Core Insights - Inspired Entertainment, Inc. has announced an early extension of its partnership with Moto Hospitality for an additional five years, marking a significant milestone in their collaboration [1][2] - The extension will see Inspired enhance Moto's offerings by introducing the Vantage B3 terminal, which will replace the existing Flex cabinets, aimed at fostering growth and improving service delivery [2][3] Company Overview - Inspired Entertainment provides a diverse portfolio of gaming content, technology, hardware, and services for regulated gaming, betting, lottery, social, and leisure operators globally [4] - The company operates in approximately 35 jurisdictions, supplying gaming systems and associated terminals for around 50,000 gaming machines, virtual sports products through over 32,000 retail venues, and digital games for more than 170 websites [4]

Core Insights - Inspired Entertainment, Inc. is showcasing its latest gaming products and solutions at the ICE tradeshow in Barcelona from January 20-22, 2025 [1] - The company emphasizes its commitment to innovation in gaming content and technology, particularly through its Hybrid Dealer and Vantage Slant offerings [2][4] Group 1: Hybrid Dealer Innovations - The Hybrid Dealer® is a new category created by the company, providing branded table and gameshow content for online play, addressing challenges associated with live dealer products [2] - Inspired is launching Roulette 4 Ball Extra Bet™, enhancing player engagement and operator portfolios through advanced technology [3] Group 2: Vantage Slant Cabinet - The Vantage Slant™ cabinet combines performance and compliance in a compact design, featuring immersive sound and twin 32" HD screens [4] - It includes next-generation menu capabilities with smart search and a game recommendation engine for improved player experience [5] Group 3: iGaming Content Expansion - Inspired is presenting a lineup of interactive content, including classics like Gold Cash Free Spins™ and recent hits like Cops 'n' Robbers Bigger Big Money™ [6] - Upcoming titles such as Reel King Big Money™ and seasonal highlights are also being showcased, aligning with the horse racing season [6] Group 4: Virtual Sports Developments - The company is highlighting its new partnership with the NHL, resulting in the first branded virtual Hockey product, alongside an updated NFL Virtual Sports product [7] Group 5: Community Gaming Experience - The Astra B3 Community Party £500™ is being introduced, featuring familiar game titles and a unique community feature called Tombola [8] Group 6: Company Overview - Inspired operates in approximately 35 jurisdictions worldwide, supplying gaming systems and content for around 50,000 gaming machines and virtual sports products through over 32,000 retail venues [11]

Core Viewpoint - Momentum investing focuses on "buying high and selling higher," contrasting with traditional strategies of "buying low and selling high" [1] Group 1: Momentum Investing Characteristics - Momentum investing can be risky as stocks may lose momentum when their valuations exceed future growth potential, leading to potential losses for investors [2] - A safer approach involves investing in bargain stocks that exhibit recent price momentum, utilizing tools like the Zacks Momentum Style Score to identify such opportunities [3] Group 2: Case Study - Inspired Entertainment (INSE) - Inspired Entertainment (INSE) has shown a four-week price change of 9%, indicating strong investor interest and recent price momentum [4] - INSE has gained 2.9% over the past 12 weeks, with a beta of 1.4, suggesting it moves 40% more than the market in either direction, indicating fast-paced momentum [5] - INSE holds a Momentum Score of A, suggesting it is an opportune time to invest in the stock for potential gains [6] Group 3: Earnings Estimates and Valuation - INSE has a Zacks Rank 2 (Buy) due to upward revisions in earnings estimates, which typically attract more investor interest and drive stock prices higher [7] - The stock is currently trading at a Price-to-Sales ratio of 0.83, indicating it is undervalued, as investors pay only 83 cents for each dollar of sales [7] Group 4: Additional Opportunities - Besides INSE, there are other stocks that meet the criteria of the 'Fast-Paced Momentum at a Bargain' screen, suggesting further investment opportunities [8] - The Zacks Premium Screens offer over 45 different strategies to help identify winning stock picks based on various investing styles [9]

Core Viewpoint - Inspired Entertainment, Inc. is under investigation for potential violations of federal securities laws and unlawful business practices following the discovery of accounting errors in its financial statements dating back to January 1, 2021 [1][2]. Financial Reporting Issues - On November 8, 2023, Inspired Entertainment announced accounting errors related to the capitalization of software development costs under U.S. GAAP standards, necessitating a restatement of financial results [2]. - The company delayed the release of its third-quarter 2023 financial results to address these issues, and the Audit Committee determined that financial statements from January 1, 2021, onwards should no longer be relied upon [2]. Market Reaction - Following the announcement of the accounting errors, Inspired Entertainment's share price fell by $3.07, or approximately 29.52%, from $10.40 per share on November 8, 2023, to close at $7.33 on November 9, 2023 [3].

