Q2 2025 Inspired Entertainment Inc Earnings Call

Operator: Good morning, everyone, and welcome to the Inspired Entertainment, Inc. second quarter 2025 conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. Please note today's event is being recorded. Please refer to the company's safe harbor statement that appears in the second quarter 2025 earnings press release, which is also available in the investors' section of the company's website at www.inseinc.com. 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 under securities laws and rules of the SEC.

Good morning everyone and welcome to the inspired entertainment, second quarter 2025 conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number 1 on your telephone keypad. If you would like to withdraw your question, press star 1 again, please note today's event is being recorded.

Please refer to the company. Safe, Harbor statement that appears in the second quarter 2025 earnings press release. Which is also available in the investors section of the company's website at www.in.gov

Operator: 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. Weil, please go ahead.

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 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.

Discuss both gaps 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 Lauren. Will the company's executive chairman, Mr? Will please go ahead.

Lorne Weil: Thank you, operator. Good morning. Thanks, everyone, for joining our second quarter earnings call. With me today, as usual, are CEO Brooks Pierce, CFO James Richardson, and Vice President of Corporate Development, Eric Carrera. Also, today, as you may have seen in our press release, we issued, I guess, last night, investor relations specialist Amy Rieme rejoins us following the two-year IR assignment with one of the world's leading B2C gaming enterprises. Needless to say, we are thrilled to have Amy back. We were quite pleased with the quarter in terms of headline numbers. EBITDA of $28.4 million was up 15% over Q2 2024 and well ahead of consensus. EBITDA margins improved from 33% to 35% in the same period. A primary growth driver was once again the interactive business, which grew EBITDA by nearly 50% in the second quarter, year over year.

Operator. Good morning.

Uh and thanks everyone for joining our second quarter uh earnings call.

Uh, with me today is usual. Our CEO Brooks, Pierce CFO, James Richardson.

Uh and VP of corporate development error Carrera.

Uh also today uh as you may have seen in uh a press release. We issued I guess last night uh investor Relations Specialist, Amy REI rejoins us following the 2-year.

IR assignment with 1 of the world's leading b2c gaming Enterprises.

And needless to say, we're thrilled to have him a back.

We were quite pleased with the quarter in terms of headline numbers.

Ibido. 28.4 million was up, 15% over Q2 2024, and well ahead of consensus.

Keep it on margins. Improve from 33% to 35% in the same period.

A primary growth driver was once again the interactive business.

Lorne Weil: Interestingly, about half the growth in EBITDA was contributed by North America, which represented less than a third of interactive EBITDA a year ago. We believe that superior game content and intense focus on account management were the underlying drivers of the North American performance. At the present time, less than 10% of the population of the United States is in jurisdictions that offer iGaming compared to sports betting, which covers at least 70% of the population. Yet in those major states that offer both sports betting and iGaming, particularly Pennsylvania, New Jersey, and Michigan, iGaming is four to five times larger than sports betting. So, despite the remarkable growth that we have been experiencing recently, our feeling is that the interactive business is still in its infancy. In another part of our digital business, Virtual Sports, there are similarly interesting dynamics at play.

Which grew ibaad by nearly 50% in the second quarter year-over-year.

Has excuse me. Interesting about half the growth in ibido.

Was contributed by North America.

Which represents less than a third of interactive ibaa year ago.

We believe that Superior game content.

And intense focus on account management for the underlying drivers of the North American performance.

At the present time less than 10% of the population of the United States is in jurisdictions. That offer I gaming.

Compared to sports betting.

Which covers at least 70% of the population yet, in those major states that offer both sports betting, and I gaming, uh, particularly Pennsylvania, New Jersey and Michigan. I gaming is 4 to 5 times larger than the sports betting.

So, despite the remarkable growth that we've been experiencing recently, uh, our feeling is that the interactive business is still in its infancy.

in other part of our digital business virtual Sports,

Lorne Weil: While second quarter Virtual Sports EBITDA declined year to year, the quarter-to-quarter sequential curve had been steadily flattening. Indeed, in the second quarter, we experienced both revenue and EBITDA increases from the first quarter to the second. In a moment, Brooks will discuss in some detail the range of product and market developmental opportunities taking place in Virtual Sports. We are cautiously optimistic that the sequential upswing we saw in the second quarter will continue and that by the end of this year, we will once again be seeing quarterly, year-over-year growth. This, of course, has a dramatic impact mathematically on our overall company growth rate. Our gaming business had a very strong quarter, both operationally and developmentally. Gaming EBITDA was up 35% year to year, driven importantly by William Hill, whose team has done an extraordinary job managing the new machine estate.

excuse me. There are similarly interesting Dynamics at Play.

Well, second quarter virtual Sports Eva, decline year to year the quarter to quarter sequential curve had been steadily flattening and indeed in the second quarter we experienced both revenue and Ava dog increases from the first quarter to the second.

in a moment, Brooks will discuss in some detail, the range of product and Market development opportunities, taking place in Virtual Sports

But we're cautiously optimistic that the sequential upswing.

We saw in the second quarter, we will continue.

And that by the end of this year, we will once again be seeing quarterly year-over-year growth.

This this, of course, has a dramatic impact. Mathematically on our overall company growth rate.

Our gaming business had a very strong quarter of both operationally and developmentally gaming even though I was up 35% year to year.

