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spk05: Good morning, everyone, and welcome to the Inspired Entertainment first quarter 2022 conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. Please note, today's event is being recorded. I'll begin today's conference call. by referring you to the company's safe harbor statement that appears in the first quarter 2022 earnings press release which is also available in the investors section of the company's website at www.inseinc.com again www.inseinc.com this safe harbor statement also applies to today's conference call. as the company's management will be making certain statements that will be considered forward-looking under the securities laws and rules of the SEC. These statements are based on management's current expectations or beliefs and are subject to risks, uncertainties, and changes in circumstances. In addition, please note that the company will discuss both GAAP and non-GAAP financial measures. A reconciliation is included in the earnings press release. With that completed, I would now like to turn the conference call over to Lorne Wheel, the company's executive chairman. Mr. Wheel, please go ahead.
spk03: Thank you, operator. Good morning, everyone, and thank you for joining our first quarter earnings call. Using a hockey metaphor, I'm pleased to say that we're back now to full strength with Stuart joining Brooks and myself in speaking this morning. And not a minute too soon because there are a huge number of developments to keep track of. And when it comes to keeping track of things, they don't get any better than Stuart. As we indicated in the press release, we were pleased with our first quarter results with consolidated EBITDA coming in nicely ahead of estimates and all the important performance vectors going in the right direction. In our last conference call, we talked about our digital business, the combination of virtual sports and interactive, moving towards accounting for half of our overall earnings. And indeed, in the first quarter, the digital business grew 47% year-over-year to reach 48% of total EBITDA. As we have also mentioned previously, this dynamic continues to positively impact the growth rate, operating margin, and capital intensity of the overall business. Virtual sports was the primary digital driver in the first quarter, with overall revenue growing 84% year after year. Despite the fact that retail virtuals returned almost to pre-COVID levels, online virtuals still recorded growth of 54%, illustrating the tremendous momentum in this business. As Brooks will discuss in a moment, virtually all this growth in the quarter was organic, coming from the existing customer base, And now to this, we will add several new customers rapidly coming on stream. We should also note that in the first quarter, there was no longer any COVID-related impact on live sports. And yet with the full menu of live sports betting options being available, virtual sports still charged ahead on this tremendous growth trajectory. Indeed, this might even reinforce a point we've been making for some time, that live and virtual sports might be complementary rather than competitive. Under normal circumstances, digital growth in the first quarter would have actually been still greater, and digital's overall share might already have been 50%. But as we've seen from the numbers in the press release, as against only modest interactive revenue growth, There was about a 34% increase in interactive operating costs, a situation that is already turning itself around nicely in the second quarter. During the first quarter, we invested heavily in new markets and new operators, but we introduced only about half the number of new titles as we typically do. But by the end of the quarter, a handful of new titles were performing very strongly, driving revenue growth and week-by-week improvement. So the outlook for this business over the balance of the year remains very positive. As can be seen in the press release as well, our combined gaming and leisure business effectively are land-based systems and equipment activities rebounded tremendously from the COVID-impacted first quarter of 2022, with combined EBITDA swinging from a loss of 3.3 million in 2021 to positive EBITDA of 12.4 million in 2021, despite the first quarter generally being relatively weaker seasonally. At the same time, we've been very pleased with the performance of our North American machine-based business, highlighted by a very significant order from the Western Canada Lottery Corporation, which, Brooks, again, we'll talk a little bit more in a minute. Elsewhere in the North American lottery world, things continue to move forward on our head of schedule. Revenue and profitability in our Dominican Republic retail lottery operation are running ahead of projections, and we're moving towards completing the development of the online platform, which we expect to launch in the early summer. This will not only drive incremental high margin in the Dominican Republic, but provide us with a lottery platform having wide applicability and synergizing well with our growing lottery content capability. Finally, let me say a word about our share repurchase announcement, which we mentioned in the press release. Throughout most of my career, I have generally not been a huge advocate for share repurchases. My feeling has generally been that allocating resources to building the fundamental business itself is the key to creating longer-run shareholder value. But we find ourselves in an interesting position right now. The fastest-growing parts of our business are also the highest margin and least capital-intensive, so generating sufficient cash to fund our growth is not an issue. And at the same time, given our outlook, We believe that repurchasing our shares will be very highly accretive to our shareholders, again, without compromising the need for growth capital. And with that, I'll turn it over to Brooks.