Core Viewpoint - Inspired Entertainment, Inc. has partnered with bet365 to launch the Hybrid Dealer Roulette game in the UK, marking a significant innovation in online gaming [1][4]. Group 1: Product Overview - Hybrid Dealer Roulette is a new online gaming product that combines casino and gameshow elements, designed to provide a live casino experience without the challenges of traditional live-dealer games [2]. - The game features high-quality Virtual CGI and pre-recorded real-life hosts, with a countdown timer for placing bets, ensuring all players see the same results simultaneously [2][3]. - This game is the second in the Hybrid Dealer series, showcasing advanced technology that allows for a realistic gaming experience without the need for dedicated studios and staffing [4]. Group 2: Market Position and Strategy - Inspired operates in approximately 35 jurisdictions worldwide, supplying gaming systems and content for around 50,000 gaming machines and virtual sports products through over 32,000 retail venues [5]. - The partnership with bet365 is aimed at enhancing the online casino experience, reflecting the company's commitment to innovation and player engagement [4][7]. - bet365 employs over 9,000 staff globally and offers a diverse range of gaming options, indicating a strong market presence and a focus on player satisfaction [7].

NEW YORK, Dec. 17, 2024 (GLOBE NEWSWIRE) -- Inspired Entertainment, Inc. ("Inspired" or the "Company") (NASDAQ:INSE), a leading provider of B2B gaming content and systems, is pleased to announce the extension of its partnership with global aggregation leader Aristocrat Interactive to provide the Virginia Lottery with a comprehensive suite of Inspired V-Lottery scheduled Virtual Sports games, set to transform the iLottery gaming landscape. The supply shall be made via NeoPollard Interactive LLC, jointly owne ...

Financial Data and Key Metrics Changes - Year-over-year EBITDA growth in Q3 was 13%, with EBITDA margins approaching the 40% target [5][11] - Cash balance at the end of Q3 was $36.5 million, up from $23.5 million at the end of Q2, with expectations to reach between $50 million and $55 million by the end of Q1 2025 [6][7] Business Line Data and Key Metrics Changes - Interactive business revenue increased by 40% year-over-year, with EBITDA up 47%, and adjusted EBITDA margin at 67.6% [12] - Virtual Sports segment saw a decline due to the loss of the largest customer, but recurring revenue from other customers grew by 11% year-over-year [17] - Gaming segment revenue, excluding low-margin sales, increased by 4% year-over-year, with EBITDA rising by 29% [19] - Leisure segment revenue was up 5% year-over-year, with EBITDA increasing by 17% [23] Market Data and Key Metrics Changes - The UK market is stabilizing and showing growth, with the company gaining market share as smaller players exit [36][37] - The company is expanding into new markets, including Brazil and South Africa, which are expected to contribute to growth [12][16] Company Strategy and Development Direction - The company aims for a 40% EBITDA margin, driven by a shift towards digital-focused growth and cost-saving initiatives [11][39] - Plans to enhance product offerings, including new games and studio capacity, to support growth in the Interactive segment [14][16] - The company is reviewing strategic options for its holiday parks business while focusing on improving operational efficiencies in other segments [23] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth potential of the Interactive segment and the overall business strategy, anticipating continued improvement in financial results [24][40] - The company is optimistic about the impact of new products and market expansions on future performance [12][16] Other Important Information - James Richardson will join as the new CFO starting January 1, 2025, bringing extensive experience in financial reporting and governance [9] - The company is implementing a plan to consolidate and reengineer remaining retail businesses to offset EBITDA from the holiday parks business [8] Q&A Session Summary Question: Thoughts on 2025 impact and consensus - Management is comfortable with the consensus for 2025, citing multiple growth drivers [26][28] Question: Update on product refreshes in the gaming market - Expected uplift from the William Hill conversion similar to previous conversions, with positive performance in North America [30][31] Question: Insights on bespoke content with FanDuel - A mix of bespoke and standard products will be offered, with bespoke content requiring upfront fees [33] Question: Regulatory environment and market share in the UK - The UK market is growing, and the company is gaining market share due to a strong retail presence [36][37] Question: Timeline for achieving 40% consolidated margin - The shift towards digital and high-margin segments will drive margins, but timing is uncertain [38][40] Question: Customer engagement with Hybrid Dealer - Positive metrics on active and repeat players indicate strong performance, with more data expected in the coming quarters [42] Question: Use of debt for share buybacks - Management will not incur additional debt for share buybacks, focusing on organic growth and acquisitions instead [44][45] Question: Challenges in integrating Interactive content with Virtual Sports - Regulatory issues and the need for major players to adopt Virtual Sports are key challenges [46][47]

