Inspired Entertainment, Inc.

appears in the first quarter 2025 earnings press release, which is also available in the investor section of the company's website at www.insync.com. This safe harbor statement also applies to today's conference call as the company's management will be making certain statements that will be considered forward-looking under securities laws and rules of the SEC. These statements are based on management's current expectations or beliefs and are subject to risk, 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 over to Lorne Will, the company's Executive Chairman. Mr. Will, please go ahead.

Thank you, operator. Good morning, everyone, and thank you for joining our first quarter call. With me here, as usual, are Brooks Pierce, James Richardson, and Eric Carrera. First quarter adjusted EBITDA of about $18.5 million. It was nicely ahead of last year, growing at close to 20% despite some unexpected negatives. As Brooks will discuss in a few minutes, The leisure business was hurt by the slippage of the UK Easter holiday from the first to the second quarter, which is a very important period for the business. So one-time product sales similarly slipped from the first into the second quarter. And there were disturbances in Brazil as new regulations, including new taxes, came into effect. And finally, we lost about a million of EBITDA due to the reclassification of lease revenue as we discussed recently at our year-end call. So in summary then, we were actually very pleased with the underlying progress in the first quarter. Following the close of the quarter, we have successfully negotiated the refinancing of our existing publicly syndicated bonds due in June 2026 with a five-year sterling denominated floating rate financing with Barclays and HGVORA. We expected to sign definitive agreements and to have the new financing in place next month. As previously discussed, we hope to complete the sale of our holiday park business in the relative near term, and we intend to use the proceeds towards deleveraging. Finally, as compared to our existing bonds, the new financing will allow much greater flexibility going forward. All in all then, we're very pleased to have successfully negotiated this financing in a less than ideal environment. with two lenders with whom we have had a great relationship for many years. Let me stay on this issue of deleveraging for a moment. Once we finalize the sale of our holiday park business, we will have divested the part of our business with the highest relative capital intensity. As we explained in the past, our recurring retail betting shop revenue in the UK and Europe is at this point predominantly capital light, And in North America, our retail business is a combination of equipment sales and recurring content revenue, similarly involving essentially no capex. So our one remaining capital intensive retail segment is the UK pub business. And here again, we have begun to implement a plan to mirror our other retail businesses where we will sell the equipment, generating recurring and predictable content and server platform fees and minimize capex. As with the case with our betting shop business, there will be some loss of public revenue in the transition phase since there will no longer be a return of capital component in pricing, but this will be ultimately outweighed by the free cash flow and deleveraging benefit. Our goal with all these initiatives is to get our annual capex to around $25 million, almost all of it content related for both our retail businesses and more importantly, are rapidly growing and very profitable digital businesses. So let me then turn to a discussion of our digital businesses. Our interactive business continues on its incredible growth trajectory, with revenue and EBITDA in the first quarter growing 49% and 79% respectively over Q1 2024, and margins expanding from 54% in 2024 to 64% in 2025. demonstrating the incredible scalability of this business. Virtually every week since the close of the quarter has recorded a new high. Our business in the United States in the first quarter grew by 90% against underlying market growth of about 20%, reflecting the quality and quantity of our content and the intensity of our account management. And bear in mind that we have only begun to see the potential for hybrid dealer It's pretty clear at this point that looking ahead, the individual states in the United States are being forced to be far less dependent on the federal government in terms of health care, education, housing, and so forth. And there will be a predictable requirement for new sources of state revenue. This is inescapable. I have mentioned previously that in states like Michigan, New Jersey, Pennsylvania, and most recently Delaware, iGaming where our interactive business participates overwhelms sports betting in terms of revenue and profitability. So looking back over the arc of the 50-year history of the relationship between gaming and state finances, we can see pretty clearly how this is going to play out, and we're ideally positioned to benefit. Our virtual sports business continues to show a remarkable level of profitability, although obviously accompanied by difficult dynamics. While the year-over-year quarterly decline in virtual sports EBITDA unfortunately masks the overall strength and acceleration of the rest of the business, the sequential performance is telling a somewhat different story. The data from the last several weeks is indicating that the business has essentially stabilized, and as Brooks will discuss in far greater detail, driven by a number of important initiatives. We expect the business to return to year-over-year growth by the third quarter or certainly the second half of this year. Together with the strength in our interactive and retail businesses, this would allow for an acceleration in aggregate company performance. And with that, I'm pleased to hand things over to Brooks.