spk10: Okay, thank you, Lorne. And I'm happy to go into a little bit more detail in each of our operating segments. And I certainly agree that our positive results in the first quarter continue building strong momentum into the second quarter and for the second half of the year. The gaming segment, it was gratifying to see the recurring revenue of our retail businesses return to pre-COVID levels, with several of our key customers actually showing growth compared to pre-COVID levels. It's also important to note that we've built a significant backlog in the sales side of our gaming business, which also includes machine sales in the UK, where we've seen success of our products in both the pub and AGC segments driving demand. Like pretty much every other business in the world, we're facing the challenges of supply chain issues and expect that our hardware sales will be a little lumpier and less predictable from a quarter-to-quarter perspective than usual because of this. However, we remain quite comfortable that over the course of this year, we'll deliver to our plans. As Lauren mentioned, this quarter we saw the results of significant efforts by our team here in North America when we received an award of 720 terminals through the Western Canada Lottery Corporation. Just for a little background, we had delivered 100 terminals to them previously, and based on the performance of our products, they renewed their commitment to Inspired with the award of 100% of the available order during this procurement cycle. Frankly, a really significant achievement by our entire team. We think this bodes well for us with other jurisdictions in Canada and North America in the future as we continue to build out this part of our business. This is also the first quarter in which we reported on our recently acquired lottery systems business through LATESA in the Dominican Republic, and their results exceeded our expectations, as Lorne mentioned. We have significant plans to build out this opportunity as we will be expanding their suite of services to include both online and mobile betting in the second half, and we expect these services to be a showcase of our capabilities in the broader lottery industry. Moving on to the virtual sports business, the virtual sports business had a record first quarter with adjusted EBITDA almost doubling from the same period in 2021 on the strength of the growth in our online segment combined with the return of our retail business. As Lauren just mentioned, the growth came largely from existing customers, frankly, demonstrating the ability to grow this business organically over time. But we're also quite excited to have a very full pipeline of customers that we expect to go live throughout the rest of the year in a number of key geographies. Results in this segment from a limited number of customers thus far in Ontario have been quite promising, and we expect that it will be a strong market for us as more and more players are exposed to the product. Second half of the year, we'll also see us go live with a new football product in Pennsylvania with the lottery and the addition of the DC lottery, as well as the launch of some key new products like our winning soccer game in time for the Euros, the summer, and our home run shootout product with licensed players from the MLB PAA, including Babe Ruth. Moving on to the interactive ride gaming segment, where we showed modest growth compared to the prior period, but which, as Lorne discussed, is in part due to the staging of content beyond Q1, which is historically the lowest quarter in this segment. We're excited for some of the new games we've launched. In April, we're already seeing strong performance and trends. We believe that several markets that are new for us in North America, including Connecticut and Ontario, will produce meaningful contributions to our growth as well as the potential licensing in Pennsylvania, which is a very big market that we're not yet live. The combination of all of the above as well as getting live with both FanDuel and Penn National in existing markets like New Jersey and Michigan in the second half of the year will help us have a strong second half. Moving to the leisure segment, we saw all aspects of the business operating with no restrictions compared to Q1 of 2021 and have seen the benefits of early openings of the holiday parks as well as increased traffic on the motorways contributing to our MSA sector performance. We're now close to 80% of our public state being digital and we'll have the whole state connected by the end of Q2, which allows us to refresh content more regularly, report more detailed analytics to our customer base, and which we expect to drive yield improvements and increase cash box. Our omnichannel content strategy continues to work as intended, as several of the titles that are successful across iGaming, betting shops, pubs, and AGCs, and we'll have more titles like this being delivered to the market throughout the rest of the year. Summary, we feel very good about the progress of the business and our execution, and we see a very clear path to deliver consistent growth across each of the segments for the rest of the year. With that, I'll hand it over to Stuart to cover off some of the financial performance.
