Q3 2023 Inspired Entertainment Inc Earnings Call
[music].
Operator: www.inspiredent.com Good evening, everyone, and welcome to the Inspired Entertainment 3rd Quarter 2023 conference call. At this time, all lines have been placed on mute to prevent any background noise.
Good evening, everyone and welcome to the inspired entertainment third quarter 2023 conference call. At this time 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 the star followed by the number one on your telephone keypad, if you'd like to withdraw your question. Please.
Operator: After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during this time, simply press the star followed by the number 1 on your telephone keypad. If you'd like to withdraw your question, please press the star followed by the number 1 once again.
What about the one once again.
Operator: Please note that today's event is being recorded. Please refer to the company's safe harbor statement that appears in the third quarter 2023 earnings press release, which is also available in the investors section of the company's website at www.imseinc.com. This Safe Harvest 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 law 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.
Please note today's event is being recorded.
Please refer to the Companys Safe Harbor statements that are based in the third quarter 2023 earnings press release, which is also available in the investors section of the company's website at Www Dot I N S E I N C don't cold.
This 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 on this.
No.
Most of the S E C.
These statements are based on management's current expectations or beliefs and assumptions risks uncertainties and changes in circumstances.
Lorne Weal: 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 over to Lorne Weal, the company's Executive Chairman. Please go ahead.
Additionally, please note the company will discuss both G. A a P. A a P financial measures.
Conciliation is included in the earnings press release.
Is that completed I would now like to turn the conference over to Laura Weil.
As executive Chairman.
Mr. Weil. Please go ahead.
Lorne Weal: Thank you, operator. Good evening, everyone, and thank you for joining us on this somewhat delayed third quarter conference call. With us this evening, as usual, is our CEO, Brooks Pierce, and joining us for the first time is our Interim CFO, Jen Stigler. Maryland has done an extraordinary job, overseeing the accounting work that's taken place in the last three months. And for those of you who may not be familiar with Marilyn's background, although I think we've made it public in a few different places, she's a 10-year veteran of the Big Four accounting world. She's a former Senior VP of Finance at IGT, and she has a Wharton MBA with a concentration in accounting.
Thank you.
Good evening, everyone and thank you for joining.
Our somewhat delayed third quarter conference call.
With us this evening as usual is our CEO Brooks Pierce.
Joining us for the first time as our interim CFO Genesis.
Maryland has done an extraordinary job.
Overseeing the accounting work that's taken place over the last three months.
And for those of you who may not be familiar with Maryland's background, although I think we've.
We've made it public in a few different places she has a 10 year veteran of the big four accounting world.
She is a former senior VP.
Finance of IGT.
And she is a word an MBA.
With a concentration in accounting.
Lorne Weal: Thanks to her work and the work of her team, we today filed an amended 10-K for 2022, amended 10-K for the first and second quarters of 2023, and the delayed 10-Q for the third quarter of 2023. With these filings, we are in full compliance with NASDAQ and with our lender group. This follows a three-month process during which our internal organization was augmented by enormous outside accounting and audit resources provided by one of the most highly regarded and prestigious firms in the public accounting industry. Indeed, it's not an overstatement, I think, to say that these are the most fully vetted financial statements. I have encountered them in my roughly 50 years of working in the public company arena.
And thanks to her work and the work with her team. We today filed an amended 10-K for 2022.
<unk> 10-K for the first and second quarters of 2023.
The delayed 10-Q for the third quarter of 2023 and with these filings we are in full compliance with NASDAQ.
And with our lender group.
This follows a three months process during which our internal organization was augmented by.
The orbis outside accounting and audit resources provided.
Provided by one of the most highly regarded and prestigious firms in the public accounting industry.
Indeed, it's not an overstatement I think to say that these are the most fully vetted financial statements I have encountered in my roughly 50 years of working.
And the public company Arena.
Lorne Weal: As mentioned in the press release, the first half of 2023 was unchanged from what had been previously reported last year, with a million dollar first quarter downward adjustment offset by a similar upward adjustment in the second quarter, and the full year 2022 EBITDA was adjusted downward by about a half a percent from $99.6 million to $99.0 million. EBITDA for the third quarter of 2023 was $26.7 million, slightly behind the third quarter of 2022, for a variety of reasons, which I'll clarify as I review the individual businesses in a moment. We think that $26.7 million very meaningfully understates the earnings power of the business at this time.
As mentioned in the press release, the first half of 2023 was unchanged for what had been previously reported last year.
With a million dollar first quarter downward adjustment.
The offset.
Biosimilar us upward adjustment in the second quarter.
And the full year 2022, EBITDA was adjusted downward by about a half a percent from $99 6 million to 99.0 million.
EBITDA in the third quarter of 2023 was $26 7 million slight.
Slightly behind the third quarter of 2022.
For a variety of reasons, which I'll clarify as I review the individual businesses in a moment.
We think that $26 7 million a.
Very meaningfully understates the earnings power of the business at this time.
Lorne Weal: Given that the fourth quarter is by now in the rearview mirror, given that we're in February, I think I can say that we expect the fourth quarter, to be in line with consensus and excluding the roughly $2 million impact of our fourth quarter computer system hack, to be nicely ahead of both ConsenSys and Q4 2022. Now, let me take a look at each of the businesses themselves. The virtual sports business continues to be as amazing a business as I've seen in all my years. Super-high margins, relatively low capital intensity, significant barriers to entry, which we have further strengthened with the NFL and NBA licenses, and tremendous long-term growth potential, following a period of extraordinary growth that was driven by the addition of several new territories, which we talked about a number of times in the past, and some great new products. We've been on a short-term plateau for a few quarters, and indeed, we saw a modest year-to-year EBITDA decline in the third quarter, which was mentioned in the press release was more than entirely occasional by our major customer deliberately and effectively pruning the user base, a process we think has run its course at this point.
Given that the fourth quarter is by now in the rearview mirror given that we're in February.
I think I can say that we expect the fourth quarter.
To be in line with consensus.
And excluding the roughly 2 million dollar impact of our fourth quarter computer systems have to.
To be nicely ahead of both consensus.
And Q4 of 2022.
Now, let me take a look at each of the businesses themselves.
The virtual sports business continues to be as amazing business as I've seen in all my years Super High margins.
Relatively low capital intensity significant barriers to entry, which we have further strengthened.
With the NFL and NBA licenses and tremendous long term growth potential.
Following a period of extraordinary growth that was driven by the addition of several new territories that we have.
<unk> talked about those a number of times in the past.
And some great new products that we've been on a short term plateau.
For a few quarters and indeed, we saw a modest year to year EBITDA decline in the third quarter.
