Release Date: August 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Inspired Entertainment Inc (INSE, Financial) reported a 56.5% sequential growth in EBITDA, surpassing expectations.
- The interactive business segment showed significant growth with revenue and EBITDA increasing by 40% and 69% respectively, year-over-year.
- Virtual Sports maintained high profitability with EBITDA margins exceeding 80%.
- The company achieved a record high market share of 8% for slots in the UK, quadrupling its position from previous years.
- The hybrid dealer initiative is gaining traction, with promising results in New Jersey and Michigan, indicating potential for significant future growth.
Negative Points
- Revenues in Virtual Sports have stagnated due to a lack of product and geographic expansion.
- The core gaming business faced challenges due to nonrecurring events, making it difficult to assess underlying momentum.
- The holiday park business is underperforming, impacting overall profitability.
- The Greek market has been soft, affecting performance in that region.
- The company faces capacity constraints in rolling out the hybrid dealer product, limiting immediate growth potential.
Q & A Highlights
Q: With the current M&A and take-private activities in the gaming tech space, how does Inspired Entertainment position itself?
A: Brooks Pierce, CEO, stated that the company's focus is on running the business efficiently and growing through performance and initiatives. They are not overly concerned with M&A activities but are open to acquisitions that align with their growth strategy.
Q: How is Inspired Entertainment approaching capital allocation, particularly regarding share repurchases?
A: Lorne Weil, Executive Chairman, mentioned that while they believe their stock is undervalued, the focus is currently on rebuilding cash reserves. They anticipate a significant increase in cash balances by the latter part of the year, which may lead to resuming share repurchases.
Q: What is the growth potential for Inspired Entertainment's hybrid dealer segment, and how does it compare to live dealer offerings?
A: Brooks Pierce, CEO, explained that there is high demand for hybrid dealer products, and they are working on expanding capacity and product offerings. The hybrid dealer segment is expected to be a significant contributor to growth, with opportunities to reach operators who cannot afford traditional live dealer products.
Q: Can you provide insights into the player demographics for the hybrid dealer product?
A: Brooks Pierce, CEO, noted that the hybrid dealer product attracts a diverse range of players, from high-stakes "whales" to everyday players. The key metric they focus on is the number of active and returning players, which has been promising.
Q: What is the status of Inspired Entertainment's expansion in the US gaming market, and are there any new opportunities?
A: Brooks Pierce, CEO, stated that they have achieved significant market coverage in the US, with over 90% penetration in major markets. They are now focusing on new geographies like Brazil, where they aim to replicate their US strategy.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
