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Inspired Reports First Quarter 2019 Results
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- Total Revenue for the First Quarter of $33.7 Million
- Functional Currency1 Virtual Sports Revenue Increased 11.0% Year-over-Year
- Net Operating Loss Narrows to $0.7 Million from $0.9 Million in the Prior Year
- Functional Currency Adjusted EBITDA Growth of 18.5% Year-over-Year
- Adjusted EBITDA2 Increased to $13.7 Million from $12.4 Million in the Prior Year
- Adjusted EBITDA Margin3 Increased to 40.7% from 36.6% in the Prior Year
- Cash Generation of $3.0 Million During the Quarter
- North American Video Lottery Terminal (“VLT”) Business Expected to Commence Shipments in the Fourth Quarter 2019
Inspired Entertainment, Inc. reported financial results for the three-month period ended March 31, 2019.
Total Revenue for the three months ended March 31, 2019 was $33.7 million, a year-over-year decrease of $3.8 million, on a reported basis, driven mainly by adverse currency movements of $2.5 million, as well as a reduction in non-recurring software licenses and nil margin sales of hardware. Excluding these sales (software licenses of $1.3 million and nil margin hardware of $3.6 million), revenue increased $3.6 million, or 11.0%, on a functional currency (£) basis, and $1.1 million, or 3.3%, on a reported basis.
Adjusted EBITDA for the three months ended March 31, 2019 was $13.7 million, a year-over-year increase of 18.5% on a functional currency basis and 10.4% on a reported basis. Adjusted EBITDA margin increased to 40.7% from 36.6% in the prior year, primarily as a result of significant overhead savings, more profitable revenue mix, and more effective business processes.
“Our results for the quarter were in line with our guidance, driven by solid participation revenue, growth in Virtual Sports, and reduced overhead expenses,” said Lorne Weil, Executive Chairman of Inspired Entertainment. “Most importantly, our high-margin Virtual Sports business, which includes Interactive, delivered a great underlying performance, increasing 11.0% on a functional currency basis.”
Mr. Weil continued, “As we move into the second quarter, we have begun to see the impact of the April implementation of the new £2 stake limit in the UK. I applaud the efforts of our UK team, which has successfully remodeled and converted our games and software to satisfy the new requirements on an accelerated timetable. Results to date, albeit only one month, are generally in line with what we were expecting and we continue to believe the projected impact of the reduction in the maximum FOBT betting stake on our Adjusted EBITDA to be approximately $10 million to $11 million annually on a steady state basis. We remain optimistic about our strategy to mitigate a portion of the potential impact. However, with only one month of data, we are not yet prepared to predict either player adoption rates or the acceleration of the mitigants with greater specificity.”
“We continue to see strong growth in our Virtual Sports and Interactive businesses and we are extremely focused and encouraged by our business development activity across a number of key territories,” concluded Mr. Weil. “In particular we have a unique opportunity and a clear strategy to build our VLT, Virtual Sports and Interactive businesses in North America and we expect to see more meaningful results starting in the fourth quarter of 2019 when we plan to commence shipments of VLTs into the market.”
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Summary of Consolidated First Quarter 2019 Financial Results (unaudited) |
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Functional |
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|
Qtr Ended |
Currency |
Currency |
||||
|
March 31 |
Change |
Movement |
Growth |
|||
|
2019 |
2018 |
(%) |
2019 |
(%) |
||
|
(In $ millions, except per share figures) |
||||||
|
GAAP Measures: |
||||||
|
Revenue |
$ 33.7 |
$ 37.5 |
-10.1% |
$ (2.5) |
-3.5% |
|
|
Net Operating Loss |
$ (0.7) |
$ (0.9) |
NM2 |
$ 0.1 |
NM |
|
|
Net (loss) |
$ (5.0) |
$ (0.5) |
NM |
$ 0.4 |
NM |
|
|
Net (loss) per diluted share |
$ (0.24) |
$ (0.02) |
NM |
|||
|
Non-GAAP Measures: |
||||||
|
Adjusted Revenue1 |
$ 33.7 |
$ 33.8 |
-0.5% |
$ (2.5) |
6.8% |
|
|
Adjusted EBITDA1 |
$ 13.7 |
$ 12.4 |
10.4% |
$ (1.0) |
18.5% |
|
|
1Reconciliation to GAAP shown below. 2Percentage change is not meaningful. |
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Recent Highlights
Server Based Gaming (“SBG”)
- End of Period Installed Base Increased 11.6% Year Over Year –Installed terminal base at the end of the period increased to 35,286 due to the continued terminal rollout in Greece, growth from new contract awards in the UK Licensed Betting Office (“LBO”) estate, and further machine growth in Italy.