Which as mentioned in the press release was more than entirely occasions.
They are a major customer deliberately and effectively pruning the user base.
The process, we think has run its course at this point.
Lorne Weal: In a moment, Brooks will talk in some detail about why we think we're about to embark on a second exponential growth phase, driven by new products and, more importantly, huge new geographies that operate in both the gaming and the lottery spaces. While growth in the virtual sports business has been in a temporary pause, the other part of our digital business, interactive..., has validated the wisdom of the major investments we've been making some time to content and platform development. Revenue in EBITDA in the third quarter grew 37% and 68%, respectively, with EBITDA margins expanding from 53% to 64%.
In a moment Brooks will talk in some detail about why we think.
We're about to embark on our second exponential growth phase driven.
Driven by new products and more importantly, huge new geographies that operate in both the gaming and the lottery spaces.
While growth in the virtual sports business has been a temporary pause in the other part of our digital business interactive.
It's validated the wisdom of the major investments, we've been committing some time to content and platform development.
Revenue and EBITDA in the third quarter grew 37% and 68%, respectively with EBITDA margins expanding from 53% to 64%.
Lorne Weal: It's important to recognize that this growth has been driven by only a small handful of iGaming jurisdictions in North America, and we're confident that the inevitable addition of new states and new provinces will further accelerate this growth. Taken together, the EBITDA of our Combined Virtual Sports and Interactive Digital Businesses accounted for 58% of our overall EBITDA in the first nine months of 2023, from about 50% in 2022. Here again, Brooks will add significantly more color in a moment.
It is important to recognize that this growth has been driven by only a small handful of I gaming jurisdictions in North America, and we're confident that the inevitable addition of new states and new provinces will further accelerate this growth.
Taken together the EBITDA of our combined virtual sports and interactive digital businesses accounted for 58%.
Our overall EBITDA in the first nine months of 2023.
From about 50% in 2022.
Here again, Brooks will add significantly more color.
A moment.
Lorne Weal: The most important development to report within our retail business is the phenomenal performance of the Vantage cabinet in both the bedding shop and pub section. In a moment, Brooks will review this subject in some detail, but along with the success of our Asset Light strategy, this cabinet and its associated content appear clearly to be a game changer in our recurring revenue retail businesses. Notwithstanding the success of the new cabinet, the EBITDA from our combined retail businesses declined modestly from 2022 to 2023, with the overall decline split about evenly between gaming and leisure. Three distinct factors contributed to this decline.
The most important development to report within our retail business is the phenomenal performance of the vantage cabinet and both of the betting shop and pub sectors.
In a moment Brooks will review this subject in some detail, but along with the success of our asset light strategy. This cabinet and its associated content.
Appears clearly to be a game changer in our recurring revenue retail businesses.
Notwithstanding the success of the new cabinet.
EBITDA from our combined retail businesses declined modestly from 2022 to 2023 with the overall decline split about evenly between gaming and leisure.
Three distinct factors contributing to this decline.
Lorne Weal: The minor loss of EBITDA attendance of the Asset Light Strategy, which we believe will be more than made up for by the performance of the Vantage Cabinet, the movement of significant one-time product sales out of the third quarter, and very significant wage increases in the holiday park business due to changes in the UK regulatory environment. Regarding the latter, we believe we have devised a restructuring program designed to recapture this lost income, which we hope to be able to discuss in our next conference call. Taking all these factors into account, we would expect to see re-accelerating growth in our retail businesses as we move through the fourth quarter and into 2020. And with that, I'll turn things over to Brooke. Okay, thank you, Lorne.
The minor loss of EBITDA attendant to the asset light strategy, which we believe will be more than made up for by the performance of the vantage cabinet.
The movement of significant one time product sales out of the third quarter.
And very significant wage increases in the holiday Park business due to changes in the UK regulatory environment.
Regarding the latter we believe we have devised a restructuring program designed to recapture this lost income, which we hope to be able to discuss in our next conference call.
Taking all these factors into account, we would expect to see reaccelerate growth in our retail businesses as we move through the fourth quarter and into 2024.
With that I'll turn things over to Brooks.
Okay. Thank you Lauren and thanks to all of you for joining the third quarter call and as I, usually do I'll try to add some color and detail to lauren's overarching comments to give some further clarity on the business progress as we see it and what we're working on in terms of future developments, certainly echo Lorne statement about the efforts.
Brooks Pierce: And thanks to all of you for joining the third quarter call. And, as I usually do, I'll try to add some color and detail to Lorne's overarching comments to give some further clarity on the business progress as we see it and what we're working on in terms of future development. I certainly echo Lauren's statement about the efforts put forth by both Maryland and the entire finance team on the accounting work it's done to take us to get to today. And frankly, I want to give thanks to the whole Inspired team who's endured this process along with other challenges, including the hack to our IT systems and the recovery from that in such a professional way. As we've mentioned in the press release, the hack will have penalized us by approximately $2 million, primarily through a reduction in our ability to deliver games, the slowdown in integrations, and other productivity reductions.
Put forth by both Maryland, and the entire finance team on the accounting work its done to take us to get to today and frankly, when I give thanks to the whole inspire team who has endured this process along with other challenges, including the hack to our it systems and the recovery from that in such a professional way as.
As we've mentioned in the press release, the hackles penalize us by approximately $2 million, primarily through the reduction in our ability to to deliver games the slowdown in integrations and other productivity reductions.
Brooks Pierce: The good news is we feel like the future is bright for Inspired and that's what the team and I are laser focused on. First, let me give you some details on the virtual sports business alongside Lorne's comments. I agree completely that it is an amazing business with all the characteristics Lorne mentioned, but the most important of which is the fact that I feel like we're in the first quarter of the game in this business. The main drivers of growth in the business are new products, licensed products, and new geographies, and we're in the very early stages in each of those categories. We've launched the NFL licensed game with our largest customer, and we're seeing exactly what we hoped for with the NFL game growing in revenue weekly without cannibalizing our existing NFL alumni game. In the first half of 24, we'll see the game launched across additional North American operators like BET, MGM, and Rush Street.
Good news is we feel like the future's bright for inspired and Thats, what the team and I are laser focused on.
First let me give you some details on the virtual sports business alongside Lawrence comments I agree completely that it is an amazing business with all the characteristics Lauren mentioned, but the most important of which is the fact that I feel like were in the first quarter of the game in this business.
The main drivers of the growth in the business, our new products licensed products in new geographies and we are in the very very early stages and each of those categories. We've launched the NFL licensed game with our largest customer and we're seeing exactly what we hoped with the NFL game growing in revenue weekly without cannibalizing our existing NFL.
