exercised by management in determining whether costs incurred on software development projects met capitalization criteria[419](index=419&type=chunk) [Consolidated Balance Sheets](index=77&type=section&id=Consolidated%20Balance%20Sheets) The consolidated balance sheets show an increase in total assets and a significant improvement in stockholders' deficit, driven by deferred tax assets, despite a decrease in cash Consolidated Balance Sheet Summary (YoY, in millions USD) | Metric | Dec 31, 2024 | Dec 31, 2023 | Change (YoY) | | :-------------------------- | :----------- | :----------- | :------------- | | Total Assets | $438.4 | $343.0 | ↑ $95.4 | | Total Liabilities | $441.7 | $418.9 | ↑ $22.8 | | Total Stockholders' Deficit | ($3.3) | ($75.9) | ↑ $72.6 | - Cash decreased from **$40.0 million in 2023 to $29.3 million in 2024**[423](index=423&type=chunk) - Accounts receivable, net, increased from **$43.8 million to $65.4 million**[423](index=423&type=chunk) - Deferred tax assets increased significantly from **$0 in 2023 to $67.4 million in 2024**[423](index=423&type=chunk) - Long-term debt remained relatively stable at **$292.2 million in 2024** compared to **$295.6 million in 2023**[423](index=423&type=chunk) - Finance lease liabilities (net of current portion) increased from **$1.6 million to $18.6 million**[423](index=423&type=chunk) [Consolidated Statements of Operations and Comprehensive Income (Loss)](index=78&type=section&id=Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income%20(Loss)) The consolidated statements of operations show an 8% decrease in total revenue, primarily from product sales, but a substantial increase in net income due to a 2024 income tax benefit Consolidated Statements of Operations Summary (YoY, in millions USD) | Metric | 2024 | 2023 | 2022 | | :------------------------------------------ | :--- | :--- | :--- | | Service Revenue | $258.6 | $257.8 | $246.8 | | Product Sales | $38.5 | $65.1 | $37.7 | | **Total Revenue** | **$297.1** | **$322.9** | **$284.5** | | Net Operating Income | $30.7 | $38.9 | $46.5 | | Net Income before Income Taxes | $1.8 | $11.9 | $23.3 | | Income Tax Benefit (Expense) | $63.0 | ($5.0) | ($2.1) | | **Net Income** | **$64.8** | **$6.9** | **$21.2** | | Comprehensive Income (Loss) | $68.8 | $0.6 | $28.2 | | Basic EPS | $2.27 | $0.25 | $0.76 | | Diluted EPS | $2.22 | $0.24 | $0.73 | - Total revenue decreased by **$25.8 million (8%)** year-over-year, primarily due to a **$26.6 million decrease in product sales**[424](index=424&type=chunk) - Net income increased significantly to **$64.8 million in 2024** from **$6.9 million in 2023**, largely driven by a **$63.0 million income tax benefit in 2024**[424](index=424&type=chunk) [Consolidated Statements of Stockholders' Deficit](index=79&type=section&id=Consolidated%20Statements%20of%20Stockholders'%20Deficit) The total stockholders' deficit improved from ($75.9) million in 2023 to ($3.3) million in 2024, primarily due to net income and increased comprehensive income Consolidated Stockholders' Deficit Summary (YoY, in millions USD) | Metric | Dec 31, 2024 | Dec 31, 2023 | | :-------------------------- | :----------- | :----------- | | Total Stockholders' Deficit | ($3.3) | ($75.9) | - The total stockholders' deficit improved from **($75.9) million at December 31, 2023, to ($3.3) million at December 31, 2024**, primarily due to the net income of **$64.8 million** and an increase in accumulated other comprehensive income[426](index=426&type=chunk) [Consolidated Statements of Cash Flows](index=80&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operating activities decreased by $23.0 million in 2024, while investing activities used less cash, and financing activities shifted to a net outflow Consolidated Cash Flow Summary (YoY, in millions USD) | Metric | 2024 | 2023 | 2022 | | :------------------------------------ | :--- | :--- | :--- | | Net cash provided by operating activities | $31.7 | $54.7 | $29.6 | | Net cash used in investing activities | ($40.1) | ($57.6) | ($37.5) | | Net cash (used in) provided by financing activities | ($1.6) | $16.2 | ($11.0) | | Net (decrease) increase in cash | ($10.7) | $15.0 | ($22.8) | | Cash, end of period | $29.3 | $40.0 | $25.0 | - Net cash provided by operating activities decreased by **$23.0 million to $31.7 million in 2024**, primarily due to adverse movements in accounts receivable and accounts payable, and corporate tax[367](index=367&type=chunk)[370](index=370&type=chunk) - Net cash used in investing activities decreased by **$17.5 million to $40.1 million**, driven by reduced spend on property and equipment and capitalized software[371](index=371&type=chunk) - Net cash used in financing activities was **$1.6 million in 2024**, a shift from a **$16.2 million inflow in 2023**, mainly due to the draw down of the revolving facility in the prior year[372](index=372&type=chunk) [Notes to the Consolidated Financial Statements](index=82&type=section&id=Notes%20to%20the%20Consolidated%20Financial%20Statements) This section provides detailed explanations and additional information supporting the amounts presented in the consolidated financial statements, including accounting policies and specific disclosures [1. Nature of Operations, Management's Plans and Summary of Significant Accounting Policies](index=82&type=section&id=1.%20Nature%20of%20Operations,%20Management's%20Plans%20and%20Summary%20of%20Significant%20Accounting%20Policies) Management expects sufficient liquidity through March 2026, with GBP as the functional currency, and details accounting policies for R&D, software capitalization, goodwill impairment, and segment reporting - Management believes that the company's cash balances, expected cash flows from operations, ability to control and defer capital projects, and available external borrowings will be sufficient to fund its net cash requirements through **March 2026**[435](index=435&type=chunk) - The British Pound (GBP) is the functional currency for most operations, with the U.S. dollar (USD) as the reporting currency[439](index=439&type=chunk) - Foreign currency losses included in net income amounted to **$2.4 million in 2024**[439](index=439&type=chunk) - Total research and development costs amounted to **$22.7 million in 2024**, with **$7.8 million capitalized**[449](index=449&type=chunk)[450](index=450&type=chunk) - Capitalized software development costs are amortized over an estimated useful life of **two to five years**[451](index=451&type=chunk) - The annual goodwill impairment assessment date was voluntarily changed from December 31 to December 1 in 2024 to align with budgeting cycles[454](index=454&type=chunk) - No impairment was required for goodwill or long-lived assets in 2024, 2023, or 2022[458](index=458&type=chunk)[459](index=459&type=chunk) - The company adopted ASU No. 2023-07, "Segment Reporting," on **January 1, 2024**, enhancing disclosures about significant segment expenses and the Chief Operating Decision Maker's (CODM) use of segment profit/loss measures[531](index=531&type=chunk)[532](index=532&type=chunk) [2. Acquisitions and Dispos

