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Dec 31, 2019
Inspired Q4 2019 Earnings Report
Inspired's Q4 2019 results demonstrated progress on its business strategy, with growth in Virtual Sports and Interactive businesses, and improvements in the Acquired Businesses, particularly in the Pub estate.
Key Takeaways
Inspired Entertainment reported positive Q4 results driven by growth in Virtual Sports and Interactive businesses, and improvements in the Acquired Businesses. The company is optimistic about future growth prospects, including North American penetration, UK Pub and Leisure digitization, and synergy realization.
SBG Service Revenue declined by $3.5 million, primarily due to the Triennial Implementation in the UK LBO market and an increase in the tax rate in the Italian market.
SBG Hardware Revenue increased by $6.0 million, driven by Valor™ cabinet sales in North America and SSBT sales in the UK LBO market.
Virtual Sports Revenue increased by $1.3 million, driven by recurring revenue for retail and scheduled online Virtuals and one-time content sales.
Acquired Businesses Service Revenue was $27.6 million, with $8.6 million from Category C gaming machines within the Pub business.
Inspired
Inspired
Inspired Revenue by Segment
Revenue by Segment
Virtual Sports Revenue
CapyFin.com Forward Guidance
Inspired expects continued growth from North American penetration, accelerated UK Pub and Leisure digitization, and additional customers in Virtual Sports and Interactive.
Positive Outlook
- Annualization of the Acquired Businesses
- Upside from North American penetration
- Accelerated UK Pub and Leisure digitization
- Additional customers coming onboard in Virtual Sports and Interactive
- Realization of expected synergies
Challenges Ahead
- Seasonality in the Acquired Businesses, with the second and third quarters seasonally strongest.
- Adjusted EBITDA Margins likely will be adversely impacted by the lower overhead absorption in the shoulder months.
- Potential impact from the Coronavirus epidemic.
- The Triennial Implementation is expected to impact Adjusted EBITDA by $10.0 million to $11.0 million annually on a steady state basis.
- Associated capital expenditures in 2020