Im not game.
First half of 'twenty four we will see the game launched across additional North American operators like bet, MGM and Rush Street, and we hope to add other operators as we go through the year and we're also seeing more interest from European and Latin American operator, So this products and we will be rolling it out to these customers also over the course of 'twenty four.
As always it takes some time to do the integrations and coordinate promotions with operators, particularly in some of the newer virtual sports markets like North America, but we are more confident than ever that there is a robust market for this product and that licensed brands will drive incremental play.
Brooks Pierce: And we hope to add other operators as we go through the year. And we're also seeing more interest from European and Latin American operators for this product. And we'll be rolling it out to these customers also over the course of 24. As always, it takes some time to do the integrations and coordinate promotions with operators, particularly in some of the newer virtual sports markets like North America, but we are more confident than ever that there's a robust market for this product and that licensed brands will drive incremental play. We're very excited to have signed a license with the NBA as well, and it will be our first but certainly not our last foray into the archived version of virtual sports, wherein footage of previous NBA games will be constructed into a virtual sports format, and we're confident that this will resonate with the vast NBA worldwide brand in many of the markets we serve.
We're very excited to have signed a license with the NBA as well.
And it will be our first but certainly not our last foray into the archived version of virtual sportswear and footage of previous NBA games will be constructed into a virtual sports format and we're confident that this will resonate with the vast NBA worldwide brand in many of the markets. We serve we expect to launch this product in the <unk>.
Quarter of 2024, with our large customer in Greece, who have 3000, approximately 3000 retail locations as well as a major online presence and we're already working with them or path and the NBA to do a major marketing and promotion launch for this product and importantly, there will be an incremental channel.
Not replace an existing virtual channel increase.
Brooks Pierce: We expect to launch this product in the second quarter of 2024 with our large customer in Greece, who have approximately 3,000 retail locations, as well as a major online presence. And we're already working with them, OPAP and the NBA, to do a major marketing and promotion launch for this product. And importantly, it will be an incremental channel, not replace an existing virtual channel in Greece.
Were also down the path on our hockey game as we've talked about in the past and hope to launch that also in 2024 and expect that will be a very popular new game in key markets like the U S, Canada and Nordic in Eastern European areas. So clearly you can tell we're very bullish on both licensed brands like the NFL and NBA and the new <unk>.
Product supporting these that will be rolling out this year.
In terms of additional geographies besides in North America.
As I said in the very early stages. We're obviously incredibly excited about the opportunity we see in Latin America, and particularly in Brazil.
Brooks Pierce: We're also down the path on our hockey game, as we've talked about in the past, and hope to launch that also in 2024. We expect that will be a very popular new game in key markets like the US, Canada, and Nordic and Eastern European areas. So clearly, you can tell we're very bullish on both licensed brands like the NFL and NBA and the new products supporting these that we'll be rolling out this year. In terms of additional geographies, besides North America, that's, as I said, in the very early stages, we're obviously incredibly excited about the opportunity we see in Latin America and, particularly, in Brazil. We are fortunate to have virtual sports specifically included in the recent sports betting law that passed in Brazil, and we've been working in that market for months to help build interest in our unique offerings. As most of you will know, soccer or football, depending on where you're from, is the biggest virtual sport for Inspired and represents more than 75% of our business currently. And Brazil is an incredibly passionate population when it comes to this sport.
We are fortunate to have virtual sports specifically included in the recent sports betting law passed in Brazil, and we've been working in that market and advance for months to help build interest in our unique offerings.
As most of you will know soccer or football depending on where you are from is the biggest virtual sport for inspired and represents more than 75% of our business. Currently in Brazil is an incredibly passionate population and when it comes to the sport and as we've seen in other markets like Greece, Italy, Turkey, and Morocco, having a passionate fan.
Base for sport is a great precursor for the success of virtual sports in that market.
So we will have a team down in Brazil actually next week for several meetings with operators and we believe that Brazil will be a market for our products, including our gaming alongside virtual sports.
B much like our other key markets of U K, North America, Greece and Italy.
We'll be very strong for our digital businesses.
As Lauren mentioned in his remarks, it's not out of the ordinary for business segment that has seen the growth that we've seen out of virtual sports to experience a period of moderating growth and ours was exacerbated by the change in policy by our biggest customer with their players, but we are confident that the strategy of additional licensed sports in either new or newly launched territories.
<unk> will propel sustainable growth for this segment going forward.
Brooks Pierce: And as we've seen in other markets like Greece, Italy, Turkey, and Morocco, having a passionate fan base for a sport is a great precursor to the success of virtual sports in that market. So we'll have a team down in Brazil actually next week for several meetings with operators, and we believe that Brazil will be a market for our products, including iGaming alongside virtual sports, that will be much like our other key markets of the UK, North America, Greece, and Italy, which will be very strong for our digital business. As Lorne mentioned in his remarks, it's not out of the ordinary for a business segment that has seen the growth that we have seen in virtual sports to experience a period of moderating growth, and ours was exacerbated by the change in policy by our biggest customer with their players, but we are confident that the strategy of additional licensed sports in either new or newly launched territories will propel sustainable growth for this segment going forward.
Moving on to the interactive segment of the digital business.
As Warner mentioned incredible growth throughout 2023 with revenue growth in the third quarter of 38% and this segment really continues to click on all cylinders. This is a result of improved games and quantity of games released along side dedicated account management to ensure that our games are positioned appropriate.
<unk> on our operator sites, we have a roadmap of content in the first half of 'twenty for that frankly looks like the strongest roadmap we've ever had for all of our key markets, including U K, and North America, Greece, Italy, and going forward in Latin America, specifically, Brazil.
Additionally, we are in the process of building our next game studio, whose primary focus will be bespoke content for the North American market.
To date, we supported the North American market from our UK Studios and considering that we've had some very strong results, but we see new states coming on in gaming and new opportunities in our retail business in North America and sink a dedicated studio will accelerate our online retail growth in this key market our omnichannel strategy is.
Brooks Pierce: Moving on to the interactive segment of the digital business. As shown, as Loren mentioned, incredible growth throughout 2023, with revenue growth in the third quarter of 38%, and this segment really continues to click on all cylinders. This is a result of improved games and quantity of games released alongside dedicated account management to ensure that our games are positioned appropriately on our operator's site.
Validated in the UK in Greece in particular, as we leverage our retail game content alongside our online content and we're gaining share in each of those markets and we will be looking to replicate that success in North America.
Many of you have seen the recent announcement about the stakes limits in the UK being adjusted to two pounds for those under 25 years old and five pounds for those over 25 years old we've.