Core Insights - The article discusses the expertise of a specialized equity analyst in the restaurant sector, focusing on various dining segments in the U.S. market [1] Group 1: Company Overview - The company, Goulart's Restaurant Stocks, is dedicated to analyzing restaurant stocks across multiple segments, including QSR, fast casual, casual dining, fine dining, and family dining [1] - Advanced analytical models and specialized valuation techniques are employed to provide detailed insights and actionable strategies for investors [1] Group 2: Industry Engagement - The analyst actively participates in academic and journalistic initiatives, contributing to institutions that promote individual and economic freedom [1] - Previous contributions include writing for Investing, where topics such as monetary policy, financial education, and financial modeling were discussed [1]

NEW YORK, March 18, 2025 (GLOBE NEWSWIRE) -- Inspired Entertainment, Inc. ("Inspired" or the "Company") (NASDAQ:INSE), a leading provider of gaming content, systems, and solutions, is pleased to announce the extension of its partnership with Buzz Bingo, Britain's leading omni-channel bingo operator. This contract extension marks a significant milestone in the long-standing collaboration between Inspired and Buzz Bingo, ensuring the supply of 500 Category B3 and C terminals across 79 Buzz Bingo venues. This ...

INSPIRED REPORTS FOURTH QUARTER AND YEAR END 2024 RESULTS New York, New York, March 17, 2025 - Inspired Entertainment, Inc. ("Inspired" or the "Company") (NASDAQ: INSE), a leading B2B provider of gaming content, technology, hardware and services, today reported financial results for the three-month period and fiscal year ended December 31, 2024. "We ended the year with a fourth quarter that reflects the strength and resilience of our diversified business model," said Lorne Weil, Executive Chairman of Inspir ...

Core Viewpoint - Inspired Entertainment reported quarterly earnings of $2.33 per share, significantly exceeding the Zacks Consensus Estimate of $0.29 per share, marking an earnings surprise of 703.45% compared to break-even earnings per share a year ago [1] - The company posted revenues of $83 million for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 6.14% and showing an increase from year-ago revenues of $81.2 million [2] Financial Performance - Over the last four quarters, Inspired Entertainment has surpassed consensus EPS estimates only once [2] - The company has topped consensus revenue estimates two times over the last four quarters [2] - The current consensus EPS estimate for the upcoming quarter is -$0.03 on revenues of $66.2 million, and for the current fiscal year, it is $0.81 on revenues of $305 million [7] Market Performance - Inspired Entertainment shares have declined approximately 7.5% since the beginning of the year, while the S&P 500 has decreased by 4.1% [3] - The stock currently holds a Zacks Rank 2 (Buy), indicating expectations of outperforming the market in the near future [6] Industry Outlook - The Technology Services industry, to which Inspired Entertainment belongs, is currently ranked in the top 27% of over 250 Zacks industries, suggesting a favorable outlook [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