Revenue Performance - Third Quarter Revenue reached $78.0 million, a 4% increase from $74.8 million in the same period last year[1] - Total revenue for Q3 2024 was $78.0 million, a decrease of 20% compared to $97.5 million in Q3 2023[23] - Service revenue increased to $73.8 million in Q3 2024, up from $70.7 million in Q3 2023, representing a growth of 4%[23] - Product sales significantly dropped to $4.2 million in Q3 2024 from $26.8 million in Q3 2023, a decline of 84%[23] - The company reported total revenue of $78.0 million for the three months ended September 30, 2024, with Gaming contributing $23.3 million, Virtual Sports $11.2 million, Interactive $10.2 million, and Leisure $33.3 million[31] - For the nine months ended September 30, 2024, total revenue reached $216.7 million, with Gaming at $74.4 million (34.3% of total revenue) and Leisure at $79.3 million (36.6% of total revenue)[33] Segment Performance - Interactive revenue grew by 40% year-over-year, contributing $10.2 million to total revenue[8] - The EBITDA margin for the Interactive segment expanded to 67.6%, driven by strong growth in key markets[2] - The Gaming segment's EBITDA increased by 29% year-over-year, reaching $10.7 million despite modest revenue growth[8] - Virtual Sports revenue experienced a decline of 16%, totaling $11.2 million, while maintaining industry-leading margins of nearly 79%[4] - Leisure segment revenue grew by 5%, with an EBITDA margin improvement to 30.6%[5] - Adjusted EBITDA for the Gaming segment was $10.7 million, while the total adjusted EBITDA for the company was $30.1 million for the three months ended September 30, 2024[26] - The adjusted EBITDA margin for the Gaming segment was 29.2%, while Virtual Sports and Leisure segments contributed 26.3% and 19.9%, respectively, highlighting the varying profitability across segments[31] - Adjusted EBITDA for the nine months ended September 30, 2024, was $71.8 million, with Gaming contributing $28.3 million and Virtual Sports contributing $28.8 million[33] Financial Metrics - Adjusted EBITDA for the third quarter was $30.1 million, reflecting a 13% increase from $26.7 million in 2023[8] - Net income for Q3 2024 was $3.4 million, unchanged from Q3 2023, while the year-to-date net income was a loss of $0.3 million compared to a profit of $7.6 million in the same period last year[23] - Total assets increased to $388.6 million as of September 30, 2024, compared to $340.9 million at the end of 2023, reflecting a growth of 14%[24] - Current liabilities rose to $109.3 million in Q3 2024 from $100.7 million at the end of 2023, an increase of 6%[24] - Long-term debt increased to $312.4 million as of September 30, 2024, up from $295.6 million at the end of 2023, a rise of 6%[24] - Cash provided by operating activities decreased to $24.8 million in Q3 2024 from $43.0 million in Q3 2023, representing a decline of approximately 42.5%[25] - Total cash and restricted cash at the end of the period was $36.5 million, up from $26.4 million at the end of the previous year[25] - The company incurred stock-based compensation expense of $5.7 million in Q3 2024, down from $9.3 million in Q3 2023[25] - Net cash used in investing activities was $(29.5) million for the three months ended September 30, 2024, compared to $(39.4) million in the same period of 2023[25] - The company reported a decrease in accounts receivable by $(4.4) million in Q3 2024, compared to an increase of $11.7 million in Q3 2023[25] - Cash paid for interest during the period was $12.8 million, slightly up from $12.1 million in the previous year[25] - The company reported a total of $1.6 million in cash paid for income taxes during Q3 2024, down from $4.8 million in Q3 2023[25] Strategic Initiatives - The company announced a licensing agreement with the NHL to develop interactive Virtual Sports games, enhancing its sports partnerships[7] - A strategic partnership with FanDuel was established to integrate Inspired's Hybrid Dealer suite and develop proprietary content[7] - The company is focused on expanding digital businesses and optimizing land-based operations to drive sustainable growth[7] - The company anticipates potential new customers and expects to execute its strategic plan effectively in the upcoming quarters[20] - The company continues to focus on market expansion and new product development to drive future growth[32] Cost Management - Costs related to group restructuring amounted to $2.8 million for the nine months ended September 30, 2024, compared to $3.7 million in the same period of 2023, showing a reduction in restructuring expenses[30] - Stock-based compensation expense for the nine months ended September 30, 2024, totaled $5.7 million, compared to $9.3 million in the prior year, reflecting a decrease of approximately 39%[28] - Interest expense for the nine months ended September 30, 2024, was $20.9 million, consistent with the previous year, indicating stable financing costs[28] - The company incurred costs of group restatement totaling $10.7 million for the nine months ended September 30, 2024, which were not present in the prior year[30] Exchange Rates - The exchange rate for USD to GBP was reported at 1.30 for the three months ended September 30, 2024[26] - The exchange rate for $ to £ was 1.28 for the nine months ended September 30, 2024, compared to 1.24 for the same period in 2023, indicating a strengthening of the dollar against the pound[29]

