Inspired Entertainment Inc. Q1 2023 Earnings Call

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Okay.

Good morning, everyone and welcome to the inspired entertainment first quarter 'twenty twenty-three conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you'd like to ask a question. During this time simply press Star then the number one on your telephone keypad.

Please note that today's event is being recorded please.

Please refer to the company's safe Harbor statement that appears in the first quarter 'twenty twenty-three earnings press release, which is also available in the investors section of the company's website at Www Dot I N S E ink dotcom.

Safe Harbor statement also applies to today's conference call as the company's management will be making certain statements that will be considered forward looking under securities laws and rules of the SEC These statements are based on management's current expectations or beliefs and are subject to risks uncertainties and changes in circumstances.

In addition, please note that the company will discuss both GAAP and non-GAAP financial measures. A reconciliation is included in the earnings press release with that completed I would now like to turn the conference call over to Lorne Weil, The company's executive Chairman Mr. <unk>. Please go ahead.

Thank you operator, good morning, everyone and thank you for joining our first quarter earnings call.

Here with me today are Brooks Pierce Stewart Baker, who will.

We will be presenting the prepared remarks.

And also Eric Herrera, who is available to answer questions as appropriate.

I'll keep my remarks, this morning fairly brief focusing on important overarching financial comparisons.

And a few particularly noteworthy specific business points Brooks and Stuart will then go more deeply into operating and financial matters.

Mentioned in the press release, there were a couple of important items that significantly impacted year to year financial comparisons.

And because of the first quarter is seasonally our lowest in terms of EBITDA and the impact of these is consequently magnified.

And normal first quarters, we would have had a very significant marketing and exhibition expense tip.

Typically approaching about $1 million for the annual ice event in the U K.

What we did have the usual likes of it in Q1 of 'twenty three.

With the associated expense.

I think it was mentioned in the press release of $800000. So there was no comparable event.

In the first quarter of 2022.

And in 2022, we had that revenue of about $900000 all of it margin.

That was a rebate from our customers that arose from that overpayments in previous years.

And then of course, there was a foreign exchange impact.

So as mentioned in the press release, when we make these adjustments the like for like increases and year to year revenue and EBITDA were 22%.

And 26%, respectively, which we think more accurately represents both the momentum generating the growth in the business.

And the operating leverage that's driving increased profitability.

And I should mention that at this point in the year. The pound is above where it was at any point in the last three quarters of 2022.

I just took a look at $1 27 today.

Well above.

Certainly well above where we were.

A year ago, so that what has been a headwind for some time could conceivably be turning now into a tailwind.

Our digital business is now accounting for nearly two thirds of our EBITDA.

Were the primary drivers of growth.

We're particularly pleased with a very strong reacceleration of our interactive business.

Which as discussed in previous earnings calls, we have been anticipating and projecting for some time.

Our interactive business initially accelerated during COVID-19.

Those of you who follow us will remember.

With virtually all of that growth coming in Europe .

As the symptoms of Covid.

<unk> started to recede, our interactive growth began to moderate.

Well it sounds you're lying our growth now the acceleration that we're now talking about is the north American market.

Which has in a very short period of time.

Become our second largest and fastest growing single market.

Driven by product and platform development designed explicitly for the North American market.

So it's only a handful of the 60 states and provinces in North America have introduced I gaming to date. The opportunities ahead are almost limitless.

The opportunity for virtual sports in North America is similar similarly limitless.

Like with interactive the acceleration of our virtual sports business had.

Its origins are independent.

With live sports in the U K and Europe were effectively shut down.

But in this case there was no plateau in the post Covid period.

As had been the case with interactive where we needed to retool.

For North America, as I mentioned a minute ago.

As we've outlined previously our growth in virtual is has come through steady expansion into new geographies complemented by product and technology development.

And now we stand at the edge of a product geography opportunity like none.

We've seen before the launch of the NFL product.

In the North American market.

And in a moment Brooks will discuss this opportunity in some more detail.

At the same time, our retail businesses continue on their intended strategic path.

Providing modest growth with strong cash generation, particularly in the context of our evolving asset light business model.

The new vantage terminal, which we talked about a lot.

Fourth quarter conference call, having demonstrated a 13% uplift and win per day now after almost a year of field trials.

Promise two it promises to enhance both growth and cash flow in all segments of our retail business.

And it's worth mentioning in conclusion that last week was the strongest week in the U K betting shop segment.

Since prior.

