Inspired Entertainment (NASDAQ:INSE) Q1 2022 Earnings Conference Call May 11, 2022 8:00 AM ET

Company Participants

Stewart Frank – Chief Financial Officer

Brooks Pierce – Chief Operating Officer

Lorne Weil – Executive Chairman

Conference Call Participants

Barry Jonas – Truist Securities

Ryan Sigdahl – Craig Hallum Capital Group

Chad Beynon – Macquarie

Edward Engel – ROTH Capital

Operator

Good morning, everyone and welcome to the Inspired Entertainment's First Quarter 2022 Conference Call. All participants will be in a listen-only mode. Should you need assistance, please signal the conference specialist by pressing the star key followed by 0. 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 Weil, the company's Executive Chairman. Mr. Weil, please go ahead.

Lorne Weil

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 Stewart joining Brooks and myself in speaking this morning. And not a minute too soon because there are huge number of developments to keep track of. And when it comes to keeping track of things, they don't get any better than Stewart. 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 redactors 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 in 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 Virtual 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.