Core Insights - Inspired Entertainment, Inc. has entered an agreement with Alberta Gaming, Liquor and Cannabis (AGLC) to purchase 150 new Valor terminals following a successful six-month trial period [1][2] - The deployment of the new terminals is expected to be completed by the end of the second quarter of 2024 [1] - The partnership with AGLC is seen as a significant step in expanding Inspired's presence in the Canadian market, complementing existing operations in Ontario and Saskatchewan [2] Company Overview - Inspired Entertainment, Inc. provides a diverse portfolio of gaming content, technology, hardware, and services for regulated gaming, betting, lottery, social, and leisure operators globally [3] - The company operates in approximately 35 jurisdictions worldwide, supplying gaming systems and associated terminals for around 50,000 gaming machines [3] - Inspired's offerings include virtual sports products available in over 32,000 retail venues, interactive games for more than 170 websites, and amusement entertainment solutions with over 16,000 installed terminals [3]

Financial Performance - Total revenue for Q1 2024 was $63.1 million, a decrease of 2.8% compared to $64.9 million in Q1 2023[14] - Net loss for Q1 2024 was $5.7 million, compared to a net loss of $1.4 million in Q1 2023, representing a significant increase in losses[14] - The company reported a comprehensive loss of $4.4 million for Q1 2024, compared to a comprehensive loss of $3.9 million in Q1 2023[14] - The Company reported a net operating loss of $1.4 million for the three months ended March 31, 2024, compared to a net operating income of $4.6 million in the same period of 2023[56][57] - Net operating loss for the three months ended March 31, 2024, was $1.4 million, a decrease of $5.7 million compared to the prior year period[93] - The company recorded a net loss of $5.7 million for the three months ended March 31, 2024, compared to a net loss of $1.4 million in the prior year period[94] Cash Flow and Liquidity - Cash and cash equivalents decreased to $35.3 million as of March 31, 2024, down from $40.0 million at the end of 2023, a decline of 18.8%[13] - Cash flows from operating activities provided $3.6 million in Q1 2024, a decrease from $11.6 million in Q1 2023[21] - Net cash inflow from operating activities decreased to $3.6 million for the three months ended March 31, 2024, down from $11.6 million in the same period in 2023, a decline of $8.0 million[174] - The company had liquidity of $35.3 million in cash and an undrawn revolver facility of $6.3 million as of March 31, 2024, compared to $27.8 million in cash and $24.7 million in undrawn revolver facilities as of March 31, 2023[180] - The company reported a working capital outflow of $1.8 million for the three months ended March 31, 2024, compared to a $2.0 million inflow for the same period in 2023[180] Expenses and Costs - Selling, general and administrative expenses increased to $34.2 million in Q1 2024, up from $29.2 million in Q1 2023, an increase of 17.2%[14] - The company incurred $2.3 million in stock-based compensation expense in Q1 2024, down from $2.9 million in Q1 2023[21] - Selling, general and administrative expenses increased by $4.1 million, or 16%, primarily due to restatement costs of $5.0 million and increased non-staff costs[89] - The defined benefit pension scheme has a net periodic cost of $0.2 million for Q1 2024, up from $0.1 million in Q1 2023[53] Assets and Liabilities - Total assets decreased to $331.1 million as of March 31, 2024, down from $340.9 million at the end of 2023, a reduction of 2.3%[13] - Total liabilities decreased slightly to $412.3 million as of March 31, 2024, from $418.9 million at the end of 2023, a decrease of 1.6%[13] - Accounts payable and accrued expenses totaled $57.6 million as of March 31, 2024, a decrease from $60.8 million as of December 31, 2023[29] - The company had an ending balance for the allowance for