Prior to the impact of the Triennial review in 2019.

And with that I'll hand, it over to Brooks.

Okay. Thank you Lauren.

We get a little more color on the business on a segment by segment basis as they normally do but I also want to add to a few points as Loren made in his remarks.

Fired has transformed in the post Covid world to a digitally led business with now two thirds of our EBITDA coming from these segments.

These segments have all the characteristics you look foreign businesses with high growth rates high margins low capital intensity and numerous expansion opportunities both from a product and geography standpoint, and highly differentiated differentiated offerings that make them unique and wide distribution through almost all tier one.

Operators around the globe frankly, it's what you would strive for if you were starting a business from scratch and we really believe that we are early in the development curve in these segments and the potential addressable markets for both across gaming lottery and sports betting operators is huge.

We feel we have a unique opportunity to capitalize on.

It's also important to mention as Loren did how strong our gaming machine businesses, particularly in the UK are performing with levels not seen since the triennial and are betting shop business and our sales funnel in the adult gaming centers segment is also at record levels.

The icing on the cake to all of this is designing the new five year agreement with our largest pubs customer J D. Wetherspoons.

It's worth noting that the importance of the synergies and benefits we derived from the combination of our digital and retail businesses, we leverage our design studios to develop games that work in both segments and drive play to each channel and reduce our overall costs by spreading the development across both segments. It's also very beneficial.

We have players exposed to our content and familiar with our content in both channels, which drives engagement with both.

Lastly, our commercial relationships are strengthened with key customers by having multiple products available to them across the globe, including our virtual sports alongside our gaming offerings and this will hold true with both lottery and sports betting operator customers.

Many in this industry talk about omni channel, but we're proof of it every day so now on to the segments themselves.

As Warren mentioned, our interactive business had a very strong first quarter with revenue growth of 38% on a functional currency basis and that momentum is carried on into April with the last week of April being the highest revenue we've ever had even beyond December which is largely driven by the holiday themed games and as historically our high watermark.

This growth was well distributed across all geographies, but primarily in the core markets of the U K and North America that make up approximately 75% of this business.

We have several drivers in the next few quarters with the launching of some key new titles, particularly in North America with the Terminator game as well as now getting fan to alive in Michigan, and with New Jersey, and Pennsylvania also to come with sandal.

We made a substantial investment in our talent base and capacity and account management, that's paying dividends with growth coming in key markets like Italy, and the Netherlands that had been reasonably flat. Our game design teams continue to produce content that is resonating with players across all our markets and our recent game catch the day rolling them in.

That's come out of the box with some amazing numbers and we're anxious to get it into the North American market.

Moving over to virtual sports virtual sports business continues to deliver very strong results with 42% revenue growth year over year on a constant currency basis.

Although online now represents almost 80% of the virtual sports revenue. We've also seen over 10% growth in the retail part of our business in mature markets, like Greece, and Italy, which speaks to the quality of our offerings and working with our customers to tweak and enhance our product to appeal to their player base.

Very excited about the potential of the NFL license and all the potential ways, we can deliver multiple products leveraging that license similar to what we've done with varied and unique offerings of our soccer product on a worldwide basis.

The NFL brand, we believe will resonate with sports betting players and operators and we will comment further on that as these opportunities coalesce. We also believe this license will really appeal to the lottery market and early indications are bearing that out.

We're targeting the first variation of the NFL product to be live for the kickoff of the 'twenty two season in September , but we will also be adding variations throughout the rest of the year and before the next Super Bowl. We're excited about the launch of our homerun shoot out game this quarter and believe this product will resonate with our customers in north and Latin America.

<unk> as well as potential new markets in other parts of the World and finally, we are excited about the women's World Cup. This summer and showcase showcasing our women's soccer product a first of its kind in women's virtual sports.

Moving over to the gaming side of the business, particularly in the U K is delivering positive results with our betting shop business hitting numbers, we've not seen since the stakes changes brought on by the triennial.

Bodes well for the business going forward as we start installations. This quarter was that Fred and Paddy power with the new vintage cabinet that Loren discussed previously and that was trialed successfully throughout 2022.

This conversion process will take most of the second and third quarter, and we would hope to see improved cash box results throughout but certainly by quarter four we're.

We're also seeing great demand for the vantage cabinet in the adult gaming center market, which is akin to slot halls, and we're ironically nomadic happens to be our largest customer and we will be rolling that cabinet out in that segment throughout the rest of the year and building up our recurring revenue content fees as we move into 2024.