Lorne Weil: Perhaps in part aided by the William Hill performance, we were recently awarded a contract to supply 100% of the gaming machines for Jennings Bet, the best-performing and largest independent bookmaker chain in the U.K. Independent, meaning not owned by Flutter, William Hill, BetFred, or InTain. This was a very busy and very productive quarter for Inspired Entertainment Inc. in other respects. During the quarter, as mentioned in the press release, we refinanced our credit facility prior to the date in June when the facility would otherwise have gone current. Despite the very choppy credit environment at that time, we were pretty happy with the result. Following the refinancing, we are in the final stages of arranging a swap of the floating rate sterling facility into fixed rate debt, thereby both lowering our current effective rate and simultaneously capping it as insurance against rates going back up.

Driven importantly, by William Hill, whose team has done an extraordinary job managing the new machine estate.

Perhaps in part aided by the William Hill performance. We were recently awarded a contract.

To supply 100% of the gaming machines, uh, for Jennings.

Vet the best performing and largest independent bookmaker chain in the UK.

Independent, meaning not owned by flutter, William hail Beth, Fred or inane.

This was a very busy and very productive quarter for inspired in other respects. Jury in the quarter was mentioned in the press release.

We refinanced our credit facility prior to the Dayton June, when the facility would otherwise go on current.

and despite the very tropey credit environment at that time,

We were pretty happy with the result.

Following the refinancing, we are in the final stages of arranging. A swap of the floating rates Sterling facility into fixed rate debt.

Lorne Weil: At the same time, we still have two step-down opportunities to lower our spread over the sterling benchmark as we deleverage, with the first anticipated in connection with the expected completion of the holiday park sale subject to the customary grace period. In connection with the holiday park sale, I can say that we have now reached an agreement in principle with a strategic buyer we have been working with for several months. We expect to sign the definitive agreement this month and close by the end of the month. The combination of cash at closing and ongoing platform and content fees will put us well within our liquidity target. Our cash position will benefit further from having owned the business through the peak cash generating period that we're in at the present time. The sale of the business will have a number of important benefits.

Thereby both lowering our current effective rate and Signal cap simultaneously capping, it has insurance against rates going back up.

At the same time, we still have 2 Step Down opportunities, to lower our spread over the Sterling Benchmark, as we deleverage with the first anticipated in connection with the expected completion of the Holiday Park sale subject to the customary, grace period.

Connection with the Holiday Park sale. Uh, I can say that we have now reached an agreement in principle with a strategic buyer, we have been working with for several months.

and we expected to sign the definitive agreement, this month and closed by the end of

The combination of cash and closing and ongoing platform and content fees will put us, well, within our liquidity Target.

And our cash position will benefit further from having owned the business through the peak of cash, trading generating periods that were in at the present time.

Lorne Weil: Our overall company EBITDA margin will approach our target of 40%. Company-wide cash conversion percent will improve significantly, and our mix of business will swing further towards digital with concomitant benefits relating to margins, capital intensity, and growth. With that, I'll hand it over to Brooks.

Uh the sale of the business will have a number of important benefits. Our overall company Eve with our margin will approach our Target of 40%.

Companywide cash. Conversion percent will improve significantly.

And our mix of business will swing further towards digital with concomitant benefits of relating to margins Capital intensity and growth.

Brooks Pierce: Okay. Thank you, Lorne. I will give a little bit more detail on our strong results for the quarter by segment and what we believe is building momentum as we move into the second half of the year. A big part of that confidence is based on the results in the second quarter for our interactive segment and what we are already seeing thus far in Q3. To put it in context, we had the single best day in our history in the segment last week, and it is broad-based across our key markets in the U.K., North America, and Greece. We are also starting to see growth in other key markets like Brazil as we get launched with additional operators and start delivering bespoke content to that market alongside a very strong roadmap of games for the second half of the year.

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

Okay, thank you Lauren and I'll get a little bit more detail on our strong results for the quarter by segments, and which we believe is building momentum. As we move into the second half of the year,

Brooks Pierce: Q2 saw our eighth consecutive quarter of more than 40% year-over-year adjusted EBITDA growth and a further expansion of our adjusted EBITDA margin by 200 basis points to 67%, which we believe clearly demonstrates the scalability and operating leverage from this part of the business. We are seeing the benefits of the investments we have made in studio expansions, as well as a deeper base of account management talent delivering on this investment. We feel we have considerable room for further growth as our wallet share and our key markets are still in the single digits but growing quarter by quarter. The other part of the interactive segment that we remain bullish on is the Hybrid Dealer product category.

Uh, a big part of that confidence is based on the results in the second quarter for our interactive segment. And what we're already seeing thus far in, Q3 to put it in context, we had the single best day in our history in the segment last week and it's broad-based across our key markets in the UK North, America and Greece. But we're also starting to see growth in other key markets, like Brazil, as we get launched with additional operators and start delivering, bespoke content to that market. Alongside a very strong roadmap of games for the second half of the year.

222. So saw our eighth consecutive quarter of more than 40% year-over-year, adjusted e. But that growth and a further expansion of our adjusted, Evita margin by 200 basis points to 67%, which we believe clearly demonstrates the scalability and operating leverage from this part of the business.

We're seeing the benefits of the Investments we've made in studio expansions, as well as a deeper base of account management Talent, delivering on this investment. But we feel we have considerable room for further growth as our wallet share and our key Market to still in the single digits, but growing quarter by quarter.

Brooks Pierce: Like the interactive segment, the key to success in this part of the business is getting your product out across a wide swath of both operators and aggregators across multiple geographies with differentiated content that resonates with players. Using those metrics as benchmark, we are happy with the progress we are seeing in Hybrid Dealer, but still feel it is very early in its development. We are now deployed with multiple versions of our roulette game and our game show-themed wheel games and are starting to see the possibilities as we expand our product offerings across our key markets. A good example of that will be the game we will be introducing with FanDuel in September that we are very excited about and think will appeal to a good cross-section of both casino players as well as sports bettors.

