Industry News

Inspired Reports Third Quarter 2023 Results

Published

5 months ago

February 29, 2024

Inspired Entertainment, a leading B2B provider of gaming content, technology, hardware and services, reported financial results for the three-month period ended September 30, 2023.

Lorne Weil, Executive Chairman of Inspired, said: “We have completed the financial restatement process and as of today, all amended filings are complete. For the first half of 2023, the net impact to Adjusted EBITDA from the restatement was effectively zero, with a $1 million decrease in previously reported results in Q1 offset by a $1 million increase in Q2. The impact to our Adjusted EBITDA for the full year 2022, was a decrease of $0.6 million, from $99.6 million to $99.0 million, or less than 1%. Adjusted EBITDA margin for the third quarter was 27%, but excluding Low Margin Gaming Hardware sales, the margin was 36%, compared to 37% in the prior year quarter.”

Weil continued: “For the quarter, our aggregate digital business, which includes our Virtual Sports and Interactive segments, grew Adjusted EBITDA 9% to $16.4 million from $15.0 million. Year to date, our digital business generated 58% of Adjusted EBITDA contribution compared to 50% in the prior year period. This performance reinforces the shift in our strategic focus towards our higher margin, scalable digital business and we continue to invest in premium content creation for these segments. At the same time, our Adjusted EBITDA for the third quarter was impacted by the timing of several one-time sales moving into the fourth quarter. Excluding one-time product sales, Adjusted EBITDA grew 4% year-over-year during the third quarter. As we look forward, we expect our fourth quarter Adjusted EBITDA to be in-line with consensus. Additionally, our fourth quarter Adjusted EBITDA would have been nearly $2 million higher if not for the ransomware attack on our IT systems impacting results.”

Weil added: “Our digital business third quarter results were led by the Interactive segment where revenue and Adjusted EBITDA increased 28% and 55% year-over-year on a constant currency basis, respectively, underscoring both the growth and scalability of the business. Interactive results reflect another quarterly record as we continue to benefit from an increased footprint through new customer launches, the consistent deployment of new content and increased promotional activity through exclusive deals with tier-one customers as well as revenue growth from existing customers. In our Virtual Sports segment, we generated $13.4 million of revenue during the quarter compared to $14.4 million during the prior year. The year-over-year decline was driven by a major customer’s optimizing of their customer base, with a partial offset due to increased retail revenue. In the last two to three years, we’ve seen extraordinary growth in our Virtual Sports business, driven by new products and market expansions. We believe we are heading into another strong growth phase, driven by our exciting new content partnerships with the NFL and NBA. We have two major markets with substantial growth opportunity, North America and Latin America. In addition, we’ve recently launched Hybrid Dealer, a revolutionary new iGaming product. We are proud to have partnered with BetMGM to launch this innovative new product. With all of this recent progress, we are more convinced than ever that we are in the early stages of an expanding global opportunity with our digital business that will continue to exhibit a high margin and low capital intensity profile.”

Weil continued: “In our land-based operations, which includes our Gaming and Leisure segments, we’ve completed the deployment of our new ‘Vantage’ cabinet across two of our largest licensed betting shop customers, recording another $22.7 million of low margin terminal sales in Q3. We continue to see approximately 11% year-over-year revenue per machine increases with these new terminal deployments. In our pubs business, we’ve deployed ‘Vantage’ across approximately 20% of our customer estate and have experienced approximately 20% year-over-year growth in revenue per machine. This gives us confidence that we are seeing a reacceleration across our land-based businesses.”

Weil concluded: “Fundamentally, our business remains very strong, which was reflected in our repurchase of $1.5 million of our stock during the third quarter. We are optimistic about the compelling digital growth dynamics of the business, as a wider audience engages with online betting and gaming while new jurisdictions continue to launch. Combined with a resilient land-based business, our diversification and expansion ability reinforce our omni-channel strategy combining our high-margin, capital efficient digital businesses with our steady land-based businesses.”

Related Topics:financial results Inspired Entertainment Lorne Weil

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Industry News

Penn Entertainment to Lay Off About 100 Employees

Published

4 days ago

July 23, 2024

Niji Narayan

Penn Entertainment plans to lay off about 100 employees as it focuses on growth for ESPN Bet.

CEO Jay Snowden told staff members in an internal email that the changes will enhance operational efficiencies following its 2021 acquisition of Canadian media and gaming powerhouse theScore.

The company employs about 20,000 people.

“When PENN acquired theScore, we hit the ground running with the build-out of our proprietary tech stack and the migration of our sportsbook to theScore’s best-in-class-platform,” Snowden wrote in the memo. “This led us to temporarily set aside any potential organizational changes that would typically follow a major acquisition.”