spk04: Thank you, Brooks. Good morning, all.
spk01: First of all, can I just say how great it is to be back? And thank you to all the extensive well wishes, including in the last earnings call. It feels even better to see that the business really didn't skip a beat. And in some ways, the overall momentum seems to have accelerated when I was gone. Whether that's the growth in virtual sports, the Western Canada Terminal Order, or any number of the other metrics, the business really has never been in a better shape than it is today. So with that in mind, it wouldn't be a quarterly call if I didn't take a little bit of time to run through the financials in a bit of detail. I will try and keep it high level as we followed the 10Q last night, and also given the rolling lockdowns during the first quarter of last year, the year-on-year comparables are not terribly meaningful. Since the third quarter of 2021, we've told you that the business has operated on a regular way basis, and this quarter is really more of the same. Overall, our revenue grew 166% on a reported level, or 173% on a constant currency basis, against the same quarter a year ago. Like I said, I remind you of the extensive lockdowns and operating restrictions that were in place in the first quarter of 2021. Additionally, last year's numbers also included VAT-related income of $3.1 million versus $0.9 million this year. So excluding this VAT-related income, overall revenue grew 203%. Now segmentally, virtual sports was clearly the standout start of the quarter, with year-on-year revenue growth of 84% on a reported basis, which actually is slightly higher than that on a constant currency basis, and an approximate increase of 300 basis points in the EBITDA margin. That said, each of our business lines performed well. And one thing to note as you read through our segment-level results, and building on what's already been mentioned in Interactive, is that we had two North American go-lives straddling the end of the quarter, Connecticut in March and Ontario in April. These go-lives took up some bandwidth, which did impact the pace of content introductions during the quarter. So we don't think the headline growth that we saw in the first quarter in Interactive is demonstrative of the practical progress made in that business. We do expect future growth in future periods to be more reflective of the higher growth rate. In terms of how our revenues compared to pre-COVID levels, we saw gaming and leisure combined recurring revenue overall at 98%, 100%, and 104% of pre-pandemic levels in January, February, and March, respectively. We continue to believe these results are reflective of a return to normalcy, and actually the positive trajectory has continued in April, rising to 109%. It's also worth noting that during the quarter, our online revenues were well over 280% of pre-COVID levels. Moving further down the income statement, adjusted EBITDA grew 418% on a reported basis, with adjusted EBITDA margin increasing by over 1,600 basis points, continuing to reflect the operating leverage and scalable nature of our business. Depreciation expense declined by approximately 23% year-on-year, reflecting our reduced capital expenditure in recent years, something that we seek to continue to build upon, shifting to reduced capital intensity. Overall, this really was a clean quarter from an income statement perspective and accounting perspective. No warrant liability impact, no earn-out accruals, and only a small below-the-line gain on the Italian VLT disposal. Following that, I can also very happily report to you that we reported positive EPS for the quarter. Turning attention to cash flows, we started the quarter with $47.8 million of cash and ended it with $40.8 million. Part of that, you'll note that $1.1 million of that decline is directly attributable to FX conversion. So on a constant currency basis, we saw a $5.9 million use of cash. But it's important to note that includes an $11.9 million bill in inventory, which we don't see as reflective of future periods. And it's related to the timing of deliveries of both finished goods and also some deliberate short-term stock piling of component parts. We expect inventory to return to normal levels by the end of the year. or to look at it another way, we expect over the course of the year the working capital outflow here to reverse. After this increase, there would have been cash generation during the first quarter. I would also note that the first quarter is also a seasonally high capex quarter, and similarly, it's also the case that certain items are payable during the first quarter, such as the payroll taxes due on employee share investing at the end of last year, which incidentally has the same impact of repurchasing about 377,000 shares. So following this, mentioned by Lorne, you will note that we announced that our board approved a share repurchase authorization yesterday. While we won't comment publicly about our exact intentions of how we may use this, I think it is demonstrative of our conviction as a management team in the long-term outlook for the company. We will obviously report back in future periods to the extent that we have taken action with respect to our securities in the capital market. So once again, it's great to be back. I look forward to speaking with you and seeing a number of you in the near future. And with that, I'll hand back to Lorne to open up the Q&A.