The other part of the interactive segment that we remain bullish on, is the hybrid dealer category. Like the interactive segment, the key to success in this part of the business is getting your product out across a wide swath of both, operators and aggregators across multiple geographies with differentiated content that resonates with players.

Using those metrics as Benchmark. We're happy with the progress. We are seeing in hybrid dealer, but still feel. It's very early in its development.

We're now deployed with multiple versions of our roulette game and our game show, themed Wheel games and are starting to see the possibilities as we expand our product offerings across our key markets.

Brooks Pierce: We will not give any more details about that, but we will look forward to reporting on its progress in our third quarter call. The Virtual Sports segment, as we have talked about frequently, has stabilized and even showed modest growth in Q2. The segment of the business has strong EBITDA margins, 72% in Q2, and strong cash contribution due to the nature and maturity of the business. We will also be introducing some product innovations in Q3 and Q4 that we believe will resonate with players in key markets like Brazil, Greece, and the U.K. Our bespoke soccer game for the Brazil market is resonating with our two biggest customers in that market, and we are in the midst of rolling our Virtual Sports content out to other key operators in that market, including BetMGM and Estrella Bet.

A good example of that will be the game will be introducing with FanDuel in September. There were very excited about and think will appeal to a good cross-section of both Casino players, as well as Sports Bettors. We won't give any more details about that but we'll look forward to reporting on its progress in our third quarter call

Virtual, uh, sports segment is we've talked about frequently has stabilized and even showed modest growth and the second quarter, the segment of the business has strong, Evita margins 72% and second quarter and strong. Cash contribution due to the nature and maturity of the business. But we'll also be introducing some product Innovations in the third and fourth quarter that we believe will resonate with players in key markets, like Brazil, Greece, and the UK

Brooks Pierce: We will update in our Q3 call as we will be adding several additional operators yet this quarter. We launched our Virtual Sports content in the lottery vertical with the Virginia Lottery, and although it is early, we are seeing the business build up as lottery players are introduced to it. Our horse racing game in particular is currently seeing the most activity, but we are confident that as we move into the football and basketball seasons, those sports will only grow. We think the lottery segment is a key and underappreciated vertical for us, and we will be reporting on our progress in that segment further throughout the year. We continue to believe that we will see demonstrable improvements in this segment in the second half versus the first half as we are live in more markets and introduce our latest innovations.

Our bespoke soccer game for the Brazil Market is resonating with our 2, biggest customers in that market. And we are in the midst of rolling. Our virtual Sports content out to other key operators in that market, including bed, MGM and Estrella bed. And again, we'll update in our third quarter call, as we'll be adding several additional operators, yet this quarter.

We launched our virtual Sports content in the lottery vertical with the Virginia Lottery. And although it's early, we're seeing the business build up as Lottery players are introduced to it.

our horse racing game in particular is currently seeing the most activity, but we're confident that as we move into the football and basketball Seasons, those Sports will only grow

Brooks Pierce: The Gaming segment had a strong Q2 with adjusted EBITDA increasing 35% year over year, due in large part to the improvement in the results with William Hill as we have talked about for months now, and we see these coming through. We are also starting to see the early benefits of our new cabinets being deployed in Greece, and that will only accelerate and continue in the second half and into 2026. The quarter also benefited from a sale to the Alberta Gaming and Lottery Group, a key customer, as we expand our BLT offerings across multiple provinces in Canada, as well as our footprint and subscription sales growing in our key market in Illinois, and as we have introduced the Valiant cabinet to that market.

We think that the lottery segment is a key and underappreciated vertical for us, and we'll be reporting on our progress and that segment further throughout the year, we continue to believe that we'll see demonstrable improvements in this segment and the second half versus the first half first half as we are live in more markets and introduce our latest Innovations.

William Hills, we've talked about for months now and we see these coming through.

We're also starting to see the early benefits of our new cabinets being deployed in Greece, and that will only accelerate and continue in the second half and into 2026.

Brooks Pierce: We were also very pleased to be awarded a new contract with Jennings Bet, the largest independent bookmaker in the U.K., and we will start to see the benefit of that by the end of the year, but mostly as we move into 2026. We are confident that our VLT cabinets and content are working across multiple geographies and that our server-based offering appeals to operators in markets where customers frequent venues multiple times a week and need the appeal of refreshing content on a regular basis. We believe there are many more markets for us to target to leverage the success we are seeing in the U.K., Greece, and North America.

The quarter also benefited from a sale to the Alberta gaming and Lottery group, a key customer, as we expand our VLT offerings across multiple provinces in Canada, as well as our footprint and subscription sales growing in our key market and Illinois. And as we've introduced, the Valiant cabinet to that market.

We were also very pleased to be awarded a new contract with Jennings bed. The largest independent bookmaker in the UK and we'll start to see the benefit of that by the end of the year, but mostly, As we move into 2026,

We're confident that our VLT cabinets and content are working across multiple geographies and that our server-based offering.

Brooks Pierce: The leisure segment performed as expected and is in the process of a structural transformation as we complete the anticipated sale of the holiday parks part of the leisure segment and also move our pubs business to a more capital-light and less labor-intensive model. We believe that this aligns with what we have accomplished in the gaming segment and will offer us the opportunity to deploy our capital in the higher growth and higher margin digital segments of our business while still capitalizing on our key strengths of development and deployment of content, as well as innovative new cabinets. Lastly, we are seeing the benefits of some of our cost improvements and efficiencies coming through with our EBITDA margin increasing by 200 basis points for the overall business year over year.