credit losses of $1.1 million as of March 31, 2024, unchanged from December 31, 2023[27] Revenue Segmentation - Revenue from the Gaming segment was $24.0 million, while the Virtual Sports segment generated $12.4 million, Interactive segment $8.1 million, and Leisure segment $18.6 million for Q1 2024[56] - Approximately 75% of revenue for the three months ended March 31, 2024, was derived from the UK, 10% from Greece, and 15% from the rest of the world[69] - Geographic revenue breakdown for Q1 2024 shows UK revenue at $47.2 million, Greece at $6.1 million, and the Rest of the World at $9.8 million[58] Operational Metrics - The average installed base of Gaming terminals increased by 0.6% to 34,924 terminals as of March 31, 2024, compared to 34,711 terminals a year earlier[99] - Customer Net Win per unit per day rose by 1.0% to £72.2 from £71.5, indicating improved performance despite overall revenue decline[99] - The number of machine sales decreased by 14.4% to 589 units in Q1 2024 from 688 units in Q1 2023[99] - The average installed base of pub digital gaming machines rose by 4.6% to 6,308 terminals, compared to 6,028 terminals last year[154] Tax and Regulatory Matters - The effective income tax rate for the three months ended March 31, 2024, was 27.4%, resulting in an income tax benefit of $2.2 million[41] - The company recorded a valuation allowance against all deferred tax assets as of March 31, 2024, and 2023, indicating a cautious outlook on future profitability[42] - The company received a subpoena from the SEC on March 12, 2024, regarding its recently restated financial statements[205] - Management believes the outcome of the SEC investigation remains uncertain and is not estimable at this time[206] Shareholder Actions - The company has authorized up to $25.0 million for share repurchases, with no repurchases made in the three months ended March 31, 2024, and a total of 1,193,118 shares repurchased at a cost of $12.0 million as of March 31, 2024[188] - The company issued a total of 340,735 shares during the three months ended March 31, 2024, related to equity-based plans[35] Currency and Foreign Operations - The company’s Euro functional currency net assets total approximately $17.3 million, while USD functional currency net assets total approximately $6.7 million[196] - A hypothetical 10% adverse change in the value of the Euro and USD relative to GBP would result in translation adjustments of approximately $1.6 million favorable and $0.7 million unfavorable, respectively[196] - A 10% weakening of GBP against the USD would change trading operational results favorably by approximately $0.1 million and result in unfavorable translation adjustments of approximately $9.4 million[198]

Executive Summary and Business Outlook This section summarizes Inspired Entertainment's Q1 2024 performance, strategic shift to digital, and recent business developments [Q1 2024 Performance Highlights](index=1&type=section&id=1.1.%20Q1%202024%20Performance%20Highlights) Q1 2024 saw decreased revenue and Adjusted EBITDA, increased net loss, but expanded VLT placements and new virtual sports product launches Total Company Financial Performance (Q1 2024 vs. Q1 2023) | Metric | Q1 2024 | Q1 2023 | | :------------------- | :------ | :------ | | Revenue | $63.1M | $64.9M | | Net Loss | $(5.7)M | $(1.4)M | | Adjusted EBITDA | $16.3M | $20.1M | - Expanded video lottery terminal placements by Western Canada Lottery Corporation with **720 Additional Valor™ Terminals** in Saskatchewan[7](index=7&type=chunk) - Announced the exclusive launch of its NBA Re-Play Virtual Sports product with long-time partner OPAP[7](index=7&type=chunk) [Executive Commentary and Strategic Direction](index=1&type=section&id=1.2.