We've widened our lead on our nearest competitor in the grease market and we will be replacing 2500 terminals. There this year with both vantage and valor cabinets, which we anticipate will strengthen our market advantage.

We're also putting terminals on trial and a key Canadian province to build upon the success of our sale to <unk> at the end of 2022.

Although the gaming segment is mature we're bullish on the various growth opportunities. We have this part of the business and leveraging our content teams to drive continued improved performance therefore, creating the operating leverage that werent addressed in his remarks.

Finally, leisure part of the business, we're seeing very positive early results in the holiday part segment of the business with growth rate percentages in the teens as we've previously discussed we lost some share in the pub segment at the end of last year, but expect to have recovered all of that loss by the end of 'twenty three and we are happy to announce that we've signed the contract extension as mentioned.

With our largest hubs customer, where we have approximately 60% of their state covering over 400 pubs and over 2000 machines. We believe that the combination of our new vantage cabinet enhanced service and analytics offerings will help us to put this part of the business back in growth mode. So with that I'll hand, it over to Stuart.

Further remarks.

Thank you Brooks and good morning all.

I'm going to keep my comments on the number three given the detail provided in early and the fact that in the 10-Q will be filed after hours today.

Again, the comparative numbers are impacted by a change in the pound to dollar rate, which was an average of one to one this year versus 134 last year, a fall of about 10%.

As Lou mentioned, we're hopeful given where the rates are being that next quarter. This becomes.

Less of an issue and may even be a tailwind.

Now when I discussed this quarter I'll talk about functional currency variances unless stated otherwise so it's easier to understand the underlying trends.

So overall revenue grew by a healthy 20% with virtual sports growing 42%.

Interrupted by 38% and gaming by 26%.

This growth in gaming is attributed to a combination of product sales, which more than doubled.

And growth in participation revenue was 12%.

As mentioned that was the final amount VIP revenue in the prior year quarter. So excluding this gaming growth would've been 31%.

While laser experienced good growth in holiday parks it declined in pubs.

This was deliberate given the strategic exit last year of noncore low margin non gaming products, but also because of a reduction in a gaming terminals as part of one customer renewal for.

For this reason we are proud to announce the JD Wetherspoon agreement today with the same number of terminals in operation as we currently have.

As mentioned holiday parks income was strong, but keep in mind that due to the first quarter seasonality. Most parks remain closed for at least two months. So the impact is less than it would have been otherwise.

That said, we are confident that liza will be back into growth mode. Soon.

It's an adjusted EBITDA level, we grew 15%, meaning EBITDA margin fell from 33% to 32%.

However, adjusting for the aforementioned <unk> revenue and also for exhibition costs in this quarter, which we didn't have last year EBITDA grew 26% and margin increased from 31% to 32%.

Virtual sports EBITA grew an impressive 50% and interactive 30% with slightly reduced margins due to investments in technology and commercial heads to continue to drive topline growth.

Gaming grew 7%, excluding 2020 twos that income again with the change in margins with the mix in product sales.

As we talked about before these can vary quarter to quarter in absolute and margin terms, depending on the deals recognized in the quarter.

Leisure EBITDA declined 29% on a small absolute number, but it's being typically weakest quarter from a seasonality point of view.

Below adjusted EBITDA, we took a charge of $3 $7 million for restructuring costs in the SG&A line, including note seven and stock based compensation.

Versus nil in the prior year.

Last year's numbers also benefited from a 0.9 gain on disposal of the Italian VLT business.

For these reasons net income per diluted share reduced from <unk> last year to a one cent loss this year.

We think it's useful to show the underlying trends of the business. So we have introduced adjusted net income which grew from zero point $7 million last year to $3 $6 million this year and.

And adjusted net income per diluted share increased from <unk> to.

The 13th.

So turning attention to cash flow overall in the quarter, we increased cash from $25 million at the start to $27 8 million at the end.

Although there was no interest payments in this quarter. It is still traditionally a cash outflow due to the holiday parks being off season, and capex, usually being the highest quarter.

Last year for example, there was an outflow in the quarter was 7 million, whereas this year. There was an inflow of $2 8 million under the demonstration of the positive trajectory of the company.

And while we didn't buy any stock back in the quarter. We did set net settle a number of Rs use which has the same impact taking out over 300000 shares at an average price of $12 67 per share.