Uh appeals to operators and markets where customers frequent venues multiple times a week and need the appeal of refreshing content on a regular basis and we believe there are many more markets for us to Target to leverage the success. We're seeing in the UK, Greece and North America

Uh, the Leisure segment performed as expected, and is in the process of a structural transformation. As we complete the anticipated sale of the holiday Parks part of the Leisure segment. And also move our pubs business, to a more Capital light and less labor, intensive model,

We believe that this aligns with what we've accomplished in the gaming segment and will offer us the opportunity to deploy our capital in the higher growth and higher margin digital segments of our business while still capitalizing on our key strengths of development and deployment of content as well as Innovative new cabinets.

Brooks Pierce: We are confident that once we complete the leisure segment initiatives mentioned previously, that we will be comfortably ahead of our target EBITDA margins of 40%. Special thanks to our team for all their hard work, and we feel positively that the results are reflecting that. With that, I will hand it back over to Lorne.

Lastly we're seeing the benefits of some of our costs improvements. And efficiencies coming through, with our ebita margin, increasing by 200 basis points for the overall business year-over-year but are confident that once we complete the Leisure segment. Initiatives mentioned previously, there will be comfortably ahead of our Target. Ebita margins of 40%.

Uh, special thanks to our team for all their hard work. We feel positively that the results are reflecting that. With that, I'll hand it back over to Lauren.

Lorne Weil: Thanks, Brooks. That was a great report. I do not have anything further to say, so operator, you can open the program up to Q&A, please.

Uh, thanks Brooks. That was a

great report. Um,

I don't have anything further to say. So operator, you can open the program up to Q&A, please.

Operator: Thank you. At this time, I would like to remind everyone, in order to ask a question, press star, then the number one on your telephone keypad. We will pause for just a moment to compile the Q&A roster. Your first question comes from the line of Barry Jonas with Truist Securities. Your line is open.

Thank you.

Time. I would like, to remind

I want, in order to ask a question, press star. Send a number 1 on your telephone keypad. We will pause for just a moment to compile the Q&A roster.

Your first question comes from the line of Barry Jonas with truist Securities, your line is open.

Analyst: Hey, good morning, everyone, and welcome back. This is Patrick Keo on for Barry Jonas this morning. I was hoping you could talk a little bit more about the momentum you're seeing in Hybrid Dealer. In your release, you stated you're gaining traction with regional operators who had traditionally lacked access. Could you give a little more color here and talk about the potential upside for the product and what it could be? Thanks.

Brooks Pierce: Sure. Yeah, it is interesting. What we are seeing is, we have a very good mix of customers. We have the large tier one customers, but we also have a number of what we would call kind of tier two customers, many of which are through aggregators, Relax being the principal one. We have just finished an integration with Games Global, and we will start rolling out to their customers as well. So interestingly, some of the things that we had anticipated, the roulette game in particular and the wheel games are doing very well. I would say the four-ball roulette game is not doing as well as we had expected, which kind of lends itself to what I had talked about in terms of product innovation.

Good morning everyone. And welcome back. Amy, uh, this is Patrick Kio on for Barry this morning. Um, I was hoping you could talk a little bit more about the momentum you're seeing in, in hybrid dealer, in your release. Uh, you stated you're gaining traction with, uh, Regional operators, who had predict traditionally lacked access. Could you give a little more color here and, uh, talk about the potential upside for the product and, and what it could be, thanks.

Sure. Yeah, um, it's interesting what we're seeing is, you know, we have a, a very good mix of customers. We have the large Tier 1 customers but we also have a number of what we would call kind of tier 2 customers. Many of which are through aggregators relaxed being uh, the principal of 1. But we've just, um, just finished an integration with games Global and we'll start rolling out to their customers as well.

Um, so interestingly, uh, some of the things that we had anticipated. Um, the roulette game in particular in the Wheel games, um, are doing very well, I would say, the 4-ball.

Brooks Pierce: For those of you that are out at G2E, I think it will be important for you to come by our booth and take a look at some of the stuff that we are showing. We think we will accentuate some of the key brands that we have had in the interactive business successfully. Good news is, the number of players, the volume, the customers, geographies are all kind of increasing on a pretty much a week-by-week basis. We will start reporting those numbers in a little bit more detail going forward. We are very happy with how it is progressing so far.

Roulette game is not doing as well as we had expected, um, which kind of lends itself to what I had talked about in terms of product innovation. So, for those of you that are out at G2E, I think it'll be important for you to come by our booth and take a look at some of the stuff that we're showing. We think it will accentuate some of the key brands that we've had and the interactive business successfully. So, good news is, you know, the number of players, the volume, the customers, and geographies are all kind of increasing on a pretty much a week-by-week basis, and we'll start reporting those numbers, you know, in a little bit more detail going forward. But we're very happy with how it's progressing so far.

Analyst: That is great. Thank you. As my follow-up, you had pointed out that Virtual Sports saw a sequential improvement in EBITDA. It is good to see return to growth there. Last quarter, you had stated that Q3 could potentially be or potentially see a year-over-year increase in EBITDA and be an inflection point for the business. Is that still the case?

The Q3 could potentially be or potentially, see a year-over-year increase in ibida and be an inflection point for the business. Is that still the case?

Brooks Pierce: I would say maybe Q3, but probably more likely Q4. You know, there's a number of variables. We're getting some products out that we probably are getting out a little bit later in the quarter than we would have hoped. So it might not be exactly Q3, it might be Q4, but yeah, that's certainly the target that we're having is, you know, seeing good growth from the existing customers, adding more customers, as I talked about, particularly in Brazil, which is a very robust market. Then introducing some new products. Again, another thing to come see at G2E that nobody has seen yet. Our customers are pretty excited for it. So hopefully Q3, but probably more likely Q4.