Okay, thank you, Lorne. I'll go through each business segment in some detail. My remarks will be a little longer than usual as we have a number of items to cover. to give a comprehensive perspective on what we're seeing in the business and the markets we serve. So again, just reiterating what Lauren said, let's start with the interactive segment that continues to produce incredibly strong results, and that momentum is carrying over into the second quarter, with Q1 revenue increasing 49%, and as Lauren mentioned, adjusted EBITDA increasing 75% over the same period, continuing the trend of substantial growth and increased operating leverage. Although this growth is broad-based geographically, where we've seen the biggest growth year-over-year is in North America, where we've now added Delaware through our partnership with Rush Street, and the partnership is off to an outstanding start. Our game designers have increased their focus on US-style games, which has really paid off with leading titles like Wolf It Up and Big Piggy Bank. They use a unique game mechanic that's resonated with players. We recently completed a tour of some of the key US operators, and they affirm that our games are continuing to grow with them and that they are some of their key titles. Additionally, we're excited to be adding some key markets later this year in North America and abroad with our games going live in West Virginia, as well as in South Africa. Now let's go over to hybrid dealer. So hybrid dealer, which comes from a combination of the game design and virtual design teams, is a product category we've talked about a lot and is now scaling rapidly. So this product has three derivatives at the moment. So the branded wheel games, single zero roulette, and four ball extra bet roulette. But we have many more derivatives in development that we're excited to get out to the market. Our branded wheel games are live with both BetMGM and Caesars in New Jersey and in Michigan with BetMGM and with Caesars going live in Michigan and Ontario, likely in the second quarter this year. We'll also deliver this product to the Pennsylvania market once we receive the requisite regulatory approvals. BetMGM Bonus City has now been live for over 14 months and has enjoyed sustained performance and even has seen substantial increases in total value played over the last two months. We're obviously gratified to see that this product has the staying power and continues to be enjoyed by players more than a year after its launch. We now also have both single zero roulette live in the UK with Bet365 and with GameSys and integrated with Relax, which has it deployed with a number of operators. We expect to go live with Lotto Quebec in May and expect that that will be a key launch for us. We'll also be rolling this out with a number of operators in Brazil here in the second quarter and later in the year, starting with Bet365 in Brazil. And then moving on to the latest derivative game, the four ball extra bet game, now live with GameSys and Relax, and the early results are encouraging. We'll be rolling this out to Bet365 and BetMGM in New Jersey later this quarter, as well as to a number of additional integrators in multiple markets. Needless to say, it's a very busy time with this product category, and we'll start sharing metrics later in the year as it settles in. But I can say safely that the combination of continued growth in the core iGaming segment, along with the accelerating rollout of hybrid dealer, has us feeling very good about the segment of the company. Going over to the virtual business, we're encouraged by the stabilization we've seen in the business after a clearly challenging start to January due to the move to a fully taxed and regulated market in Brazil that's been discussed broadly across the industry. We were no different and were impacted as well, but have seen a steadying in that market from our two biggest customers in the last few months. We also have a number of key initiatives happening over the next several quarters that we believe will put virtuals back on a growth trajectory. We're focused on launching our license content, such as the NFL, NBA, and NHL. They cater to a North American audience with key operators in North America, and we aim to be able to go live with BetMGM during the second half of the year. In Brazil, although it's early days, we launched a Brazil-specific soccer game in Portuguese and with local stadium views. The early performance numbers are encouraging, with one operator showing stakes growth of over 25%, and we'll be deploying this version to our largest Brazil customers over the next several months. In Greece, OPAP's adding a fourth virtual sports channel to its retail state that should drive incremental play. And we've also just gone live in Turkey through our partnership with Cecil, part of Flutter, to add our virtual products in 2,000 retail shops with monitors. In addition, another 3,000 shops where customers will be able to bet using a QR code. Finally, we're excited to launch our V lottery game with the Virginia Lottery here in the second quarter, which will be our first online lottery deployment in North America through a partnership with Aristocrat Interactive and with a very successful iLottery operator in the Virginia Lottery. We're very active in the lottery space in both North America and around the world, and they expect this to be a very good channel for the virtual sports product. Moving on to the gaming segment, the business continues to perform well through a combination of new cabinets with a key customer, as well as cost savings initiatives being realized despite some macroeconomic challenges in the retail sector in the UK. We successfully delivered and installed the 5,000 Vantage terminals to the William Hill estate on time and on budget, and we're seeing high single-digit growth from this customer year over year. In Greece, we also expect to see the benefit of the rollout of our newest terminals in the market throughout this year and have a roadmap of strong local-based content that will be delivered. And in Illinois, it's early in the trial period, but we are seeing strong performance from our portrait-style Valiant cabinet, and our game subscriptions were taken up by almost all customers in the market, leading to the strongest game performance since we went live there several years ago. And finally, our leisure business performed as expected with the one notable point that Lauren mentioned, and being that the UK holiday was in the first quarter last year and was in the second quarter this year, which caused a disconnect in the performance numbers. And now that we've had that holiday period, we've seen strong results at the holiday parks over that holiday weekend. With that, I'll hand it back over to Lorne for any closing remarks.