- Total OPAP Terminals Installed Increased to Over 7,300 – The roll out into Greece continued during the period, with an additional 500 terminals having been deployed on site and live as of March 31, 2019. The performance of our Greek terminals continues to be strong compared to those of other suppliers.
- Growth in Italy Estate –Customer Gross Win per unit per day in Italy increased by 4.2% (in Euros) across all customers compared to the same period last year, due to continued improvement in games and account management. However, an increase in tax on revenue reduced Net Win per unit per day by 22%.
- 125 Self Service Betting Terminals (“SSBTs”) sold and deployed in the UK – In addition to the hardware sale margin, these terminals also generate a recurring service fee.
- 50 “Flex” B3 Terminals Sold to a Major Customer in the UK – Terminals were installed towards the end of the first quarter and will result in a recurring service fee and content revenue share to Inspired.
- Over 100 “Sabre Hydra” Terminals Sold – These Electronic Table Games were sold to a major casino customer in the UK and are expected to be installed during the early half of 2019.
Virtual Sports
- Additional Virtual Sports Operators – Number of Virtual Sports operators increased to 101 live worldwide (as of March 31, 2019), up 7.4% from the same time last year.
- Launched Two Streams of Rush Football 2® with BetStars – Both scheduled and on-demand Virtual Sports launched online with BetStars, the international online sports betting brand of The Stars Group Inc., one of the world’s largest online gaming operators.
- Launched Rush Football 2 with the Moroccan Lottery – Virtual Sports went live in Morocco via the Intralot platform in approximately 200 venues.
- Inspired Named Virtual Supplier of the Year – The Gaming International Awards at ICE 2019 recognized Inspired as the Virtual Supplier of the Year.
Interactive
- Number of Live Interactive Customers Increased to 35 – Two new Interactive customers launched during the quarter via the NYX platform.
- Launched Proprietary Virtual Connect Platform with Genting Online – Virtual Horses, Dogs and Football went live in the UK on Genting’s online platform.
- Renewed Bet365 Contract – Inspired to continue to provide Virtual Sports online to Bet365 for a further three years.
- Signed Contract with BCLC to Provide Virtual Sports – New Interactive contract with British Columbia Lottery Corporation (“BCLC”) to supply Virtual Sports on demand, slots and table content.
“Now that the implementation of the £2 maximum stake in the UK is behind us, we are focused on mitigation efforts, including further streamlining of our organization, to more effectively align our resources. We began this process proactively last quarter and I’m happy to report that we realized over 400 basis points of year-over-year improvement to our Adjusted EBITDA margin in the quarter,” said Stewart Baker, Executive Vice President and Chief Financial Officer of Inspired. “We have also seen a decrease in our capital expenditures due to lower levels of machine spending and software development, leading to positive cash flow in the quarter.”
Management Outlook and Commentary
As previously announced, the implementation of the reduction in the maximum FOBT betting stake mandated by the Triennial Review took place on April 1, 2019. Management has made no changes to the outlook previously presented on the projected impact on Adjusted EBITDA to be approximately $10 million to $11 million annually on a steady state basis, assuming exchange rates remain stable. Outside of the UK FOBT business, management anticipates growth across its business units and more meaningful contributions from its North American business in the fourth quarter of 2019.
