INSE Inspired Entertainment Inc

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended March 31, 2024

 

OR

 

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period _______________

 

Commission File Number: 001-36689

 

INSPIRED ENTERTAINMENT, INC.

(Exact name of registrant as specified in its charter)

 

Delaware		47-1025534
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification Number)

 

250 West 57th Street, Suite 415
New York, NY		10107
(Address of principal executive offices)		(Zip Code)

 

Registrant’s telephone number, including area code: (646) 565-3861

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Date File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer”, “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer ☐		Accelerated filer ☒
Non-accelerated filer ☐		Smaller reporting company ☐
		Emerging growth company ☐

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common stock, par value $0.0001 per share		INSE		The NASDAQ Stock Market LLC

 

As of May 7, 2024, there were 26,571,308 shares of the Company’s common stock issued and outstanding.

 

 

 

TABLE OF CONTENTS

 

PART I.	FINANCIAL INFORMATION	1
ITEM 1.	FINANCIAL STATEMENTS	1
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income	2
	Condensed Consolidated Statement of Stockholders’ Deficit	3
	Condensed Consolidated Statements of Cash Flows	5
	Notes to Condensed Consolidated Financial Statements	6
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	14
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	33
ITEM 4.	CONTROLS AND PROCEDURES	34
PART II.	OTHER INFORMATION	35
ITEM 1.	LEGAL PROCEEDINGS	35
ITEM 1A.	RISK FACTORS	35
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	35
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	35
ITEM 4.	MINE SAFETY DISCLOSURES	35
ITEM 5.	OTHER INFORMATION	35
ITEM 6.	EXHIBITS	35
SIGNATURES		36

 

 

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

References in this report to “we,” “us,” “our,” the “Company” and “Inspired” refer to Inspired Entertainment, Inc. and its subsidiaries unless the context suggests otherwise.

 

Certain statements and other information set forth in this report, including in Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere herein, may relate to future events and expectations, and as such constitute “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Section 27A of the Securities Act of 1933, as amended (the “Securities Act”). Our forward-looking statements include, but are not limited to, statements regarding our business strategy, plans and objectives and our expected or contemplated future operations, results, financial condition, beliefs and intentions. In addition, any statements that refer to projections, forecasts or other characterizations or predictions of future events or circumstances, including any underlying assumptions on which such statements are expressly or implicitly based, are forward-looking statements. The words “anticipate”, “believe”, “continue”, “can”, “could”, “estimate”, “expect”, “intend”, “may”, “might”, “plan”, “possible”, “potential”, “predict”, “project”, “scheduled”, “seek”, “should”, “would” and similar expressions, among others, and negatives expressions including such words, may identify forward-looking statements.

 

Our forward-looking statements reflect our current expectations about our future results, performance, liquidity, financial condition, prospects and opportunities, and are based upon information currently available to us, our interpretation of what we believe to be significant factors affecting our business and many assumptions regarding future events. Actual results, performance, liquidity, financial condition, prospects and opportunities could differ materially from those expressed in, or implied by, our forward-looking statements. This could occur as a result of various risks and uncertainties, including the following:

 

	●	government regulation of our industries;
	●	our ability to compete effectively in our industries;
	●	the effect of evolving technology on our business;
	●	our ability to renew long-term contracts and retain customers, and secure new contracts and customers;
	●	our ability to maintain relationships with suppliers;
	●	our ability to protect our intellectual property;
	●	our ability to protect our business against cybersecurity threats;
	●	our ability to successfully grow by acquisition as well as organically;
	●	fluctuations due to seasonality;
	●	our ability to attract and retain key members of our management team;
	●	our need for working capital;
	●	our ability to secure capital for growth and expansion;
	●	changing consumer, technology and other trends in our industries;
	●	our ability to successfully operate across multiple jurisdictions and markets around the world;
	●	changes in local, regional and global economic and political conditions; and
	●	other factors described in the reports and documents we file from time to time with the U.S. Securities and Exchange Commission (the “SEC”).

 

In light of these risks and uncertainties, and others discussed in this report, there can be no assurance that any matters covered by our forward-looking statements will develop as predicted, expected or implied. Readers should not place undue reliance on any forward-looking statements. Except as expressly required by the federal securities laws, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, changed circumstances or any other reason. We advise you to carefully review the reports and documents we file from time to time with the SEC.

 

 

PART I - FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS

 

INSPIRED ENTERTAINMENT, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in millions, except share data)

 

		March 31, 2024				December 31, 2023
		(Unaudited)
Assets
Cash		$	35.3			$	40.0
Accounts receivable, net			37.5				40.6
Inventory, net			31.7				32.3
Prepaid expenses and other current assets			39.6				39.6
Total current assets			144.1				152.5
Property and equipment, net			63.2				62.8
Software development costs, net			21.9				21.8
Other acquired intangible assets subject to amortization, net			12.9				13.4
Goodwill			58.3				58.8
Operating lease right of use asset			15.2				14.2
Costs of obtaining and fulfilling customer contracts, net			9.7				9.4
Other assets			5.8				8.0
Total assets		$	331.1			$	340.9
Liabilities and Stockholders’ Deficit
Current liabilities
Accounts payable and accrued expenses		$	57.6			$	60.8
Corporate tax and other current taxes payable			3.2				6.3
Deferred revenue, current			4.9				5.6
Operating lease liabilities			5.1				4.7
Current portion of long-term debt			18.9				19.1
Other current liabilities			4.4				4.2
Total current liabilities			94.1				100.7
Long-term debt			293.3				295.6
Finance lease liabilities, net of current portion			2.5				1.6
Deferred revenue, net of current portion			8.0				7.1
Operating lease liabilities			10.5				9.8
Other long-term liabilities			3.9				4.1
Total liabilities			412.3				418.9
Commitments and contingencies			-				-
Stockholders’ deficit
Preferred stock; $0.0001 par value; 1,000,000 shares authorized, no shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively.			—				—
Common stock; $0.0001 par value; 49,000,000 shares authorized; 26,559,756 shares and 26,219,021 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively			—				—
Additional paid in capital			387.3				386.1
Accumulated other comprehensive income			45.8				44.5
Accumulated deficit			(514.3	)			(508.6	)
Total stockholders’ deficit			(81.2	)			(78.0	)
Total liabilities and stockholders’ deficit		$	331.1			$	340.9

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

 

INSPIRED ENTERTAINMENT, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(in millions, except share and per share data)

(Unaudited)

 

