Q3 2025 Inspired Entertainment Inc Earnings Call

November 5, 2025

Operator: Participants' lines have been placed on mute to prevent any background noise. After the speaker's remarks, we will open the call for a question-and-answer session. Please note that today's event is being recorded. Before we begin, please refer to the company's forward-looking statements that appear in the Q3 2025 earnings press release and in accompanying slide presentation, both of which are available in the Investors section of the company's website at www.inseinc.com. These also apply to today's conference call. Management will be making a forward-looking statement within the meaning of United States securities laws. These statements are based on management's current expectations and beliefs and are subject to various risks, uncertainties, and other factors that may cause actual results to differ materially from those exposed or implied in such statements.

Event any background noise.

After the speakers remarks, we will open the call for a question and answer session.

Please note that today's event is being recorded.

Before we begin please refer to the company's before were looking statements that appear in the third quarter of 2025 earnings press release and accompanying slide presentation.

Both of which are available in the investors section of the company's website at Www, that's I N.

S E I N C dot com.

This also applies to today's conference call.

Management will be making are forward looking statements within the meaning of United States Securities laws.

These statements are based on management's current expectations and beliefs.

And are subject to various risks uncertainties and other Fox ballpark doors that may cause actual results to differ materially from those exposed or implied in such statements.

For a discussion on these risks and uncertainties. Please refer to the company's filings with Securities and Exchange Commission.

Operator: For a discussion on this risk and uncertainties, please refer to the company's filing with Securities and Exchange Commission. The company assumes no obligation to update or review any forward-looking statements except as required by law. During today's call, the company will discuss both GAAP and non-GAAP financial measures. Reconciliations of these non-GAAP measures to the most directly comparable GAAP measures can be found in today's earnings release and slide presentation, which are both available on the website. As a reminder, the slide presentation will be advanced by the operator to accompany management's remarks. A PDF version of the slides will be available following the call in the Investors section of the company's website. I would now like to turn the call over to Lorne Weil, the company's Executive Chairman. Mr. Weil, please go ahead.

The company assumes no obligation to update or review any forward looking statements, except as required by law.

During today's call the company will discuss both GAAP and non-GAAP financial measures reconciliations of these non-GAAP measures to the most directly comparable GAAP measures can be found in todays earnings release, and slide presentation, which are both available on the.

The website.

As a reminder, the slide presentation will be advanced by the operators to accompany management's remarks.

A PDF version of the slides will be available following the call in the investors section of the company's website.

With that I would now like turn the call over to Lorne Weil, the company's executive Chairman Mr. Weil. Please go ahead.

Thank you operator, good morning, everyone and thank you for joining our third quarter conference call.

Lorne Weil: Thank you, operator. Good morning, everyone, and thank you for joining our Q3 conference call. As we reported earlier this morning, Q3 and trailing 12-month adjusted EBITDA were GBP 32.3 million and GBP 110 million respectively, both well ahead of consensus and last year, a result that we're pleased with. In a departure from press protocols, we have prepared a brief slide deck today, summarized here in slide 4, which will be presented by President and CEO Brooks Pierce and myself. There are a lot of moving parts right now. The sale of Holiday Parks, the restructuring of pubs, the continued phenomenal growth of interactive as examples that paint a very exciting picture, we feel that this kind of comprehensive discussion will help us put everything in proper perspective.

As we reported.

Earlier, this morning third quarter and trailing 12 months adjusted EBITDA.

We're at 32 3 million and $110 million respectively.

Both well ahead of consensus and last year.

And a result that were up.

Pleased with.

The departure from past protocols, we have prepared a brief slide deck today summarized here on slide four.

It will be presented by President and CEO Brooks Pierson and myself.

There are a lot of moving parts right now with the sale of holiday parks the restructuring of pubs.

<unk> phenomenal growth of interactive as examples that paint a very exciting picture and.

And we feel that this kind of comprehensive discussion will help us put everything in proper perspective.

Then at the conclusion, we'll discuss earnings balance sheet and cash flow projections for 2006 and 'twenty seven.

Lorne Weil: At the conclusion, we will discuss earnings, balance sheet, and cash flow projections for 2026 and 2027. To begin, I'll hand it over to Brooks, who will discuss in some detail current results and operations.

To begin I'll hand that over to Brooks, who will discuss in some detail current results and operations.

Okay. Thanks Loren.

Before I dive into the business update I want to briefly address the upcoming U K budget announcement on November 26, and the discussion around potential tax changes and the gaming industry.

Brooks Pierce: Okay. Thanks, Lorne. Before I dive into the business update, I wanna briefly address the upcoming UK budget announcement on 26 November and the discussion around potential tax changes in the gaming industry. There's been a lot of coverage and discussion on all sides of the issue and its impact on the industry, frankly, this isn't new. We've managed through the 2019 Triennial, which cut maximum stakes in betting shops from effectively GBP 50 to GBP 2, a major change that we successfully navigated through product innovation and operational discipline. Today, performance in that business is well above pre-Triennial levels. Potential shop closures have been in the headlines as well, our experience tells us that this is also manageable.

Been a lot of coverage in discussion on all sides of the issue and its impact on the industry, but frankly this isn't new we've managed through that we manage through the 2019, triennial, which cut maximum stakes in betting shops from effectively 50 pounds to two pounds.

A major change that we successfully navigated through product innovation and operational discipline.

Today performance in that business as well above pre triennial levels.

Potential shop closures had been in the headlines as well in our experience tells us that this is also manageable.

Typically lower performing shops are most at risk and much of that play finds its way to nearby shops, effectively lowering our servicing costs.

Brooks Pierce: Typically, lower-performing shops are most at risk, and much of that play finds its way to nearby shops, effectively lowering our servicing costs. The potential increase in Remote Gaming Duty would be another facet we've experienced dealing with. We've managed similar changes in other markets, and our performance in the interactive segment speaks to our ability to adapt effectively. Once the UK budget's announced, we'll share more specifics, but in the meantime, we're planning proactively and are confident in our ability to manage changes effectively, just as we have in the past. We have a number of levers and opportunities at our disposal to navigate our way through this. Okay, moving to the next slide. We're pleased with the performance of the business in Q3 and are carrying that momentum into Q4.

The potential increase in remote gaming duty would be another facet, we've experienced dealing with we've managed similar changes in other markets and our performance in the interactive segment speaks to our ability to adapt effectively.

Once the UK budgets announced who will share more specifics, but in the meantime, we're planning proactively and are confident in our ability to manage changes effectively just as we have in the past and we have a number of levers and opportunities at our disposal to navigate our way through this.

Okay moving to slide next slide we're pleased with the performance of the business in the third quarter and are carrying that momentum into the fourth quarter. We're confident we'll exceed Q4 2020 for performance and curtain guidance, assuming current FX rates don't change materially.

Brooks Pierce: We're confident we'll exceed Q4 2024 performance and current guidance, assuming current FX rates don't change materially. The interactive and gaming segments were particularly strong, with interactive achieving more than 40% year-over-year adjusted EBITDA growth for the ninth consecutive quarter. October is now complete and is the single largest revenue month for this segment in our history. Last week was the biggest week we've ever had. This was all highlighted by the success of some of our seasonal games. Frankly, we're seeing strong performance throughout the portfolio and market share gains across our key geographies in both the UK and North America.

The interactive and gaming segments were particularly strong with interactive achieving more than 40% year over year adjusted EBITDA growth for the ninth consecutive quarter.

Cobra is now complete and it is the single largest revenue month for this segment in our history and last week was the biggest we've ever had this was all highlighted by the success of some of our seasonal games, but frankly, we are seeing strong performance throughout the portfolio and market share gains across our key geographies in both the UK and north.

Erica.

Also pleased to see a second consecutive quarter of stabilization and the virtual sports segment and are confident that it will grow year over year in the fourth quarter.

Brooks Pierce: We're also pleased to see a second consecutive quarter of stabilization in the virtual sports segment and are confident that it will grow year over year in Q4. The close of the sale of the Holiday Parks business on 7 November is a milestone in our shift to higher adjusted EBITDA margins, lower CapEx, and close to 40% lower headcount going forward. Taking the proceeds from the Holiday Parks sale to improve our net leverage puts us in a stronger financial position as we move through Q4 and into 2026. In addition, we announced today that our board has reauthorized a $25 million share buyback plan as part of our plans going forward.