Brooks Pierce: We have a road map of content for the first half of 24 that frankly looks like the strongest road map we've ever had for all of our key markets, including UK, North America, Greece, Italy, and going forward, Latin America and specifically Brazil. Additionally, we're in the process of building our next game studio, whose primary focus will be bespoke content for the North American market. To date, we've supported the North American market from our UK studios, and considering that, we've had some very strong results, but we see new states coming into iGaming and new opportunities in our retail business in North America and think a dedicated studio will accelerate our online and retail growth in this key market. Our omni-channel strategy has been validated in the UK and Greece, in particular, as we leverage our retail game content alongside our online content Many of you will have seen the recent announcement about the stakes limits in the UK being adjusted to £2 for those under 25 years old and £5 for those over 25 years old.
<unk> been an active participant in these discussions and are fully prepared for this outcome that will start in the fall and we expect it to have a very modest impact.
And our game designers have been planning for this for a long time and frankly, we feel that this is probably a good thing for the market long term.
Many of you will have seen a product that we introduced at <unk>, a revolutionary product frankly that we call hybrid dealer and we recently showed it even more extensively at ice in London. So we've now soft launch that with bet MGM and have worked through all the technical and regulatory steps.
Alongside them and they are planning a big marketing push now that the Super Bowl is behind them and we look forward to reporting on that in future calls.
We also expect to go live with Roulette and the second quarter of 2004 and expect that this will be the larger of the product segments, and we will apply to a broader set of our customer base our.
Our booth at ice was filled with operators wanting to see this product in our pipeline of potential customers is extremely full and we'll be working throughout 2024 to be delivering this product segment to as many key operator customers as possible.
Overall, we feel like we've positioned the digital segments of our business as Lauren talked about for continuing along this great growth trajectory.
Brooks Pierce: We've been an active participant in these discussions and are fully prepared for this outcome that will start in the fall. We expect it to have a very modest impact, and our game designers have been planning for this for a long time, and frankly, we feel that this is probably a good thing for the market in the long term. Many of you will have seen a product that we introduced at G2E, a revolutionary product, frankly, that we call Hybrid Dealer. And we recently showed it even more extensively at ICE in London.
Moving over to the retail businesses.
Those characteristics are also our lower growth and stable businesses with recurring revenues streams based largely on our participation in the cashbox, but we also have a component of onetime sales in that business that can move from quarter to quarter impacting performance when looking at the narrow lens of one quarter and that's what we saw in Q3.
Three of 23 with some sales moving into the fourth quarter.
The biggest news in these businesses is the phenomenal success of the vantage cabinet and then we're much further down the road and the replacement of an asset light strategy. We are driving in these segments.
Brooks Pierce: So we've now soft-launched that with BetMGM and have worked through all the technical and regulatory steps alongside them. And they are planning a big marketing push now that the Super Bowl is behind them. And we look forward to reporting on that in future calls. We also expect to go live with Roulette in the second quarter of 24 and expect that this will be the larger of the product segments and will apply to a broader set of our customer base. Our booth at ICE was filled with operators wanting to see this product, and our pipeline of potential customers is extremely full, and we'll be working throughout 2024 to deliver this product segment to as many key operator customers as possible.
We've completed the full installation of vantage evidenced in both Betfred Paddy power shops, and the vantage can cabinet continues to produce an uplift of close to.
Excuse me, 11% for these operators over the cabinets they replaced.
We've now installed over 1200 vantage cabinets in our pubs business, which represents about 19% of our states and we're seeing actually a greater uplift with daily cash box in the pub segment up 21% versus the machines. They replaced we're now starting to place these cabinets and other venues such as Agc's motorway services.
And bingo venues.
On the sales front in North America, we've seen improved performance in our terminals in Illinois with a brand new game pack, that's proving to be very successful and we're working with several key prospects in the Canadian market and we will look to report on that in future quarters.
Brooks Pierce: Overall, we feel like we've positioned the digital segments of our business, as Lauren talked about, to continue along this great growth trajectory. Moving over to the retail businesses, whose characteristics are also, you know, lower growth and stable businesses with recurring revenue streams based largely on our participation in the cash bucks, but we also have a component of one-time sales in that business that can move from quarter to quarter, impacting performance when looking at the narrow lens of one quarter, and that's what we saw in Q3 of 23, with some sales moving into the fourth quarter. The biggest news in these businesses is the phenomenal success of the Vantage Cabinet and that we are much further down the road in the replacement and asset-light strategy we are driving in these segments.
As Lauren mentioned, we certainly have some cost pressures in the holiday parks segment of the leisure business that we have plans to mitigate and are working diligently across the entire business to find economies and efficiency improvements to run our business segments more profitably and we will we'll report on that progress on that front in subsequent quarters, So even though we <unk>.
Haven't had formal calls due to the restatement. We've obviously been very hard at work building. What we think is a growing diverse and profitable business. So with that I'll hand, it back over to Lorne for any closing remarks before we open up to Q&A. Thanks Brooks.
I don't really have anything to add to what.
Brooks and I have already said I'm sure we will.
Plenty to talk about as we get into the Q&A.
Brooks Pierce: We've completed the full installation of Vantage Cabinets in both Betfred and Patty Power shops, and the Vantage Cabinet continues to produce an uplift of close to 11% for these operators over the cabinets they replace. We've now installed over 1,200 Vantage cabinets in our pubs business, which represents about 19% of our estate, and we're seeing a greater uplift with daily cash boxes in the pubs segment up 21% versus the machines they replaced. We're now starting to place these cabinets in other venues, such as AGCs, motorway services, and bingo venues.
I think.
Look at our screen and see who is in line to ask questions and has it had.
An opportunity to do so for six months.
<unk>.
I should also mention that.
Maryland Jensen, our CFO will not be making any prepared remarks.
This evening.
We've released.
Gigantic amount of financial information today and.
Just to try to digest that but.
Maryland is here and.
Ready to answer any.
Finance <unk> accounting related questions that you might have.
Or anything else that she feels like Sean.
Yes.
With that.
Brooks Pierce: On the sales front in North America, we've seen improved performance in our terminals in Illinois with a brand new game pack that's proving to be very successful. And we're working with several key prospects in the Canadian market, and we'll look to report on that in future quarters. As Lauren mentioned, we certainly have some cost pressures in the holiday park segment of the leisure business that we have plans to mitigate, and we are working diligently across the entire business to find economies and efficiency improvements to run our business segments more profitably, and we'll report on progress on that front in subsequent quarters.
Operator can you. Please open the program up to Q&A.