Revenue Performance - Service revenue for the three months ended September 30, 2024, was $73.8 million, up from $70.7 million in the same period last year, representing a growth of 3.7%[8] - Total revenue for the three months ended September 30, 2024, was $78.0 million, with service revenue contributing $73.8 million and product sales $4.2 million[36] - Total revenue for the nine months ended September 30, 2024, was $216.7 million, compared to $241.8 million for the same period in 2023, reflecting a decrease of 10.4%[8] - Total revenue for the nine months ended September 30, 2024, was $216.7 million, with service revenue at $196.7 million and product sales at $20.0 million[39] - Total revenue for the nine months ended September 30, 2023, was $241.8 million, with service revenue contributing $195.7 million, representing a significant portion of total revenue[40] Income and Expenses - Net income for the three months ended September 30, 2024, was $3.4 million, consistent with the same period last year, while the net income for the nine months was a loss of $0.3 million compared to a profit of $7.6 million in 2023[8] - Selling, general, and administrative expenses for the three months ended September 30, 2024, increased to $31.4 million from $26.9 million, marking a rise of 16.7%[8] - The company reported a net operating income of $11.9 million for the three months ended September 30, 2024, compared to $12.2 million in the same period last year, a decline of 2.5%[8] - The company reported a net operating loss of $30.6 million for the nine months ended September 30, 2023[40] - The company recorded stock-based compensation expenses of $1.8 million for the three-month period, down from $3.3 million in the same period of 2023[60] Cash Flow and Liquidity - Cash flows from operating activities for the nine months ended September 30, 2024, amounted to $24.8 million, a decrease from $43.0 million in the prior year[12] - The company had cash on hand of $35.7 million as of September 30, 2024, with additional working capital of $20.4 million[12] - The company reported a working capital outflow of $16.4 million for the nine months ended September 30, 2024, compared to an outflow of $8.0 million for the same period in 2023[111] - Net cash provided by operating activities decreased to $24.8 million for the nine months ended September 30, 2024, down from $43.0 million in the prior year, representing an $18.2 million decline[108] - Net cash used in investing activities was $29.5 million for the nine months ended September 30, 2024, a decrease of $9.9 million compared to the previous year[109] Assets and Liabilities - The accumulated deficit as of September 30, 2024, was $508.9 million, compared to $508.6 million at the beginning of the year, indicating a slight increase in the deficit[9] - Total inventories as of September 30, 2024, amount to $31.6 million, a slight decrease from $32.3 million on December 31, 2023[15] - Accounts payable and accrued expenses totaled $60.4 million as of September 30, 2024[17] - The total contractual obligations as of September 30, 2024, amounted to $435.6 million, with $65.5 million due within one year[116] - The company reported a net leverage ratio of 3.1x as of September 30, 2024, in compliance with the financial covenants[20] Segment Performance - The company operates across four segments: Gaming, Virtual Sports, Interactive, and Leisure, with performance evaluated based on revenue streams[35] - Segment operating income for Gaming was $4.4 million, Virtual Sports $7.4 million, Interactive $5.5 million, and Leisure $6.9 million, totaling $11.9 million[36] - The Interactive segment went live with seventeen new operators during the three months ended September 30, 2024, increasing the total number of customers by twelve overall[52] - Total Gaming Revenue for the three-month period ended September 30, 2024, was £17.9 million, a decrease of 50% compared to £35.5 million for the same period in 2023[71] - Total revenue for the Interactive segment for the three-month period was £7.8 million, an increase of 36.8% from £5.7 million in the same period last year[90] Foreign Currency and Exchange Rates - The company experienced a foreign currency translation loss of $6.3 million for the nine months ended September 30, 2024, compared to a gain of $3.6 million in the same period last year[9] - The average GBP:USD exchange rate for the three-month period ended September 30, 2024, was 1.30, compared to 1.27 for the same period in 2023, indicating currency fluctuations impact[51] - The exchange rate for USD to GBP was reported at 1.30, impacting revenue calculations[102] - A hypothetical 10% adverse change in the Euro and US Dollar relative to GBP would result in favorable translation adjustments of approximately $2.3 million and $1.3 million, respectively[128] Pension and Taxation - The effective income tax rate for Q3 2024 was 23.3%, resulting in an income tax expense of $1.0 million, compared to 37.6% and $2.0 million in Q3 2023[28] - The company maintained a full valuation allowance on deferred tax assets as of September 30, 2024, indicating potential future recognition of these assets[28] - The company expects to eliminate the defined benefit pension scheme funding shortfall by October 31, 2026, following a recovery plan implemented in June 2022[33] - The company reported a funding shortfall in its defined benefit pension scheme as of March 31, 2021, which was finalized in June 2022[33] Compliance and Governance - The company's disclosure controls and procedures were not effective at the reasonable assurance level as of September 30, 2024, due to identified material weaknesses[130] - Management is redesigning and implementing existing and additional controls to remediate the identified material weaknesses in disclosure controls[130] - The company must provide unaudited quarterly financial statements within 60 days after the close of the quarter, which was met following a restatement of previously reported financials[114] - The company reported no new legal proceedings or updates to prior disclosures[133]