The close of the sale of the holiday parks business on November 7th is a milestone in our shift to higher adjusted EBITDA margins, lower Capex and close to 40% lower head count going forward.

Taking the proceeds from the holiday park sale to improve our net leverage puts us in a stronger financial position as we move through the fourth quarter and into 2026.

In addition, we announced today that our board has reauthorized, a $25 million share buyback plan as part of our plans going forward.

The next slide demonstrates the success of our strategy and making North America bigger part of our business in large part due to the growth we're seeing in this market from our interactive business, but we're also gaining momentum in our North American VLT business that I'll cover in more detail later in the presentation.

Brooks Pierce: The next slide demonstrates the success of our strategy in making North America a bigger part of our business, in large part due to the growth we're seeing in this market from our interactive business. We're also gaining momentum in our North American VLT business that I'll cover in more detail later in the presentation. The success of the Vantage cabinet in the William Hill estate is coming through in our results and was highlighted recently by Evoke in their trading update. We're also starting to see the impact on performance of the refreshed terminals in the Greek estate. Although the year-over-year performance in the virtual segment continues to be impacted by the taxation that started in January in Brazil, our comps in the Q4 and 2026 will be easier.

The success of the vantage cabinet and the William Hill State is coming through in our results and was highlighted recently by evoke and Theyre trading update.

We're also starting to see the impact on our performance of our refreshed terminals and the Greek state.

Although the year over year over year performance in the virtual segment continues to be impacted by the taxation that started in January in Brazil, our comps in the fourth quarter in 2026 will be easier and we've also introduced a number of initiatives and increased our customer counts in Brazil, and Turkey, and we're starting to see some of that improvement come through.

Brooks Pierce: We've also introduced a number of initiatives and increased our customer counts in Brazil and Turkey. We're starting to see some of that improvement come through the numbers. As you can see on slide 8, we've been generating solid year-over-year adjusted EBITDA growth every quarter. The trailing twelve-month adjusted EBITDA is now at GBP 110 million. This is certainly a positive. The most important aspect of this slide is the impact we expect to see going forward with the sale of the Holiday Parks business and the move in our pubs business to a machine and content-led strategy. Both the interactive and virtual segments are operating at higher than 60% EBITDA margins after corporate allocations. We expect the operating leverage of both of these segments to strengthen further as revenue increases.

Through the numbers.

As you can see on slide eight we have been generating solid year over year adjusted EBITDA growth every quarter in the trailing 12 months adjusted EBITDA is now at $110 million.

Certainly a positive but the most important aspect of this slide is the impact we expect to see going forward with the sale of the holiday parks business and the move in our pubs business to a machine and content led strategy.

Both the interactive and virtual segments are operating at higher than 60% EBITDA margins after corporate allocations.

And we expect the operating leverage of both of these segments to strengthen further as revenue increases.

Combination of margin expansion the sale of the holiday parks business and the change in the pubs business model will significantly reduce our capital intensity and have a very positive impact on cash flow.

Brooks Pierce: Combination of margin expansion, the sale of the Holiday Parks business, and the change in the pubs business model will significantly reduce our capital intensity and have a very positive impact on cash flow. The next couple slides highlight not only the strong performance of the interactive segment, but frankly, the significant opportunity we see ahead as additional iGaming states potentially come online. The potential we believe could be transformational for our business. Our content's resonating broadly across all the key geographies, and we're positioning the business to scale across even more. Looking ahead to next year, we plan to increase game deliveries through added capacity and a new interactive studio. Most common feedback we get from customers is they want more of our great content, and we're excited to deliver on that challenge.

The next couple of slides highlight not only the strong performance of the interactive segment, but frankly, the significant opportunity. We see ahead as additional I gaming states potentially come online the potential we believe could be transformational for our business.

Our content is resonating broadly across all the key geographies and we're positioning the business to scale across even more.

Looking ahead to next year, we plan to increase game deliveries through added capacity and a new interactive studio.

<unk>.

The most common feedback we get from customers is they want more of our great content and we're excited to deliver on that challenge.

Business and the change in the pubs business model will significantly reduce our capital intensity and have a very positive impact on cash flow.

As we've talked about in the past, we're very bullish on the opportunity for an increase in the number of I gaming states as it is clear that I gaming is a much larger opportunity than the online sports betting as you can see in the GTR from just three of the existing gaming states the.

Brooks Pierce: As we've talked about in the past, we're very bullish on the opportunity for an increase in the number of iGaming states as it's clear that iGaming is a much larger opportunity than online sports betting, as you can see in the GGR from just 3 of the existing iGaming states. The delivery of additional states is very seamless and frankly, should produce significant operating leverage as the only real cost to add states is in bandwidth. We don't have a crystal ball, of course, but we're confident that states will see the opportunity and feel it's a matter of when, not if. Now moving over to Hybrid Dealer. We've been talking about Hybrid Dealer for some time, and we felt validated to have won the award at G2E for Product Innovation of the Year.

The delivery of additional states is very seamless and frankly should produce significant operating leverage as the only real cost that states as in bandwidth.

Our content is resonating broadly across all the key geographies and we're positioning the business to scale across even more.

We don't have a crystal ball of course, but we're confident that states will see the opportunity and feel it's a matter of when not if.

Looking ahead to next year, we plan to increase game deliveries through added capacity and a new interactive studio.

Now moving over to hybrid dealer, we've been talking about hybrid deal. It for some time and we felt validated to have won the award at <unk> for innovative product of the year. More importantly, we are starting to see the network effect of rolling this product out across our customer base.

The most common feedback we get from customers is they want more of our great content and we're excited to deliver on that challenge.

Brooks Pierce: More importantly, we're starting to see the network effect of rolling this product out across our customer base. We have a very good mix of both tier one and tier two customers and have seen success with both. Our William Hill-branded roulette game in the UK is producing amazing results, which we view as a proof point for other operators. The next phase of development will emphasize and highlight our proprietary player favorite content such as our Wolf It Up and Piggy Bank family of games. We see this as the natural evolution of our product strategy, supported by an increasing pace of game delivery to meet the strong market demand.

As we've talked about in the past, we're very bullish on the opportunity for an increase in the number of I gaming States. It's clear that I gaming is a much larger opportunity than online sports betting as you can see in the <unk> from just three of the existing gaming states.

We have a very good mix of both tier one and tier two customers and have succeeding have seen success with both our.

William Hill branded Roulette game in the UK. The UK is producing amazing results, which we view as a proof point for other operators.

The delivery of additional states is very seamless and frankly should produce significant operating leverage as the only real cost that states as in bandwidth.

The next phase of development will emphasize and highlight our proprietary player favorite content, such as our Wolf It up and Piggy Bank family of games, we see this as the natural evolution of our product strategy supported by an increasing pace of game delivery to meet the strong market demand.

We don't have a crystal ball of course, but we're confident that states will seize the opportunity and feel it's a matter of when not if.

Now moving over to hybrid dealer, we've been talking about hybrid deal. It for some time and we felt validated to have won the award at <unk> for innovative product of the year more importantly, we're starting to see the network effect of rolling this product out across our customer base.

While hybrid deal is not expected to be as large as the broader interactive market. We believe it will be a valuable complement to our portfolio enhance our offering add diversity to our content and contribute meaningfully in 2026 and beyond.

Brooks Pierce: While Hybrid Dealer is not expected to be as large as the broader interactive market, we believe it will be a valuable complement to our portfolio, enhance our offering, add diversity to our content, and contribute meaningfully in 2026 and beyond. Moving over to gaming. Our gaming business continues to perform well across our 3 key markets of the UK, Greece, and North America. In the UK, we're gaining share in the betting shop business with the addition of 2 key customers. In Greece, our new cabinets are strengthening our leading position, and with nearly half of our machines still to be upgraded, we see continued opportunity for growth. In North America, performance in Illinois and key Canadian provinces is at its highest level since we introduced these products into mature markets, which frankly is never easy.

We have a very good mix of both tier one and tier two customers and have succeed have seen success with both.

Moving over to gaming our gaming business continues to perform well across our three key markets of the UK, Greece in North America, and the U K, we're gaining share in the betting shop business with the addition of two key customers.

Our William Hill branded Roulette game in the U K U K is producing amazing results, which we view as a proof point for other operators.

In Greece, our new cabinets are strengthening our leading position in with nearly half of our machines still to be upgraded we see continued opportunity for growth.

In North America performance in Illinois, and key Canadian provinces is at its highest level. Since we introduced these products into mature markets, which frankly is never easy.