Overview of First Quarter Results
Total Revenue for the three months ended March 31, 2019 was $33.7 million on a reported basis. Revenue for the period decreased 3.5% year-over-year on a functional currency (£) basis, driven mainly by a reduction in SBG nil margin hardware and software license sales.
SBG revenue decreased by $2.4 million on a functional currency, or 8.5% at a constant rate, comprised of a reduction in service revenue of $1.2 million and reduction in hardware sales of $1.2 million on a functional currency at constant rate basis. Total SBG Recurring Revenue increased 1.1% on a functional currency basis.
Virtual Sports revenue increased by $1.1 million on a functional currency basis, or 11.0% at a constant rate, due to growth in the UK and growth in new customer launches in the rest of the world, as well as one-off income from historic recurring revenues previously unreported to the Company. Total Virtual Sports Recurring Revenue increased 16.7% on a functional currency basis.
Adjusted Revenue, revenue excluding nil margin sales, for the three months ended March 31, 2019 was relatively flat year-over-year on a reported basis and up 6.8% on a functional currency basis.
Adjusted EBITDA for the three months ended March 31, 2019 was $13.7 million, a year-over-year increase of 18.5% on a functional currency (£) basis and an increase of 10.4% on a reported basis. Adjusted EBITDA margin increased to 40.7%, from 36.6% in the prior year, primarily as a result of overhead savings due to lower staff related costs from group restructuring.
SG&A expenses decreased by $0.9 million, or 5.6%, on a reported basis, to $14.7 million. This decrease was driven by staff related cost savings of $1.5 million. These savings were offset by an increase in the costs of group restructure of $1.1 million (removed from Adjusted EBITDA) and a decrease in net labor capitalization and manufacturing recoveries of $0.7 million due to mix of projects and lower factory throughput as a result of fewer machines being built in the quarter.
On a reported basis, net operating result improved from a loss of $0.9 million in the prior period to a loss of $0.7 million, mainly due to savings in cost of sales and depreciation and amortization, partly offset by a decrease in revenue and increases in stock-based compensation, acquisition related transaction and SG&A expenses.
For the three months ended March 31, 2019 the Company reported a change in fair value of earnout liability of $2.3 million. In the prior period, due to changes in share price, the corresponding figure was a $3.8 million gain, a $6.0 million difference. On March 25, 2019 the shares relating to the earnout liability were issued and will no longer represent a liability to the Company.
About Inspired Entertainment, Inc.
Inspired is a global games technology company, supplying Virtual Sports, Mobile Gaming and Server Based Gaming systems with associated terminals and digital content to regulated lottery, betting and gaming operators around the world. Inspired currently operates approximately 30,000 digital gaming terminals and supplies its Virtual Sports products through more than 40,000 retail channels and over 100 websites, in approximately 35 gaming jurisdictions worldwide. Inspired employs more than 650 employees in the UK and elsewhere, developing and operating digital games and networks. Additional information can be found at www.inseinc.com.
Source: Latest News on European Gaming Media Network
This is a Syndicated News piece. Photo credits or photo sources can be found on the source article: Inspired Reports First Quarter 2019 Results
R. Franco Digital, Spain’s iGaming provider, has further increased the breadth of games content available through its IRIS Platform by signing a partnership with tier 1 Bulgarian supplier Amusnet.
For its history of 8 years now, Amusnet has established a position as a leading supplier in Europe with an impressive games catalogue of 300+ casino games that includes hit titles 40 Super Hot, Burning Hot, Shining Crown, and Phoenix Star.
The new partnership boosts R. Franco Digital’s platform across key regulated markets, featuring Amusnet’s extensive catalogue comprising more than casino games. Currently, the supplier’s content is live on over 2000 operators’ platforms across 35 jurisdictions.