Finally, focusing on the balance sheet. Just a reminder, our debt has a fixed coupon rate is less than 8% and does not mature until June 2026, Although from next month is callable.

And we finished the quarter with net leverage of two six times.

So with that I'll hand back to loan for any closing remarks before opening up to Q&A.

Thanks, Stuart that was it.

The state released a great financial.

Summary.

I don't have anything to add to that.

Just at the moment so.

Operator.

Can you please open up.

Program to Q&A.

At this time, if you'd like to ask a question simply press star one on your telephone keypad. Our first question will come from the line of Barry Jonas with Truth Securities. Please go ahead.

Hey, guys.

I wanted to start with the White paper was recently released and.

I would like to just get your thoughts on how you see it impacting both your digital as well.

The land based businesses. Thanks.

I think we need to keep this answer short Barry.

But our our short takeaway answer to that question is there was.

Got.

There was nothing at all.

In the way of negative surprises in the.

And the white paper.

<unk>.

And where we're comfortable that at least as the white paper stands now.

We've pretty much.

Baked the impact of all of that into.

Our our planning and projections for the business.

Understood and then just a follow up NFL deal very exciting wanted to maybe just.

Got a few more thoughts on how you think this could grow the business and if you were you able to give any color on the deal structuring or maybe more directly how this should influence the segment margins that would be pretty helpful. Thanks.

Yeah, well I think in terms of the.

The opportunity is as I mentioned in my remarks from a product standpoint.

I have a couple of different variation similar to what we have in soccer and I think it's reasonable to assume that the that the largest sports betting operators.

Our.

Aye.

Consider this a catalyst moment for us in North America in particular, but certainly all of our existing customers bed 306 fives of the world are very excited about this product.

In terms of the of the economics.

Or a sub licensee to aristocrat as you know.

We feel that the economics are very favorable from not only our perspective and aristocrats, but also the nfl's. So I would expect that if this does the numbers that we expected to do that it will only.

Obviously, our margins are extremely extraordinarily high in this business already but.

I would certainly expect that it would help increase the margins in this business whatever royalties, we might pay will not dilute our margins I think that's yeah. So laurent what borrowers are saying is that whatever.

Just to reiterate that the royalties that we would have to pay would not dilute our margins, which is true in fact, I think our margins will increase.

Great. That's really helpful. Thanks, Thank you so much.

Thanks Barry.

Your next question comes from the line of David Bain with B Riley. Please go ahead.

Great. Thank you and good morning, everyone.

Obviously significant growth across the board, particularly as you unpack the FX the VAT the other item.

Given one key trends do you think about and really trends to date.

Do you think about 2023 growth the same way you did a few months back, especially when also factoring the sterling appreciation and Lauren before either of your answer I mean recall last earnings you mentioned, you're comfortable with consensus so I am not sure. We can relate the response to that comment.

<unk>, but maybe this one time would be helpful.

Yeah.

Yes.

I had a hunch that questions Tony.

Yes.

Yes, so we did back at the end of the fourth quarter.

Say that we were comfortable with consensus.

Consensus estimates for 2023.

And we weren't comfortable at that time, saying much more than that because as you know and as we reiterated.

Our.

General policy is not to give guidance, but.

I think as you correctly.

Identifies Dave.

A number of things.

Has either clarified for or strengthened since the end of the fourth quarter.

Clearly the pound is.

It is very important.

As I said, a second ago right now it's $1 27, so it's five or 6% higher.

Then it was on average for the entire second half us tires last three quarters.

Of 2022, so that's.

An important indicator.

As I said a minute ago.

There were no negative surprises that we could see in the white paper so.

I think any any impact of that we have.

Already accounted for.

In our budgeting and in our projections.

Not to sound like a broken record but.

Again, the apples to apples.

Growth momentum in the first quarter was.

Obviously very significant.

With now most recently the betting shop, and the interactive business being at record levels.

And as Stuart said.

The strength of the new customers that we've got in.

In the holiday Park business makes us feel pretty comfortable that as we move through the year, we'll go back into growth in leisure.

And these 22%.

Revenue growth and 26% EBITDA momentum in the first quarter was after.

A decline in leisure, which we're pretty sure is going to reverse itself. So I think if we take all that stuff together.

It would probably be.

Disingenuous of me to Assembly.

Reiterate what we said at the end of the fourth quarter, which is we're comfortable with.

The consensus I think you can.

Look at all of those let's say clarification factors in.

