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Inspired Reports First Quarter 2019 Results

George Miller



Inspired Reports First Quarter 2019 Results
Reading Time: 7 minutes


  • Total Revenue for the First Quarter of $33.7 Million
  • Functional Currency1 Virtual Sports Revenue Increased 11.0% Year-over-Year
  • Net Operating Loss Narrows to $0.7 Million from $0.9 Million in the Prior Year
  • Functional Currency Adjusted EBITDA Growth of 18.5% Year-over-Year
  • Adjusted EBITDA2 Increased to $13.7 Million from $12.4 Million in the Prior Year
  • Adjusted EBITDA Margin3 Increased to 40.7% from 36.6% in the Prior Year
  • Cash Generation of $3.0 Million During the Quarter
  • North American Video Lottery Terminal (“VLT”) Business Expected to Commence Shipments in the Fourth Quarter 2019

Inspired Entertainment, Inc. reported financial results for the three-month period ended March 31, 2019.

Total Revenue for the three months ended March 31, 2019 was $33.7 million, a year-over-year decrease of $3.8 million, on a reported basis, driven mainly by adverse currency movements of $2.5 million, as well as a reduction in non-recurring software licenses and nil margin sales of hardware.  Excluding these sales (software licenses of $1.3 million and nil margin hardware of $3.6 million), revenue increased $3.6 million, or 11.0%, on a functional currency (£) basis, and $1.1 million, or 3.3%, on a reported basis.

Adjusted EBITDA for the three months ended March 31, 2019 was $13.7 million, a year-over-year increase of 18.5% on a functional currency basis and 10.4% on a reported basis.  Adjusted EBITDA margin increased to 40.7% from 36.6% in the prior year, primarily as a result of significant overhead savings, more profitable revenue mix, and more effective business processes.

“Our results for the quarter were in line with our guidance, driven by solid participation revenue, growth in Virtual Sports, and reduced overhead expenses,” said Lorne Weil, Executive Chairman of Inspired Entertainment.  “Most importantly, our high-margin Virtual Sports business, which includes Interactive, delivered a great underlying performance, increasing 11.0% on a functional currency basis.”

Mr. Weil continued, “As we move into the second quarter, we have begun to see the impact of the April implementation of the new £2 stake limit in the UK.  I applaud the efforts of our UK team, which has successfully remodeled and converted our games and software to satisfy the new requirements on an accelerated timetable.  Results to date, albeit only one month, are generally in line with what we were expecting and we continue to believe the projected impact of the reduction in the maximum FOBT betting stake on our Adjusted EBITDA to be approximately $10 million to $11 million annually on a steady state basis.  We remain optimistic about our strategy to mitigate a portion of the potential impact.  However, with only one month of data, we are not yet prepared to predict either player adoption rates or the acceleration of the mitigants with greater specificity.”

“We continue to see strong growth in our Virtual Sports and Interactive businesses and we are extremely focused and encouraged by our business development activity across a number of key territories,” concluded Mr. Weil.  “In particular we have a unique opportunity and a clear strategy to build our VLT, Virtual Sports and Interactive businesses in North America and we expect to see more meaningful results starting in the fourth quarter of 2019 when we plan to commence shipments of VLTs into the market.”

Summary of Consolidated First Quarter 2019 Financial Results (unaudited)


Qtr Ended



March 31









(In $ millions, except per share figures)

GAAP Measures:


$      33.7

$       37.5


$        (2.5)


Net Operating Loss

$      (0.7)

$       (0.9)


$         0.1


Net (loss)

$      (5.0)

$       (0.5)


$         0.4


Net (loss) per diluted share

$    (0.24)

$     (0.02)


Non-GAAP Measures:

Adjusted Revenue1

$      33.7

$       33.8


$        (2.5)


Adjusted EBITDA1

$      13.7

$       12.4


$        (1.0)


1Reconciliation to GAAP shown below.

2Percentage change is not meaningful.