Analyst: Sounds good. Thank you very much. I appreciate it.

I would say um, maybe Q3 but probably more likely Q4. Um, you know, there's a there's a number of variables. We were getting some products out that, uh, we probably are getting out a little bit later in the quarter than we would have hoped. So it might not be exactly Q3 it might be Q4. But yeah, that's that's certainly the Target that we're having is, is, you know, seeing good growth from the existing customers adding more customers. As I talked about particularly in Brazil, which is a, is a very robust market and then introducing some new products. Um, again another thing to come, see, a g2e that nobody has seen yet, um, and our customers are pretty excited for it so hopefully, uh, Q3 but probably more likely Q4.

Brooks Pierce: Sure thing.

Sounds good. Thank you very much. I appreciate it.

Sure thing.

Operator: The next question comes from the line of Ryan Sigdahl with Craig-Hallum. Your line is now open.

The next question comes from the line of Ryan sigdal with Craig Hallam. Your line is now open

Analyst: Good morning. This is Will Yeager on for Ryan Sigdahl. Thanks for taking our questions. First, wanted to touch on your gaming segment. You have seen really good momentum with William Hill, as you were talking about, and you just added Jennings Bet as well. Curious what you are hearing from other customers in terms of the Vantage cabinets and if this is maybe just the start of a greater expansion there. Thanks.

Good morning. This is Will Jagger on for Ryan signal. Thanks for taking our questions. Uh, first wanted to touch on your gaming segment. You've seen really good momentum, kind of with William Hill as you were talking about and you just added Jennings bet as well, curious, what you're hearing from other customers and towards the, in terms of the Vantage cabinets. And if this is maybe just the start of kind of a

Greater expansion there. Thanks.

Brooks Pierce: We are getting very positive feedback from the results from the Vantage cabinet that we have been talking about for a while now with all our customers. I know Evoke specifically mentioned in their call, William Hill specifically mentioned in their call the improvement in their retail business, and they attributed that mostly to the Vantage cabinet. Jennings Bet is a big win for us. It is a customer that was with one of our competitors for about 20 years. The fact that they have made the decision to do business with us after that length of time, I think, bodes very well for the cabinet. In the U.K. LBO business, there are really kind of two of us that split the market. I do not see a huge opportunity because of the length of the contracts for growth other than the ones that we have picked up.

Brooks Pierce: The Vantage cabinet is out in multiple other markets, both on a recurring basis and on a for-sale basis. It is the cabinet that we are rolling out in Greece, or one of the cabinets we are rolling out in Greece. The summary is we are very happy with the Vantage and how it is doing in pretty much every market we put it in.

Um, well, I mean, obviously, we're we're getting very positive feedback, um, from the results from the Vantage cabinet that we've been talking about for a while. Now, with all our customers. I know evoke, um, specifically, mentioned and their call William Hill, specifically mentioned in their call the Improvement in their retail business. And they attributed that, you know, mostly to, uh, the Vantage cabinet, um, jennings's bed is a big win for us. Um, it's a, it's a customer that was with 1 of our competitors for, um, about 20 years. So the fact that they've made the, uh, decision to do business with us. Um, after that length of time, I think bodes very well for the cabinet in the UK. It'll be, oh business. There's really kind of 2 of us, that split the market. So I don't see, you know, a huge opportunity because of the length of the contracts, um, for growth other than the ones that

We've picked up, but the Vantage cabinet is is out and, you know, multiple other markets, both on a recurring basis, and on a, for sale basis. Um, it's the cabinet that we're rolling out in Greece, for 1 of the cabinets, we're rolling out in Greece. So yeah, we're the, the, the summary is, we're very happy with the Vantage and how it's doing, and pretty much every Market. We put it in,

Analyst: Great. Then a follow-up quickly on Brazil. It is a bit of a tough start at the beginning of the year. What do you think the factors for that, how those changed going into Q3? You are live with both of the market leaders continuing to add a lot of partners for Virtual Sports. Are there just certain games that people are maybe engaging with more, or how is it developing there? Thanks.

Brooks Pierce: Yeah, I mean, I think it is the story in Brazil and Virtual Sports, but frankly, in iGaming as well, the beginning of the year was very choppy with moving from an unregulated to a regulated market. Now that we are seeing customers and they see our product on a regular basis, and as we add both customers that we go direct and also through aggregators, we are just starting to see both in the Virtual Sports side, but also on the iGaming side, starting to get some traction. In particular, we made a game, a virtual soccer game that is really kind of more Brazil feeling, fireworks in the stands and all kinds of crazy fan stuff that seems to be resonating with the players and obviously in the native language, Portuguese, as well.

Great. And then a follow-up quickly, on Brazil. It's a bit of a tough start at the beginning of the year. What do you think that factors for that? You know, how how those changed going into Q3 you're live with? Both of the market leaders, continue to add a lot of partners for virtual sports are there just certain games that people are maybe engaging with more or uh, you know, how does it develop there? Yeah.

Yeah, I mean, I think it's the the story in Brazil in in Virtual sports, but frankly in eye gaming as well is, you know, the the beginning of the year was very choppy with moving from an unregulated to a regulated market. Um, but now that we're seeing, um, you know, customers and they see our product on a, on a regular basis, and as we add, um, both customers that we go direct. And also through aggregators, we're just starting to see both in the in the virtual Sports side. But also in the I gaming side starting to, to get some traction. Um, in particular, we made a game of virtual soccer game. That is really

Brooks Pierce: As I mentioned, we have got a couple of innovations that we are going to be bringing to the market here in the third and fourth quarter that we think will actually drive that even further. Brazil is obviously a very key market for us in Virtual Sports, but kind of a key market overall.