Thank you Sir at this time I would like to remind everyone that in order to ask a question. Please press the star followed by the number one on your telephone keypad.
So just a moment to compile the Q&A roster.
Okay.
Our first question comes from the line of Barry Jonas from <unk> Securities. Please go ahead.
Okay.
Hey, guys.
Good afternoon, good evening nice to have you back.
Wanted to ask about hybrid dealer, which is something we all saw G to me.
Wanted to get a little more detail on it.
Is this sort of meant to be a replacement or complimentary for the live dealer experience and how big do you ultimately think hybrid can get.
Well I would say, it's complementary but as we've talked about Barry kind of individually.
Brooks Pierce: So even though we haven't had formal calls due to the restatement, we've obviously been very hard at work building what we think is a growing, diverse, and profitable business. So with that, I'll hand it back over to Lauren for any closing remarks before we open up the Q&A. Thanks, Brooks.
It's it's an important differentiation from the live dealer market and that there is not the same operating costs. There's not the same setup costs. So theres a number of economies that the hybrid dealer offers to the operators. So certainly what were seeing with with bet MGM and with future customers. I think we've mentioned Caesars has been <unk>.
Lorne Weal: I don't really have anything to add to what Brooks and I have already said. I'm sure we'll... I have plenty to talk about as we get into the Q&A, since I can look at our screen and see who's in line to ask questions and haven't had an opportunity to do so for six months. I should also mention that Marilyn Jensen, our CFO, will not be making any prepared remarks this evening.
Lined up is.
To their incentive to try and drive traffic to.
Two hybrid dealer just actually today Ironically saw the fully fleshed out that MGM marketing plan and we're super excited about that so I don't think anyone expects that its going to replace live dealer, but I think the operators are extremely motivated to drive as much.
This business is possible as as Annette and additives to live dealer.
Operator: You know, we've released a gigantic amount of financial information today. It's enough just to try to digest that but, uh... Maryland is here and ready to answer any finance or accounting-related questions that you might have and or anything else that she feels like she wants to answer. With that operator, can you please open the program up to Q&A?
I think the other point to add to that.
Barry is.
Brooks is saying.
It is absolutely right.
Far as certainly the what we call the tier one operators MGM.
Operator: Thank you, sir. At this time, I would like to remind everyone that in order to ask a question, please press the star followed by the number 1 on your telephone keypad. We'll pause for just a moment to compile the Q&A rollout. Our first question comes from the line of Barry Jonas from Truist Securities. Please go ahead. Hey, guys. Good, good afternoon. Good evening. Nice to have you back.
So you should et cetera, et cetera, et cetera, and even.
Even maybe the tier two operators, but there are huge number of operators, who can afford any dealer product.
For the for these people its not a question of.
Whether our business is adding to the life deal or replacing the lives. They just don't have it and this is going to give.
Literally hundreds of operators now for the first time.
Barry Jonas: Wanted to ask about Hybrid Dealer, which was something we all saw at GQE. Wanted to get a little more detail on it. You know, actually, is this sort of meant to be a replacement or complementary for the live dealer experience? And how big do you ultimately think Hybrid can get?
<unk> that has this function. So yes, like we're incredibly excited by and MGM, but frankly, we're just as excited about the other end of the market that has never had a product before.
Great and then just for a follow up I wanted to ask you about capital allocation you purchased that you've been purchasing back stock curious if you can say whether thats continued into.
Brooks Pierce: Well, I would say it's complementary, but as we've talked about, Barry, you know, kind of individually, it's an important differentiation from the live dealer market in that, you know, there are not the same operating costs, there are not the same setup costs, so there's a number of economies that the hybrid dealer offers to the operators. So certainly, what we're seeing with BED MGM and, you know, with future customers, I think we've mentioned Caesar's has been signed up, is, you know, it's their incentive to try and drive traffic to the hybrid dealers. I just actually today, ironically, saw the fully fleshed out BED MGM marketing plan, and we're super excited about that. So I don't think anyone expects that it's going to replace live dealer, but I think the operators are extremely motivated to drive as much business as possible as an additive to live dealer.
The Q4, and just get your thoughts on prioritization and whether thats more share repurchases M&A that Rick Yes, no yes.
Got it.
It could.
Continue into Q4, because we've really been blacked out ever since we havent bought any stock since we.
Since this whole third quarter situation arose so we haven't been able to buy stock and I'm not sure when.
Then we will we certainly at this point aren't going to be able to buy any stock until we report the fourth quarter and filed.
For.
The full.
2023 10-K Barry.
Got it and then I guess, just beyond that thoughts M&A or how youre thinking about prioritization. Once this is fully concluded with the accounting issues.
Brooks Pierce: I think the other point to add to that... Barry is, you know, I think what Brooks is saying is absolutely right, you know, as far as certainly the, what we call the Tier 1 operators, you know, MGM, CUs, etc., etc., etc., and even, even maybe the tier two operators, but there are a huge number of operators who can't afford any dealer product. So for these people, it's not a question of whether our business is adding to the live deal or replacing the live deal; they just don't have it. And this is going to give literally hundreds of operators now, for the first time, a product that has this function.
I think I, probably feel more comfortable having that conversation. After we report the fourth quarter and filed a 10-K.
Then everything to do with this will be behind us and we will be.
Free to talk about whatever we want to talk about.
Fair enough alright, thank you so much.
Sure.
Thank you and our next question comes from the line of Jordan Bender from citizens JMP. Please go ahead.
Good afternoon, everyone with some of the M&A in the carrier space recently, I think it shines a spotlight back on the lottery space. So what's your take on the progress within the eye lottery industry and maybe the long term uplift coming from that business as well.
Lorne Weal: So, yeah, like we're incredibly excited about MGM, but frankly, we're just as excited about the other end of the market that has never had a product. Great. And then just for a follow-up, you know, I wanted to ask about capital allocation. You've been purchasing back stocks. Curious if you can say whether that's continued into the Q4 and just get your thoughts on prioritization, whether that's more share purchases, M&A, or debt repayment. Yeah, no. Yeah, it couldn't continue into Q4 because we've really been blacked out ever since. We haven't bought any stocks yet.
Well.
In the United States.
The lottery business.
Okay.
Has been evolving.
More or less the way the <unk> the <unk> gaming businesses is which is the states that have it.
Are doing very well.
But the <unk>.
Great.
<unk>.
New states.
Introducing rigs for either I gaming or I lottery.
Frankly not been as.
Accelerating as we would've expected.
But my feeling is that has that changed or has a thousand reasons why it has to change.
And looking forward I think we're going to see an acceleration in.