Notably 80, or 98, excuse me, 98% of our Illinois customers.

Brooks Pierce: Notably, 98% of our Illinois customers ordered our GamePack subscriptions this year, validating our philosophy that server-based gaming is a powerful tool for operators to keep their players engaged, and we see applicability for that in many more markets around the world. Now I'll pass it over to Lorne.

Our game pack subscriptions this year validating our philosophies of server based gaming as a powerful tool for operators to keep their players engaged and we see applicability for that in many more markets around the world.

Moving over to gaming our gaming business continues to perform well across our three key markets of the UK, Greece in North America, and the UK, we're gaining share in the betting shop business with the addition of two key customers.

And I'll pass it over to Lorne.

Thanks Brooks.

Interesting concepts.

Lorne Weil: Thanks, Brooks. A lot of interesting concepts and data to digest. I'll begin with slide 14, giving a snapshot of where we are at the end of Q3. I apologize if some of this material is repetitious for those who have been following us for a while, but will help level set for anyone new to the story. We're starting with trailing twelve-month revenue, adjusted EBITDA, and EBITDA margin of $310 million, $110 million, and 35% respectively. The digital retail mix is just under 50/50, and net leverage ratio of 3.2 times. As we move through the rest of the material, I try to explain why we're confident in projecting significant expansion in margins, reductions in leverage, and strong free cash flow.

And data to digest.

I'll begin with slide 14.

In Greece, our new cabinets are strengthening our leading position in with nearly half of our machines still to be upgraded we see continued opportunity for growth.

Giving a snapshot of where we are at the end of the third quarter.

I apologize if some of this materials repetitious for those who are those who have been following us for a while.

North America performance in Illinois.

But we will help level set for anyone new to the story.

Liam provinces is at its highest level since we introduced these products into mature markets, which frankly is never easy.

So we're starting with a trailing 12 month revenue adjusted EBITDA, and EBITDA margin of $310 million $110 million and 35% respectively. The digital retail mix is just under 50 50.

Notably 80, or 98, excuse me, 98% of our Illinois customers.

Ordered our game pack subscriptions this year validating our philosophies of server based gaming as a powerful tool for operators to keep their players engaged and we see applicability for that in many more markets around the world and.

Our net leverage ratio of three two times.

As we move through the rest of the material I tried to explain why we're confident in projecting significant expansion in margins reductions in leverage and strong free cash flow.

And I'll pass it over to Loren.

Thanks Brooks.

Interesting concepts.

And data to digest.

I'll begin with slide 14.

Slide 15 summarizes the underlying dynamics that have been underway for some time.

Giving a snapshot of where we are at the end of the third quarter.

Lorne Weil: Slide 15 summarizes the underlying dynamics that have been underway for some time. Earlier, Brooks talked about the high margin, relatively low CapEx and scalability of our digital business. It's the swing in the mix of our business in that direction that's the primary driver of financial performance. In parallel, the divestiture of the Holiday Parks business provides an immediate boost to margins. The operational re-engineering going on throughout the company allows us to make up for the divested Holiday Parks' EBITDA. In a moment, I'll quantify with some specificity the exact impact of each of these three elements. Slide 16 summarizes the three things that, of course, everybody wants: revenue growth, expanding margins, and growing free cash flow. Generally, in my experience, you only get to pick two, and as the slide implies, in our case, the three are highly interdependent.

I apologize if some of this material is repetitious for those who are those who have been following us for a while.

Earlier.

<unk> talked about the high margin relatively low capex and scalability of our digital business.

But we will help level set for anyone new to the story.

It's the swing in the mix of our business in that direction. That's the primary driver of financial performance.

So we're starting with trailing 12 month revenue adjusted EBITDA, and EBITDA margin of $310 million $110 million and 35% respectively. The digital retail mix is just under 50 50.

In parallel the.

The divestiture of the holiday part business provides an immediate boost to margins in.

And the operational reengineering going on throughout the company allows us to make up for the divested holiday parks EBITDA.

In a moment I'll quantify with some specificity of the exact impact of each.

Our net leverage ratio of three two times.

As we move through the rest of the material I tried to explain why we're confident in projecting significant expansion in margins reductions in leverage and strong free cash flow.

Each of these three elements.

Slide 16 summarizes the three things that of course, everybody wants revenue growth expanding margins and growing free cash flow. Although generally in my experience can only get to pick two.

Slide 15 summarizes the underlying dynamics that have been underway for some time.

As the slide implies in our case the three are highly interdependent.

Earlier.

Talked about the high margin relatively low capex and scalability of our digital business.

Our revenue growth is driven by the compounding of market share gains within growing markets with content development and greater allocation of resources to marketing, having recently been their principal underlying drivers rare.

Lorne Weil: Our revenue growth is driven by the compounding of market share gains within growing markets, with content development and greater allocation of resources to marketing having recently been the principal underlying drivers. Revenue growth, revenue mix, and scalability together drive expanding margins, and the latter combined with declining CapEx drives free cash flow. If only it were that easy in execution. Slide 17 decomposes our projection of 1,000 basis point increase in adjusted EBITDA margin between now and 2027, with the increase being almost equally split between the increased digital mix, the sale of Holiday Parks, and the operational re-engineering that we have undergoing. Regarding the latter, we expect most of the benefits to begin to take effect in Q1 2026. Which finally brings us to slide 18, where we bring this all together.

It's the swing in the mix of our business in that direction. That's the primary driver of financial performance and.

In parallel the.

The divestiture of the holiday Park business provides an immediate boost to margins in.

Revenue growth revenue mix and scalability together drive expanding margins in.

And the operational reengineering going on throughout the company allows us to make up for the divested holiday parks EBITDA.

And the latter combined with declining capex drives free cash flow.

If only it were that easy and execution.

In a moment I'll quantify with some specificity of the exact impact of.

Slide 17 decomposes, our projection of a 1000 basis point increase in adjusted EBITDA margin between now and 2027.

Each of these three elements.

Slide 16 summarizes the three things that of course, everybody wants revenue growth expanding margins and growing free cash flow. Although generally in my experience you can only get to pick two.

With the increase being almost equally split between the increased digital mix the sale of holiday parks and the operational reengineering that we have undergoing regarding the latter we expect most of the benefits to begin to take effect in the first quarter of 2026.

As the slide implies in our case the three are highly interdependent.

Our revenue growth was driven by the compounding of market share gains within growing markets with content development and greater allocation of resources to marketing, having recently been the principle underlying drivers.

Which finally brings us to slide 18, where we bring this all together to summarize we're projecting the digital mix after corporate allocation to reach 60% by 2027 heads.

Lorne Weil: To summarize, we're projecting the digital mix after corporate allocation to reach 60% by 2027. Headcount to decline by nearly 40%. Adjusted EBITDA margin to grow by 10 percentage points from 35% to 45%. Free cash flow conversion to reach 30% of EBITDA, and net leverage to decline to under 2. A few minutes ago, Brooks discussed the expectation of increased UK gaming taxes in November UK budget. It's for this reason that for now we've expressed absolute adjusted EBITDA guidance in terms of high single-digit growth, which we will then translate to more specific guidance once the tax proposal is known. As Brooks mentioned earlier, we've been through this drill before, and we're confident we can do much to mitigate any impact.

Revenue growth revenue mix and scale ability together drive expanding margins.

Head count to decline by nearly 40%.

And the latter combined with declining capex drives free cash flow.

Adjusted EBITDA margin to grow by 10 percentage points from 35% to 45%.

If only it were that easy and execution.

Slide 17 decomposes, our projection of 1000 basis point increase in adjusted EBITDA margin between now and 2027.

Free cash flow conversion to reach 30% of EBITDA and net leverage to decline to.

With the increase being almost equally split between the increased digital mix the sale of holiday parks.

Now on to two.

A few minutes ago Brooks discuss the expectation of increased UK gaming taxes in the November U K budget.

The operational reengineering that we are undergoing regarding the latter we expect most of the benefits to begin to take effect in the first quarter of 2026.

It's for this reason that for now we've expressed absolute adjusted EBITDA guidance in terms of high single digit growth, which will then translate to more specific guidance. Once the tax proposal is known.

Which finally brings us to slide 18, where we bring this all together to summarize we're projecting the digital mix after corporate allocation to reach 60% by 2027.

As <unk> mentioned earlier, we've been through this drill before and we're comfortable we can do much to mitigate any impact.