%20Executive%20Commentary%20and%20Strategic%20Direction) The company focuses on shifting earnings to digital, with 76% of Q1 2024 Adjusted EBITDA from digital, implementing cost improvements, and anticipating Q2 growth - Digital business accounted for **76% of Adjusted EBITDA contribution in Q1 2024**, up from 69% in the prior year, aligning with the long-term strategy to shift earnings to digital[3](index=3&type=chunk) - Interactive segment revenue and Adjusted EBITDA increased approximately **31% and 38% year-over-year** on a constant currency basis, driven by existing customer growth and new customer expansion[5](index=5&type=chunk) - Virtual Sports continued to experience trends from H2 2023, including a major customer optimizing their base, but future growth is expected in H2 2024 with expanded content like NBA and NFL-themed products[4](index=4&type=chunk)[5](index=5&type=chunk) - Land-based business (Gaming and Leisure) saw lower service revenue in the UK LBO market and Greece due to expired amortized licensed revenue, but trends are reversing with 'Vantage' cabinet showing low double-digit revenue per machine increases[6](index=6&type=chunk) - Initiated a cost improvement initiative across the business to drive Adjusted EBITDA margins in response to higher costs in an inflationary environment[6](index=6&type=chunk) - Anticipates improving trends into Q2 and future growth from new markets opening and new Virtual Sports products launching, leveraging its content portfolio in expanding online betting and gaming markets[8](index=8&type=chunk) [Recent Business Developments](index=2&type=section&id=1.3.%20Recent%20Business%20Developments) Inspired Entertainment announced several key business developments, including the expansion of VLT placements, the exclusive launch of a new NBA-themed Virtual Sports product, and a long-term contract extension for arcade games - Subsequent to quarter-end, expanded video lottery terminal ("VLT") placements by Western Canada Lottery Corporation ("WCLC") with award of **720 Additional Valor™ Terminals** in Saskatchewan[12](index=12&type=chunk) - Subsequent to quarter-end, announced the exclusive launch of its NBA Re-Play Virtual Sports product with long-time partner, Greek Organisation of Football Prognostics S.A. ("OPAP")[12](index=12&type=chunk) - Launched the virtual product, End Zone Cash, featuring NFL Alumni players with the Pennsylvania Lottery[12](index=12&type=chunk) - Signed a long-term contract extension as the provider of arcade games and entertainment products to longtime partner Parkdean Resorts, the UK's largest holiday park operator[12](index=12&type=chunk) Consolidated Financial Results This section details Inspired Entertainment's Q1 2024 consolidated and segment-level financial performance, including revenue, net loss, and Adjusted EBITDA [Summary of Q1 2024 Financials](index=2&type=section&id=2.1.%20Summary%20of%20Q1%202024%20Financials) Inspired Entertainment's total revenue for Q1 2024 decreased by 3% year-over-year to $63.1 million, reporting a net loss of $(5.7) million and a 19% decline in Adjusted EBITDA to $16.3 million Total Company Financial Performance (Q1 2024 vs. Q1 2023) | Metric | Q1 2024 (USD millions) | Q1 2023 (USD millions) | Reported Variance (%) | Functional Currency Variance (%) | | :-------------------------- | :--------------------- | :--------------------- | :-------------------- | :------------------------------- | | Total Company Revenue | $63.1 | $64.9 | (3)% | (7)% | | Net operating (loss) income | $(1.4) | $4.6 | (130)% | (124)% | | Net loss | $(5.7) | $(1.4) | 307% | 271% | | Net loss per basic share | $(0.20) | $(0.05) | 296% | NM | | Net loss per diluted share | $(0.20) | $(0.05) | 296% | NM | | Total Company Adjusted EBITDA | $16.3 | $20.1 | (19)% | (23)% | | Adjusted EBITDA Margin | 26% | 31% | | | | Adjusted net income (loss) | $(0.4) | $2.5 | (117)% | (117)% | | Adjusted net income (loss) per diluted share | $(0.02) | $0.09 | (117)% | (117)% | [Segment-level Financial Performance](index=2&type=section&id=2.2.