Recent Highlights

Server Based Gaming (“SBG”)

  • End of Period Installed Base Increased 11.6% Year Over Year –Installed terminal base at the end of the period increased to 35,286 due to the continued terminal rollout in Greece, growth from new contract awards in the UK Licensed Betting Office (“LBO”) estate, and further machine growth in Italy.
  • Total OPAP Terminals Installed Increased to Over 7,300 – The roll out into Greece continued during the period, with an additional 500 terminals having been deployed on site and live as of March 31, 2019. The performance of our Greek terminals continues to be strong compared to those of other suppliers.
  • Growth in Italy Estate –Customer Gross Win per unit per day in Italy increased by 4.2% (in Euros) across all customers compared to the same period last year, due to continued improvement in games and account management. However, an increase in tax on revenue reduced Net Win per unit per day by 22%.
  • 125 Self Service Betting Terminals (“SSBTs”) sold and deployed in the UK – In addition to the hardware sale margin, these terminals also generate a recurring service fee.
  • 50 “Flex” B3 Terminals Sold to a Major Customer in the UK – Terminals were installed towards the end of the first quarter and will result in a recurring service fee and content revenue share to Inspired.
  • Over 100 “Sabre Hydra” Terminals Sold – These Electronic Table Games were sold to a major casino customer in the UK and are expected to be installed during the early half of 2019.

Virtual Sports

  • Additional Virtual Sports Operators – Number of Virtual Sports operators increased to 101 live worldwide (as of March 31, 2019), up 7.4% from the same time last year.
  • Launched Two Streams of Rush Football 2® with BetStars – Both scheduled and on-demand Virtual Sports launched online with BetStars, the international online sports betting brand of The Stars Group Inc., one of the world’s largest online gaming operators.
  • Launched Rush Football 2 with the Moroccan Lottery – Virtual Sports went live in Morocco via the Intralot platform in approximately 200 venues.
  • Inspired Named Virtual Supplier of the Year – The Gaming International Awards at ICE 2019 recognized Inspired as the Virtual Supplier of the Year.


  • Number of Live Interactive Customers Increased to 35 – Two new Interactive customers launched during the quarter via the NYX platform.
  • Launched Proprietary Virtual Connect Platform with Genting Online – Virtual Horses, Dogs and Football went live in the UK on Genting’s online platform.
  • Renewed Bet365 Contract – Inspired to continue to provide Virtual Sports online to Bet365 for a further three years.
  • Signed Contract with BCLC to Provide Virtual Sports – New Interactive contract with British Columbia Lottery Corporation (“BCLC”) to supply Virtual Sports on demand, slots and table content.

“Now that the implementation of the £2 maximum stake in the UK is behind us, we are focused on mitigation efforts, including further streamlining of our organization, to more effectively align our resources.  We began this process proactively last quarter and I’m happy to report that we realized over 400 basis points of year-over-year improvement to our Adjusted EBITDA margin in the quarter,” said Stewart Baker, Executive Vice President and Chief Financial Officer of Inspired.  “We have also seen a decrease in our capital expenditures due to lower levels of machine spending and software development, leading to positive cash flow in the quarter.”

Management Outlook and Commentary

As previously announced, the implementation of the reduction in the maximum FOBT betting stake mandated by the Triennial Review took place on April 1, 2019.  Management has made no changes to the outlook previously presented on the projected impact on Adjusted EBITDA to be approximately $10 million to $11 million annually on a steady state basis, assuming exchange rates remain stable.  Outside of the UK FOBT business, management anticipates growth across its business units and more meaningful contributions from its North American business in the fourth quarter of 2019.

Overview of First Quarter Results

Total Revenue for the three months ended March 31, 2019 was $33.7 million on a reported basis.  Revenue for the period decreased 3.5% year-over-year on a functional currency (£) basis, driven mainly by a reduction in SBG nil margin hardware and software license sales.

SBG revenue decreased by $2.4 million on a functional currency, or 8.5% at a constant rate, comprised of a reduction in service revenue of $1.2 million and reduction in hardware sales of $1.2 million on a functional currency at constant rate basis.  Total SBG Recurring Revenue increased 1.1% on a functional currency basis.

Virtual Sports revenue increased by $1.1 million on a functional currency basis, or 11.0% at a constant rate, due to growth in the UK and growth in new customer launches in the rest of the world, as well as one-off income from historic recurring revenues previously unreported to the Company. Total Virtual Sports Recurring Revenue increased 16.7% on a functional currency basis.

Adjusted Revenue, revenue excluding nil margin sales, for the three months ended March 31, 2019 was relatively flat year-over-year on a reported basis and up 6.8% on a functional currency basis.

Adjusted EBITDA for the three months ended March 31, 2019 was $13.7 million, a year-over-year increase of 18.5% on a functional currency (£) basis and an increase of 10.4% on a reported basis.  Adjusted EBITDA margin increased to 40.7%, from 36.6% in the prior year, primarily as a result of overhead savings due to lower staff related costs from group restructuring.