Financial Data and Key Metrics Changes - Adjusted EBITDA for Q4 was $30.9 million, up 22% from the previous year [6] - Full year adjusted EBITDA was $100.1 million, compared to $99.3 million for 2023 [6][7] - The company received a letter from the SEC indicating that their inquiry is now closed with no further action [7] Business Line Data and Key Metrics Changes - The Interactive business saw revenue and EBITDA growth of 45% and 105% respectively in Q4, accounting for approximately 22% of overall company EBITDA [8][9] - The Digital business is expected to approach 60% of EBITDA by year-end, driven by growth in Interactive and modest acceleration in Virtual Sports [12] - The land-based gaming segment had EBITDA growth of 42% year-over-year in Q4, attributed to gaming hardware sales [25] Market Data and Key Metrics Changes - The company noted that in states with both iGaming and Sports Betting, iGaming outperforms Sports Betting by a ratio of 4 or 5 to 1 [9] - The company is optimistic about the potential growth in the Brazilian market, which is expected to become a significant market for them [53] Company Strategy and Development Direction - The company is focusing on enhancing product development in the Virtual Sports segment to replicate the success seen in Interactive [75] - There is a strategic review ongoing for the holiday parks business, with a cautious optimism about a favorable conclusion [37] - The company is actively looking for M&A opportunities that fit their criteria, although nothing is currently on the horizon [39] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of their business structure, with over 85% of revenue being contractually recurring [13] - The company is optimistic about the future growth of the Virtual Sports business, especially with new innovations and market expansions [34][75] - Management indicated that the current economic environment is being navigated well, with a strong balance sheet and cash position [76] Other Important Information - The company plans to file their 10-K by the end of the week following the earnings call [7] - The company is experiencing a significant year-to-year increase in accounts receivable, impacting year-end cash [15] Q&A Session Summary Question: Challenges in Virtual Sports segment - Management acknowledged that the struggles are primarily driven by one customer but noted stabilization and modest growth in the rest of the business [32][34] Question: Updates on M&A strategy - The company is exploring the sale of holiday parks and remains optimistic about the outcome, while also looking for M&A opportunities that align with their strategy [36][39] Question: U.K. white paper impact - Management expects minimal impact from the upcoming stakes limits and is hopeful for the liberalization of B3 cabinets, which would benefit their sales [42][44] Question: Cash balance expectations - Management indicated that the cash balance is likely to be lower than previously guided due to delays in receivables and accelerated supplier payments [45][46] Question: Virtual Sports growth confidence - Management expressed confidence in the stabilization of Virtual Sports revenue and highlighted strong results from key customers in Brazil [50][53] Question: CapEx needs and cash flow - Management confirmed that CapEx needs are planned and budgeted, with no unexpected expenses anticipated [60][62] Question: Lottery business growth opportunities - Management is excited about the upcoming launch of a cloud-based lottery system and sees significant opportunities in the lottery segment [64][68]

Financial Data and Key Metrics Changes - Adjusted EBITDA for Q4 was $30.9 million, up 22% from the previous year, with full-year adjusted EBITDA of $100.1 million compared to $99.3 million for 2023 [6][8] - The company received a letter from the SEC indicating that their inquiry is now closed, with no further action required [7] Business Line Data and Key Metrics Changes - The Interactive business saw revenue and EBITDA growth of 45% and 105% respectively in Q4, accounting for approximately 22% of overall company EBITDA [8][12] - The Digital business is expected to approach 60% of EBITDA by year-end, driven by growth in Interactive and modest acceleration in Virtual Sports [12][29] - The land-based gaming segment had EBITDA growth of 42% year-over-year in Q4, attributed to gaming hardware sales [25] Market Data and Key Metrics Changes - The company noted that in states with both iGaming and Sports Betting, iGaming outperforms Sports Betting by a ratio of 4 or 5 to 1 [9] - The company is optimistic about the potential growth in the Brazilian market, which is expected to become a significant contributor [53] Company Strategy and Development Direction - The company is focusing on enhancing product development in the Virtual Sports segment, which had previously been under-invested due to the success of Interactive [74] - The company is exploring the sale of its holiday parks segment while maintaining a strong performance in other business areas [38] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of the business structure, with over 85% of revenue being contractually recurring [13] - The company anticipates that the eventual spread of iGaming legislation across states is inevitable, providing limitless opportunities [10] Other Important Information - The company plans to file its 10-K by the end of the week following the earnings call [7] - The company is working on a new credit facility expected to be more flexible and likely at floating rates [16] Q&A Session Summary Question: Challenges in Virtual Sports segment - Management acknowledged that the struggles are primarily driven by one customer but noted stabilization and modest growth in the rest of the business [32][34] Question: Update on M&A strategy - The company is exploring the sale of holiday parks and remains open to M&A opportunities that fit their criteria [36][39] Question: U.K. white paper impact - Management expects minimal impact from new stake limits and is hopeful for liberalization of B3 cabinets, which would benefit sales [42][44] Question: Cash balance guidance - Management indicated that cash balance may be slightly lower than previously guided due to delays in receivables [45][46] Question: CapEx needs and cash flow - CapEx needs are planned and budgeted, with no unexpected expenses anticipated [60][62] Question: Opportunities in lottery business - The company is excited about the launch of a new cloud-based lottery system and sees significant growth potential in the lottery segment [64][68]