		2024				2023
		Three Months Ended March 31,
		2024				2023
Revenue:
Service		$	57.1			$	57.5
Product sales			6.0				7.4
Total revenue			63.1				64.9
Cost of sales:
Cost of service (1)			(15.9	)			(15.0	)
Cost of product sales			(4.5	)			(6.7	)
Selling, general and administrative expenses			(34.2	)			(29.2	)
Depreciation and amortization			(9.9	)			(9.4	)
Net operating (loss) income			(1.4	)			4.6
Other expense
Interest expense, net			(6.6	)			(6.3	)
Other finance income			0.1				0.1
Total other expense, net			(6.5	)			(6.2	)
Loss before income taxes			(7.9	)			(1.6	)
Income tax benefit			2.2				0.2
Net loss			(5.7	)			(1.4	)
Other comprehensive income (loss):
Foreign currency translation gain (loss)			1.0				(2.9	)
Reclassification of loss on hedging instrument to comprehensive income			—				0.2
Actuarial gains on pension plan			0.3				0.2
Other comprehensive income (loss)			1.3				(2.5	)
Comprehensive loss		$	(4.4	)		$	(3.9	)
Net loss per common share – basic and diluted		$	(0.20	)		$	(0.05	)
Weighted average number of shares outstanding during the period – basic and diluted			28,603,734				27,974,182
Supplemental disclosure of stock-based compensation expense
Stock-based compensation included in:
Selling, general and administrative expenses		$	(2.3	)		$	(2.9	)

 

(1)	Excluding depreciation and amortization

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

 

INSPIRED ENTERTAINMENT, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT

THREE MONTHS ENDED MARCH 31, 2024

(in millions, except share data)

(Unaudited)

 

		Shares				Amount				capital				income				deficit				deficit
		Common stock								Additional paid in				Accumulated other comprehensive				Accumulated				Total stockholders’
		Shares				Amount				capital				income				deficit				deficit
Balance as of December 31, 2023			26,219,021				—				386.1				44.5				(508.6	)			(78.0	)
Foreign currency translation adjustments			—				—				—				1.0				—				1.0
Actuarial gains on pension plan			—				—				—				0.3				—				0.3
Issuances under stock plans			340,735				—				(0.8	)			—				—				(0.8	)
Stock-based compensation expense			—				—				2.0				—				—				2.0
Net loss			—				—				—				—				(5.7	)			(5.7	)
Balance as of March 31, 2024			26,559,756			$	—			$	387.3			$	45.8			$	(514.3	)		$	(81.2	)

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

 

INSPIRED ENTERTAINMENT, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT

THREE MONTHS ENDED MARCH 31, 2023

(in millions, except share data)

(Unaudited)

 

		Common stock								Additional paid in				Accumulated other comprehensive				Accumulated				Total stockholders’
		Shares				Amount				capital				income				deficit				deficit
Balance as of December 31, 2022			25,909,516				—				378.2				50.8				(514.6	)			(85.6	)
Balance			25,909,516				—				378.2				50.8				(514.6	)			(85.6	)
Foreign currency translation adjustments			—				—				—				(2.9	)			—				(2.9	)
Actuarial gains on pension plan			—				—				—				0.2				—				0.2
Reclassification of loss on hedging instrument to comprehensive income			—				—				—				0.2				—				0.2
Issuances under stock plans			353,554				—				—				—				—				—
Stock-based compensation expense			—				—				3.0				—				—				3.0
Net loss			—				—				—				—				(1.4	)			(1.4	)
Balance as of March 31, 2023			26,263,070			$	—			$	381.2			$	48.3			$	(516.0	)		$	(86.5	)
Balance			26,263,070			$	—			$	381.2			$	48.3			$	(516.0	)		$	(86.5	)

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

 

INSPIRED ENTERTAINMENT, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)

(Unaudited)

 

		2024				2023
		Three Months Ended March 31,
		2024				2023
Cash flows from operating activities:
Net loss		$	(5.7	)		$	(1.4	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization			9.9				9.4
Amortization of right of use asset			1.1				0.8
Stock-based compensation expense			2.3				2.9
Contract cost expense			(2.4	)			(2.6	)
Reclassification of loss on hedging instrument to comprehensive income			—				0.2
Non-cash interest expense relating to senior debt			0.2				0.3
Changes in assets and liabilities:
Accounts receivable			2.7				8.3
Inventory			0.4				(3.5	)
Prepaid expenses and other assets			4.3				1.0
Corporate tax and other current taxes payable			(6.3	)			(6.2	)
Accounts payable and accrued expenses			(2.6	)			3.5
Deferred revenues and customer prepayment			0.6				(0.2	)
Operating lease liabilities			(1.0	)			(0.9	)
Other long-term liabilities			0.1				—
Net cash provided by operating activities			3.6				11.6
Cash flows from investing activities:
Purchases of property and equipment			(4.4	)			(5.5	)
Acquisition of third-party company trade and assets			—				(0.6	)
Purchases of capital software			(3.3	)			(2.8	)
Net cash used in investing activities			(7.7	)			(8.9	)
Cash flows from financing activities:
Repayments of finance leases			(0.2	)			(0.5	)
Net cash used in financing activities			(0.2	)			(0.5	)
Effect of exchange rate changes on cash			(0.4	)			0.6
Net (decrease) increase in cash			(4.7	)			2.8
Cash, beginning of period			40.0				25.0
Cash, end of period		$	35.3			$	27.8
Supplemental cash flow disclosures
Cash paid during the period for interest		$	0.1			$	0.1
Cash paid during the period for income taxes		$	—			$	0.1
Cash paid during the period for operating leases		$	2.1			$	2.1
Supplemental disclosure of noncash investing and financing activities
Additional paid in capital from net settlement of RSUs		$	(0.8	)		$	—
Lease liabilities arising from obtaining right of use assets		$	(2.2	)		$	(0.1	)
Property and equipment acquired through finance lease		$	1.3			$	—

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

 

1. Nature of Operations, Management’s Plans and Summary of Significant Accounting Policies

 

Company Description and Nature of Operations

 

We are a global gaming technology company, supplying content, platform, gaming terminals and other products and services to online and land-based regulated lottery, betting and gaming operators worldwide through a broad range of distribution channels, predominantly on a business-to-business basis. We provide end-to-end digital gaming solutions (i) on our own proprietary and secure network, which accommodates a wide range of devices, including land-based gaming machine terminals, mobile devices and online computer applications and (ii) through third party networks. Our content and other products can be found through the consumer-facing portals of our interactive customers and, through our land-based customers, in licensed betting offices, adult gaming centers, pubs, bingo halls, airports, motorway service areas and leisure parks.

 

Liquidity Discussions

 

As of March 31, 2024, the Company’s cash on hand was $35.3 million, and the Company had working capital in addition to cash of $14.7 million. The Company recorded a net loss of $5.7 million and $1.4 million for the three months ended March 31, 2024 and 2023, respectively. Net income/losses include non-cash stock-based compensation of $2.3 million and $2.9 million for the three months ended March 31, 2024 and 2023, respectively. Historically, the Company has generally had positive cash flows from operating activities and has relied on a combination of cash flows provided by operations and the incurrence of debt and/or the refinancing of existing debt to fund its obligations. Cash flows provided by operations amounted to $3.6 million and $11.6 million for the three months ended March 31, 2024 and 2023, respectively.

 

Management currently believes that the Company’s cash balances on hand, cash flows expected to be generated from operations, ability to control and defer capital projects and amounts available from the Company’s external borrowings will be sufficient to fund the Company’s net cash requirements through May 2025.