And I should mention that certain important upsides new.

Head count to decline by nearly 40%.

Lorne Weil: I should mention that certain important upsides, new iGaming states, for example, would be significant additional mitigating factors as they are not factored at all into our analysis. Finally, this entire discussion is focused on organic growth and does not reflect any expectation of M&A impact, which we continue to look at very carefully. With that, we can open to Q&A. operator, we can have Q&A now, please. Oh, boy.

<unk> gave me States for example would be significant additional mitigating factors as leader in loss factor at all into our analysis.

Adjusted EBITDA margin to grow by 10 percentage points from 35% to 45%.

Free cash flow conversion to reach 30% of EBITDA and net leverage to decline to.

Finally, this entire discussion is focused on organic growth and does not reflect any expectation of M&A, an impact, which we continue to look at very carefully and with that we can open to Q&A.

Andre too.

A few minutes ago Brooks discussed the expectation of increased UK gaming taxes in the November U K budget.

Yeah.

Okay.

Operator, we can have Q&A now please.

Oh boy.

As Brooks mentioned earlier, we've been through this drill before and we're comfortable we can do much to mitigate any impact.

Thank you for that we will now open the Q&A session.

Operator: Thank you for that. We will now open the Q&A session. If you have dialed in and would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press the star 1 again. If you are called upon to ask your question and listening via loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question. Again, please press star 1 to join the queue. Your first question comes from the line of Ryan Sigdahl of Craig-Hallum. Your line is now open.

You have diode, even we'd like to ask a question. Please press star one on your telephone keypad to raise your hand and join the queue.

And I should mention that certain important upsides new.

New I gave me States for example would be significant additional mitigating factors as they are not factor at all into our analysis.

And if you would like to withdraw your question. Thank you press the star one again.

Finally, this entire discussion is focused on organic growth and does not reflect any expectation of M&A, an impact, which we continue to look at very carefully and with that we can open to Q&A.

If you are called upon to ask your question and listening via loud speaker on your device. Please speak up your handset and ensures that your phone is not on mute when asking your question.

Again, Please press star one.

He joined the queue.

And your first question comes from the line of Ryan.

Yeah.

<unk> of Craig Hallum.

Operator, we can have Q&A now please.

Your line is now open.

Hey, good morning, guys I appreciate it.

Oh boy.

Ryan Sigdahl: Hey, good morning, guys. Appreciate kind of the targets and laying out the path over the next several years, what this company looks like. Still kind of digesting that in real time, but very back of the envelope math, maybe staring at slide 18 here. If we assume EBITDA grows at a high single digit CAGR, EBITDA margin extends by 10 points over the next 2 to 3 years. I guess that implies revenue is kind of flattish, maybe even down. Yeah, I guess walk through what's going on there and maybe part of that is the starting point of Holiday Parks included or not.

The targets and laying out the path over the next several years with this company looks like.

Thank you for that we will now open the Q&A session.

Still kind of digesting that in real time, but very back of the envelope math, maybe staring at slide 18 here. If we assume EBITDA grows at a high single digit CAGR EBITDA margin. It seems like 10 points over the next.

Do you have diode, even we'd like to ask a question. Please press star one on your telephone keypad to raise your hand and join the queue.

And if you would like to withdraw your question. Thank you press the star one again.

Two to three years I guess that implies revenue is kind of flattish maybe even down.

If you are called upon to ask your questions and listening via loud speaker on your device.

Speak up your handset and ensures that your phone is not on mute when asking your question.

Yes, I guess walk through what's going on there and maybe part of that is the starting point of holiday parks included or not.

Again, Please press star one.

Yes, I think the the principal reason for that is obviously.

Please join the queue.

Lorne Weil: Well, I think the principal reason for that is obviously, you know, the Holiday Parks business going away. That's, you know, that's the single biggest driver of the revenue that you kinda modeled out. I wouldn't say We obviously are confident that the rest of the business segments are gonna continue to grow at varying degrees. Obviously, the interactive business continues to race ahead, but the gaming business and the virtuals business both, we expect to grow.

And your first question comes from the line of <unk>.

The holiday parks business going away.

Nancy <unk> of Craig Hallum.

So that's the single biggest driver of the revenue that you've kind of modeled out.

Your line is now open.

Hey, good morning, guys I appreciate it.

The targets and laying out the path over the next several years with this company looks like.

But I wouldn't say, we obviously you're confident that the rest of the business segments are going to continue to grow at varying degrees. Obviously the interactive business continues to the race ahead, but the gaming business and the virtual business, both we expect to grow.

Still kind of digesting that in real time, but very back of the envelope math, maybe staring at slide 18 here. If we assume EBITDA grows at a high single digit CAGR EBITDA margin expanded by 10 points over the next two to three years I guess that implies revenue was kind of flattish maybe even down.

Helpful.

Yes, I think it's just a comparison of kind of the starting baseline there.

Ryan Sigdahl: Helpful. Yeah, I think it's just a comparison of kind of the starting baseline there. Virtual sports, I think I heard, expect year-over-year growth in Q4. I guess, what gives you that confidence in the acceleration? Because it was up, you know, a decimal point sequentially, it appears like it's stabilizing. What gives you the confidence to see a re-accelerating growth, at least sequentially, which will get you back to year-over-year growth by Q4?

Virtual sports I think I heard expect year over year growth in Q4, I guess, what gives you that confidence in the acceleration because it was up a decimal point sequentially and so it appears like its stabilizing but what gives you the confidence to see a re accelerating growth at least sequentially, which will get you back to year over year growth by Q4.

Yes, I guess walk through what's going on there and maybe part of that is the starting point of holiday parks included or not.

Yes, I think the.

The principal reason for that is obviously.

The holiday parks business going away.

So that's the single biggest driver of the revenue that you've kind of modeled out.

Sure.

Yeah, a couple of different things.

Brooks Pierce: A couple different things. We've made some adjustments with our biggest customer that we're starting to see the benefits coming through already. We've added additional customers in Brazil. I think we added 6 in the quarter, which you wouldn't have seen full impact of, and we'll get that in Q4. We've also seen some nice growth out of some of the business that we're doing in Turkey, and we're adding another stream of content in the Turkish market. Combination of kind of all of those things gives us confidence that, you know, we're gonna grow. I think the Q4 number EBITDA is GBP 7.2 from last year. It's not an insignificant amount we need to grow, but that's what our target is.

We've made some adjustments with our biggest customer that we're starting to see.

But but I wouldn't say, we obviously you're confident that the rest of the business segments are going to continue to grow at varying degrees. Obviously the interactive business continues to to race ahead, but the gaming business and the virtual business, both we expect to grow.

The benefits coming through already.

We've added additional customers in Brazil, I think we added six in the quarter, which you wouldn't have seen full impact of and we will get that.

In the fourth quarter and we've also seen some nice growth out of some.

Helpful.

Yes, I think it's just the comparison of kind of the starting baseline there.

Some of the business that we're doing in Turkey, and we're adding another stream.

Yeah.

Of of content in the Turkish market. So combination of kind of all of those things gives us confidence that.

That we're going to grow I think the.

For the fourth quarter number EBITDA is $7 two from last year.

Yeah, a couple of different things.

So it's not an insignificant amount we need to grow but that's what our target is.

Made some adjustments with our biggest customer that we're starting to see.

Okay.

If I may a quick follow up just on that any commentary or added detail on what those adjustments with your largest customer work and then I'll hop back in the queue. Thanks guys.

The benefits coming through already.

Ryan Sigdahl: If I may, quick follow-up just on that. Any commentary or added detail on what those adjustments with your largest customer were? I'll hop back in the queue. Thanks, guys.

We've added additional customers in Brazil, I think we added six in the quarter, which you wouldn't have seen full impact of them will get that.

Thanks.

I think we'll probably keep that to our two between us and our customer if you don't mind.

Brooks Pierce: Thanks. No, I think we'll probably keep that to between us and our customer, if you don't mind.

In the fourth quarter and we've also seen some nice growth out of.

Fair enough. Thanks, guys. Good luck.

Some of the business that we're doing in Turkey, and we're adding another stream.

Ryan Sigdahl: Fair enough. Thanks, guys. Good luck.

Thanks.

Brooks Pierce: Thanks.

Your next question comes from the line of Barry Jonas of <unk> Securities. Please go ahead.

<unk> of.

Content in the Turkish market, so combination of kind of all of those things gives us confidence that.