%20Segment-level%20Financial%20Performance) In Q1 2024, Interactive and Leisure segments showed revenue and Adjusted EBITDA growth, while Gaming and Virtual Sports segments experienced declines Segment Revenue Performance (Q1 2024 vs. Q1 2023) | Segment | Q1 2024 (USD millions) | Q1 2023 (USD millions) | Reported Variance (%) | Functional Currency Variance (%) | | :------------- | :--------------------- | :--------------------- | :-------------------- | :------------------------------- | | Gaming | $24.0 | $27.1 | (11)% | (15)% | | Virtual Sports | $12.4 | $14.8 | (16)% | (20)% | | Interactive | $8.1 | $5.9 | 37% | 31% | | Leisure | $18.6 | $17.1 | 9% | 5% | Segment Adjusted EBITDA Performance (Q1 2024 vs. Q1 2023) | Segment | Q1 2024 (USD millions) | Q1 2023 (USD millions) | Reported Variance (%) | Functional Currency Variance (%) | | :------------- | :--------------------- | :--------------------- | :-------------------- | :------------------------------- | | Gaming | $7.3 | $9.7 | (25)% | (26)% | | Virtual Sports | $10.4 | $12.7 | (18)% | (23)% | | Interactive | $4.4 | $3.1 | 42% | 38% | | Leisure | $1.8 | $0.9 | 100% | 61% | | Corporate | $(7.6) | $(6.3) | (21)% | (13)% | Non-GAAP Financial Measures This section defines Inspired Entertainment's non-GAAP financial measures, provides reconciliations for Adjusted EBITDA and Adjusted Net Income, and details pro-rated segment Adjusted EBITDA contributions [Definitions and Use](index=3&type=section&id=3.1.%20Definitions%20and%20Use) Inspired Entertainment uses non-GAAP measures like Adjusted EBITDA and Adjusted Net Income to offer additional insight into operating performance by excluding specific non-recurring or non-cash items - EBITDA is defined as net loss excluding depreciation and amortization, interest expense, interest income, and income tax expense[14](index=14&type=chunk) - Adjusted EBITDA further excludes stock-based compensation, changes in earnout liabilities, legacy business income/expenditure, restructuring costs, M&A costs, and non-ordinary course gains/losses[15](index=15&type=chunk) - Adjusted Net Income excludes legacy business items, restructuring costs, M&A costs, and non-ordinary course gains/losses, adjusted for their tax impact[17](index=17&type=chunk) - These non-GAAP measures are used to analyze operating performance and manage the business, providing expanded insight into operating results and trends[13](index=13&type=chunk)[16](index=16&type=chunk) [Adjusted EBITDA Reconciliation](index=9&type=section&id=3.2.%20Adjusted%20EBITDA%20Reconciliation) The reconciliation tables detail adjustments from net income (loss) to Adjusted EBITDA for each segment and the total company for Q1 2024 and Q1 2023 Adjusted EBITDA Reconciliation by Segment (Q1 2024) | Metric | Gaming | Virtual Sports | Interactive | Leisure | Corporate | Total | | :-------------------------- | :----- | :------------- | :---------- | :------ | :-------- | :------ | | Net income (loss) | $2.8 | $9.4 | $3.1 | $(1.3) | $(19.7) | $(5.7) | | Pension charges | — | — | — | — | $0.3 | $0.3 | | Costs of group restructure | — | — | — | — | $0.2 | $0.2 | | Costs of group restatement | — | — | — | — | $5.0 | $5.0 | | Stock-based compensation | $0.2 | $0.1 | $0.1 | $0.1 | $1.8 | $2.3 | | Depreciation & amortization | $4.3 | $0.9 | $1.2 | $3.0 | $0.5 | $9.9 | | Interest expense, net | — | — | — | — | $6.6 | $6.6 | | Other finance income | — | — | — | — | $(0.1) | $(0.1) | | Income tax | — | — | — | — | $(2.2) | $(2.2) | | **Adjusted EBITDA** | **$7.3** | **$10.4** | **$

First Quarter Revenue of $63.1 million versus $64.9 million in the prior year periodFirst Quarter Net Loss of $(5.7) millionFirst Quarter Adjusted EBITDA of $16.3 millionExpanded video lottery terminal placements by Western Canada Lottery Corporation with 720 Additional Valor™ Terminals in SaskatchewanAnnounced the exclusive launch of its NBA Re-Play Virtual Sports product with long-time partner OPAP NEW YORK, May 10, 2024 (GLOBE NEWSWIRE) -- Inspired Entertainment, Inc. ("Inspired" or the "Company") (NASDA ...