 

Basis of Presentation

 

The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and pursuant to the applicable rules and regulations of the SEC. Certain information or footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly, they do not include all the information and footnotes necessary for a comprehensive presentation of financial position, results of operations, or cash flows. It is management’s opinion, however, that the accompanying unaudited interim condensed consolidated financial statements include all adjustments, consisting of a normal recurring nature, which are necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented.

 

The accompanying unaudited interim condensed consolidated financial statements should be read in conjunction with the Company’s consolidated financial statements and notes thereto for the years ended December 31, 2023 and 2022. The financial information as of December 31, 2023 is derived from the audited consolidated financial statements presented in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on April 15, 2024. The financial information for the three months ended March 31, 2023 is derived from the unaudited consolidated financial statements presented in the Company’s Annual Report on Form 10-Q/A for the three months ended March 31, 2023 filed with the SEC on February 27, 2024. The interim results for the three months ended March 31, 2024 are not necessarily indicative of the results to be expected for the year ending December 31, 2024 or for any future interim periods.

 

6

 

 

2. Allowance for Credit Losses

 

Changes in the allowance for credit losses are as follows:

 

Schedule of Changes in Allowance for Credit Losses

		March 31, 2024				December 31, 2023
		(in millions)
Beginning balance		$	(1.1	)		$	(1.4	)
Additional allowance for credit losses			—				(0.2	)
Recoveries			—				0.2
Write offs			—				0.4
Foreign currency translation adjustments			—				(0.1	)
Ending balance		$	(1.1	)		$	(1.1	)

 

3. Inventory

 

Inventory consists of the following:

Schedule of Inventory 

		March 31, 2024				December 31, 2023
		(in millions)
Component parts		$	22.5			$	23.3
Work in progress			1.0				0.4
Finished goods			8.2				8.6
Total inventories		$	31.7			$	32.3

 

Component parts include parts for gaming terminals. Our finished goods inventory primarily consists of gaming terminals which are ready for sale.

 

4. Accounts Payable and Accrued Expenses

 

Accounts payable and accrued expenses consist of the following:

 Schedule of Accounts Payable and Accrued Expenses

		March 31, 2024				December 31, 2023
		(in millions)
Accounts payable		$	35.2			$	41.9
Interest payable			8.4				—
Payroll and related costs			5.1				5.5
Cost of sales including inventory			5.0				6.4
Other creditors			3.9				7.0
Total accounts payable and accrued expenses		$	57.6			$	60.8

 

5. Contract Related Disclosures

 

The following table summarizes contract related balances:

Schedule of Contract Related Balances 

		Accounts Receivable				Unbilled Accounts Receivable				Right to recover asset				Deferred Income				Customer Prepayments and Deposits
		(in millions)
At March 31, 2024		$	36.7			$	20.5			$	0.6			$	(12.9	)		$	(3.1	)
At December 31, 2023		$	42.8			$	24.0			$	0.6			$	(12.7	)		$	(2.9	)

 

Revenue recognized that was included in the deferred income balance at the beginning of the period amounted to $1.9 million and $1.2 million for the three months ended March 31, 2024 and 2023, respectively.

 

For the periods ended March 31, 2024 and 2023 respectively, there was no significant amounts of revenue recognized as a result of changes in contract transaction price related to performance obligations that were satisfied in the respective prior periods.

 

Transaction Price Allocated to Remaining Performance Obligations

 

At March 31, 2024, the transaction price allocated to unsatisfied performance obligations for contracts expected to be greater than one year, or performance obligations for which we do not have a right to consideration from the customer in the amount that corresponds to the value to the customer for our performance completed to date, variable consideration which is not accounted for in accordance with the sales-based or usage-based royalties guidance, or contracts which are not wholly unperformed, is approximately $102.6 million. Of this amount, we expect to recognize as revenue approximately 30% through December 31, 2024, approximately 50% through December 31, 2026, and the remaining 20% through December 31, 2029.

 

7

 

 

6. Stock-Based Compensation

 

A summary of the Company’s restricted stock unit (“RSU”) activity during the three months ended March 31, 2024 is as follows:

Schedule of Restricted Stock Unit Activity 

		Number of Shares
Unvested Outstanding at January 1, 2024 (1)			1,242,175
Granted (2)			604,709
Forfeited			(29,599	)
Vested			(10,166	)
Unvested Outstanding at March 31, 2024			1,807,119

 

(1)

The amount shown as “unvested outstanding at January 1, 2024” does not include certain tranches of Adjusted EBITDA RSUs that have performance criteria for annual periods later than 2023 (an aggregate of 312,500 RSUs, including 62,500 subject to 2024 criteria), which were part of sign-on tranches approved for our Executive Chairman and our Chief Executive Officer during the years 2021 and 2023, as the applicable performance targets were not set by January 1, 2024 (and, accordingly, the accounting grant dates had not yet occurred for the tranches). Such tranches had previously been included in the amounts shown as unvested outstanding since the initial approval date for the tranches.

(2)

The amount shown as “granted” includes 245,694 performance-based target RSUs for 2024 as to which the number that ultimately vests would range from 0% to 200% of the target amount of RSUs (a maximum of 491,388 RSUs based on attainment of Adjusted EBITDA targets for 2024). The amount shown also includes a tranche of 62,500 Adjusted EBITDA RSUs (subject to performance criteria for 2024) which can be earned at up to 100% of the target amount of RSUs; such tranche was part of a sign-on award of multiple tranches approved in 2021 for our Executive Chairman with respect to which the accounting grant date for the 2024 tranche did not occur until the targets were set in February 2024.

 

The Company issued a total of 340,735 shares during the three months ended March 31, 2024, in connection with the Company’s equity-based plans, which included an aggregate of 333,161 shares issued in connection with the net settlement of RSUs that vested during the prior year (on December 29, 2023).

 

7. Accumulated Other Comprehensive Loss (Income)

 

The accumulated balances for each classification of comprehensive loss (income) are presented below:

Schedule of Accumulated Other Comprehensive Loss (Income) 

		Foreign Currency Translation Adjustments				Change in Fair Value of Hedging Instrument				Unrecognized Pension Benefit Costs				Accumulated Other Comprehensive (Income)
		(in millions)
Balance at January 1, 2024		$	(78.3	)		$	—			$	33.8			$	(44.5	)
Change during the period			(1.0	)			—				(0.3	)			(1.3	)
Balance at March 31, 2024		$	(79.3	)		$	—			$	33.5			$	(45.8	)

 

		Foreign Currency Translation Adjustments				Change in Fair Value of Hedging Instrument				Unrecognized Pension Benefit Costs				Accumulated Other Comprehensive (Income)
		(in millions)
Balance at January 1, 2023		$	(84.2	)		$	0.3			$	33.1			$	(50.8	)
Change during the period			2.9				(0.2	)			(0.2	)			2.5
Balance at March 31, 2023		$	(81.3	)		$	0.1			$	32.9			$	(48.3	)

 

In connection with the issuance of Senior Secured Notes and the entry into a Revolving Credit Facility (“RCF”) Agreement (the “RCF Agreement”), on May 19, 2021, the Company terminated all of its interest rate swaps. Accordingly, hedge accounting is no longer applicable. The amounts previously recorded in Accumulated Other Comprehensive Income are amortized into Interest expense over the terms of the hedged forecasted interest payments. Losses reclassified from Accumulated Other Comprehensive Income into Interest expense in the Consolidated Statements of Operations and Income for the three months ended March 31, 2024 and March 31, 2023 amounted to $0.0 million and $0.2 million, respectively.