Operator: Your next question comes from the line of Barry Jonas of Truist Securities. Please go ahead.

Thank you Lauren can you expand a little on your M&A commentary in the prepared remarks, just curious what the pipeline looks like and the types of companies deals you you'd be most interested in thank you.

We're going to grow I think the.

Barry Jonas: Thank you. Lorne, can you expand a little on your M&A commentary in the prepared remarks, just curious what the pipeline looks like and the types of companies deals you'd be most interested in? Thank you.

The fourth quarter number EBITDA is $7 two from last year.

So it's not an insignificant.

Sure.

<unk> amount, we need to grow but thats, what our target is.

Hum.

Lorne Weil: Sure. Well, I think to begin, from a financial point of view, we're only interested in deals where that there's significant touch points with the company and our operations now, so that we can anticipate, you know, meaningful, immediate synergies and a deal that makes significant financial sense. We're not gonna do anything that's highly in a diversification mode, or, you know, pay crazy prices that we can't we can't mitigate by having a lot of operational synergies. That's sort of that's the overarching concern. In terms of kinds of companies, we would be interested either in, you know, what people nowadays call tuck-in acquisitions that strengthens one of our existing businesses.

Well.

I think to begin.

If I may a quick follow up just on that any commentary or added detail on what those adjustments with your largest customer work and then I'll hop back in the queue. Thanks guys.

Okay.

From a financial point of view, we're only interested in deals.

Where.

Thanks.

We'll probably keep that two are two between us and our customer if you don't mind.

They're going to.

<unk> touch points with the company and our operations now so that we can.

Fair enough. Thanks, guys. Good luck.

Anticipate.

Thanks.

Meaningful immediate synergies.

Your next question comes from the line of Barry Jonas of <unk> Securities. Please go ahead.

<unk>.

And a deal that makes significant financial sense, we're not going to do anything that's.

Thank you Lorne can you expand a little on your M&A commentary in the prepared remarks, just curious what the pipeline looks like and the types of companies deals you'd be most interested in thank you.

Highly diversification mode.

Sure.

A crazy prices that we cant.

Sure.

We can't mitigate by having a lot of operational synergies. So so that's sort of that's the overarching concern in terms of the kinds of companies.

So.

Well.

I think to begin.

From a financial point of view, we're only interested in deals.

<unk>.

Where.

We're reintroduce it we would be interested either in.

Theyre going to Cigna.

With people.

Significant touch points with the company and our operations now so that we can.

Nowadays call tuck in acquisitions that strengthened one of our existing businesses most likely would be.

Anticipate.

Meaningful immediate synergies and.

Brooks Pierce: The most likely would be an interactive studio or an interactive business that had products that we don't have or was addressing markets that we don't address, that we could easily fold in. The same thing would be possible in our equipment business. I think it's unlikely that we would do something very big in an M&A sense right now because the business is running beautifully. There's plenty of opportunity to, as I said, to do tuck-in acquisitions. That's kind of what we're doing, Barry.

An interactive studio or an interactive.

And a deal that makes significant financial sense, we're not going to do anything that's.

Business that had products that we don't have or was addressing markets that we don't address.

Highly diversification mode.

That we could easily fold in.

<unk>.

<unk> crazy prices that we cant.

Same thing would be possible.

We can't mitigate by having a lot of operational synergies. So so that's sort of that's the overarching concern in terms of the kinds of companies.

And our.

In our equipment business.

I think.

It's unlikely that we would do something very big in an M&A sense right now because the business is running beautifully.

We're reintroducing.

Would be interested either in.

With people.

There's plenty of opportunity to.

Nowadays call tuck in acquisitions that strengthens one of our existing businesses.

As I said to do tuck in acquisitions.

Most likely would be.

And that's kind of what we're doing there.

An interactive studio or an interactive.

Got it.

Then.

Barry Jonas: Got it. I noticed there was a release about your premium iGaming entrance into West Virginia recently. Just curious if you could talk more about that, and then any other notable jurisdictions you'll be soon to enter, hopefully. Thanks.

I noticed there was a release about your.

Business that had products that we don't have or was addressing markets that we don't address.

Premium I gaming entrance into West Virginia recently, just curious if you could talk more about that and then any other notable jurisdictions youll be soon to center hopefully.

That we could easily fold in.

Same thing would be possible.

And our.

And our equipment business.

Yes.

We started with a draft Kings and Rush Street I think the two first customers in West Virginia.

Brooks Pierce: Yeah. We've started with DraftKings and Rush Street, I think, are the two first customers in West Virginia. You know, for a while, we're kind of waiting to see how some of these markets develop. Delaware as well, which was originally pretty small, but Rush Street's made that into a pretty amazing market, and same thing in West Virginia. A number of our operator customers, you know, were pressing us to get the content in all their markets. You know, clearly, West Virginia is rolling out. We'll start seeing the impact of that here in Q4. I think the rest is what we talked a little bit about is, you know, new states. I think the only state we're not in now is Rhode Island, which is kind of a unique environment.

I think.

It's unlikely that we would do something very big in an M&A sense right now because the business is running beautifully.

For a while.

Waiting to see how some of these markets develop Delaware as well, which was originally pretty small, but rough streets made that into a pretty amazing market and same thing in west Virginia, So a number of our operator customers.

There's plenty of opportunity to.

Two as I said to do tuck in acquisitions.

And that's kind of what we're doing Barry.

We're pressing us to.

To get the content and all of our markets. So clearly so west Virginia is rolling out we will start seeing the impact of that here in the fourth quarter.

Got it.

And then.

I noticed there was a release about your.

Premium I gaming entrance into West Virginia recently, just curious if you could talk more about that and then any other notable jurisdictions youll be soon to center hopefully.

I think the rest is what we talked a little bit about as new states I think the only state. We're not in now is Rhode Island, which is kind of a unique environment. So certainly if any states were to be added.

Brooks Pierce: Certainly, if any states were to be added, you know, that's a, that's a huge bonus for us. In terms of the international markets, you know, I think we have almost 500 customers now. We're pretty much in every market you can think about. I would say that probably the biggest market that we're not participating in a meaningful way that we hope to, is probably South Africa. Brazil is, you know, growing and some of the other Latin American markets are growing. We kinda have no lack of geographical opportunities for us.

Yes.

We started with a draft Kings and Rush Street I think of the two first customers in West Virginia.

That's a huge bonus for us in terms of the international markets.

For a while kind of waiting to see how some of these markets develop Delaware as well, which was originally pretty small but <unk>.

We have almost 500 customers now we're pretty much in every market you can think about I would say that probably the biggest market that we're not participating in in a meaningful way that we hope to is probably South Africa.

Our streets made that into a pretty amazing market and same thing in west Virginia, So a number of our operator customers.

But Brazil is growing in some of the other Latin American markets are growing so we kind of have no lack of of geographical opportunities for us.

We're pressing us.

To get the content and all of their markets. So clearly so west Virginia is rolling out we will start seeing the impact of that here in the fourth quarter.

Great and congrats on the quarter and appreciate the new targets. Thank you.

Barry Jonas: Great. Congrats on the quarter and appreciate the new targets. Thank you.

Thanks Barry.

Your next question comes from the line of Jordan Bender citizen.

Brooks Pierce: Thanks, Barry.

Operator: Your next question comes from the line of Jordan Bender, Citi. Your line is now open.

Your line is now open.

That's a huge bonus for us in terms of the international markets.

Hey, everyone. Good morning, maybe just follow up on the M&A comment first off you mentioned youre going to open a new interactive studio.

Jordan Bender: Hey, everyone. Good morning. Maybe to just follow up on the M&A comments. You know, first, you mentioned you're gonna open a new interactive studio. Are you buying this or is this an organic initiative? Maybe more broadly, kind of the related to the M&A part of this, you know, have you seen multiples for studios come down at all? I know those have been quite elevated in the years past. It seems like that's kind of a natural fit for the trajectory of your business at this point. Thank you.

I think we have almost 500 customers now we're pretty much in every market. You can think about I would say that probably the biggest market that we're not participating in in a meaningful way that we hope to is probably South Africa.

Are you buying this or is this an organic initiative and then maybe more broadly kind of it related to the M&A part of this.

Have you seen multiples for studios come down at all I know there was it being quite elevated in years past. It seems like that's kind of a natural fit for the trajectory of your business at this point. Thank you.