SG&A expenses decreased by $0.9 million, or 5.6%, on a reported basis, to $14.7 million. This decrease was driven by staff related cost savings of $1.5 million.  These savings were offset by an increase in the costs of group restructure of $1.1 million (removed from Adjusted EBITDA) and a decrease in net labor capitalization and manufacturing recoveries of $0.7 million due to mix of projects and lower factory throughput as a result of fewer machines being built in the quarter.

On a reported basis, net operating result improved from a loss of $0.9 million in the prior period to a loss of $0.7 million, mainly due to savings in cost of sales and depreciation and amortization, partly offset by a decrease in revenue and increases in stock-based compensation, acquisition related transaction and SG&A expenses.

For the three months ended March 31, 2019 the Company reported a change in fair value of earnout liability of $2.3 million.  In the prior period, due to changes in share price, the corresponding figure was a $3.8 million gain, a $6.0 million difference.  On March 25, 2019 the shares relating to the earnout liability were issued and will no longer represent a liability to the Company.


About Inspired Entertainment, Inc.

Inspired is a global games technology company, supplying Virtual Sports, Mobile Gaming and Server Based Gaming systems with associated terminals and digital content to regulated lottery, betting and gaming operators around the world. Inspired currently operates approximately 30,000 digital gaming terminals and supplies its Virtual Sports products through more than 40,000 retail channels and over 100 websites, in approximately 35 gaming jurisdictions worldwide. Inspired employs more than 650 employees in the UK and elsewhere, developing and operating digital games and networks. Additional information can be found at

George Miller started his career in content marketing and has started working as an Editor/Content Manager for our company in 2016. George has acquired many experiences when it comes to interviews and newsworthy content becoming Head of Content in 2017. He is responsible for the news being shared on multiple websites that are part of the European Gaming Media Network.

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Industry News

Approval of Foundation Level Gambling Industry Tester Specialist Syllabus by ISTQB®

Niji Narayan



Reading Time: 2 minutes


International Software Testing Qualifications Board (ISTQB) is a software testing certification organisation that operates internationally, founded in Edinburgh in November 2002. The company has approved the release of 2019 version of the ISTQB® Gambling Industry Tester Specialist (GT) Syllabus.

The GT Syllabus gives essential understanding and knowledge to anyone involved in testing in the gambling industry and also reflects the current best practices and procedures for testing in the gambling industry.

The ISTQB® provides the new GT Syllabus as follows:


  1. To the ISTQB® Member Boards, to translate into their local language and to accredit training providers. Member boards may adapt the syllabus to their particular language needs and modify the references to adapt to their local glossary terms.
  2. To the certification bodies, to derive examination questions in their local language adapted to the learning objectives for this syllabus
  3. To the training providers, to produce courseware and determine appropriate teaching methods
  4. To the certification candidates, to prepare for the certification exam (either as part of a training course or independently)
  5. To the international software and systems engineering community, to advance the profession of software testing, and as a basis for books and articles.


ISTQB® President, Olivier Denoo, stated – “the focus of ISTQB® is towards addressing its customers main needs. The Gambling Industry Tester certification, will address a growing market of Gaming of all kinds, including Gambling games, which has a great potential for those developing and testing those games. We have shown with this certification we are not looking only for huge markets, but also on unique trends and customers who needs certifications in today’s growing IT market”.

Alon Linetzki, ISTQB® Marketing working group chair added: “as ISTQB® is trying to address evolving and new areas of testing and target Software Testers, came out this unique syllabus. It addresses the needs of a growing industry – Gaming and Gambling Testing – which this is the first syllabus in that domain”.


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Industry News

iovation Research: Fraudsters Increasingly Leveraging Mobile Devices for Schemes

George Miller



iovation Research: Fraudsters Increasingly Leveraging Mobile Devices for Schemes
Reading Time: 3 minutes


TransUnion company explores top continents and countries for risky mobile transactions, and types of behavior businesses to need to look for to catch mobile fraud

iovation, a TransUnion company, today released its recent research that about half of all risky online transactions appear to be coming from a mobile device. Specifically, in the first half of 2019 iovation saw 49% of all risky transactions come from mobile devices, up from 30% in 2018, 33% in 2017 and 25% in 2016.