Lorne Weal: Since we, Since this whole third quarter situation arose, we haven't been able to buy stock, and I'm not sure when we will. We certainly at this point aren't going to be able to buy any stock until we report the fourth quarter and file the fourth quarter, the full 2023 10k bear. Got it. And then I guess just beyond that thoughts, M&A, or you know, how do you think about prioritizations once this is fully concluded with the accounting issue? You know, I think I probably feel more comfortable having that conversation after we report the fourth quarter and file the 10k, because then everything to do with this will be behind us, and we will be free to talk about whatever we want to talk about. Fair enough. All right. Thank you so much. Thank you, our next question comes from the line of Jordan Bender from Citizens J&P. Please go ahead. Good afternoon, everyone.
And the <unk> business, where.
Getting ready for that.
<unk>.
We are making phenomenal progress on.
Cloud based lottery system that we're developing in.
Down in the Caribbean.
We recently launched the lottery.
Part of that platform.
Which.
Is it going to serve two functions for us one.
It's a product that we can actually used to get into the platform business in other parts of the world If we choose.
But more importantly, we can use it as a test bed.
For lottery products that we want to launch on that platform and that would include.
Not only traditional electric what are called.
Called the electronic instant tickets, if you will but.
But also a virtual sports which for us.
We think a huge opportunity in the lottery business. So.
In a way it's kind of good for us that things have been going a little bit slower than the market, because it's giving us more time to.
Jordan Bender: With some of the M&A in the courier space recently, I think it shines a spotlight back on the lottery space. So what's your take on the progress within the iLottery industry and maybe the long-term uplift coming from that business as well? Um, Well, in the United States, the iLottery business has been evolving more or less the way the iGaming business is, which is the states that have it are doing very well, but the rake of a new state introducing regulations for either iGaming or iLottery. Frankly, not been as Accelerating as we would have expected, but my feeling is that has to change. There's a thousand reasons why it has to change.
To complete the products that we're trying to develop it rounds out our product line get our ducks in a row.
<unk>.
And I think.
And I think certainly Europe.
You are right that the.
On the M&A activity in.
And the industry, starting with scientific games getting bought and then.
<unk>.
Neil games acquisition by aristocrat.
I think a lot is going to happen in this part of the business and we're very excited about it.
But it's not evolving as fast as people thought it was going up thats for sure and Jordan, maybe <unk> one more thing I would add is remember we talked about we have introduced a couple I lottery games, particularly.
Lorne Weal: And looking forward, I think we're going to see an acceleration in the iLottery business, getting ready for that. We are making phenomenal progress on the cloud-based lottery system that we're developing down in the Caribbean. We recently launched the iLottery, which is part of that platform, is going to serve two functions for us. One, it's a product that we can actually use to get into the platform business and other parts of the world, if we choose. But more importantly, we can use it as a testbed for iLottery products that we want to launch on that platform, and that would include... Not only traditional, what are called electronic instant tickets, if you will, but also virtual sports, which for us is, we think, a huge opportunity in the
Particularly with Lotto, Quebec, because they had a unique technical setup that fit that worked well for us.
And the games are kind of a year old and ones still on the top five and the other ones and then I think the top 25, so the content creation that we use for both our I gaming business and our retail business is definitely transferable to the lottery business. So I would echo what Lawrence has probably not been the worst.
Staying in the world for Us to have it go a little bit slower because.
We know we have content and we can build content that will resonate and I lottery.
Great and then on the follow up I don't think I missed it but did you guys comment on or all of the conversion units Donlin as we sit here today I think William Hill was supposed to last into the new year.
Yes, we commented that Betfred Paddy power are done.
Lorne Weal: In a way, it's kind of good for us that things have been going a little bit slower in the market because it's giving us more time to complete the products that we're trying to develop, round out our product line, get our ducks in a row, and I think... And I think certainly you're right that the M&A activity in the industry, starting with Scientific Games getting bought and then the Neogames acquisition by Aristocra I would add, remember we talked about, we introduced a couple of iLottery games, particularly with Lotto Quebec, because they had a unique technical setup that worked well for us, and the games are, you know, kind of a year old, and one's still in the top five, and the other one's in, I think, the top 25.
<unk> has not is not done yet.
There is.
A trial Thats ongoing right now.
Whereas wherein the success that we're seeing from both of our other big customers is also happening with with William Hill.
So that's we'll when we can comment on the William Hill status, we will but needless to say the trial that we have ongoing with William Hill's is going very successfully right now.
Great. Thank you very much.
Youre welcome.
Thank you. Our next question comes on line of Orion Se DAU from Craig Hallum Capital Group. Please go ahead.
Hey, good afternoon guys.
I wanted to jump over to virtual sports.
Though revenue declined in the quarter I guess, it's plateaued, a little bit here, but.
What's your visibility and confidence to reaccelerate that business in timeline to do that and as you think about kind of the hurdles to getting all the newly license whether it's homerun shoot out NBA NFL you have a ton of new product that seems like it should resonate, but I guess, what's the biggest barrier to getting that faster into the market.
Lorne Weal: So the content creation that we use for both our iGaming business and our retail business is definitely transferable to the lottery business, so I'd echo what Lauren says. It's probably not been the worst thing in the world for us to have it go a little bit slower because we know we have content and we can build content that will resonate in iLottery.
Yes.
I think you are right and we do think that that's the kind of baseline for <unk>.
Growth.
Alongside the obviously, the new market in Brazil that we mentioned.
Brooks Pierce: Great. And then on the follow-up, I don't think I missed it, but did you guys comment on whether or not all the conversion units are done as we sit here today? I think William Hill was supposed to last into the new year. Yeah, we commented that Fred and Patty Power were done.
But yes look it's like it's everything.
You've got technical stuff that you've got to do you've got to get customers signed up you got to get regulatory approval.
Frankly, it's part of the reason why it's taken as long as it has but I really do feel like we're at an inflection point now with bet MGM going live and Rush Street going live and honestly I think it will that will help drive some of the other operators. If we're successful with those guys and the strategy for us has been in <unk>.
Brooks Pierce: William Hill has not is not done yet. There's a trial that's ongoing right now, whereas the success that we're seeing from both of our other big customers is also happening with William Hill. So that's when we can comment on the William Hill status. We will, but needless to say, the trial that we have ongoing with William Hill is going very successfully right now.
Particularly with these licensed brands because virtual sports is new to the U S. Betting consumer so we thought the power of brands like the NBA and the NFL would be a good way to introduce this to the North American market seeing good results out of Ontario.
Brooks Pierce: Great, thank you very much. Thank you. Our next question comes from Ryan Siddall from Craig Hallam Capital Group. Please go ahead. Hey, good afternoon, guys. Want to jump over to virtual sports?