Penn went on to say it’s embarking on a new phase of growth in its interactive business, which includes ESPN Bet, a $2 billion branding partnership with Disney’s ESPN. Snowden said the initiatives include product enhancements and deeper integration into ESPN’s ecosystem.

Investors are impatient for Penn to demonstrate its muscle with the rebranded sportsbook, and activist investor Donerail Group has called on the board to sell the casino company.

Rumors have swirled about the potential interest from many other online gaming and brick-and-mortar casino companies.

Truist gaming analyst Barry Jonas wrote in a note Thursday that a sale is unlikely in the near term because of the complexity of a transaction that would likely involve major divestitures.

Penn’s release of new ESPN Bet features this fall during football season should meaningfully improve its product, Jonas said, and a focus on costs indicate the company’s commitment to seeing its investment yield results.

Penn shares have plummeted 25% year to date. It has missed earnings expectations the last two quarters and lowered guidance.

“Investors continue to wonder what an ESPN Bet success could look like, and how much more investment (beyond what’s guided) it’ll take to reach,” Jonas notes.

Industry News

Stevin ‘Hedake’ Smith to Promote Gambling Harm Awareness Through EPIC

Published

5 days ago

July 22, 2024

Niji Narayan

Stevin ‘Hedake’ Smith was at the center of one of the most high-profile examples of gambling-related harm in basketball history, which makes him the perfect latest addition to EPIC Global Solutions’ team as they continue to educate the current generation of professional and collegiate athletes on how to avoid the repeat of a similar scenario.

The former point guard made his name as a star player at Arizona State University in the early 1990s, setting college records for three-point attempts and being a two-time All-Pac-10 selection. However, his involvement in point-shaving – which was the subject of a 2021 Netflix documentary – led to a one-year prison sentence and impacted an NBA career with hometown team, Dallas Mavericks.

The source of his gambling harm – being approached by a gambler to change the final score of a game without changing who wins – is an issue that remains very pertinent to student-athletes 30 years on, in spite of the significant changes to sports wagering legislation.

This ensures that his planned involvement in EPIC’s range of education sessions to teams connected to partners such as the NCAA, MLB, and MLSPA will be an important lesson for the athletes, coaches, and staff in attendance when he travels to address them in his new role as US sports advisor for the company.

“I’m passionate about wanting to tell my story and get out there to prevent this from happening again,” he explained.

“I’ve been able to tell my story to players previously and I’m able to have a relationship with all of them in the audience because of the way I deliver my message and coming from one big fraternity in sport. Knowing that EPIC has a global reach is something that really stood out to me about this opportunity and I’m passionate about getting out there and speaking about my experience.”

Though already a renowned name in sporting circles, Smith’s profile is set to rise again in the months ahead with the release of eponymous autobiography, ‘Hedake’, which will coincide with his work with EPIC.

“We’re proud to welcome Hedake to our team and can’t wait to see the impact he’ll have on audiences,” added Teresa Fiore, EPIC’s VP of partnerships.

“In being approached to shave points on game, Hedake has experienced a type of gambling-related harm which is different to many of our other team members. His story represents an area of increasing concern within sports, which adds to the range of our education designed to benefit our valued partners and the key people in their organisations.”

Industry News

Public Health Advocacy Institute (PHAI) Calls for Overhaul of “Responsible Gambling” Model

Published

5 days ago

July 22, 2024

Niji Narayan

As the National Council on Problem Gambling (NCPG) gathered for their annual conference in San Diego last week, the Public Health Advocacy Institute (PHAI)—a nonprofit research center for public health laws affiliated with Northeastern University School of Law— released a new video to highlight the ethical and scientific failure of the “Responsible Gambling” model.

Under the direction of its president, Professor Richard Daynard, Executive Director Mark Gottlieb, and Director of Gambling Policy Dr. Harry Levant, PHAI is leading the efforts to replace the Responsible Gambling model with a comprehensive public health response to the unprecedented expansion of the gambling industry and online gambling. PHAI will be advocating for and advancing much-needed public health reform and regulation at both the federal and state levels.

The new video, which can be found on the PHAI website here, analyzes key flaws in the Responsible Gambling model—an approach favored by both the gambling industry, and the gambling-industry-funded NCPG.

In the video, Dr. Levant highlights the situation’s urgency, stating “The expansion of online gambling without appropriate safeguards and regulation is an industry-driven ‘wild west’ environment, resulting in a looming public health crisis.”

President Daynard echoed this statement by criticizing the current Responsible Gambling model: “The Responsible Gambling model puts the onus on the customer, rather than focusing on the irresponsible design and marketing decisions of the gambling industry.”

Professor Gottlieb also emphasized the need for change. “The time has come to expose the failures of the Responsible Gambling model and move forward with a public health approach to regulation and reform,” he said.