 

8

 

 

8. Net Earnings (Loss) per Share

 

Basic income/loss per share (“EPS”) is computed by dividing net income/loss attributable to common stockholders by the weighted-average number of common shares outstanding during the period, excluding the effects of any potentially dilutive securities. Diluted EPS gives effect to all dilutive potential shares of common stock outstanding during the period, including stock options and RSUs, unless the inclusion would be anti-dilutive.

 

The computation of diluted EPS excludes the common stock equivalents of the following potentially dilutive securities because they were either contingently issuable shares or because their inclusion would be anti-dilutive:

Schedule of Anti-dilutive Securities Excluded from Computation of Earnings per Share 

		2024				2023
		Three Months Ended March 31,
		2024				2023
RSUs		$	1,807,119			$	1,917,231

 

There were no reconciling items for the three months ended March 31, 2024 or March 31, 2023.

 

The calculation of Basic EPS includes the effects of 1,840,165 and 1,893,136 shares for the three months ended March 31, 2024 and 2023, respectively, with respect to RSU awards that have vested but have not yet been issued.

 

9. Other Finance Income (Expense)

 

Other finance income (expense) consisted of the following:

Schedule of Other Finance Income (Expense) 

		Three Months Ended March 31,
		2024				2023
		(in millions)
Pension interest cost		$	(0.9	)		$	(0.8	)
Expected return on pension plan assets			1.0				0.9
Other finance income (Costs)		$	0.1			$	0.1

 

10. Income Taxes

 

The effective income tax rate for the three months ended March 31, 2024 and 2023 was 27.4% and 13.2%, respectively, resulting in a $2.2 million and $0.2 million income tax benefit, respectively.

 

The effective tax rate reported in any given year will continue to be influenced by a variety of factors, including the level of pre-tax income or loss, the income mix between jurisdictions, and any discrete items that may occur.

 

The Company recorded a valuation allowance against all of our deferred tax assets as of both March 31, 2024 and 2023. We intend to continue maintaining a full valuation allowance on our deferred tax assets until there is sufficient evidence to support the reversal of all or some portion of these allowances. However, given our current earnings and anticipated future earnings, we believe that there is a reasonable possibility that within the next 12 months, sufficient positive evidence may become available to allow us to reach a conclusion that a significant portion of the valuation allowance will no longer be needed. Release of the valuation allowance would result in the recognition of certain deferred tax assets and a decrease to income tax expense for the period the release is recorded. However, the exact timing and amount of the valuation allowance release are subject to change on the basis of the level of profitability that we are able to actually achieve.

  

9

 

 

11. Related Parties

 

Macquarie Corporate Holdings Pty Limited (UK Branch) (“Macquarie UK”) (an arranger and lending party under our RCF Agreement) is an affiliate of MIHI LLC, which beneficially owned approximately 11.4% of our common stock as of March 31, 2024. Macquarie UK held $2.1 million of the total $18.9 million of RCF drawn at March 31, 2024 and December 31, 2023, respectively. Macquarie UK did not hold any of the Company’s aggregate senior debt at March 31, 2024 or December 31, 2023. Interest expense payable to Macquarie UK for the three months ended March 31, 2024 and 2023 amounted to $0.1 million and $0.0 million, respectively. MIHI LLC is also a party to a stockholders agreement with the Company and other stockholders, dated December 23, 2016, pursuant to which, subject to certain conditions, MIHI LLC, jointly with Hydra Industries Sponsor LLC, are permitted to designate two directors to be nominated for election as directors of the Company at any annual or special meeting of stockholders at which directors are to be elected, until such time as MIHI LLC and Hydra Industries Sponsor LLC in the aggregate hold less than 5% of the outstanding shares of the Company.

 

On December 31, 2021, the Company entered into a consultancy agreement with Richard Weil, the brother of A. Lorne Weil, our Executive Chairman, under which Richard Weil received a success fee for services provided in connection with our acquisition of Sportech Lotteries, LLC. The success fee was paid during the year ended December 31, 2022. Under the agreement, as extended in November 2022 and in July 2023 and December 2023, he will provide consulting services to the Company relating to the lottery in the Dominican Republic through December 31, 2024, for which he was compensated at a rate of $10,000 per month in consulting fees through to June 30, 2023, and at a rate of $12,500 per month for the remainder of the term of the agreement. The aggregate amount incurred by the Company in consulting fees was $37,500 and $30,000 for the three months ended March 31, 2024 and 2023, respectively.

 

12. Leases

 

Certain of our arrangements include leases for equipment installed at customer locations. As the lessor, we combine lease and non-lease components for all classes of underlying assets in arrangements that involve operating leases. The single combined component is accounted for under ASC 606, Revenue from Contracts with Customers based on the consideration that the non-lease components are the predominant items in the arrangements. If a component cannot be combined, the consideration is allocated between the lease component and the non-lease component based on relative standalone selling price. The lease component is accounted for under ASC 842, Leases and the non-lease component is accounted for under ASC 606.

 

Lease income from operating leases and from sales type leases is not material for any of the periods presented.

 

13. Commitments and Contingencies

 

Employment Agreements

 

We are party to employment agreements with our executive officers and other employees of the Company and our subsidiaries which contain, among other terms, provisions relating to severance and notice requirements.

 

Legal Matters

 

From time to time, the Company may become involved in lawsuits and legal matters arising in the ordinary course of business. While the Company believes that, currently, it has no such matters that are material, there can be no assurance that existing or new matters arising in the ordinary course of business will not have a material adverse effect on the Company’s business, financial condition or results of operations.

 

10

 

 

14. Pension Plan

 

We operate a defined contribution plan in the US, and both defined benefit and defined contribution pension schemes in the UK. The defined contribution scheme assets are held separately from those of the Company in independently administered funds.

 

Defined Benefit Pension Scheme

 

The defined benefit scheme has been closed to new entrants since April 1, 1999 and closed to future accruals for services rendered to the Company for the entire financial statement periods presented. The Actuarial Valuation of the scheme as at March 31, 2021, determined that the statutory funding objective was not met, i.e., there were insufficient assets to cover the scheme’s technical provisions and there was a funding shortfall.

 

In June 2022, a recovery plan was put in place to eliminate the funding shortfall. The plan expects the shortfall to be eliminated by October 31, 2026.

 

The following table presents the components of our net periodic pension cost:

Schedule of Net Periodic Pension Cost 

		Three Months Ended March 31,
		2024				2023
		(in millions)
Components of net periodic pension cost:
Interest cost		$	0.9			$	0.8
Expected return on plan assets			(1.0	)			(0.9	)
Amortization of net loss			0.3				0.2
Net periodic cost		$	0.2			$	0.1

 

11

 

 

15. Segment Reporting and Geographic Information

 

The Company operates its business along four operating segments, which are segregated on the basis of revenue stream: Gaming, Virtual Sports, Interactive and Leisure. The Company believes this method of segment reporting reflects both the way its business segments are managed and the way the performance of each segment is evaluated.