<unk> already which has been out for a while.
But I would say 'twenty for us is going to be the time to kind of put up or shut up in terms of North America.
Ryan Siddall: So revenue declined in the quarter, I guess it's plateaued a little bit here. But I guess what your visibility and confidence are to reaccelerate that business and timeline to do that? And as you think about kind of the hurdles to getting all the new licensed products, whether it's home run shootout, NBA, NFL, you have a ton of new product that seems like it should resonate. But I guess what's the biggest barrier to getting that faster into the market?
And then for my follow up question. Just overall I think you said <unk> you did say in line Q4, with where consensus is which is a modest EBITDA growth. So I guess, what's your confidence in getting back to EBITDA growth in Q4, and then again into 2024. Thanks. Good luck guys.
Thanks, Brian Yes.
I'm not sure whether you asked the question at the end, Ryan or you're just kind of signing off but.
Brooks Pierce: Yeah, I think you're right, and we do think that that's the kind of baseline for growth alongside, obviously, the new market in Brazil that we mentioned. But yeah, look, it's everything.
If U S. If you asset has a question.
And then I think I think what we're we're comfortable.
Brooks Pierce: You've got technical stuff that you've got to do. You've got to get customers signed up. You've got to get regulatory approval.
Seeing right now is we feel.
Obviously, it's February so.
We are.
And we've we've scrubbed the.
Brooks Pierce: Frankly, that's part of the reason why it's taken as long as it has. But I really do feel like we're at an inflection point now with BetMGM going live and Rush Street going live. And honestly, I think it will help drive some of the other operators if we're successful with those guys. And the strategy for us has been, in particular with these licensed brands, because virtual sports is new to the US betting consumer.
The Q4 numbers already very comprehensively, so I think.
We're comfortable.
Saying, what I said in my in my in my prepared comments that.
Q4 should be.
In line with consensus if you adjust it for the.
For the $2 million.
Hit we took with the hacking.
It would put US comfortably ahead of consensus and certainly ahead of last year as far as.
Brooks Pierce: So we thought the power of brands like the NBA and the NFL would be a good way to introduce this to the North American market. We're seeing good results out of Ontario already, which has been out for a while. But I would say 24 is going to be the time to kind of put up or shut up in terms of North America. And then for my follow-up question, just overall, I think you said, or you did say in line with Q4 with where the consensus is, which is modest EBIT growth. So I guess what your confidence is in getting back to EBIT growth in Q4 and then again in 2024? Thanks. Good luck, guys. Thanks, Ryan. Do you want... Yeah, well, I'm not sure whether you asked a question at the end, Ryan, or you were just kind of signing off.
What.
What we think going beyond that I think again I'd rather wait.
Until the end of the of the first quarter and when we.
Report, the fourth quarter and file the 10-K, and then maybe we'll be able to talk.
More comfortably.
About 24.
Very good thank you Mark.
Yep.
Thank you. Our final question comes from the line of Chad Beynon from Macquarie. Please go ahead.
Hi afternoon. Thanks for taking my question, Hi, Lawrence Hi, Brooks.
First just wanted to hit on the vantage cabinet uplift I know you had talked about this on prior calls and it looks like.
What you had forecasted is coming true in terms of the double digit increase can you talk any more just in terms of if that has been stable since those have been deployed.
Lorne Weal: If you ask it as a question, then I think, I think what we're comfortable saying right now is what we feel. You know, obviously it's February so we were, and we've scrubbed the, The Q4 numbers already, very comprehensively, so I think Comfortable, saying what I said in my prepared comments that, Q4 should be, in line with consensus, if you adjust it for the $2 million hit we took with the hacking, it would put us comfortably ahead of consensus and certainly ahead of last year as far as. What?
And then Brooks could you just touch on <unk>.
The White paper change do you think that could affect the.
I guess the increase in terms of the cabinets here or like you said that that might already be factored in.
Sure thing Chad, Yes, I mean, the good news is as we've been kind of fully deployed and Paddy power and Betfred for multiple quarters now and it is the growth is has remained in double digits. So we're very confident about that and the William Hill trial is actually showing even better results.
Lorne Weal: Subs by www.zeoranger.co.uk. What we think going beyond that, I think, again, I'd rather wait until the end of the first quarter and when we report the fourth quarter and file the 10-K, and then maybe we'll be able to talk more comfortably about it. Very good. Thank you, Lauren. Yes. Thank you. Our final question comes from the line of Chad Baynon from Macquarie. Please go
So I think we feel we feel quite good about that and obviously it seeing an even bigger impact in the pubs business some of which is fixed fee and some of which is recurring revenue. So hopefully that will start flowing through in the results and we'll obviously talk about that as we can.
In terms of the white paper and the stakes limit thing.
Look this has been talked about AD nauseum.
It came in exactly as we predicted I'm not sure we would have predicted that it was going to be age driven.
Chad Baynon: Hi. Afternoon. Thanks for taking my question. Hi, Lauren. Hi, Brooks.
Driven but we thought it would be a some kind of split.
Either be 5% or two so I think it's actually pretty much as we expected it will supposedly be implemented in September. So I, just don't think it will have a material impact.
Chad Baynon: First, I just wanted to hit on the Vantage cabinet uplift. I know you talked about this on prior calls, and it looks like what you had forecasted is coming true in terms of the double-digit increase. Can you talk any more just in terms of if that has been stable since those have been deployed? And then, Brooks, could you just touch on the white paper change, do you think that could affect the, I guess, the increase in terms of the cabinets here? Or, like you said, that might already be factored in?
On us this.
This year and frankly with.
Game design and the operators, we hope to over the course of the year mitigate what very small impact. They may have so it's just just doesn't feel like a big thing to us.
Just arent embedding.
About it when you're when you're playing online people just aren't generally staking five pounds. So it just doesn't have the same kind of impact like it did with the triennial for sure. We are in the same category.
Okay I appreciate it.
Brooks Pierce: Thanks. Sure thing, Chad. Yeah, I mean, the good news is we've been kind of fully deployed in Paddy Power and Bedfred for multiple quarters now, and the growth has remained in double digits. So we're very confident about that, and the William Hill trial is actually showing even better results. So I think we feel quite good about that, and obviously it's seeing an even bigger impact in the pubs business, some of which is a fixed fee and some of which is recurring revenue. So hopefully that will start flowing through in the results, and we'll obviously talk about that as we can. In terms of the white paper and the stakes limit thing, look, this has been talked about ad nauseum. It came in exactly as we predicted. I'm not sure we would have predicted that it was going to be age-driven, but we thought it would be some kind of split, either five or two.
