In This Article:
Release Date: May 08, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Inspired Entertainment Inc (NASDAQ:INSE) reported a 49% increase in revenue and a 79% increase in margins for its interactive business, showcasing strong growth and scalability.
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The company successfully negotiated the refinancing of its existing bonds, providing greater financial flexibility and extending maturity by five years.
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The digital business in North America grew by 90%, significantly outperforming the market growth of 20%, indicating strong content quality and account management.
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The company is implementing a strategy to reduce capital expenditure by selling equipment and focusing on recurring content revenue, which is expected to enhance free cash flow.
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The virtual sports business is showing signs of stabilization and is expected to return to year-over-year growth by the third quarter, driven by new initiatives and market expansions.
Negative Points
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The leisure business was negatively impacted by the shift of the UK Easter holiday to the second quarter, affecting first-quarter performance.
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New regulations and taxes in Brazil caused disturbances, impacting the company's operations in that market.
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There was a reclassification of lease revenue, resulting in a loss of about a million in IEA.
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The UK retail market is facing challenges, with some customers experiencing softness, although William Hill's performance has been strong.
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The virtual sports segment experienced a decline in the first quarter, attributed to regulatory changes in Brazil and market volatility.
Q & A Highlights
Q: Can you discuss the impact of tariffs in the US on your business, particularly regarding costs and any changes in operator or player behaviors? A: Tariffs are not a significant issue for us, as they mainly affect sales in Illinois, which is a small part of our business. Being UK-based, we might even benefit from selling to Canadian markets. Additionally, a recent trade deal between the US and UK could further mitigate any tariff concerns. (Respondent: Unidentified_3 and Unidentified_2)
Q: Are you on track to achieve the 40% EBITDA margin target with the sale of the Holiday Park business and reworking the pub business? A: Yes, once these changes are implemented, we are confident in comfortably achieving EBITDA margins over 40%. We are optimistic about concluding these changes within the year, hopefully in the next few months. (Respondent: Unidentified_2)