spk03: Thank you, Stuart. I don't have any more prepared remarks to make, so operator, if you could go ahead with the Q&A, please.
spk05: Yes, sir. We will now begin the question and answer session. To ask a question, you may press star then one on your touchtone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster? The first question comes from Barry Jonas with Truist Securities. Please go ahead.
spk07: Hey guys, good morning and Stuart, welcome back. I wanted to start by talking about the macro environment. We've heard some operators talk about starting to see some impact to the consumer from inflation or just general macro trends. Curious what you guys are seeing there today and any expectations going forward.
spk03: It's Lauren. I'll tell you what I see or don't see, and I'll hand that over to Brooks because he's a lot closer to it on a day-by-day basis than I am. But I... I'm hearing the same things that you're saying, but we're, at least so far, we're not seeing any meaningful impact of that in any of our businesses. You know, if you look at the, certainly our cross-the-board performance in the first quarter, there's not much to suggest that that's having an impact. You know, we were thinking that maybe we had begun to see it a little bit in the interactive business because, as both Brooks and I mentioned, you know, the first quarter, revenue growth in the interactive business was not overwhelming. But I think, in our case, it had really... I mean, this is a business... That's driven by new game introductions. That's just really what the name of the game is once you have your customer base, which we obviously do. The last couple of weeks in April, we've seen a tremendous acceleration week after week after week. So what we're seeing right now absolutely does not suggest that there's an impact. of a slowdown in consumer spending. But again, in our case, it really had to do with our own game and product introduction. So we're not, and we're certainly not seeing it in virtual sports, and we're not seeing it in the machine businesses in the UK.
spk10: I mean, Brooks, you're seeing some... No, I think you covered it very well. I mean, I think in Stuart, Barry, I'm not sure if you caught that with Stuart's response about the pre-COVID levels kind of accelerating in the gaming side of the business, even more so in our April results. So where you might think that you see the impact of inflation on the consumer in the UK and even Greece, frankly, what we're seeing is an acceleration of the business. And, you know, who knows if that's some pent-up demand issues from COVID, some some of the reductions in the COVID issues that, you know, for restrictions into the betting shops in Greece, et cetera, et cetera. But as Lauren said in summary, we're not seeing it.
spk07: Great, great. That's really helpful. For a follow-up question, you guys have been very successful diversifying the mix of the business into digital. I'm curious, how do you think the geographical mix will shift over time just with the majority today in the U.K.? ?
spk03: Well, I was tempted to say it's a virtual certainty, but Brooks and Dan hate it when I say things like that. So I'll restate it and say it is our very strong belief and certainly our objective that over the next couple of years, the mix of the business is going to swing very, very strongly towards North America, both U.S. and Canada. We're just in the very, very early innings of both the iGaming and lottery evolution in North America. There's only a handful of states that are doing it, and yet we've seen Tremendous growth. I think in Ontario we're seeing that virtual sports definitely has the same potential here as it has had in Europe. Brooks talked about the machine business in Western Canada lottery. That in turn has spawned tremendous interest on the part of a number of other jurisdictions because of the terrific performance of our products in Western Canada that gave rise to this large order that Brooks talked about. So I would have to think in the next couple of years, even without any M&A enhancement to our growth, but just organically. And, of course, assuming that the opening up of new iGaming and iLottery markets proceeds at the rate that we think it's going to, that we should be getting pretty close to 50-50 between North America and Europe.