In terms of margins outside of the accounting nuances and a $2 million hit how should we think about.
Inflationary impacts I guess.
The digital business or the retail and leisure business as we kind of get into 'twenty four or there are still lingering inflationary measures supply chain et cetera, or if the business is flat to slightly up could we assume that on a same store basis margins could follow suit as well.
Thanks.
Okay.
Well the in the digital businesses there.
Theres really no inflationary pressure to speak of because you don't have the.
At least in the way our business is worth the large field service organizations.
That.
That you do.
And the other parts of the business.
So.
I think we're seeing.
Certainly in the case of interactive.
Because there is very little really no inflationary pressure the way.
Brooks Pierce: So I think it's actually pretty much as we expected. It will supposedly be implemented in September, so I just don't think it will have a material impact on us this year, and frankly, with Game Design and the operators, we hope to, over the course of the year, mitigate what very small impact it may have. So it just doesn't feel like a big thing, because people just aren't betting, you know, think about it when you're when you're playing online. You know, So it just doesn't have the same kind of impact like it did with the triennial, for sure. I mean, we're in the same category.
The business scales as the revenues grow the margins grow faster.
That's also the case.
With.
The virtual sports business, we haven't seen that the last couple of quarters, but we've certainly seen it.
In the space over the last couple of years with the margins accelerating like crazy as the revenues have grown and I think as Brook said.
I think we can expect that those revenues are going to reaccelerate as we move through 24 in the.
The retail businesses because of there is a very large.
Good.
Main thing is large field service component hundreds of people.
Chad Baynon: Okay, I appreciate it. In terms of margins, outside of the accounting nuances in a $2 million hit, how should we think about inflationary impacts, I guess, in the digital business or the retail and leisure business as we kind of get into 24? Are there still lingering inflationary measures, supply chain, et cetera? Or if the business is, you know, flat to slightly up, could we assume that on a same store basis, margins could follow suit as well? Thanks. Not bad; you can do it, if you want.
And there have been increases in the U K.
Minimum wage and living wage and all kinds of other stuff that that makes it very difficult to.
Okay.
Ah <unk>.
To see the kind of margin improvement that we've.
We have seen in the digital businesses, but as I said.
So we absolutely are seeing.
Inflationary.
Pressure, but we think.
That.
We can restructure the business is in a way that we can blood a lot of that impact.
And so.
Lorne Weal: Well, the, in the digital businesses, there's, There's really no inflationary pressure to speak of because you don't have the at least in the way our businesses work, the large field service organizations, you know that that that you do in and the other parts of the business, so, I think we're seeing, certainly in the case of interactive, uh... because there's very little really no inflationary pressure the way the business scales as the revenues grow the you know the margins grow faster That's also the case, with, The virtual sports business, you know, we haven't seen that the last couple of quarters, but we've certainly seen it, you know, in spades over the last couple of years with the margins accelerating like crazy as the as the revenues have grown. And I think as Brooke said.
I think we are feeling pretty good.
Our 2020 for margins across the board will certainly be as good as they were in 2023, notwithstanding the inflationary pressures so whatever.
Over our let's say adjusted EBITDA margin after taking account of unusual factors was.
In 2003.
I would not expect that the margins will be lower than that in 2004.
Okay, Yeah, I think Lauren Thank you understand right about all that and just one last thing Chad it because I know we've talked about this on a number of calls before about the UK consumer and the concern about that and what's going to happen. If there is a recession et cetera et cetera.
Lorne Weal: I think we can expect that those revenues are going to re-accelerate as we move through 2024. The retail businesses, because there is a very large, Main thing is large, field service component, you know, hundreds of people and there have been increases in the UK, uh... minimum wage and and living wage and all kinds of other stuff that makes it very difficult to to see the kind of margin improvement that, We've seen in the digital businesses, but as I said, so we absolutely are seeing, inflationary, Pressure, but we think, that we can restructure the businesses in a way that we can blunt a lot of that impact.
I think the results are pretty conclusive.
That the UK consumer has figured out how to manage themselves such that it isn't impacting their gaming plays as kind of shown by the results of the of the vantage cabinets. So I think it's the feel as you are in the UK is that.
There is certainly less and less talk about consumer issues and an inflation in that regard. So that also is good.
Lorne Weal: And so I think we're feeling pretty good, that is. 2024 margins across the board will certainly be as good as they were in 2023, notwithstanding the inflationary pressure. So whatever our, let's say, adjusted EBITDA margin after taking account of unusual factors was in 2023, I would not expect that the margins would be lower than that.
Great I appreciate it thank you very much.
No problem Chad.
Thank you no further questions at this time, Mr. Lord <unk> Executive Chairman I'll turn the call back over to <unk>.
Thank you operator.
Thanks, everybody for.
Joining today.
And thanks for.
Your support over the last several months.
Brooks Pierce: Yeah, I think Lauren's 100% right about all that. Just one last thing, Chad, because we talked about this on a number of calls before about the UK consumer and the concern about that and, you know, what was going to happen if there was a recession, et cetera, et cetera, and I think the results are pretty conclusive that the UK consumer has figured out how to manage themselves such that it isn't impacting their gaming, as kind of shown by So I think it's, you know, the feeling as you're in the UK is that, you know, there's certainly less and less talk about consumer issues and inflation in that regard.
We obviously appreciate it and where.
We're happy that.
We've come to what we think is a pretty good place right now.
And where.
Pretty enthusiastic about about 2024 so.
Guests, who will be speaking to you now.
Fairly soon and since we're in most of the way through the first quarter.
And we look forward to reporting more to you at that time. So thank you.
Thanks, operator.
Thank you. This concludes today's conference call. We thank you for participating and you may now disconnect.
[music].
Yes.
[music].
Okay.
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Sure.
[music].
Okay.
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Okay.
Brooks Pierce: So that also is a concern. Great, I appreciate it all. Thank you very much. No problem, Chad. Thank you. There are no further questions at this time.
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Operator: Mr. Lorne Will, Executive Chairman, I turn the call back over to you. Thank you, Operator. Again, thanks everybody for joining today. And thanks for your support over the last several months. We obviously appreciate it, and we're happy that we've come to what we think is a pretty good place right now, and we're, uh, pretty enthusiastic about 2024. So, I guess we'll be speaking to you now, fairly soon, since we're most of the way through the first quarter, and we look forward to reporting more to you So thank you. Thanks, Operator. Thank you. This concludes today's conference call. We thank you for participating, and you may now disconnect.
Okay.
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Yes.
Thank you.
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