The um, kind of more Brazil feeling, you know, fireworks in the stands and all kinds of, you know, crazy fan stuff that seems to be resonating, um, with the players and the obviously in the native language Portuguese as well. So, um, and we've, as I mentioned, uh, we've got a couple of Innovations, um, that we're going to be bringing to the market here in the third and fourth quarter that we think will actually drive that even further. So, Brazil is, is obviously a very key market for us in Virtual sports but kind of a key Market overall.

Analyst: Thanks, guys.

Thanks guys.

Brooks Pierce: You're welcome.

Operator: Once again, if you wish to ask a question, please press star, then the number one on your telephone keypad. The next question comes from Josh Nichols with B. Riley Securities. Your line is now open.

You're welcome. When

The next question comes from, Josh Nichols with B Riley Securities. Your line is now, open.

Analyst: Hi, this is Matthew on for Josh Nichols. Thanks for taking my questions. I guess just going back to the gaming side, gaming EBITDA up impressively. You mentioned William Hill and some Greece wrapping. What do you think drives the next leg of growth, maybe, I guess, to push that more in 2026?

Hi. This is Matthew on for Josh Nichols. Thanks for taking.

The questions.

I guess.

Brooks Pierce: Yeah, I mean, I think there's, as I mentioned in my remarks, it is really a combination of a couple of things. One is some of the existing customers that we have. The Canadian provinces are a great opportunity for us to add sales. Obviously, Q2 was benefited by a one-time sale to Alberta, but between all the other Canadian provinces we do business with, we think that that is a good opportunity. In Illinois, we have been very successful selling subscriptions to our customers because they want to continue to refresh their content. Illinois is approaching now a 40,000 machine market, and the replacement cycle is really just in its early days. So that is a market for sure that we will be going after.

Just going back to the the gaming side, you know gaming even though uh impressively you mentioned William Hill and some Greece ramping. What do you think drives the next leg of growth? Maybe uh I guess to to push that more in 2026.

I mean, I think there is well, as I mentioned in my remarks, um, so I think it's really a combination of a couple things 1 is some of the existing customers that we have. Um, you know, the Canadian provinces are a great opportunity for us to add sales. I mean obviously the second quarter was benefited by a 1-time sale to Alberta but

Brooks Pierce: Then, as I mentioned in my remarks, we think what we are good at is where we can download content and refresh content and where people are going, server-based gaming, where people are going to a venue multiple times a week. So there are many markets outside of the key markets that we have already talked about that we think will have a good opportunity. I am sure you have probably read in the press, there is lots of discussion about Brazil as potentially a huge machine market. If that were to come to fruition, we think our product would be a perfect fit for the Brazil market. So yeah, we think we are kind of hitting on both cylinders and that the existing business is showing good growth and good opportunity out of our existing customers.

Between you know, all the other Canadian provinces we do business with. We think that that's uh a good opportunity in Illinois. Um, we've been very successful selling subscriptions to our customers um because they want to continue to refresh their content but you know, Illinois's approaching now a 40,000 machine Market. Um, and the replacement cycle is really just in its early days. So that's a market for sure. That will be going after. Um, and then, as I mentioned in my remarks, um, we think, you know, what we're good at is,

Brooks Pierce: But we feel very confident that there are additional markets that we can go after that our product will fit very nicely in.

Where we can download content and refresh content, and where people are going server-based gaming, where people are going to a venue multiple times a week. So there's many markets outside of the key markets that we've already talked about. Um, that we think will have a good opportunity and I'm sure you've probably read in the Press. There's lots of discussion about Brazil as potentially a, you know, a huge machine Market if that were to come to fruition. You know, we think our product would be a perfect fit for, for the Brazil market. So, yeah, I mean, we think we're, we're kind of hitting on on both cylinders and that the existing business is showing, you know, good growth and good opportunity out of our existing customers. But we feel, you know, very confident that there's additional markets that we can go after that, our product will fit very nicely in.

Analyst: Thanks. Very helpful. And I guess kind of similar on the Hybrid Dealer product front, I mean, you mentioned multiple geographies, and it seems like there's such a large TAM. I am just wondering, which new international markets do you think look promising for the next year or so?

Brooks Pierce: Well, it is so early in the process that, I mean, I think pretty much every market is new. I mean, I would say the existing markets where we are, North America, U.K., Greece, but, you know, we are still in the very early stages of getting the product out to those markets, Brazil. I do not see any gaming market where Hybrid Dealer is not an offering that makes sense. Now, I mentioned the game that we are doing with FanDuel, and that is a very bespoke game that we are building for them that we have been working on that for, you know, probably close to a year. So we are pretty excited about seeing that out in September. I think just the general rolling out of the product across more and more markets, very similar to the iGaming business.

Thanks very helpful and I guess kind of similar on the hybrid dealer front. I mean you mentioned multiple geographies and it seems like there's such a large table. I'm just wondering which new international markets. Do you think look promising for the next year or so?

Well, it's so early in the process that, I mean, I think pretty much every Market is new. I mean, I would, I would say the existing markets where we are in North America, UK Greece. But, you know, we're, we're still in the very early stages of getting the product out to, um, those markets Brazil. Um, but I, I, I don't see any gaming Market where hybrid

Brooks Pierce: I mean, it is what we saw in iGaming. If you look way back, you know, a number of years ago, it took the combination of getting the kind of network wired with all the customers and then making sure you have content that resonates with the players. To me, I think the, you know, the parallels between the iGaming segment and the Hybrid Dealer are very stark. So we are just in the early stages. You are seeing the benefit of how that is working for us in iGaming. Obviously, I do not know if it will reach the size and scale of the iGaming segment, but it certainly has all the, you know, characteristics and attributes that we look for, very similar to iGaming.