But Brazil is growing in some of the other Latin American markets are growing so we kind of have no lack of of geographical opportunities for us.

Sure.

Maybe I'll answer the first part and a little bit of the second part and then more and can expand so the studio.

Brooks Pierce: Sure. Maybe I'll answer the first part and a little bit of the second part, and then Lorne can expand. The studio, we're building it ourselves. We've hired the guy to run the studio. He's got a non-compete. He'll get started after the first of the year, and we'll build it out. It'll be a lot of the content that we're kinda known for, but we also will give him some runway to try some, you know, newer types of content that maybe will help broaden our portfolio. In terms of M&A, we've looked at, you know, lots and lots and lots of studios.

Great and congrats on the quarter and I appreciate the new targets. Thank you.

Thanks Barry.

As is.

Is going to be or that where we're building it ourselves we've hired.

Your next question comes from the line of Jordan Bender citizen.

The guy to run the studio he's got a noncompete.

Your line is now open.

So he'll get started after the first of the year.

Hey, everyone. Good morning, maybe you could just follow up on the M&A comment first on you mentioned youre going to open a new interactive studio.

And we will build it out and it'll be a lot of the content that we are kind of known for but we also will give him. Some some runway to try some.

You buy in this or is this an organic initiative and then maybe more broadly kind of it related to the M&A part of this.

Newer types of content that maybe will help broaden our portfolio.

In terms of M&A, we've looked at lots and lots and lots of studios.

And probably the single biggest issue for us is.

Brooks Pierce: You know, probably the single biggest issue for us is, you know, there's lots of markets where some of these studios get revenue that we won't go into. That's probably the single biggest gating factor as to why we haven't done an acquisition in that space before. We continue to look at it and as the content pipeline gets bigger and bigger, there's more and more of these companies that are popping up. You know, we're constantly looking at that. Maybe Lorne.

Sure.

Theres lots of markets, where some of these studios get revenue that we won't go into and Thats, probably the single biggest gating factor as to why we haven't done an acquisition in that space before but we continue to look at it in and as the content pipeline gets bigger and bigger there's more and more of these.

I'll answer the first part and a little bit of the second part and then more and can expand so the studio.

Is.

Is going to be where that where we're building it ourselves we've hired.

The guy to run the studio he's got a noncompete.

So he'll get started after the first of the year.

Companies that are popping up so we're constantly looking at that and maybe Lauren.

And we will build it out and it'll be a lot of the content that we are kind of known for but we also will give him. Some some runway to try some.

No I don't have anything to add to that I think thats right.

Lorne Weil: Yeah, no, I don't have anything to add to that. I think that's right.

Okay.

Newer types of content that maybe will help broaden our portfolio.

Perfect.

And just following up on the share buyback it's been a couple of years you've bought back stock can you just maybe remind us your philosophy, it's just going to be kind of a program programmatic buyback opportunistic just anything to help us there.

Jordan Bender: Perfect. Just following up. On the share buyback, you know, it's been a couple years since you've bought back stock. Can you just maybe remind us your philosophy? You know, is this gonna be kind of a programmatic buyback, opportunistic? Just anything to help us there.

In terms of M&A, we've looked at lots and lots and lots of studios.

And probably the single biggest issue for us is.

Yeah, I mean I.

Theres lots of markets, where some of these studios get revenue that we won't go into and that's probably the single biggest gating factor as to why we haven't done an acquisition in that space before but we continue to look at it in and as the content pipeline gets bigger and bigger there's more and more of these company.

Thank you.

Brooks Pierce: Yeah. I mean, I.

Yeah.

Well.

Just to address the point about not having done the buyback for the last couple of years.

Lorne Weil: Well, just to address the point about not having done a buyback for the last couple of years. You know, that largely was occasioned by the accounting issue that we fortunately are now has completely behind us. While it was going on, we weren't able to buy back stock. Now we're in a situation where that's all behind us. We're generating plenty of cash. Our cash position itself is strong and so we're obviously in a position to do it. We think right now our stock is at a level where regardless of what anybody's philosophy is about the subject of share buybacks in the context of capital allocation, our view is it's obviously very attractive. I don't think it's gonna be programmatic, though.

Largely was occasion by the accounting issue that we are.

Fortunately are now has completely behind us, but while it was going on.

These that are popping up so we're constantly looking at that and maybe Lauren.

We were able to buy back stock. So now we're in a situation where.

Yes, no I don't have anything to add to that.

That's right.

That's all behind us.

Perfect.

We're generating plenty of cash our cash position itself is strong and.

Just following up on the share buyback, it's been a couple of years you've bought back stock can you just maybe remind us your philosophy.

So we're obviously in a position to do it and we think right now our stock is at a level where.

Can it be kind of a program programmatic buyback opportunistic just anything to help us there.

Regardless of what anybody's philosophy is about.

Yeah, I mean I think.

The subject of.

Okay.

Share buybacks in the context of.

Well.

Just to address the point about not having done a buyback for the last couple of years that largely was occasion by the accounting issue that we.

Capital allocation.

<unk>.

It's <unk>.

Our view is it's obviously very attractive.

I don't think its going to be programmatic, though I think it's still going to be.

Uh huh.

Fortunately are now has completely behind us, but while it was going on.

Lorne Weil: I think it's still gonna be opportunistic because we're constantly balancing the goal to bring our leverage ratio down to the level that we talked about in these projections. I think that's a priority. You know, we don't know whether and when a meaningful M&A opportunity will come across or will come along, and then we need to act on that. I don't think we want to be programmatic about share buybacks because again, we're balancing all of these factors. We're certainly gonna be more aggressive than we've been in the last couple of years, that's for sure.

Opportunistic because we're constantly balancing.

We were able to buy back stock. So now we're in a situation where.

Uh huh.

The the goal to bring our leverage ratio down to the level that we talked about of these projections and I think.

That's all behind us.

Okay.

We're generating plenty of cash our cash position itself was strong and.

I think thats a.

So we're obviously in a position to do it and we think right now our stock is at a level where.

Priority.

And.

Whether and when.

Regardless of what anybody's philosophy is about.

A meaningful M&A opportunity will come across.

<unk>.

Or will come along and then we need to act on that so.

Subject of.

Share buybacks in the context of that.

I don't think we want to be programmatic about share buybacks because again, we're balancing all of these factors but.

Capital allocation.

It's it's.

Our view is it's obviously very attractive.

But we're certainly going to be more aggressive than we've been in the last couple of years that's for sure.

I don't think its going to be programmatic, though I think it's still going to be.

Opportunistic because we're constantly balancing.

Thank you very much.

Jordan Bender: Thank you very much.

Thanks Jordan.

And your next question comes from the line of Chad Beynon of Macquarie. Please go ahead.

The the goal to bring our leverage ratio down to the level that we talked about of these projections and I think.

Brooks Pierce: Thanks, Jordan.

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

Hi, Good morning, Brooklyn peers, Thanks for taking my question.

I think thats a priority.

Chad Beynon: Hi. Good morning, Brooks Pierce. Thanks for taking my question. Wanted to revisit, Brooks, your comment about interactive October being the largest in history and obviously looking at the financials for Q3, the $11 million of EBITDA. Maybe, first question, are you adding new partners in your biggest market like the United Kingdom, or are you just gaining market share? The second part of that, do you think that, you know, certain partners are better cushioned against, you know, some regulatory changes? I know we'll hear more about that. I guess wanted to ask about, you know, tier 1, 2, 3 partners versus just overall share in that market. Thank you.

I wanted to revisit Brooks your comment about.

And.

Interactive October being the largest in history and obviously looking at the financials for Q3, the 11 million of EBITDA.

Whether and when.

A meaningful M&A opportunity will come across.

Or will come along and then we need to act on that so.

So.

Maybe.

I don't think we want to be programmatic about share buybacks because again, we're balancing all of these factors but.

First question are you are you, adding new partners and your biggest market like the United Kingdom are you just gaining market share and then the second part of that do you think that.

But we're certainly going to be more aggressive than we've been in the last couple of years that's for sure.

Certain partners are.

Better cushioned against.

Thank you very much.

Some regulatory changes I know, we'll hear more more about that but I guess just wanted to ask about tier 123 partners versus just overall share in that market. Thank you yeah, yeah. Thanks Chad.

Thanks Jordan.

And your next question comes from the line of Chad Beynon of Macquarie. Please go ahead.

Hi, Good morning, Brooklyn peers, Thanks for taking my question.