spk04: Thank you. That's really helpful. Appreciate it.
spk05: The next question comes from Ryan Signal with Craig Hallam Capital Group. Please go ahead.
spk09: Good morning, guys. Stuart, welcome back. Glad you're doing better. I want to start on virtual sports. So you mentioned a lot of kind of new upcoming game launches. Can you just remind us kind of the cadence of past game launches and maybe what that did to the virtuals business and then how the forthcoming game kind of you mentioned three, but launches, how that compares to past years?
spk10: Sure. Well, probably the two most notable launches for us, and again, kind of plays on Lauren's last answer to Barry's question about North America focus. So, you know, the football game that we launched as well as our basketball game. So now all of a sudden, you know, we're clearly the predominant sport for us because of our exposure outside of of North America is soccer. But the addition of football, basketball, and we're super excited about this baseball game that I think, Ryan, you've seen. And I think at some point, particularly with the experience we're seeing in Ontario, I don't think it would be a leap of faith to think that we'll be having a hockey game as well. So generally what they do is when you introduce these new sports, it doesn't actually cannibalize, it generally is accretive. People just tend to play more frequently with the addition of the sports. And obviously on the online segment, where it's so much easier to introduce sports, it's clearly kind of a big win for us. So obviously we think this is gonna be, we continue to try and develop products that will make sense in the markets. And, again, I think baseball for us will be a big product here in North America. And, obviously, as we look to Latin America, we think that will be a big product as well.
spk03: One thing I would add to that is, you know, when we first started in virtual sports, apart from an experience we had with a boxing game, we really haven't had much to do with licensing or licensed product in the virtual sports business. And this whole sports licensing thing actually is something that we had phenomenal success with and phenomenal experience with back in our scientific games days. We actually, we at Cygames created the instant ticket sports licensing business, which for many years was probably the most important driver of growth in scientific games. So we had relationships with the NBA, with Major League Baseball, and so forth, and actually at some point we did a licensed basketball game in China that was just absolutely spectacularly successful. This is one of these things where it's a chicken and egg problem because these licenses aren't cheap. If you're not doing enough business to justify spending the money on the license, then you can't. But on the other hand, if you're not doing the licensing, it's difficult to drive the growth. We've I think we've reached that inflection point in Inspired. So in the fall, we're going to be launching the football game that uses all the players from the retired NFL Players Association, which we think will be phenomenal. And now we've got, as Brooke said, the licensed baseball game. So we'll have... we'll have a home run hitting contest between Babe Ruth and Reggie Jackson or whoever else we want. So I think on top of all of the sports specific things that Brooks talked about, baseball, basketball, hockey, and so forth, I personally think that we're going to get a real jolt from the addition of professional sports licensing to these games and And then once that process starts, it really feeds on itself. We saw it in the lottery business at CyGames, and I'm as certain as I can be that we're going to see it in our virtual sports as well.
spk09: I appreciate that, Collar. Just a follow-up on the licensing. So historically, virtual has had phenomenal margins. I mean, north of 90% gross margins. close to 80% on the EBITDA margin. So I guess given these not cheap licensing fees, how should we think about margins in that segment? And then secondly, how do the contracts work? Are they revenue share or is it a fixed cost for that license content?
spk03: Yeah, so again, everything tends to be on a rev share basis. Typically what happens in the licensing world, there's a there'll be some kind of guarantee so that if the revenue projections turn out not to be accurate, then there's some short-term negative impact on margins because we have to pay the fixed guaranteed licensing fees even if we don't get the revenues. I'll really be shocked if in the case of the football and baseball that we don't get a very significant bump in revenue and that that revenue growth will offset the cost of the licenses.