Amusnet’s extensive collection of games, known for their innovation and player engagement, will now be seamlessly integrated into the IRIS platform, providing players with access to a host of new and thrilling gaming experiences. This collaboration exemplifies R. Franco Digital’s continuous efforts to expand its content offerings and provide operators with a competitive edge in the dynamic iGaming landscape.
Javier Sacristán, International Business Director of R. Franco Digital, said: “Amusnet is a very highly regarded name in our industry, having developed a deserved reputation for creating highly engaging products that resonate with players. Adding more premium third-party content to IRIS is a key goal as we continue to further our standing as a leading partner to operators all over the world.”
Edwin Cruz, Managing Director at Amusnet Spain, said: “This collaboration represents another important step in Amusnet’s global expansion. This strategic partnership allows us to unlock new audiences by sharing our engaging content with R. Franco Digital’s wide network, solidifying our position as a major player in the global gaming industry.”
The post R. Franco Digital joins forces with Amusnet to enhance global iGaming excellence appeared first on European Gaming Industry News.
SGG Media, the leading sports social media marketing agency, has today announced a new partnership with PlayAIO, which will deliver an innovative product of the Social Media Insights Engine, which will help SGG Media to fully captialize on the value generated by social media data.
Through this collaboration, SGG will leverage PlayAIO’s ability to streamline social media data processing, enabling them to gather real-time insights, identify trends, and unlock additional value across multiple platforms. By centralizing this data, SGG Media will gain a more comprehensive understanding of audience behavior, allowing for enhanced decision-making and more efficient use of resources.
SGG uses its extensive network of 2,500 sports micro-influencer content creators and their 75 million sports fan followers to promote some of the industry’s most exciting operator brands and this latest partnership will give SGG the opportunity to optimize its overall service offering.
Troy Paul, Co-Founder of SGG Media, said: “PlayAIO is a data expert, and we want to enhance our reporting to our 30 plus social media advertising customers.”
“PlayAIO’s Social Media Insights Engine is designed to minimize manual work and increase efficiency by automating data collection and analysis from various social channels, which will be hugely valuable as we continue to build on our reputation for offering the most cost-effective way to reach the next generation of sports fans.”
Joshua Gibbs, CEO of PlayAIO, said: “We’re excited to partner with Troy and his team on this innovative project. Our Social Media Insights Engine empowers businesses like SGG to make faster, data-driven decisions.”
“This partnership also reflects PlayAIO’s commitment to providing solutions that drive true business value for businesses by simplifying complex data and delivering actionable insights in real-time.”
The post SGG Media Partners with PlayAIO to Launch the Social Media Insights Engine appeared first on European Gaming Industry News.
Revenue optimization has emerged as one of the key success factors in the highly competitive online poker industry. With the growing costs of acquiring players and the challenge of retaining them, poker operators need more ways of generating revenue. In this light, the In-Store feature developed by EvenBet Gaming has brought a new change in the industry: boosting the operator’s revenue while offering engaging game perks for the players.
The mechanics of online poker rooms
Historically, online poker rooms have been able to attract a variety of players with diverse games, starting from the more common Texas Hold’em to the less known Razz. In the past, poker platforms have depended on rake, which is a small percentage of every pot, or tournament fees as their main sources of income.
However, nowadays, these models have become less dependable as poker operators face a number of challenges. They are always torn between the need to meet regulatory requirements, maintain their profit margins, and keep the players happy. This has led to the need to increase the average revenue per user (ARPU) without losing customers in this competitive environment.
Welcome cross-sell and upsell — two effective techniques successfully implemented in niches like e-commerce and are now actively used in the poker segment. These strategies have been effective in increasing the LTV and customer retention rates. For poker rooms, this could mean the difference between going bust and holding out for the long term.
Cross-selling in poker
Cross-selling is the practice of selling related products or services to existing customers. In the poker context, this could take several forms:
- Basic cross-sell: advertising casino games to sports bettors and the other way around. For example, a poker room may recommend slot games to the players who frequently play Texas Hold’em.