Brooks Pierce: Yeah. Yeah. Thanks, Chad. I mean, it's kind of exactly what you would want. It's pretty broad-based. It's across, you know, our three biggest markets, North America, UK and Greece. But, you know, some of the other smaller markets are growing as well. Principally, it's us gaining share. You know, I think we are ranked number four or number five in the most recent Eilers report in North America. I think we've made a pretty focused shift to having build games that resonate with the North American players, and that's turning out. You know, all the big guys, whether it's DraftKings, FanDuel, BetMGM, Rush Street, are all doing better and better. It really goes all the way through, you know, tier 2, tier 3, lower markets. It's pretty broad-based across the business.

Yes, I mean, it's kind of exactly what you would want it's pretty broad based it's across our.

I wanted to revisit Brooks your comment about <unk>.

Interactive October being the largest in history, and obviously looking at the financials for Q3, the $11 million of EBITDA.

Our three biggest markets North America U K and in Greece.

But some of the other smaller markets are growing as well and principally it is us gaining share.

So.

Maybe.

First question are you are you, adding new partners and your biggest market like the United Kingdom are you just gaining market share and then the second part of that do you think that.

I think we're ranked <unk>.

<unk> four number five in the most recent Eilers report in North America, we've made a pretty focused.

Certain partners are.

Shift to having build games that resonate with the North American players and that's turning out and so all the big guys, whether its draft kings fan dual that MGM <unk> are all doing better and better but it really goes all the way through.

Better cushioned against.

Some regulatory changes I know, we'll hear more about that but I guess just wanted to ask about tier 123 partners versus just overall share in that market. Thank you yeah, yeah. Thanks Chad.

Here to tier three lower market, so it's pretty broad based across the business and like I say the October numbers were great.

Yes, I mean, it's kind of exactly what you would want it's pretty broad based it's across.

Brooks Pierce: Like I said, you know, the October numbers were great. You get the advantage of having Halloween. When I mentioned that last week was the single biggest week we've ever had. We had the, you know, the confluence of payday in the UK, Halloween, and the resetting of limits all happen, you know, in 1 week. That, you know, kind of led to pretty phenomenal results. We obviously, as we go into Q4, you know, December is historically, you know, one of the biggest, if not the biggest months with all the Christmas games. November, you know, is also a very good month. The Q4 is shaping up nicely.

Our three biggest markets North America U K and in Greece.

You get the advantage of having a Halloween.

When I mentioned that last week was the single biggest.

But some of the other smaller markets are growing as well and principally it is us gaining share.

We've ever had we had the the <unk>.

Confluence of payday in the UK Halloween and the resetting of limits all happen in one week, so that kind of led to pretty phenomenal results, but we obviously as we go into the fourth quarter December is historically one of the biggest if not the biggest months with all the Christmas games.

I think we're ranked.

Number four number five in the most recent Eilers report in North America, we've made a pretty focused.

Shift to having build games that resonate with the North American players and that's turning out and so all the big guys, whether its draft Kings Fandel bet MGM Rush Street are all doing better and better but it really goes all the way through tier two tier three lower market. So it's pretty broad.

In November.

It was also a very good months, so the fourth quarter is shaping up nicely.

Thank you.

And then on the prediction markets, obviously, you guys have extremely minimal exposure to.

Chad Beynon: Thank you. On the prediction markets, obviously, you guys have extremely minimal exposure to, I guess, North American sports betting. We have seen a lot of the publicly traded equities trade off as a result of some competition there. Can you just talk about prediction markets if you believe that affects any of your business segments here? Thank you.

<unk> based across the business and like I say the October numbers were great.

I guess North American sports betting we have seen a lot of the publicly traded equities trade off as a result of some competition. There can you just talk about prediction markets. If that if you believe that effects.

You get the advantage of having a Halloween.

I mentioned that last week was the single biggest we've ever had we had the confluence of payday in the UK Halloween and the resetting of limits all happen in one week, so that kind of led to pretty phenomenal results, but we obviously as we go into the fourth quarter.

Any of your your business segments here. Thank you.

No. We don't we certainly arent seeing anything unfortunately, it's because we don't have the one that it might potentially impact would be virtual as in North America and as I've said on a number of the calls were frustrated by the pace at which we're getting virtual sports in North America.

Brooks Pierce: No, we don't. We certainly aren't seeing anything. Unfortunately, it's because we don't have the one that it might potentially impact would be virtuals in North America. As I've said on a number of the calls, we're frustrated by the pace at which we're getting virtual sports in North America. The content, you know, the NBA content, the NFL content is resonating with markets outside of North America, but we're still struggling to get more and more operators in North America launched. That's really the only part of the business that I would see impacted. We certainly aren't seeing any impact in the interactive space from, you know, prediction markets taking, you know, players away. Even though the operators obviously try and cross-sell, I think they're fairly separate and distinct players.

<unk> December is historically one of the biggest if not the biggest months with all the Christmas games.

In November.

It was also a very good month, so the fourth quarter is shaping up nicely.

Yeah.

The content the NBA content. The NFL content is resonating with markets outside of North America, but we are still struggling to get more and more operators in North America launch. So that's really the only part of the business that I would see impact and we certainly aren't seeing any impact in the interactive space from.

Thank you.

And then on the prediction markets, obviously, you guys have extremely minimal exposure to.

Yes, North American sports betting we have seen a lot of the publicly traded equities tradeoffs as a result of some competition. There can you just talk about prediction markets. If that if you believe that effects.

<unk>.

Prediction markets taking.

Players away I think they're I think they're fairly even though the operators, obviously try and cross sell I think they are fairly separate and distinct player.

Any of your your business segments here. Thank you.

Players.

Yeah.

Thanks Brooks appreciate it and appreciate the slide deck.

Chad Beynon: Thanks, Brooks. Appreciate it and appreciate the slide deck.

Chad Thanks.

Brooks Pierce: Okay, Chad. Thanks.

Your next question comes from the line of Joshua Nichols B Riley Securities. Please go ahead.

Operator: Your next question comes from the line of Josh Nichols of B. Riley Securities. Please go ahead.

<unk>.

The content.

The NBA content. The NFL content is resonating with markets outside of North America, but we are still struggling to get more and more operators in North America launch. So that's really the only part of the business that I would see impact that we certainly aren't seeing any impact in the interactive space from.

Yes, Thanks for taking my question and great to see.

Josh Nichols: Thanks for taking my question, and great to see the Holiday Parks business approaching a sale here and the stock buyback. Sorry if it was already addressed. I joined the call a few minutes late. I wanted to just talk about the interactive business. Phenomenal growth that you've been seeing there overall. I think it's on pace for something close to 50% growth this year. Do you expect that pace is likely to continue next year? What are the key kind of drivers that you see that's gonna be driving interactive, whether that's Brazil or expanding your partnerships with some players in the US and things that are in the pipeline for that business?

Mark's business approaching a sale here and the stock buyback.

Sorry, if it was already addressed I joined the call few minutes late but I wanted to just talk about the interactive business phenomenal growth that you've been seeing there overall.

Prediction markets taking.

I think it's on pace for something like close to like 50% growth. This year do you expect that that pace is likely to continue next year and what are the key kind of drivers.

Players away I think they're I think they're fairly even though the operators, obviously try and cross sell I think they are fairly separate and distinct players.

Players.

See that's going to be driving attractive, whether that's like Brazil or expanding your partnerships with some players in the U S and things that are in the pipeline for that business.

Yeah.

Thanks Brooks appreciate it and appreciate the slide deck.

Chad Thanks.

Your next question comes from the line of Joshua Nichols B Riley Securities. Please go ahead.

Yeah, we sort of address it a little bit earlier, but I'm happy to go back through it.

Brooks Pierce: Yeah, we sort of addressed it a little bit earlier, but I'm happy to go back through it. Yeah, I mean, look, 9 quarters in a row of more than 40% EBITDA growth is, you know, eventually the math gets a little bit more challenging. As I mentioned, you know, the October numbers were great. We expect Q4 to continue, you know, to build on that momentum. The biggest issue for us, which again, I talked about a little bit, is, you know, what our customers are saying is, your games are great, your game mechanics are great.

I mean look 99 quarters in a row of more than 40% EBITDA growth as is eventually the math.

Yes, Thanks for taking my question and great to see.

<unk> business approaching a sale here and the stock buyback.

It gets a little bit more challenging, but as I mentioned.