Dealer is not an offering that makes sense. Now, I mentioned, um, the game that we're doing with FanDuel, um, and that's a very bespoke game that we're building for them that we've been working on that for, you know, probably close to a year. So we're pretty excited about seeing that out in September. But I think just the general, um, rolling out of the product across more and more markets, very, very similar to the I gaming business, I mean, it's what we saw in. I gaming, if you look way back um, you know, a number of years ago, it took the combination of getting the kind of network wired with all the customers and then making sure you have content that resonates with the players and and to me I think the the, you know, the parallels between the I gaming segment and the hybrid, dealer are very Stark. And so we're just in the early stages. You're seeing the benefit of how that's working for us and I gaming. And obviously, I don't know if it'll reach the size and scale of the I gaming segment, but but it's

Certainly has all the, you know, characteristic characteristics and attributes that we look for very similar to I gaming.

Analyst: Got it. Thank you. Last one for me. On the capital deployment side, you had a strong quarter of free cash flow generation. You are expecting to close that holiday park sale soon. With the new debt facility, I am wondering what in terms of priorities, where are you ranking things in terms of focusing on accelerating Hybrid Dealer rollout or anything else?

Got it. Thank you. And again and last 1 for me, I mean, just on the sort of capital deployment side, I mean you had a strong quarter of free cash flow generation. You're expecting to close that Holiday Park sale soon. And with the new deficit, he also just I'm wondering like, what in terms of priorities, where does

Where are you ranking things in terms of, maybe just focusing on accelerating hybrid, hybrid dealer, rollout, or, or anything else?

Brooks Pierce: I'm not sure I understand exactly what the question is. Can you please ask it again?

I'm not sure.

I'm not sure I understand exactly what the question is, can you?

Analyst: So in terms of focusing on investing in growth for a certain segment, where do you think, where are you ranking your priorities? Is it mainly something?

Please ask it again.

Brooks Pierce: Oh, I see. So you are.

Analyst: Hybrid Dealer rollout?

Brooks Pierce: Well, the interesting thing about all the digital business, Hybrid Dealer, but iGaming in particular and Virtual Sports, is that the capital intensity is so low that our growth in those areas is really not constrained by capital at all. We can grow almost as fast as we want. The constraints are, like Brooks was talking about, right now, we are in the process of doing integrations with Hybrid Dealer with some of the new customers. We are not too concerned about that. I think what I thought your question was, was more about what people today are calling capital allocation in terms of what our priorities were with the free cash flow that we are really beginning to see coming. If that was sort of the question, then obviously our first priority is always going to be funding the growth of the businesses.

Senior priorities. Is it mainly something? Oh, I see. So you're hyper dealer. Roll out.

yeah, um, well the interesting thing about

all the digital business, um, hybrid dealer, but

uh, I gaming in particular and

and virtual Sports is.

Is that?

The capital intensity is so low that our growth in those areas is really not constrained by Capital at all. We, we can grow

Uh, almost as fast as we want. The, the constraints are like Brooks was talking about right now we're in the process of doing Integrations.

Uh, with hybrid dealer, with some of the new customers. So

um,

uh, so I I I'm we're not too concerned about that. I think.

What what? I thought your question was was more about what what people today are calling.

you know, Capital allocation

uh,

In, in terms of what I, our priorities were with the free cash flow that we're really beginning to see coming.

and if if, if that was sort of the question then,

Brooks Pierce: Again, as we swing to more and more digital, the capital required to do that becomes less and less. I would say in the short run, after that, our first priority would be debt reduction because in the deal that we did a couple of months ago to refinance our debt, we have significant benefits by deleveraging. We want to get that done first. Everybody always wants to know about share repurchases. We still have a program in place. I would say after the priority of funding our business growth and then the priority of deleveraging, that we would certainly consider share repurchase.

obviously our first priority is always going to be funding the growth of the businesses, but again as we swing to more and more digital

the capital required to do that becomes less and less. So I say in the short run,

After that, our our, our first priority would be uh, debt reduction.

um, because

uh,

In the deal that we did a couple of months ago to refinance our debt.

we have significant benefits by deleveraging, so we

We want to get that done first.

and then, uh,

Everybody always wants to know about uh, sharing purchases. Um, we still have

Uh, a program in place. And I would say

uh, after the priority of funding our business growth and then the priority of

uh, of deleveraging that, uh,

We would certainly consider.

uh, Sherry purchase

Analyst: Got it. Yeah, it was a mix of both. So you answered my questions. Thank you.

Got it. Yeah, it was a mix of both, so you answered my questions. Thank you.

Operator: The next question comes from the line of Chad Beynon with Macquarie. Please ask your question.

The next question comes from the line of Chad Bayon.

Brooks Pierce: Good morning. Thanks for taking my question. Brooks, I wanted to start with Virtual Sports and the positive inflection that you talked about in Q4. Do you think as we look past this, maybe more into 2026, this could return to a growth market, maybe not as high growth as we saw in the past couple of years, but is this something that we should start to think about again, growing maybe at the same as some of the global digital rates? Thank you. Yeah, thanks, Chad. I think the drivers of that are going to be how we roll out in some of the markets like we have talked about in Brazil, but really North America as well. It is kind of one of the veins of my existence that we have not gotten as much traction in the North American market as I think we should have.

With mclary, please ask your question.