spk10: Yeah, and Ryan, just maybe one other thing I'd add to that. Remember, particularly for the licensees, virtual sports is a brand new space. So, you know, maybe after the initial contracts, if they're really successful, licensing fees might be something that we, you know, obviously have to keep our eye on. But at this point, it's frankly going to the, you know, the licensors and basically talking to them about what virtual sports is and what the potential is. And, you know, they're kind of in, they've got some skin in the game with us, as Lauren talked about. So I don't anticipate anything. any margin erosion certainly for the foreseeable future.
spk09: Great. I want to switch over to leisure. Just curious what you're seeing kind of boots on the ground from holiday bookings and planned summer travel in the UK.
spk10: Yeah. So the good news is the holiday parks have opened sooner than they did last year. So we're seeing the benefit of that. And the bookings are stronger. which last year, as you remember, last year was a record year, and the bookings are even stronger this year. So, you know, that might actually be one of the, conversely, benefits of inflation is that folks in the U.K. may decide not to take overseas vacations and may stay and go to our holiday parks. So, so far, the results have been, you know, outstanding.
spk09: Great. A lot of exciting things happening. Good luck, guys.
spk05: Thank you, Ryan. The next question comes from Chad Benyon with Macquarie. Please go ahead.
spk08: Hi, good morning. Thanks for taking my question. Stuart, good to have you back. Can you talk about any supply chain bottlenecks that you're currently or expecting to see? You mentioned the inventory builds and the working capital hit. but just trying to understand if you're able to fulfill all orders and if there should be an impact later on the year in margins. Thanks.
spk10: Sure. Well, I'll take the first part, and, Stuart, if you want to add the second part. I mean, one of the things, as Stuart talked about in terms of inventory, is we have been aggressive, quite frankly, to meet the demand. So we've probably ordered more inventory than certainly we historically have. As I mentioned in my remarks, obviously there's going to be a little bit more of a lumpy nature to this. We're not having problems getting product, but certainly we have some issues with delays. How we've killed that with a sledgehammer, so to speak, is just ordered enough inventory to make sure that we have the flow of product to be able to deliver to the demand. But I think as Stuart also mentioned, we certainly feel like we'll work through that over the course of the year. In terms of the margin side, sure, we're getting a very modest probably uptick in certainly the container costs and shipping costs and a little bit on the product side. But our ASP is holding pretty strong, so I don't see a real issue with margins either.
spk08: Great. Thanks. And then in terms of CapEx for the year, Stuart, I don't think you gave that. How should we think about how that starts to flow in and then how that affects how much share repurchases you're available to do in the year? Thanks.
spk01: Yeah. So in terms of CapEx, so you've seen the numbers in the back of the release. So just over $10 million for the quarter. And as we say, that's The first quarter is always the highest from capital spend, not least because it makes sense to put the new terminals, new equipment into holiday parks at the start of the year rather than during them. I think we've talked around on a stabilized basis, CapEx being around the $30 million mark per year. Some years that's higher and some years that's lower. That might be slightly higher this year. There's a lot of opportunities out there, and we've got a lot of decisions to make in terms of whether we bring that expenditure forward so we can exploit those opportunities earlier, certainly in the land-based businesses. Obviously, as Lauren said, in the digital businesses, there's much less of a decision point to be made. Obviously, the fall in exchange rate on the pound may actually reduce our dollar spend to some extent, but we'll see how that plays out. I don't think it makes a big difference in terms of what we're thinking about in terms of share buyback. I think we're very confident around the long-term cash flows of the business. Yeah, I don't think it comes to that. I mean, Lorne, do you want to add anything in terms of how it is?