NEW YORK, May 10, 2024 (GLOBE NEWSWIRE) -- Inspired Entertainment, Inc. ("Inspired" or the "Company") (NASDAQ:INSE), a leading B2B provider of gaming content, systems and solutions, today announced the debut of its NBA Re-Play Virtual Sports product exclusively in Greece with long-time partner OPAP. OPAP is the leading gaming company in Greece and one of the most renowned internationally, offering a wide range of games, including numerical lotteries, sports betting, passive lotteries, scratch cards, etc. T ...

Financial Performance - Total revenue for the twelve-month period ended December 31, 2023, was $323.0 million, an increase of 15% compared to $281.6 million for the same period in 2022[27] - Net income for the twelve-month period ended December 31, 2023, was $7.6 million, a decrease of 64% from $20.6 million in 2022[27] - The Company reported a decrease in revenue of $0.5 million or 0.8% for the twelve-month period ended December 31, 2023[79] - Adjusted Revenue, excluding low margin gaming sales, was $292.4 million for 2023, compared to $281.6 million in 2022, indicating a growth of 3.0%[95] - Adjusted EBITDA for the twelve months ended December 31, 2023, was $99.0 million, compared to $43.7 million in 2022, reflecting a significant increase of 126.5%[95] Revenue Breakdown - Service revenue increased by 5% to $261.2 million, while product revenue surged by 86% to $61.8 million[27] - Total Gaming Revenue for the year ended December 31, 2023, was £114.1 million, an increase of £23.7 million or 26.2% compared to £90.4 million in 2022[67] - Gaming Participation Revenue increased to £44.3 million, up £0.8 million or 1.8% from £43.5 million in 2022[67] - Total Gaming Recurring Revenue was £61.6 million, reflecting a growth of £0.8 million or 1.3% from £60.8 million in the previous year[67] Expenses and Costs - Cost of sales, excluding depreciation and amortization, rose by $32.1 million, or 34%, driven by a $29.7 million increase in cost of product[31] - Selling, general and administrative expenses increased by $12.5 million, or 13.7%, compared to the previous year[32] - Stock-based compensation expense increased by 66.7% to $1.0 million compared to $0.6 million in the previous year[78] - Net Operating Income for the year ended December 31, 2023, was $6.8 million, a decrease of $3.4 million or 34.3% from $9.9 million in 2022[78] Cash Flow and Investments - Cash flow from operating activities showed a working capital outflow of $9.0 million for 2023, an improvement from a $44.5 million outflow in 2022[110] - Net cash utilized in investing activities increased by $15.8 million to $48.4 million in 2023, driven by higher spending on plant and equipment, including the installation of 2,500 terminals in Greece[108] - The company had a working capital of $51.8 million, which includes a non-cash settled item of $5.6 million of deferred income[884] Assets and Liabilities - Non-current assets as of December 31, 2023, were 71% attributable to the UK, 12% to Greece, and 17% to the rest of the world[19] - The Company’s current liabilities total $100.7 million, compared to $74.9 million in the previous period[874] - The total contractual obligations as of December 31, 2023, amounted to $408.8 million, with $61.9 million due within one year[116] Goodwill and Impairment - Total goodwill as of December 31, 2023, is allocated as follows: Virtual Sports $44.8 million, Interactive $1.8 million, Gaming $9.3 million, and $2.9 million for another Gaming unit, with no goodwill remaining in the Leisure unit[120] - The annual goodwill impairment test concluded that the fair values of all reporting units substantially exceeded their carrying values, indicating no need for further assessment[121] - The company has determined there were no indicators of impairment for goodwill as of December 31, 2023, 2022, and 2021[906] Foreign Exchange and Financial Instruments - Interest expense increased by $2.0 million primarily due to foreign exchange movements and the termination of swaps[33] - A hypothetical 10% adverse change in the value of the Euro and USD relative to GBP would result in translation adjustments of approximately $1.1 million favorable and $2.2 million unfavorable, respectively, recorded in trading operations[128] - The Company’s Euro functional currency net assets total approximately $18.3 million, while USD functional currency net liabilities total approximately $7.4 million[861] Research and Development - Total research and development costs for the year ended December 31, 2023, amounted to $20.3 million, an increase of 11% from $18.3 million in 2022[896] - Software development costs capitalized during the year ended December 31, 2023, were $7.5 million, up from $6.9 million in 2022, reflecting a 9% increase[896] Revenue Recognition - Revenue recognition is based on the satisfaction of performance obligations, with transaction prices allocated to each obligation based on standalone selling prices[917] - The company recognizes revenue over time for performance obligations that enhance an asset controlled by the customer[923] - The company provides a hosted solution for Virtual Sports, which includes proprietary online and mobile turnkey solutions[928]

NEW YORK, April 09, 2024 (GLOBE NEWSWIRE) -- Inspired Entertainment, Inc. ("Inspired") (NASDAQ: INSE), a leading B2B provider of gaming content, technology, hardware and services, announced that it will report financial results for the fourth quarter and fiscal year ended December 31, 2023 on Monday, April 15, 2024, before the market opens. Inspired management will host a conference call and simultaneous webcast at 9:00 a.m. ET / 2:00 p.m. in the UK the same day to discuss the Company's results and general ...