Good morning. Thanks for taking my question. Uh, Brooks I wanted to start with um, virtual um and and you know, the positive inflection that you talked about in the fourth quarter. Do you think as we look past this, maybe more into into 26, this could return to, uh, you know, a growth Market maybe not as high growth as as we saw in the past couple years. But is this something that we should? Um you know start to think about again growing maybe um at the same as uh some of the global digital uh rates. Thank you. Yeah.

Yeah, thanks Chad. Um,

Brooks Pierce: I think we will. It is just taken longer than I expected. I think if we get rolled out to, we kind of have half the market right now in Brazil. As we roll out to the other half, the second half is anywhere as good as the first half. That is going to be a very, very meaningful contribution to the business. As I mentioned, we have seen some success, early success with the Virginia Lottery, and we are bullish about a couple more opportunities we are looking at in the lottery vertical that we think will also add. We also need to get some better penetration in the North American market. BetMGM should be the first customer that will go out in the market first. We see it as a reasonable market for some of the other operators to add.

Yeah. I mean I think the drivers of that are going to be um, you know, how we roll out. Um and some of the markets like we've talked about in Brazil but but really North America as well. Um, you know, it's kind of 1 of the veins of my existence that we haven't gotten as much traction in the North American Market, as I think we should have. And I think we will, it's just taking longer than I expect, uh, or expected. But yeah, I mean, I think if we if

Brooks Pierce: The long-winded answer is, I am hoping that we are building momentum each of the next couple of quarters in 2026 will get us back on a real growth trajectory, not just stabilizing and beating slightly. Great. Thank you. On the hardware side, now that some of these competitive privatizations have closed, have you seen anything in terms of just the competition out there positively or negatively? Are there more deals that are being done on the hardware side, or are some of these private companies potentially pulling back a little bit and kind of focusing on something different? I know it is very early, but wondering if you are seeing anything at this point. I think the last part of your statement is right. I think it is very early.

If we get rolled out to, we kind of have half the market right now in Brazil and as we roll out to the other half, if the second half is anywhere, as good as the first half, that's going to be a very, very meaningful contribution to the business. Um, as I mentioned, we've seen some success um, early success with the Virginia Lottery. And we're bullish about a couple more opportunities. We're looking at in the lottery vertical that we think will also add, um, but we also need to get some, you know, some, some better penetration in the North American, uh, Market with, uh, bet MGM should be the first customer that will go out in the market first. But we see, you know, we see it as a, as a reasonable market for some of the other operators to add so

Izing and and, and beating slightly.

Great, thank you. And then on the hardware side. Now, that some of these, um, competitive privatizations have have closed. Have you seen anything in terms of just the

Um, the competition out there, positively or negatively, or there are more deals that are being done on the hardware side, or some of these private companies potentially, you know, pulling back a little bit and kind of focusing on something different. I know it's very early, but, uh, wondering if you're seeing anything at this point.

Brooks Pierce: I mean, I think the, you know, IGT would be probably the one that we would compete with the most because of their strength in the Canadian provinces. But obviously, Illinois is a pretty competitive market. We actually just went through a whole big review on the Illinois business, and we're indexing higher than we've ever indexed in Illinois. So I feel very good about our chances in the replacement market, recognizing that our competition is pretty steep, but they're going through some transitions. So we are going aggressively after every one of those markets. But we're just not in the same, you know, we're not in the Class 3 market or the Class 2 market where you would see some of those companies you mentioned as though that's their primary markets, and it's really not ours.

Yeah, I I think you're the last part of your statement is right. I think it's it's very early. I mean I I think the you know the well IGT would be the probably the 1 that we would compete with the most because of their strength in the, you know, in the Canadian provinces. But obviously, um, Illinois is is a pretty competitive market. Um, and, you know, we, we actually just went through a whole big review on the Illinois business and, and we're indexing higher than we've ever indexed in Illinois. So I feel very good about our chances in the replacement Market recognizing, um, you know, that our competition is is pretty steep but they're going through some transitions. So we would, uh, you know, we're going aggressively after every 1 of those markets, but we're just not in the

Brooks Pierce: So we don't go head-to-head with them other than Illinois and the Canadian provinces. But to answer your question, I haven't seen any substantive changes at this point.

Same, you know we're not in the class 3 Market or the class 2 Market, where you would see you know some of those companies you mentioned as though that's their primary markets and it's really not ours so we don't go head-to-head with them other than Illinois and the Canadian provinces. But to answer your question I haven't seen any, you know, substantive changes at this point.

Analyst: Thank you. Nice quarter, guys.

Brooks Pierce: Thanks, Chad.

Thank you, nice quarter, guys.

Operator: There are no further questions from the line at this time. I will now turn the call back over to Mr. Lorne Weil for any closing remarks.

Brooks Pierce: Thanks, operator. I do not really have too much to add to what we have talked about so far. I think it is a very good quarter. I think we are feeling pretty positive about the rest of the year. We will continue to see these trends moving in that same direction. So we look forward to talking to everybody in a few months. Thanks.

Thanks Chad, there are no further questions from this from the line at this time. I will now turn the call back over to Mr. Lauren wheels for any closing remarks,

Uh thanks operator. I don't really have too much to add to what we've talked about.

Uh, so far. Um, I think it's uh,

A very good quarter. I think we're

feeling.

Uh, pretty positive about the rest of the year uh, that will continue to see.

Uh, these Trends moving in that same direction.

Uh, and so we look forward to, uh,

Talking to everybody in a few months. Thanks.

Operator: Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.

Ladies and gentlemen, that concludes today's call, thank you all for joining. You may now disconnect