And not come to the conclusion that we're comfortable right now that we that we can beat.

The consensus for the year, but.

You want to get at least another quarter.

The head.

Before we started to even think about.

Establishing a range for quantifying that but certainly.

We're feeling much more volumes.

About the last three quarters of this year and because of the strength in the first quarter. The full year than we were a couple of months ago.

Now lets super helpful.

And then just given you'll go ahead <unk>.

Yes.

Okay.

Given the EBITDA growth Max Capex, why the free cash flow no sorry, low net leverage that dynamic how are you viewing capital allocation, particularly as it relates to share repurchases I know we're active.

In light of what you just discussed too.

And the dynamic I did.

What other capital allocation.

Just how are we thinking about buybacks.

Going forward relative to what you've done to date.

Yes, well.

<unk>.

We haven't been able to buy any stock back lately because we've been in.

An extended blackout period.

Hi.

I think I can comfortably say that as soon as.

We are allowed to resume share buybacks.

We intend to start doing so.

Absolutely Okay awesome.

That works.

Thank you very much.

Yes.

Your next question comes from the line of Chad Beynon with Macquarie. Please go ahead.

Good morning, Thanks for taking my question.

To ask a two parter on interactive I guess, firstly can you kind of help frame out how important.

The <unk> integration and partnership with <unk>.

You mentioned, that's going to happen in the near term and in Michigan and kind of how.

Revenues could potentially build throughout the year and then the second part of that is just related to the overall content that you have if your games are successful I'm guessing your partners will want a bigger menu of <unk>. How are you feeling with just the overall content delivery that you have.

And if it makes sense to bulk up or potentially acquire an additional studio. Thank you.

Sure Chad so in terms of <unk>. So we're live with them now in Michigan.

We're seeing the results exactly as we expected as we roll games out.

To them and so it's resonating with their players just as we had hoped it would.

So we're I think we're like 93% market penetration now in Michigan, but in Pennsylvania, and New Jersey were still kind of 70% because of not having <unk>.

So clearly when we go with <unk> and in Pennsylvania, and New Jersey, We would expect to get the same uplift that we're seeing.

Out of Michigan, So thats, obviously, thats kind of the biggest customer that we don't have across.

All of our markets.

Second part of your question in terms of content I think we're we certainly arent going to forsake.

The quality of our content because it's clearly resonating with players and there is a limit as we're currently constructed with how many games how many very good games that we can get out the door. So I think it's a natural and certainly our customers would like to have more content from us and.

We're either going to have to figure out a way to either.

Build or buy to provide more content because that seems to be the thing thats kind of.

I guess, maybe not necessarily missing, but would be additive and help even further enhance the growth and the interactive business. So yes, you are spot on with that.

Okay great.

Then.

Looking at margins you said, excluding the items that you called out I believe margins were actually up year over year and a lot of that just comes down to the segment growth. So I'm, assuming if digital continues to grow you should have some some overall margin lift for the company, but anything else for us too.

Just be aware of when we're thinking about margins whether it's.

Inflation component costs et cetera, or do you think.

On the expense side of the business is that a good place and as the revenues grow we could actually see margins expand thank you.

Yes, I think.

They are there.

Yes.

There are elements on either side of the scale exactly as you said Chad.

<unk>.

All of the supply chain stuff has still not completely worked its way through the system I for one think it's actually the most important reason why we still have inflation in the United States.

And it will take the fixing of the supply chain team once and for all to <unk>.

Any inflation back to where it needs to be so we're seeing that.

And we certainly have inflation in our costs.

In the UK, but at the same time.

The operating leverage, particularly in our digital businesses is so huge.

And with the growth rates that we're seeing in the digital revenue.

We're pretty comfortable that the benefit to margins.

From the operating leverage in the growth of the digital businesses will continue to outweigh.

The negative drag of supply chain inflation. So net net I think as our revenues continue to grow.

Without getting into any quantification.

We're pretty comfortable that our margins will will be growing in tandem.

Thanks, Lauren Thanks Brooks appreciate it.

Okay. Thanks.

Your next question comes from the line of Jordan Bender with JMP. Please go ahead.

Great. Thanks for taking my question and good morning.

So interactive and virtual those segments continue to grow nicely I think the lives kind of lagging online opportunity comes from the lottery segment that you guys have spoken about can you just kind of update us on some of the conversations you're having there it seems like legalization.

Just maybe a little bit slower.