NEW YORK, April 09, 2024 (GLOBE NEWSWIRE) -- Inspired Entertainment, Inc. ("Inspired") (NASDAQ: INSE), a leading B2B provider of gaming content, technology, hardware and services, announced that it will report financial results for the fourth quarter and fiscal year ended December 31, 2023 on Monday, April 15, 2024, before the market opens. Inspired management will host a conference call and simultaneous webcast at 9:00 a.m. ET / 2:00 p.m. in the UK the same day to discuss the Company's results and general ...

[Q3 2023 Financial Performance Overview](index=1&type=section&id=Q3%202023%20Financial%20Performance%20Overview) [Management Commentary and Strategic Highlights](index=1&type=section&id=Management%20Commentary%20and%20Strategic%20Highlights) Management completed its financial restatement, shifted focus to the higher-margin digital business, and repurchased company stock - The financial restatement process is complete, with a minimal net impact on Adjusted EBITDA: a **$0.6 million decrease for full-year 2022** and effectively zero for the first half of 2023[3](index=3&type=chunk) - The company's strategic focus is shifting towards its higher-margin digital businesses, which generated **58% of year-to-date Adjusted EBITDA contribution**[3](index=3&type=chunk) - The Interactive segment demonstrated strong growth, with revenue and Adjusted EBITDA increasing by **28% and 55% year-over-year** on a constant currency basis, respectively[3](index=3&type=chunk) - The land-based business is showing a reacceleration, with new 'Vantage' cabinet deployments leading to approximately **11% YoY revenue per machine increases** in betting shops and 20% in pubs[5](index=5&type=chunk) - The company repurchased **121,847 shares for $1.5 million** during the third quarter, bringing the total to approximately 1.2 million shares since the program's inception[4](index=4&type=chunk)[5](index=5&type=chunk) [Summary of Third Quarter 2023 Segment Financial Results](index=3&type=section&id=Summary%20of%20Third%20Quarter%202023%20Segment%20Financial%20Results) Q3 total revenue grew 31% driven by hardware sales, but net income declined 63% and the Adjusted EBITDA margin contracted to 27% Q3 2023 Key Financial Metrics (vs. Q3 2022) | Metric | Q3 2023 | Q3 2022 | % Change | Functional Currency % Change | | :--- | :--- | :--- | :--- | :--- | | **Total Revenue** | $97.5M | $74.2M | +31% | +22% | | **Net Income** | $3.4M | $9.2M | -63% | -65% | | **Net Income per Diluted Share** | $0.12 | $0.32 | -63% | -67% | | **Total Company Adjusted EBITDA** | $26.7M | $27.3M | -2% | -8% | Q3 2023 Adjusted EBITDA by Segment (vs. Q3 2022) | Segment | Q3 2023 Adj. EBITDA | Q3 2022 Adj. EBITDA | % Change | | :--- | :--- | :--- | :--- | | Gaming | $8.3M | $9.0M | -7% | | Virtual Sports | $11.7M | $12.2M | -5% | | Interactive | $4.7M | $2.8M | +66% | | Leisure | $8.7M | $9.6M | -9% | [Recent Business Developments](index=2&type=section&id=Recent%20Business%20Developments) The company launched new products like 'Hybrid Dealer' and expanded strategic partnerships with the NBA, FanDuel, and Kambi Group - Launched 'Hybrid Dealer', a new iGaming product blending physical and digital elements, in partnership with BetMGM[6](index=6&type=chunk) - Strengthened its Virtual Sports offering by signing an agreement with the NBA and launching an NFL-themed product with bet365[6](index=6&type=chunk) - Expanded its North