Sentiment Analysis of the earnings transcript to help figure out if there are any bullish or bearish sentiments that could be gathered from it. We're doing ML and AI based analysis on the earnings call to get some more insights.
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| In terms of additional geographies besides North America, that's, as I said, in the very early stages, we're obviously incredibly excited about the opportunity we see in Latin America and particularly in Brazil |
| Seeing good results out of Ontario already, which has been out for a while |
| And we're happy that we've come to what we think is a pretty good place right now |
| But we are confident that the strategy of additional licensed sports in either new or newly launched territories will propel sustainable growth for this segment going forward |
| The Virtual Sports business continues to be as amazing a business as I've seen in all my years, super high margins, relatively low capital intensity, significant barriers to entry, which we have further strengthened with the NFL and NBA licenses, and tremendous long-term growth potential |
| I just actually today ironically saw the fully fleshed out BetMGM marketing plan, and we're super excited about that |
| This is a result of improved games and quantity of games released alongside dedicated account management to ensure that our games are positioned appropriately on our operator sites |
| While growth in the Virtual Sports business has been in temporary pause the other part of our digital business Interactive, has validated the wisdom of the major investments we've been committing some time to content and platform development, Revenue and EBITDA in the third quarter grew 37% and 68%, respectively, with EBITDA margins expanding from 53% to 64% |
| And we're confident that the inevitable addition of new states and new provinces will further accelerate this growth |
| The most important development to report within our retail business is the phenomenal performance of the Vantage cabinet in both of the betting shops and pub sectors |
| And considering that we've had some very strong results, but we see new states coming on in iGaming and new opportunities in our retail business in North America and think a dedicated studio will accelerate our online retail growth in this key market |
| Taking all these factors into account, we would expect to see reaccelerating growth in our retail businesses as we move through the fourth quarter and into 2024 |
| Good news is we feel like the future is bright for Inspired and that's what the team and I are laser focused on |
| On the sales front, in North America, we've seen improved performance in our terminals in Illinois with a brand new game pack that's proving to be very successful |
| And so I think we're feeling pretty good that our 2024 margins across the board will certainly be as good as they were in 2023, notwithstanding the inflationary pressure |
| And frankly, we feel that this is probably a good thing for the market long-term |
| And that would include not only traditional -- what are called electronic instant tickets, if you will, but also virtual sports, which for us is, we think a huge opportunity in the lottery business |
| But we are more confident than ever, that there's a robust market for this product, and that licensed brands will drive incremental play |
| So I think we feel quite good about that |
| And we're confident that this will resonate with the vast NBA worldwide brand and many of the markets we serve |
| So we are very confident about that and the William Hill trial is actually showing even better results |
| So clearly you can tell we're very bullish on both licensed brands like the NFL and NBA, and the new product supporting these that we'll be rolling out this year |
| Moving on to the Interactive segment of the digital business, as shown, as Lorne mentioned, incredible growth throughout 2023, with revenue growth in the third quarter of 38%, and this segment really continues to click on all cylinders |
| The biggest news in these businesses is the phenomenal success of the Vantage cabinet and that we are much further down the road in the replacement and asset light strategy we're driving in these segments |
| Overall, we feel like we've positioned the digital segments of our business as Lorne about, for continuing along this great growth trajectory |
| And we're seeing actually a greater uplift with daily cashbox in the pubs segment up 21% versus the machines they replaced |
| We are making phenomenal progress on the cloud-based lottery system that we're developing in -- down in the Caribbean |
| And looking forward, I think we're going to see an acceleration in the iLOTTERY business |
| Given that the fourth quarter is by now, in the rearview mirror, given that we're in February, I think I can say that we expect the fourth quarter to be in line with consensus, and excluding the roughly $2 million impact of our fourth quarter computer systems hack to be nicely ahead of both consensus and Q4 2022 |
| And we're gaining share in each of those markets and we'll be looking to replicate that success in North America |
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| And there have been increases in the U.K minimum wage and living wage and all kinds of other stuff that makes it very difficult to see the kind of margin improvement that we've seen in the digital businesses |
| The minor loss of EBITDA attendant to the asset light strategy, which we believe will be more than made up for by the performance of the Vantage cabinet, the movement of significant one-time product sales out of the third quarter, and very significant wage increases in the holiday park business due to changes in the U.K regulatory environment |
| As we've mentioned in the press release, the hack will have penalized us by approximately 2 million primarily through the reduction in our ability to deliver games, the slowdown in integrations and other productivity reductions |
| And indeed, we saw a modest year-to-year EBITDA decline in the third quarter, which is mentioned in the press release was more than entirely occasioned by our major customer deliberately, and effectively pruning the user base, a process we think has run its course at this point |
| As Lorne mentioned in his remarks, it's not out of the ordinary for business segment that has seen the growth that we've seen out of Virtual Sports to experience a period of moderating growth, and ours was exacerbated by the change in policy by our biggest customer with their players |
| Notwithstanding the success of the new Cabinet, the EBITDA from our combined retail businesses declined modestly from 2022 to 2023 |
| So revenue declined in the quarter |
| But as I said -- so we absolutely are seeing inflationary pressure |
| Brooks Pierce Yes, I think the one thing [indiscernible] about all that, just one last thing, Chad, because I know we've talked about this on a number of calls before about the U.K consumer and the concern about that and what was going to happen if there was a recession, et cetera, et cetera |
| Three distinct factors contributed to this decline |
| So it's just doesn't feel like a big thing to us |
| Certainly echo Lorne's statement about the efforts put forth by both Marilyn and the entire finance team on the accounting work it's done to take us to get to today and frankly, want to give thanks to the whole Inspired team who has endured this process along with other challenges, including the hack to our IT systems and the recovery from that in such a professional way |
| So whatever, whatever our let's say, adjusted EBITDA margin after taking account of unusual factors was in '23, I would not expect that the margins will be lower than that in '24 |
| But my feeling is that has to change |
| And the full year 2022 EBITDA was adjusted downward by about a 0.5% from $99.6 million to $99.0 million |
| But the rate of new states introducing REGS for either iGaming, or iLOTTERY have, frankly not been as accelerating as we would have expected |
| And obviously, it's seeing an even bigger impact in the pubs business, some of which is fixed fee and some of which is recurring revenue |
| Brooks Pierce No problem, Chad |
| With the overall decline split about evenly between gaming and leisure |
| I guess it's plateaued a little bit here |
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