Core Insights - Inspired Entertainment, Inc. reported strong financial results for Q4 2024, with total revenue of $83.0 million, a 2% increase year-over-year, primarily driven by a 45% growth in the Interactive segment [7][11] - The company achieved a net income of $68.0 million for Q4 2024, compared to a net loss of $1.7 million in Q4 2023, indicating a significant turnaround [7][11] - Adjusted EBITDA for Q4 2024 was $30.9 million, up 22% from the previous year, with the Interactive segment's Adjusted EBITDA growing by 105% year-over-year [7][11] Financial Performance - The Interactive segment saw a revenue increase of 45% year-over-year, reaching $11.6 million, while the Gaming segment's revenue was $38.8 million, a slight decrease of 1% [9][11] - The Leisure segment reported a 7% revenue increase to $22.5 million, driven by Vantage deployments and growth in bingo and holiday park businesses [5][11] - The Virtual Sports segment faced challenges, with revenue declining by 22% to $10.1 million, but the company is optimistic about future growth through strategic measures [4][11] Operational Highlights - The company successfully launched the MGM Bonus City game with BetMGM in Michigan and the Hybrid Dealer Roulette game in Canada, indicating progress in its Hybrid Dealer rollout strategy [2][4] - A partnership with William Hill is advancing, with the installation of 5,000 new Vantage cabinets expected to drive further growth [3][11] - The company is focusing on expanding its digital businesses and optimizing land-based operations, with a commitment to investing in new market opportunities [6][11] Segment Performance - For the full year 2024, the Interactive segment's revenue increased by 41% to $39.3 million, while the Gaming segment's revenue decreased by 1% to $110.6 million [11] - The Virtual Sports segment's full-year revenue declined by 19% to $45.4 million, but the company remains confident in its long-term potential [10][11] - The Leisure segment's full-year revenue grew by 6% to $101.8 million, reflecting steady growth across its various businesses [11] Strategic Initiatives - The company is implementing strategic measures to streamline its Virtual Sports segment and unify product and platform teams under cohesive leadership [4][11] - Inspired Entertainment is expanding its mobile and slot games catalog in Brazil, indicating a focus on new market opportunities [8][11] - The company has extended its partnership with Aristocrat Interactive to provide V-Lottery Virtual Sports games to the Virginia Lottery, enhancing its product offerings [10][11]

NEW YORK, March 14, 2025 (GLOBE NEWSWIRE) -- Inspired Entertainment, Inc. (“Inspired” or the “Company”) (NASDAQ: INSE), a leading B2B provider of gaming content, technology, hardware, and services, today announced the extension of its long-standing partnership with Welcome Break, one of the UK’s leading motorway service area operators, running 60 service areas and 31 hotels across the UK. Under this new agreement, Inspired will serve as the sole supplier of gaming machines to Welcome Break. The agreement in ...

Financial Results - Inspired Entertainment, Inc. is set to release its fourth-quarter financial results on March 17, with expected earnings of 15 cents per share, a decrease from 17 cents per share in the previous year [1] - The projected quarterly revenue is $79.19 million, down from $81.2 million a year earlier [1] Partnership Expansion - On March 10, Inspired Entertainment announced an expansion of its partnership with Rush Street Interactive, Inc. [2] - Following the announcement, Inspired Entertainment shares fell by 6.4%, closing at $8.03 [2] Analyst Ratings - JMP Securities analyst David Scharf has a Market Outperform rating with a price target of $14, with an accuracy rate of 66% [3] - B. Riley Securities analyst David Bain reinstated a Buy rating with a price target of $21, achieving an accuracy rate of 65% [3] - Truist Securities analyst Barry Jonas maintained a Buy rating but reduced the price target from $21 to $19, also with an accuracy rate of 65% [3]