American footprint through a partnership with FanDuel across multiple states and integrated its Virtual Sports products into the Kambi sportsbook platform[6](index=6&type=chunk) [Financial Statements](index=7&type=section&id=Financial%20Statements) [Condensed Consolidated Statements of Operations](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Q3 revenue grew to $97.5 million, but higher costs led to a decline in net operating income and a fall in net income to $3.4 million Statement of Operations Summary (in millions) | Line Item | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :--- | :--- | :--- | :--- | :--- | | **Total Revenue** | $97.5 | $74.2 | $241.8 | $205.0 | | **Net Operating Income** | $12.2 | $15.3 | $30.6 | $34.4 | | **Net Income** | $3.4 | $9.2 | $7.6 | $17.1 | | **Net Income per Diluted Share** | $0.12 | $0.32 | $0.26 | $0.58 | [Condensed Consolidated Balance Sheets](index=8&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets increased to $304.7 million as of September 30, 2023, while the total stockholders' deficit improved to ($72.5) million Balance Sheet Summary (in millions) | Account | Sep 30, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | Total Current Assets | $133.3 | $126.9 | | **Total Assets** | **$304.7** | **$287.2** | | Total Current Liabilities | $77.8 | $74.9 | | Long-term Debt | $282.7 | $277.6 | | **Total Liabilities** | **$377.2** | **$372.8** | | **Total Stockholders' Deficit** | **($72.5)** | **($85.6)** | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the first nine months of 2023, net cash from operations was $35.3 million, with the period ending with a cash balance of $26.4 million Cash Flow Summary - Nine Months Ended Sep 30 (in millions) | Cash Flow Activity | 2023 | 2022 | | :--- | :--- | :--- | | Net Cash Provided by Operating Activities | $35.3 | $31.8 | | Net Cash Used in Investing Activities | ($31.7) | ($25.5) | | Net Cash Used in Financing Activities | ($2.6) | ($10.5) | | **Net Increase (Decrease) in Cash** | **$1.4** | **($10.4)** | | **Cash, End of Period** | **$26.4** | **$37.4** | [Non-GAAP Financial Measures and Reconciliations](index=4&type=section&id=Non-GAAP%20Financial%20Measures%20and%20Reconciliations) [Explanation of Non-GAAP Measures](index=4&type=section&id=Explanation%20of%20Non-GAAP%20Measures) The company uses non-GAAP measures like Adjusted EBITDA and Adjusted Revenue to provide additional insight into its operating performance - **Adjusted EBITDA** is defined as net income excluding depreciation, amortization, interest, taxes, stock-based compensation, and other adjustments for items considered outside the normal course of business[12](index=12&type=chunk) - **Adjusted Revenue** (Revenue Excluding Low Margin Gaming Hardware Sales) is defined as revenue excluding hardware sales sold at a low margin to secure longer-term recurring revenue[14](index=14&type=chunk) - **Adjusted Net Income** excludes non-recurring items such as restructuring costs, M&A expenses, and gains or losses not in the ordinary course of business, adjusted for tax impacts[15](index=15&type=chunk) [Reconciliation of Adjusted EBITDA by Segment](index=10&type=section&id=Reconciliation%20of%20Adjusted%20EBITDA%20by%20Segment) Q3 2023 Adjusted EBITDA was $26.7 million, reconciled from a net income of $3.4 million with Virtual Sports as the largest contributor Q3 2023 Reconciliation of Net Income to Adjusted