 

The following tables present revenue, cost of sales, excluding depreciation and amortization, selling, general and administrative expenses, depreciation and amortization, stock-based compensation expense and acquisition related transaction expenses, operating profit/(loss), and total capital expenditures for the periods ended March 31, 2024 and March 31, 2023, respectively, by business segment. Certain unallocated corporate function costs have not been allocated to the Company’s reportable operating segments because these costs are not allocable and to do so would not be practical. Corporate function costs consist primarily of selling, general and administrative expenses, depreciation and amortization and capital expenditures relating to corporate/shared functions.

 

Segment Information

Schedule of Segment Reporting Information by Segment 

Three Months Ended March 31, 2024

 

		Gaming				Virtual Sports				Interactive				Leisure				Corporate Functions				Total
		(in millions)
Revenue:
Service		$	18.6			$	12.4			$	8.1			$	18.0			$	—			$	57.1
Product sales			5.4				—				—				0.6				—				6.0
Total revenue			24.0				12.4				8.1				18.6				—				63.1
Cost of sales, excluding depreciation and amortization:
Cost of service			(5.8	)			(0.4	)			(0.6	)			(9.1	)			—				(15.9	)
Cost of product sales			(4.3	)			—				—				(0.2	)			—				(4.5	)
Selling, general and administrative expenses			(6.6	)			(1.6	)			(3.1	)			(7.5	)			(13.1	)			(31.9	)
Stock-based compensation expense			(0.2	)			(0.1	)			(0.1	)			(0.1	)			(1.8	)			(2.3	)
Depreciation and amortization			(4.3	)			(0.9	)			(1.2	)			(3.0	)			(0.5	)			(9.9	)
Segment operating income (loss)			2.8				9.4				3.1				(1.3	)			(15.4	)			(1.4	)
Net operating loss																						$	(1.4	)
Total capital expenditures for the three months ended March 31, 2024		$	2.0			$	1.2			$	0.5			$	4.9			$	0.5			$	9.1

 

12

 

 

Three Months Ended March 31, 2023

 

		Gaming				Virtual Sports				Interactive				Leisure				Corporate Functions				Total
		(in millions)
Revenue:
Service		$	20.2			$	14.8			$	5.9			$	16.6			$	—			$	57.5
Product sales			6.9				—				—				0.5				—				7.4
Total revenue			27.1				14.8				5.9				17.1				—				64.9
Cost of sales, excluding depreciation and amortization:
Cost of service			(5.9	)			(0.4	)			(0.3	)			(8.4	)			—				(15.0	)
Cost of product sales			(5.8	)			—				—				(0.9	)			—				(6.7	)
Selling, general and administrative expenses			(5.7	)			(1.7	)			(2.5	)			(6.9	)			(9.5	)			(26.3	)
Stock-based compensation expense			(0.3	)			(0.2	)			(0.2	)			(0.1	)			(2.1	)			(2.9	)
Acquisition and integration related transaction expenses			—				—				—				—				—				—
Depreciation and amortization			(4.5	)			(0.8	)			(0.6	)			(3.1	)			(0.4	)			(9.4	)
Segment operating income (loss)			4.9				11.7				2.3				(2.3	)			(12.0	)			4.6
Net operating income																						$	4.6
Total capital expenditures for the three months ended March 31, 2023		$	2.4			$	0.4			$	1.1			$	5.2			$	0.5			$	9.6

 

Geographic Information

 

Geographic information for revenue is set forth below:

Schedule of Geographic Information 

		Three Months Ended March 31,
		2024				2023
		(in millions)
Total revenue
UK		$	47.2			$	49.0
Greece			6.1				5.6
Rest of world			9.8				10.3
Total		$	63.1			$	64.9
Total revenue		$	63.1			$	64.9

 

UK revenue includes revenue from customers headquartered in the UK, but whose revenue is generated globally.

 

Geographic information of our non-current assets excluding goodwill is set forth below:

 

		March 31, 2024				December 31, 2023
		(in millions)
UK		$	90.0			$	91.9
Greece			14.7				15.3
Rest of world			24.0				22.4
Total		$	128.7			$	129.6
Total non- current assets excluding goodwill		$	128.7			$	129.6

 

Software development costs are included as attributable to the market in which they are utilized.

 

16. Customer Concentration

 

During the three months ended March 31, 2024, there was one customer that represented at least 10% of the Company’s revenues, accounting for approximately 11% of the Company’s revenues. This customer was served by the Virtual Sports and Interactive segments. During the three months ended March 31, 2023, there was one customer that represented at least 10% of the Company’s revenues, accounting for approximately 15% of the Company’s revenues. This customer was served by the Virtual Sports and Interactive segments.

 

At March 31, 2024 no customers represented at least 10% of the Company’s accounts receivable. At December 31, 2023, there was one customer that represented at least 10% of the Company’s accounts receivable, accounting for approximately 24% of the Company’s accounts receivable.

 

17. Subsequent Events

 

The Company evaluates subsequent events and transactions that occur after the balance sheet date up to the date that the financial statements were issued. The Company did not identify subsequent events that would have required adjustment or disclosure in the consolidated financial statements.

 

 

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the financial statements and related notes thereto included elsewhere in this report. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual future results could differ materially from the historical results discussed below. Factors that could cause or contribute to such differences include, but are not limited to, those identified below and those referenced in the section titled “Risk Factors” included elsewhere in this report.

 

Forward-Looking Statements

 

We make forward-looking statements in this Management’s Discussion and Analysis of Financial Condition and Results of Operations. For definitions of the term “forward-looking statements”, see the definitions provided in the Cautionary Note Regarding Forward-Looking Statements at the forepart of this report.

 

Seasonality

 

Our results of operations can fluctuate due to seasonal trends and other factors. Sales of our gaming machines can vary quarter-on-quarter due to both supply and demand factors. Player activity for our holiday parks is generally higher in the second and third quarters of the year, particularly during the summer months and slower during the first and fourth quarters of the year.

 

Revenue

 

We generate revenue in four principal ways: (i) on a participation basis, (ii) on a fixed rental fee basis, (iii) through product sales, (iv) by services provided and (v) through software license fees. Participation revenue generally includes a right to receive a share of our customers’ gaming revenue, typically as a share of net win but sometimes as a share of the handle or “coin in” which represents the total amount wagered.

 

Geographic Range

 

Geographically, the majority of our revenue is derived from, and the majority of our non-current assets are attributable to, our UK operations. The remainder of our revenue is derived from, and non-current assets attributable to, Greece and the rest of the world (including North America).

