Inspired Entertainment (INSE) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenue was $75.6M, down 5% year-over-year, with net income of $2.0M, a 64% decline from Q2 2023; Interactive segment led growth with revenue up 40% and EBITDA up 69% year-over-year.

• Declines in Gaming and Virtual Sports were partially offset by growth in Interactive and Leisure segments.

• SG&A expenses increased significantly due to $7.8M in restatement costs and higher facility, travel, and labor costs.

• Major new contracts signed, including a six-year agreement with William Hill for 5,000 Vantage terminals and launches with AGLC, Fanatics, FanDuel, bet365, Scientific Games, and Mecca Bingo.

• The company remains in compliance with all debt covenants and maintains sufficient liquidity to fund operations through August 2025.

Financial highlights

• Q2 2024 revenue: $75.6M (down 5% year-over-year); net income: $2.0M (down 64%); Adjusted EBITDA: $41.7M for six months, down from prior year.

• Interactive segment revenue up 40% to $9.4M; Adjusted EBITDA up 69% to $6.1M year-over-year.

• Virtual Sports revenue fell 23% to $11.7M; Adjusted EBITDA down 27% to $9.6M.

• Cash at June 30, 2024: $23.5M, with $6.3M undrawn revolver; net cash used in operations for six months: $2.1M outflow.

• SG&A expenses up 23% in Q2, mainly due to restatement and restructuring costs.

Outlook and guidance

• Hybrid Dealer expansion is a top priority, with new launches and roulette rollout planned for H2 2024.

• Virtual Sports revenue and Adjusted EBITDA expected to exceed H1 2024 levels in H2.

• Management expects current cash, operating cash flows, and available borrowings to be sufficient to fund requirements through August 2025.

• Anticipated strong cash build in Q4, potentially enabling share repurchases.

• Possible release of deferred tax asset valuation allowance within the next six months if profitability improves.