So anything you can kind of color there. Thank you.

Yeah, well, maybe two things one is we had mentioned on the last call that we were about to go live with our <unk>.

Online.

Lottery product in the Dominican Republic, and we have subsequently done that and that's so that's a nice achievement for us and we will start seeing some more growth out of the existing Dr business, but in terms of of the eye lottery expansion opportunities and in the states. Obviously, we're following some of this very closely.

Sits in particular looks like it seemingly has some momentum to add that it's kind of it's kind of like handicapping, what states and gaming.

We will also get legalized so we're we're preparing and building product.

With the idea that both from an I gaming ni lottery perspective that there'll be more and more states coming down.

The pipe, but we just don't know exactly when that's going to happen. So we want to be prepared for us issues. Yes. It did it did mentioned, Massachusetts yet.

Great.

Yes, okay.

That's all I got this morning, thanks, guys.

Okay. Thanks.

Your next question comes from the line of Edward Engel with Roth. Please go ahead.

Hi, Thanks for taking my question.

The gross win per day continues.

On the gaming side continues to impress it looks like it was up <unk>.

<unk> again.

Just curious I mean is advantage really move the needle at all yet or is it still such a small part of the basin. I guess can you just remind us the number of vantage units you are expecting to deploy.

Part of your your two big deals over the next few quarters. Thanks.

Yes, so thank you Ed.

Vantage has only been on trial, but it has been for over a year and thats. The 13% uplift number that we that we referenced so vantage is there arent vantage terminals out live other than the trial machines, but through.

The rest of this really the second and the third quarter may be bleeding, a little bit into the fourth quarter. We will have 6000 units out in the field and the betting shop business, so with Paddy power and Betfred. So there'll be fully converted by the time, we get into the fourth quarter and then William Hill subsequently.

So we're certainly expecting we see no reason, it's a smaller sample size on the 13% so there'll be a little bit of dilution, but we're certainly expecting the cashbox to lift by the vantage terminal there as our customers feel that way and the players are very engaged so we're fully expecting once vantages.

Fully deployed to get an uplift in the cashbox, which.

We should also just add to that.

Sure.

Flex was saying about the.

The gaming or the betting shop businesses exactly right, but.

We're also.

We're very sanguine about what the impact of the vantage Cat C version or the.

The the pub and.

The AGC version of vantage will be and so we're really expecting.

A.

A double pronged impact of that in the market.

Yes, good point.

Helpful. Thanks, and then for the Greece.

Agreement that you announced.

Announced today.

Is that more in line with your legacy structure.

Are you going to do the Capex yourself in place or is it more like some of these new contracts, where it's more of an asset light.

So hey, it's Jim.

It's in line with how we've done before so it 10 Lee shows is that Capex I think as we said previously we get.

Significant upfront contribution so from an accounting point of view, we see the capex, but we don't see the big cash here.

Perfect Great. Thanks, Adam Yeah, Congrats on another great quarter.

Thanks, Ed.

Your next question comes from the line of Ryan <unk> with Craig Hallum. Please go ahead.

Good morning, Lauren broke Stuart.

Just one for US otherwise everything has been covered just follow up on Greece, I guess I think I caught a 2500, new placements I guess are those new placements expansions or are you displacing competitors in that market and then can you remind us kind of where your market share stands today.

Sure.

Actually replacement terminals. So we have just over 9000 terminals, there and I think we're.

Bye.

15% in terms of placements higher than anybody else in the market.

But the 2500 terminals.

That are going on which will be a combination of both valor and vantage.

Our replacement terminals that are.

Those terminals are public five years old.

So as part of the again with in concert with our customer <unk> and trying to make sure that we maintain our edge in can do everything to drive the cashbox numbers up because that's how we that's how we participate putting in new content and as Stuart just mentioned, we get an upfront fee from from them.

<unk> been doing so so it's it's to our advantage to have the newest best highest performing content in the market. So that's more or less what we're doing with the 2500 terminals.

Very good nice job guys.

Thanks.

I will now turn the call back to Lorne for any closing remarks.

Thanks, Operator, I don't have any.

Anything to say really at this point that we Havent said already I think we are.

We're all very.

Pleased with with where we are at the end of the first quarter I think everything is pretty much clicking on all cylinders.

We're looking forward to a very strong second quarter.

And.

We look forward to talking to you again in three months at the conclusion of that so thanks again.

That will conclude today's call. Thank you all for joining you may now disconnect.

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