- Intermediate cross-sell: the use of player data to develop more specific campaigns. For instance, if data reveal that poker tournament players like to play blackjack, the room may target blackjack to tournament players.
- Advanced cross-sell: a more complex approach that employs dynamic and data-driven models to provide the player with customized suggestions. For example, when a player’s activity and their preferences are used to recommend new games or tournaments that may be interesting.
Upselling in poker
Upselling persuades the customer to choose a better version of the product they are already using. In poker rooms, this might involve:
- Providing VIP tournament seats to the ordinary cash game participants.
- Offering higher risk and reward tables to players who play at lower limits.
- Offering additional services such as higher level statistics or time bank top-up.
Through these strategies, poker operators can develop multi-players — customers who interact with several products. Multi-players have higher retention rates and an average future value of 50% higher than that of single-product players.
For poker room operators, understanding these cross-sell and up-sell strategies might be the only way to not only survive but prosper in the highly saturated online gaming market. It’s about the long-term perspective and the audience that will provide constant revenues.
Applying cross-selling and upselling to poker platforms
The poker industry is one of the most suitable for cross-sell and upsell strategies. The EvenBet Gaming In-Store feature is a game-changer for operators as it provides a range of virtual items that can improve the players’ experience.
Items available for cross-selling include:
- Play money packages: for those who wish to play or warm up with other games without staking their real money.
- Time bank extensions: allowing the players to spend more time making strategic moves over the course of the game.
- Rabbit hunting feature: enabling the players to see the cards that would have been dealt in the next round once a round is over.
- Opponent game statistics: informing the players about the actions and strategies of their opponents during the game.
Upselling opportunities in the store include:
- VIP cards with bundled perks: EvenBet store offers customisable sets of benefits that come at a lower price when bought together.
Yet another option are loyalty programme incentives that can come in different styles:
- Premium tournament entries: as players accumulate cash game points or achieve a certain hand count, they can unlock access to exclusive tournaments.
- Exclusive game access: higher-tier loyalty members might gain entry to special cash games or tables not available to the general player base.
These features are beneficial for the platform’s revenue, and they also boost the gaming experience and bring greater satisfaction to the players.
Strategies for increasing the cash flow
To optimize revenue in online poker stores, operators should implement a comprehensive strategy that encompasses several key elements:
- Strategic offer placement: display relevant promotions in the lobby and during the game, so that they do not interfere with the gameplay. This approach keeps the audience interested in your offer without being annoying.
- Personalized marketing: use player data to create specific promotions that will appeal to the players’ preferences and activities.
- Value-driven bundles: offer appealing promotional offers like “two for the price of one” and combo packages. Such offers have high perceived value for the players, as in a bundle they receive more than each separate item’s worth.
- Time-sensitive promotions: take advantage of the FOMO effect by offering time-sensitive products or services. This creates urgency, which in turn leads to faster buying decisions.
- Integrated loyalty schemes: integrate cross-selling and upselling opportunities in the loyalty programme. This helps retain the players for a long time and makes them use the platform more frequently.
By implementing these strategies, poker room operators can create a more engaging and profitable store environment. This holistic approach not only drives revenue but also enhances the overall player experience, fostering loyalty and sustained growth in the competitive online poker market.
Seizing the opportunity
Well-adopted cross-sell and upsell strategies can greatly improve both the cash flow and the players’ experience. This way, operators can increase their user lifetime value while enhancing the quality of the game. If you want to transform your poker platform’s monetisation model, learn more about EvenBet Gaming’s advanced store options and find out how these enhancements can help you increase player worth and involvement. The operators able to balance the revenue targets and player satisfaction will be in good standing to succeed in this competitive market.
The post Cross-Selling and Upselling in Poker Stores: How to Increase the Average Check appeared first on European Gaming Industry News.
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