Core Insights - Inspired Entertainment, Inc. reported a third quarter revenue of $78.0 million, a 4% increase year-over-year, primarily driven by record Interactive revenue, which grew 40% [1][9] - The company achieved a net income of $3.4 million and an adjusted EBITDA of $30.1 million, reflecting a 13% increase from the previous year [1][9] - James Richardson has been appointed as the new Chief Financial Officer, effective January 1, 2025 [1][6] Financial Performance - Total revenue for the Gaming segment (excluding low margin hardware sales) was $23.3 million, up 4% from $22.4 million in 2023 [9] - Virtual Sports revenue decreased by 16% to $11.2 million, while Interactive revenue surged to $10.2 million, marking a 40% increase [9] - Leisure segment revenue grew by 5% to $33.3 million, with an EBITDA margin improvement to 30.6% [5][9] Segment Highlights - The Interactive segment's EBITDA increased by 47% year-over-year, with an EBITDA margin of 67.6%, showcasing strong growth in key markets such as the UK, North America, and mainland Europe [2][9] - The Gaming segment saw a 29% increase in EBITDA, attributed to an improved revenue mix, despite modest revenue growth [3][9] - Virtual Sports maintained high margins of nearly 79%, with ongoing investments in strategic growth initiatives, particularly in Brazil [4][9] Strategic Developments - The company successfully launched the MGM Bonus City game with BetMGM in Michigan and is advancing its Hybrid Dealer Roulette game in Canada with Loto-Québec [2][8] - A strategic partnership with FanDuel was announced to integrate Inspired's Hybrid Dealer suite and develop proprietary content [2][8] - A licensing agreement with the National Hockey League was established to develop interactive Virtual Sports games featuring NHL branding [7][8] Future Outlook - The company remains focused on expanding its digital businesses, optimizing land-based operations, and investing in new market opportunities [7] - The strong performance in the Interactive segment and improving profitability in Gaming provide confidence in sustainable growth and shareholder value creation [7]