spk03: Yeah, thanks, Stuart. Well, I was just going to add again to the last part of Chad's question, which is was there a concern with CapEx having an impact on our ability to execute the share repurchase program, and I think the answer to that is no. If you take our current cash position, and I think it's pretty comfortable, given our backlog, that the inventory build is going to unwind over the course of the year, so that will all come back in as cash flow. And bear in mind also, Chad, that our revolver is completely undrawn. So with the cash we have now, the cash that's going to be generated by the operations plus the reverse of the inventory build and then the availability of the revolver, I think we'll be in a position to do whatever we feel is the right thing to do with the share repurchase.
spk04: Thank you very much. Appreciate it, and a nice quarter. Thank you. Again, if you have a question, please press star then 1.
spk05: The next question comes from Edward Engel with Roth Capital. Please go ahead.
spk00: Hi, thank you for taking my question. Just kind of following up on that last one, can you just maybe remind us what your target leverage ratio is today versus what your actual leverage stands today? And then maybe, I mean, it sounded like you'd be willing to maybe even increase net debt to EBITDA alongside the buyback. Do you think that's necessary or do you think you have enough free cash flow to kind of maintain that ratio or even decline it?
spk03: Yeah. I can talk about it conceptually, and then if Stuart, who's a lot closer, or Dan, to the numbers can embellish on it. But in terms of the first part of your question, we've said repeatedly that our target leverage is three, which on a net debt basis I think is about where we are now. where we've historically been comfortable letting it go up above three if we can see that the EBITDA and cash flow growth going forward is going to quickly bring us back down to that. I don't think that we would have announced the share buyback if we weren't quite confident that we could execute it without upsetting our target of being at or below three. So I think it's actually a very good question, and I'm glad you asked it, but the answer is I think all of these objectives are consistent with one another, again, mainly because, as you can see in the first quarter, with so much of our growth, coming from businesses that have really very high margins and very little capital intensity that we're able to keep all these balls in the air at the same time.
spk06: And one way to think about it is the business, as Stuart said, has never been in better shape than it's in today. and we've never had more financial flexibility and a better balance sheet than we have today. But as we look forward and we look at our long-term plan, we see pretty consistent improvement in that on a short, medium, and long-term basis. So even though it's in the best shape it's ever been in today, from our standpoint, it's only going to improve going forward. And so we think that gives us a lot of flexibility to opportunistically implement and execute the plan.
spk00: Great. That's helpful. And then just kind of wanted to get a better sense of what you're seeing in Ontario. It sounds like your virtual sports products are getting really good traction, but we've kind of heard that there might have been a little bit of a slower ramp for iGaming for the industry overall. Just kind of wondering what you're seeing on the ground.
spk10: Yeah, that's true. I think, I mean, I'm happy to say that the last week we had is the best week we've had in Ontario. So the trend is going in the right direction. But I would say, and I've listened to some of the other calls, and I think everyone probably underestimated what it would take to do this kind of changeover into a regulated market. But I think over the long term, Ontario will bear fruit. You know, it's 13 or 14, Lorne would know since he's from Ontario, but 13 or 14 million people, obviously plenty of gaming up there. So I think long term, the prospects are still great. But, yeah, it's probably started slower. I think we're certainly in that same group with everyone else that's talking about it is that it started slower than we anticipated.
spk00: Helpful. Thanks, Nami. And congrats on the quarter.
spk10: Thanks. Thank you.
spk05: This concludes our question and answer session. I would like to turn the conference back over to Lorne Wheel for any closing remarks.
spk03: Okay. Thanks, Operator. I think actually Dan's comments a couple of seconds ago was the perfect closing remarks. I'll simply echo it that despite the fact that the business right now is in the best shape it's ever been from every point of view. Because of the way we see the dynamics unfolding, we actually think it is going to consistently get better and better. Our view of the future couldn't possibly be more brilliant, and we're looking forward to talking to you again in three months and reporting on what we think will be tremendous progress over the next three months. So thanks for calling in, and we'll talk to you soon.
spk05: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
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