Sorry, if it was already addressed I joined the call few minutes late but I wanted to just talk about the interactive business economic growth that you've been seeing there overall.

The October numbers were great, we expect fourth quarter to continue.

To build on that momentum the biggest issue for us, which again I talked about a little bit is.

I think it's on pace for something like close to like 50% growth. This year do you expect that that pace is likely to continue next year and what are the key kind of drivers.

What our customers are saying is your games are great. Your game mechanics are great. We just want more of them.

Brooks Pierce: We just want more of them." Hence, that's why we're investing in the studio to increase the capacity so that we can get more games out to the market, which I think will hopefully help us, you know, sustain the growth levels. There's, you know, there's so much content out there now that you really do have to have the combination of the quality and the quantity. Our, you know, our game design teams have come up with some really interesting mechanics. We mentioned in the, in the presentation about this persistence game that we're doing called Player Link that's driving increased play. We got lots of levers that we're pulling, and we, you know, we hope this streak continues.

And hence that's why we're investing in the studio to increase the capacity. So that we can get more games out to the market, which I think will hopefully help us sustain the growth levels.

See thats can be driving attractive, whether that's like Brazil or expanding your partnerships with some players in the U S and things that are in the pipeline for that business.

There's so much content out there now that you really do have to have the combination of the quality and the quantity, but our our.

Yeah, we sort of address it a little bit earlier, but I'm happy to go back through it.

I mean look 99 quarters in a row of more than 40% EBITDA growth as is eventually the math.

Our game design teams have come up with some really interesting mechanics, we mentioned in the presentation about this persistence game that we're doing called player link that's driving increased play. So we got lots of levers that we're that we're pulling and we you know we hope to streak continues.

Gets a little bit more challenging, but as I mentioned.

<unk> numbers were great. We expect the fourth quarter to continue.

To build on that momentum the biggest issue for us, which again I talked about a little bit is.

What our customers are saying is your games are great Youre game mechanics are great. We just want more of them.

Thanks, and then last question for me virtual sports, obviously, a smaller piece of the business today, but good to see how that businesses.

Josh Nichols: Thanks. Last question for me. Virtual sports, obviously, you know, a smaller piece of the business today, but good to see how that business has stabilized over the last couple quarters. You talked about trying to get up and running with some more operators in the US. What needs to be done to really get that business back into growth for 2026? Are there a couple larger opportunities that you're kind of optimistic about when we look beyond just the Q4, but for next year, really?

And hence that's why we're investing in the studio to increase the capacity. So that we can get more games out to the market, which I think will hopefully help us sustain the growth levels.

They realized over the last couple of quarters.

You talked about trying to get up and running with some more operators in the U S. What needs to be done to really get that business back into into growth for 2026 and are there a couple of larger opportunities that you are kind of optimistic when we look beyond just the fourth quarter, but next year really.

There's so much content out there now that you really do have to have the combination of the quality and the quantity, but our our.

Our game design teams have come up with some really interesting mechanics.

Yeah, I mean, so not to put any undue pressure on bet MGM, but they're likely to be the first big operator in North America. So they have gone live with us in Ontario, and Theyre seeing phenomenal results over the last few months and it's got some regulatory and resource challenge.

You mentioned in the presentation about this persistence game that we're doing called player link that's driving increased place. So we've got lots of levers that we're that we're pulling and we we hope the streak continues.

Brooks Pierce: Yeah. I mean, not to put any undue pressure on BetMGM, but they're likely to be the first big operator in North America. They've gone live with us in Ontario, and they're seeing, you know, phenomenal results over the last few months. It's got some regulatory and resource challenges that we're working through with them, but we expect hopefully to go live with them yet this quarter. I'm hoping that that will be a catalyst for a number of other operators to see that virtual sports resonates and works in every other market around the world we've been in, and we think it will in North America.

Thanks, and then last question for me virtual sports, obviously, a smaller piece of the business today, but good to see how that businesses.

Is that we're working through with them, but we expect.

Hopefully to go live with them, yet this quarter and I'm, hoping that that will be a catalyst for a number of other operators to see.

They realized over the last couple of quarters.

You talked about trying to get up and running with some more operators in the U S. What needs to be done to really get that business back into growth for 2026 and are there a couple of larger opportunities that you are kind of optimistic when we look beyond just the fourth quarter, but next year really.

The virtual sports resonates and works in every other market around the world we've been in and we think it will in North America. So unfortunately for US we haven't been able to frankly, because the operators have lots of priorities that they are working on further I gaming and their sports business in virtually just kind of has <unk>.

Brooks Pierce: You know, unfortunately for us, we haven't been able to, frankly, because the operators have lots of priorities that they're working on for their, you know, iGaming and their sports business, and virtual just kinda has slid down their priority list a little bit. I still believe that it will resonate. I still believe we have, you know, licensed content with the NFL, NBA, and NHL that will resonate with the North American player base. Once, you know, like I said, it's doing phenomenally well in Ontario. I think once we get one of the big guys, hopefully BetMGM first, live in North America and they do well, I think that will hopefully be a catalyst for the other big operators to put some resources to this.

Sit down their priority list, a little bit, but I still believe that it will resonate I still believe we have licensed content with the NFL NBA and NHL that will resonate with a north American player base and once you know like I said, it's doing phenomenally well in Ontario.

We're working through with them, but we expect.

I think once we get one of the big guys hopefully that MGM first live in North America and they do.

Hopefully to go live with him yet this quarter and I'm, hoping that that will be a catalyst for a number of other operators to see.

Well I think that will hopefully be a catalyst for the other big operators.

The virtual sports resonates and works in every other market around the world we've been in and we think it will in North America. So unfortunately for US we haven't been able to frankly because of the operators have lots of priorities that they're working on further I gaming and their sports business in virtual just kind of as <unk>.

To put some resources to this because it's not a challenge for US it's really just a resource issue for the other guys.

Brooks Pierce: It's not a challenge for us, it's really just a resource, issue for the other guys.

Understood. Thanks for the context.

Josh Nichols: Understood. Thanks for the context. Appreciate it.

No problem.

Brooks Pierce: No problem.

And there are no questions I will now turn the conference back over to Mr. Weil for any closing remarks.

Sit down their priority list, a little bit, but I still believe that it will resonate I still believe we have licensed content with the NFL NBA and NHL that will resonate with a north American player base and once like I said, it's doing phenomenally well in Ontario.

Operator: There are no questions. I will now turn the conference back over to Lorne Weil for the closing remarks.

Thank you operator.

Lorne Weil: Thank you, operator, thanks everyone for joining the call today. I know, is it Smart Radar System just started 5 minutes ago, we probably lost a few of our listeners. Just to reiterate where we are, we're feeling very ebullient about the business right now. The rest of this year looks solid. We're pretty confident that as we move through 2026 and 2027, we can achieve the kind of performance parameters we talked about in the presentation. Thanks again for your support. We look forward to talking to you in a few months. Thanks.

Thanks, everyone for.

Joining the call today.

Is it support radar just started.

Five minutes ago. So.

I think once we get one of the big guys hopefully bet MGM first live in North America and they do.

We probably lost a few of our listeners but.

Just to reiterate where we are we're we're feeling very.

Well I think that will hopefully be a catalyst for the other big operators.

The <unk> about the business right now.

To put some resources to this because it's not a challenge for US it's really just a resource issue for the other guys.

Rest of this year looks.

Solid.

We're pretty confident that as we move through 2006 and 2007 weekend.

Understood. Thanks for the context.

<unk> achieved the kind of the.

Performance parameters, we talked about in the presentation. So.

No problem.

Okay.

Thanks again for your support.

And there are no questions I will now turn the conference back over to Mr. Weil for any closing remarks.

And we look forward to talking to you in a few months.

Thank you operator.

Thanks, everyone for.

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

Joining the call today.

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

Does it support radar just started.

Yeah.

Five minutes ago. So.

We probably lost a few of our listeners but.

Just to reiterate where we are we're feeling very good.

<unk> about the business right now.

First of this year looks.

Solid.

And we're pretty confident that as we move through 2006 and 2007, we can.

<unk> achieved the kind of the.

Performance parameters, we talked about in the presentation. So.

Thanks again for your support.

And we look forward to talking to you in a few months.

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

Yeah.

[noise].

Q3 2025 Inspired Entertainment Inc Earnings Call

Request a DemoDemo

INSE

Inspired Entertainment

Earnings