EBITDA (in millions) | Description | Amount | | :--- | :--- | | Net Income | $3.4 | | Depreciation and amortization | $10.3 | | Interest expense, net | $6.9 | | Stock-based compensation expense | $3.3 | | Income tax | $2.0 | | Other adjustments | $0.8 | | **Adjusted EBITDA** | **$26.7** | [Reconciliation of Adjusted Net Income](index=12&type=section&id=Reconciliation%20of%20Adjusted%20Net%20Income) Q3 2023 Adjusted Net Income was $4.9 million, or $0.17 per diluted share, a significant decrease from the prior-year period Adjusted Net Income Reconciliation (in millions, except per share data) | Metric | Q3 2023 | Q3 2022 | | :--- | :--- | :--- | | Net Income | $3.4 | $9.2 | | Adjustments | $1.5 | $2.7 | | **Adjusted Net Income** | **$4.9** | **$11.9** | | **Adjusted Net Income per Diluted Share** | **$0.17** | **$0.41** | [Reconciliation of Adjusted Revenue](index=12&type=section&id=Reconciliation%20of%20Adjusted%20Revenue) Adjusted Revenue for Q3 2023 was $74.8 million, nearly flat year-over-year after excluding $22.7 million in low-margin hardware sales Adjusted Revenue Reconciliation (in millions) | Line Item | Q3 2023 | Q3 2022 | | :--- | :--- | :--- | | Net Revenues | $97.5 | $74.2 | | Less: Low Margin Gaming Hardware Sales | ($22.7) | — | | **Adjusted Revenue** | **$74.8** | **$74.2** | [Pro-rated Segment Adjusted EBITDA Contribution](index=13&type=section&id=Pro-rated%20Segment%20Adjusted%20EBITDA%20Contribution) After allocating corporate costs, the Virtual Sports segment was the largest contributor to Q3 Adjusted EBITDA at 39.3% Q3 2023 Segment Contribution to Adjusted EBITDA (in millions) | Segment | Adjusted EBITDA | Corporate Allocation | Segment-level Adj. EBITDA | % Contribution | | :--- | :--- | :--- | :--- | :--- | | Gaming | $8.3 | ($2.0) | $6.3 | 23.6% | | Virtual Sports | $11.7 | ($1.2) | $10.5 | 39.3% | | Interactive | $4.7 | ($0.6) | $4.1 | 15.1% | | Leisure | $8.7 | ($2.9) | $5.8 | 22.0% | | **Total** | **$33.4** | **($6.7)** | **$26.7** | **100.0%** | [Other Disclosures](index=4&type=section&id=Other%20Disclosures) [Revision of Prior Period Results](index=4&type=section&id=Revision%20of%20Prior%20Period%20Results) The company restated prior financial statements for FY2022 and Q1/Q2 2023 to correct accounting errors in software cost capitalization - The company completed a restatement of prior financial statements (Form 10-K/A for FY2022, Forms 10-Q/A for Q1 and Q2 2023) due to accounting errors[9](index=9&type=chunk) - The errors were primarily related to the company's accounting policies for capitalizing software development costs under U.S. GAAP[9](index=9&type=chunk) [Forward-Looking Statements](index=6&type=section&id=Forward-Looking%20Statements) The release contains forward-looking statements subject to risks and uncertainties, and the company does not commit to updating them - The report includes forward-looking statements regarding business plans, new customers, and financial performance, which are not guarantees of future results[23](index=23&type=chunk) - These statements are subject to known and unknown risks and uncertainties, and the company undertakes no obligation to update them[24](index=24&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period _______________ Commission File Number: 001-36689 INSPIRED ENTERTAINMENT, INC. (Exact name of registrant as specified in its charter) | Delaware | 47-1025534 | | --- | -- ...