 

For the three months ended March 31, 2024 we derived approximately 75% of our revenue from the UK (including customers headquartered in the UK but whose revenue is generated globally), 10% from Greece, and the remaining 15% across the rest of the world. In the three-months ended March 31, 2023 we derived approximately 76% of our revenue from the UK (including customers headquartered in the UK but whose revenue is generated globally), 9% from Greece, and the remaining 15% across the rest of the world.

 

As of March 31, 2024, our non-current assets (excluding goodwill) were attributable as follows: 70% to the UK, 12% to Greece and 18% across the rest of the world. As of March 31, 2023 our non-current assets (excluding goodwill) were attributable as follows: 80% to the UK, 5% to Greece and 15% across the rest of the world.

 

Foreign Exchange

 

Our results are affected by changes in foreign currency exchange rates as a result of the translation of foreign functional currencies into our reporting currency and the re-measurement of foreign currency transactions and balances. The impact of foreign currency exchange rate fluctuations represents the difference between current rates and prior-period rates applied to current activity. The geographic region in which the largest portion of our business is operated is the UK and the British pound sterling (“GBP”) is considered to be our functional currency. Our reporting currency is the U.S. dollar (“USD”). Our results are translated from our functional currency of GBP into the reporting currency of USD using average rates for profit and loss transactions and applicable spot rates for period-end balances. The effect of translating our functional currency into our reporting currency, as well as translating the results of foreign subsidiaries that have a different functional currency into our functional currency, is reported separately in Accumulated Other Comprehensive Income.

 

During the three months ended March 31, 2024 we derived approximately 25% of our revenue from sales to customers outside the UK. In the thee months ended March 31, 2023 we derived approximately 24% of our revenue from sales to customers outside the UK.

 

In the section “Results of Operations” below, currency impacts shown have been calculated as the current-period average GBP:USD rate less the equivalent average rate in the prior period, multiplied by the current period amount in our functional currency (GBP). The remaining difference, referred to as functional currency at constant rate, is calculated as the difference in our functional currency, multiplied by the prior-period average GBP:USD rate. This is not a U.S. GAAP measure, but is one which management believes gives a clearer indication of results. In the tables below, variances in particular line items from period to period exclude currency translation movements, and currency translation impacts are shown independently.

 

Non-GAAP Financial Measures

 

We use certain financial measures that are not compliant with U.S. GAAP (“Non-GAAP financial measures”), including EBITDA and Adjusted EBITDA, to analyze our operating performance. In this discussion and analysis, we present certain non-GAAP financial measures, define and explain these measures and provide reconciliations to the most comparable U.S. GAAP measures. See “Non-GAAP Financial Measures” below.

 

Results of Operations

 

Our results are affected by changes in foreign currency exchange rates, primarily between our functional currency (GBP) and our reporting currency (USD). During the three months ended March 31, 2024 and March 31, 2023, the average GBP:USD rates for the periods 1.27 and 1.21, respectively.

 

 

The following discussion and analysis of our results of operations has been organized in the following manner:

 

	●	a discussion and analysis of the Company’s results of operations for the three-month period ended March 31, 2024, compared to the same period in 2023; and
	●	a discussion and analysis of the results of operations for each of the Company’s segments (Gaming, Virtual Sports, Interactive and Leisure) for the three-month periods ended March 31, 2024, compared to the same period in 2023, including key performance indicator (“KPI”) analysis.

 

In the discussion and analysis below, certain data may vary from the amounts presented in our consolidated financial statements due to rounding.

 

For all reported variances, refer to the overall company and segment tables shown below. All variances discussed in the overall company and segment results are on a functional currency (at constant rate) basis, which excludes the impact of any changes in foreign currency exchange rates.

 

Key Events

 

During the three-month period ended March 31, 2024 in the Gaming segment, we completed over 240 B3 / Category C installations of Inspired’s new Vantage terminal into the Gaming estate.

 

During the three-month period ended March 31, 2024 the Interactive segment went live with four new operators including Winmasters, Midnite, Favbet, and OLG and bet365 in New Jersey.

 

Key agreements signed in the three-month period ended March 31, 2024 include a new contract with Kambi Group to integrate Inspired Virtual Sports products into the Kambi sportsbook platform, a new multi-year contract with Parkdean resorts for the sole supply of amusement and gaming machines to their holiday park estate of 64 sites nationwide in the UK and a new multi-year contract with Away Resorts for sole supply to 19 sites nationwide in the UK. We also secured an early contract extension with Hydes in the pubs business.

 

Overall Company Results

 

Three Months ended March 31, 2024, compared to Three Months ended March 31, 2023

 

		For the Three-Month								Variance
(In millions)		Period ended								2024 vs 2023
		March 31, 2024				March 31, 2023				Variance Attributable to Currency Movement				Variance on a Functional currency basis				Total Functional Currency Variance %				Total Reported Variance %
Revenue:
Service		$	57.1			$	57.5			$	2.4			$	(2.8	)			(5	)%			(1	)%
Product			6.0				7.4				0.2				(1.6	)			(22	)%			(19	)%
Total revenue			63.1				64.9				2.6				(4.4	)			(7	)%			(3	)%
Cost of Sales, excluding depreciation and amortization:
Cost of Service			(15.9	)			(15.0	)			(0.6	)			(0.3	)			2	%			6	%
Cost of Product			(4.5	)			(6.7	)			(0.3	)			2.5				(37	)%			(33	)%
Selling, general and administrative expenses			(31.9	)			(26.3	)			(1.5	)			(4.1	)			16	%			21	%
Stock-based compensation			(2.3	)			(2.9	)			(0.1	)			0.7				(24	)%			(21	)%
Depreciation and amortization			(9.9	)			(9.4	)			(0.4	)			(0.1	)			1	%			5	%
Net operating (loss) income			(1.4	)			4.6				(0.3	)			(5.7	)			(124	)%			(130	)%
Other expense
Interest expense, net			(6.6	)			(6.3	)			(0.3	)			-				0	%			5	%
Other finance income			0.1				0.1				(0.0	)			-				0	%			0	%
Total other expense, net			(6.5	)			(6.2	)			(0.3	)			-				0	%			5	%
Loss before income taxes			(7.9	)			(1.6	)			(0.6	)			(5.7	)			356	%			394	%
Income tax expense			2.2				0.2				0.1				1.9				950	%			1000	%
Net loss		$	(5.7	)		$	(1.4	)		$	(0.5	)		$	(3.8	)			271	%			307	%
Exchange Rate - $ to £			1.27				1.21

 

See “Segments Results” below for a more detailed explanation of the significant changes in our components of revenue within the individual segment results of operations.

 

 

Revenue (for the three months ended March 31, 2024, compared to the three months ended March 31, 2023)

 

Consolidated Reported Revenue by Segment

 

 

For the three months ended March 31, 2024, revenue on a functional currency (at constant rate) basis decreased by $4.4 million, or 7%.

 

For the three-month period, Gaming revenue declined by $4.1 million and Gaming service revenue declined by $2.4 million predominantly due to a decrease in the UK and Greek markets. Gaming Product revenue decreased by $1.7 million predominately due to UK and mainland Europe product sales. Virtual Sports declined by $3.0 million predominately due to reduced Online revenues. Interactive grew by $1.8 million, driven primarily by revenue growth in the UK, mainland Europe and Latin America. Leisure grew by $0.8 million, driven primarily by the increase in the revenue generated per machine in the Pubs and increased revenues in Holiday Parks.