“Fraudsters are like chameleons. They are always adapting their tactics to make it look like they’re legitimate customers,” said iovation’s Senior Director of Customer Success, Melissa Gaddis. “With well over half of all transactions now coming from mobile devices, our analysts increasingly see fraudsters either using mobile devices or making it look like their transactions are coming from mobile when in fact they are using a traditional desktop.”

Among its research, iovation found:

  • The top continents for mobile fraud: So far in 2019 it is North America with 59% of all risky transactions coming from mobile devices. In 2018, it was Asia at 53%. In 2017, it was North America with 55%. In 2016, it was North America again with 36%.

  • The top countries for mobile fraud: Gabon leads so far in 2019 with 85% of all risky transactions coming from mobile devices. It 2018, it was Japan with 79%. Papua New Guinea led in 2017 with 86%. In 2016, it was Bangladesh with 59%.

  • The top industries for mobile fraud: So far in 2019 it is telecommunications with 75% of all risky transactions coming from mobile devices. In 2018, it was gambling with 60%. Communities (for example social networks or online dating sites) led in 2017 at 59%. In 2016, it was healthcare with 58%.

To find fraudulent transactions from mobile devices, iovation suggests businesses closely analyze specific indicators including:

  • Mobile emulators: Fraudsters like to hide information by using emulators to make it look like their desktop device is a mobile device.

  • Orientation: Is a device staying in the same position or is it face down? These could be tell-tale signs of a bot or a fraudster emulating a mobile device.

  • SIM card country: Since fraudsters often try to mask their location, the SIM card country provides yet another method for identifying the true location of the end-user. Fraud analysts may find fraudsters that target their businesses tend to have devices from particular countries.

  • SIM card carrier name: Certain mobile carriers can have a higher percentage of fraudulent activity originating from them.

  • Currency: The type of currency tied to a device provides additional context to the region associated with the device. This can be another way to determine if the device is coming from a risky location.

  • Language: Much like countries, carriers and currency, the language used on a device provides additional context on the transaction which can help crack a fraud case when a fraudster is attempting to mask other aspects of their device.

  • Mobile OS version: Certain mobile operating system versions may correlate with fraud or abuse.


Mobile Transaction Jump

iovation found 61% of all online transactions came from mobile devices so far this year, up from 56% in 2018, 51% in 2017 and 45% in 2016. Europe and North America are consistently among the top continents for mobile transactions with 67% and 60% respectively so far this year. The top industry for mobile transactions so far in 2019 is communities with 73%.

For more insights into iovation’s findings along with new iovation features to catch mobile fraud, go to this blog post that includes an infographic.


iovation came to its findings by analyzing the 30 billion online transactions it evaluated for fraud from January 2016 to June 30, 2019. To find the risky mobile transactions, it calculated the percent of risky transactions from mobile devices compared to overall risky transactions. For overall mobile transactions, it calculated the percent of mobile transactions compared to all online transactions. iovation defines risky transactions as those that typically result in fraud.


About iovation:

iovation, a TransUnion company, was founded with a simple guiding mission: to make the Internet a safer place for people to conduct business. Since 2004, the company has been delivering against that goal, helping brands protect and engage their customers, and keeping them secure in the complex digital world. Armed with the world’s largest and most precise database of reputation insights and cryptographically secure multifactor authentication methods, iovation safeguards tens of millions of digital transactions each day.


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Industry News

Zitro’s LINK ME Arrives in Spain

Niji Narayan



Zitro’s LINK ME Arrives in Spain
Photo Source:
Reading Time: 1 minute


The casinos of the Grup Peralada, Casino Barcelona and Casino Peralada, have installed the Zitro’s LINK ME. Link Me is a new progressive bank, that along with Link King, are delighting the players of the establishments of this important Group of Casinos.

“At Grup Peralada we always try to be pioneers and offer the latest products on the market. Our priority is to provide our customers with a game offer of absolute technological vanguard, and that is why we have relied again on Zitro for our group of casinos,” Josep Maria Roig, general director of Casinos at Grup Peralada said.

“The bet that Grup Peralada has made for Zitro products, once again, fills us with pride. We are convinced that the results of Link Me in both casinos will be formidable, just as they are in casinos in all parts of the world. Link King, Link Me and Link Shock are consolidating as the most profitable video slots banks in the global market,” Nadège Teyssedre, Commercial Director of ZITRO for EMEA said.

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