 

Cost of sales, excluding depreciation and amortization

 

Cost of sales, excluding depreciation and amortization, for the three months ended March 31, 2024, decreased by $2.2 million, or 10% compared to the three-month period ended March 31, 2023. The decrease was mainly driven by $2.5 million in cost of product related to the reduction in Gaming Product sales.

 

Selling, general and administrative expenses

 

Selling, general and administrative (“SG&A”) expenses for the three months ended March 31, 2024 increased by $4.1 million, or 16% compared to the three-month period March 31,2024.

 

The increase was driven primarily by the cost of restatement work of $5.0 million (excluded from Adjusted EBITDA) as well as an increase in non-staff costs of $2.1 million, of which the largest proportion was driven by audit and accountancy costs of $0.7 million that were not incurred in the prior period. This was partially offset by $3.0 million for restructuring costs incurred in the prior year period that were not repeated in this period (removed from Adjusted EBITDA).

 

Stock-based compensation

 

During the three months ended March 31, 2024, the Company recorded expenses of $2.3 million compared to expenses of $2.9 million for the three months ended March 31, 2023. All expenses were related to outstanding awards. The three months ended March 31, 2023 included an expense of $0.7 million relating to the group restructure.

 

Depreciation and amortization

 

Depreciation and amortization decreased for the three-month period by $0.1 million. This was driven by Gaming reduction of $0.4 million and Leisure reduction of $0.3 million due to assets being fully written down, partly offset by an increase of $0.6 million in Interactives.

 

Net operating income/(loss) / net loss

 

During the three-month period ended March 31, 2024, net operating loss was $1.4 million, a decrease of $5.7 million compared to the prior year period. The decrease was attributable to the decrease in gross margin of $2.2 million and an increase in selling, general and administrative expenses of $4.1 million, including the cost of restatement and additional audit and accountancy fees, partially offset by the lower restructuring costs.

 

For the three-months ended March 31, 2024 net loss was $5.7 million, compared to a net loss of $1.4 million in the prior year period. The $3.8 million decline year-over-year was primarily due to the decline in net operating income of $5.7 million, partially offset by an increase in income tax benefit of $1.9 million.

 

 

Deferred Tax

 

The effective income tax rate for the three months ended March 31, 2024 and 2023 were 27.4% and 13.2%, respectively, resulting in a $2.2 million and $0.2 million income tax benefit respectively.

 

The effective tax rate reported in any given year will continue to be influenced by a variety of factors including the level of pre-tax income or loss, the income mix between jurisdictions, and any discrete items that may occur.

 

The Company recorded a valuation allowance against all of our deferred tax assets as of both March 31, 2024 and 2023. We intend to continue maintaining a full valuation allowance on our deferred tax assets until there is sufficient evidence to support the reversal of all or some portion of these allowances. However, given our current earnings and anticipated future earnings, we believe that there is a reasonable possibility that within the next 12 months, sufficient positive evidence may become available to allow us to reach a conclusion that a significant portion of the valuation allowance will no longer be needed. Release of the valuation allowance would result in the recognition of certain deferred tax assets and a decrease to income tax expense for the period the release is recorded. However, the exact timing and amount of the valuation allowance release are subject to change on the basis of the level of profitability that we are able to actually achieve.

 

Segment Results (for the three months ended March 31, 2024, compared to the three months ended March 31, 2023)

 

Gaming

 

We generate revenue from our Gaming segment through the delivery of our gaming terminals preloaded with proprietary gaming software, server-based content, as well as services such as terminal repairs, maintenance, software upgrades and upgrades on a when and if available basis and content development. We receive rental fees for machines, typically in conjunction with long-term contracts, on both a participation and fixed fee basis. Our participation contracts are typically structured to pay us a percentage of net win (defined as net revenue to our operator customers, after deducting player winnings, free bets or plays and any relevant regulatory levies) from gaming terminals placed in our customers’ facilities. Typically, we recognize revenue from these arrangements on a daily basis over the term of the contract.

 

Revenue growth for our Gaming business is principally driven by changes in (i) the number of operator customers we have, (ii) the number of Gaming machines in operation, (iii) the net win performance of the machines and (iv) the net win percentage that we receive pursuant to our contracts with our customers.

 

Gaming, Key Performance Indicators

 

		For the Three-Month Period ended								Variance
										2024 vs 2023
Gaming		March 31, 2024				March 31, 2023								%
End of period installed base (# of terminals) (2)			34,924				34,711				213				0.6	%
Total Gaming - Average installed base (# of terminals) (2)			34,783				34,778				5				0.0	%
Participation - Average installed base (# of terminals) (2)			29,834				30,793				(959	)			(3.1	)%
Fixed Rental - Average installed base (# of terminals)			4,949				3,985				964				24.2	%
Service Only - Average installed base (# of terminals)			7,848				14,160				(6,312	)			(44.6	)%
Customer Gross Win per unit per day (1) (2)		£	98.8			£	98.3			£	0.5				0.5	%
Customer Net Win per unit per day (1) (2)		£	72.2			£	71.5			£	0.7				1.0	%
Inspired Blended Participation Rate			5.4	%			5.8	%			(0.4	)%
Inspired Fixed Rental Revenue per Gaming Machine per week		£	41.5			£	49.6			£	(8.1	)			(16.3	)%
Inspired Service Rental Revenue per Gaming Machine per week		£	5.1			£	5.1			£	-				0.0	%
Gaming Long term license amortization (£’m)		£	0.5			£	0.8			£	(0.3	)			(37.5	)%
Number of Machine sales			589				688				(99	)			(14.4	)%
Average selling price per terminal		£	7,196			£	7,880			£	(684	)			(8.7	)%

 

(1)	Includes all server-based gaming terminals in which the Company takes a participation revenue share across all territories.
(2)	Includes approximately 2,500 lottery terminals where the share is on handle instead of net win.

 

 

In the table above:

 

“End of Period Installed Base” is equal to the number of deployed Gaming terminals at the end of each period that have been placed on a participation or fixed rental basis. Gaming participation revenue, which comprises the majority of Gaming Service revenue, is directly related to the participation terminal installed base. This is the medium by which our customers generate revenue and distribute a revenue share to the Company. To the extent all other key performance indicators (KPIs) and certain other factors remain constant, the larger the installed base, the higher the Company’s revenue would be for a given period. Management gives careful consideration to this KPI in terms of driving growth across the segment. This does not include Service Only terminals.

 

Revenue is derived from the performance of the installed base as described by the Gross and Net Win KPIs.

 

If the End of Period Installed Base is materially different from the Average Installed Base (described below), we believe this gives an indication as to potential future performance. We believe the End of Period Installed Base is particularly useful for assessing new customers or markets, to indicate the progress being made with respect to entering new territories or jurisdictions.

 

“Total Gaming - Average Installed Base” is the average number of deployed Gaming terminals during the period split by participation terminals and Fixed Rental terminals. Therefore, it is more closely aligned to revenue in the period. We believe this measure is particularly useful for assessing existing customers or markets to provide comparisons of historical size and performance. This does not include Service Only terminals.

 

“Participation - Average Installed Base” is the average number of deployed Gaming terminals that generated revenue on a participation basis.

 

“Fixed Rental - Average Installed Base” is the average number of deployed Gaming terminals that generated revenue on a fixed rental basis.

 

“Service Only - Average Installed Base” is the average number of terminals that generated revenue on a Service only basis.

 

“Customer Gross Win per unit per day” is a KPI used by our management to (i) assess impact on the Company’s revenue, (ii) determine changes in the performance of the overall market and (iii) evaluate the impacts of regulatory change and our new content releases on our customers. Customer Gross Win per unit per day is the average per unit cash generated across all Gaming terminals in which the Company takes a participation revenue share across all territories in the period, defined as the difference between the amounts staked less winnings to players divided by the Average Installed Base in the period, then divided by the number of days in the period.

 

Gaming revenue accrued in the period is derived from Customer Gross Win accrued in the period after deducting gaming taxes (defined as a regulatory levy paid by the Customer to government bodies) and applying the Company’s contractual revenue share percentage.

 

Our management believes Customer Gross Win measures are meaningful because they represent a view of customer operating performance that is unaffected by our revenue share percentage and allow management to (1) readily view operating trends, (2) perform analytical comparisons and benchmarking between customers and (3) identify strategies to improve operating performance in the different markets in which we operate.

 

“Customer Net Win per unit per day” is Customer Gross Win per unit per day after giving effect to the deduction of gaming taxes.

 

“Inspired Blended Participation Rate” is the Company’s average revenue share percentage across all participation terminals where revenue is earned on a participation basis, weighted by Customer Net Win per unit per day.

 

 

“Inspired Fixed Rental Revenue per Gaming Machine per week” is the Company’s average fixed rental amount across all fixed rental terminals where revenue is generated on a fixed fee basis, per unit per week.

 

“Inspired Service Rental Revenue per Gaming Machine per week” is the Company’s average service rental amount across all service only rental terminals where revenue is generated on a service only fixed fee basis, per unit per week.

 

“Gaming Long-term license amortization” is the upfront license fee per terminal which is typically spread over the life of the terminal.

 

Our overall Gaming revenue from terminals placed on a participation basis can therefore be calculated as the product of the Participation - Average Installed Base, the Customer Net Win per unit per day, the number of days in the period, and the Inspired Blended Participation Rate, which is equal to “Participation Revenue”.

 

“Number of Machine sales” is the number of terminals sold during the period.

 

“Average selling price per terminal” is the total revenue in GBP of the Gaming terminals sold divided by the “number of Machine sales”.

 

Gaming, Recurring Revenue

 

		For the Three-Month Period ended								Variance
		March 31,				March 31,				2023 vs 2022
(In £ millions)		2024				2023								%
Gaming Recurring Revenue
Total Gaming Revenue		£	18.9			£	22.3			£	(3.4	)			(15.3	)%
Gaming Participation Revenue		£	10.5			£	11.5			£	(1.0	)			(8.7	)%
Gaming Other Fixed Fee Recurring Revenue		£	3.2			£	3.6			£	(0.4	)			(11.1	)%
Gaming Project Recurring Revenue		£	0.2			£	0.2			£	-				0.0	%
Gaming Long-term license amortization		£	0.5			£	0.8			£	(0.3	)			(37.5	)%
Total Gaming Recurring Revenue		£	14.4			£	16.1			£	(1.7	)			(10.6	)%
Gaming Recurring Revenue as a % of Total Gaming Revenue			76.2	%			72.2	%			4.0	%

 

Set forth below is a breakdown of our Gaming recurring revenue. Gaming recurring revenue principally consists of Gaming participation revenue and fixed rental revenue.

 

 

In the table above:

 

“Gaming Participation Revenue” includes our share of revenue generated from (i) our Gaming terminals placed in gaming and lottery venues; and (ii) licensing of our game content and intellectual property to third parties.

 

“Gaming Other Fixed Fee Recurring Revenue” includes service revenue in which the Company earns a periodic fixed fee on a contracted basis.

 

“Gaming Project Recurring Revenue” relates specifically to a single customer for machine estate upgrades and distribution.

 

“Gaming Long term license amortization” – see the definition provided above.

 

“Total Gaming Recurring Revenue” is equal to Gaming Participation Revenue plus Gaming Other Fixed Fee Recurring Revenue.

 

Gaming, Service Revenue by Region

 

Set forth below is a breakdown of our Gaming service revenue by geographic region. Gaming Service revenue consists principally of Gaming participation revenue, Gaming other fixed fee revenue, Gaming long-term license amortization and Gaming other non-recurring revenue. See “Gaming Segment Revenue” below for a discussion of gaming service revenue between the periods under review.

 

		For the Three-Month Period ended								Variance
(In millions)		March 31, 2024				March 31, 2023				2024 vs 2023								Total Functional Currency %
Service Revenue:
UK LBO		$	9.2			$	9.7			$	(0.5	)			(5.2	)%			(8.2	)%
UK Other			3.5				3.4				0.1				2.9	%			23.5	%
Italy			0.4				0.8				(0.4	)			(50.0	)%			(62.5	)%
Greece			3.9				4.3				(0.4	)			(9.3	)%			(11.6	)%
Rest of the World			0.2				0.6				(0.4	)			(66.7	)%			(66.7	)%
Lotteries			1.4				1.4				-				0.0	%			(7.1	)%
Total Service revenue		$	18.6			$	20.2			$	(1.6	)			(7.9	)%			(12.4	)%
Exchange Rate - $ to £			1.27				1.21

 

 

Note: Exchange rate in the table is calculated by dividing the USD total service revenue by the GBP total service revenue, therefore this could be slightly different from the average rate during the period depending on timing of transactions.

 

 

Gaming, Results of Operations

 

		For the Three-Month								Variance
(In millions)		Period ended								2024 vs 2023
		March 31, 2024				March 31, 2023				Variance Attributable to Currency Movement				Variance on a Functional currency basis				Total Functional Currency Variance %				Total Reported Variance %
Revenue:
Service		$	18.6			$	20.2			$	0.8			$	(2.4	)			(12	)%			(8	)%
Product			5.4				6.9				0.2				(1.7	)			(25	)%			(22	)%
Total revenue			24.0				27.1				1.0				(4.1	)			(15	)%			(11	)%
Cost of Sales, excluding depreciation and amortization:
Cost of Service			(5.8	)			(5.9	)			(0.2	)			0.3				(5	)%			(2	)%
Cost of Product			(4.3	)			(5.8	)			(0.2	)			1.7				(29	)%			(26	)%
Total cost of sales			(10.1	)			(11.7	)			(0.4	)			2.0				(17	)%			(14	)%
Selling, general and administrative expenses			(6.6	)			(5.7	)			(0.2	)			(0.7	)			12	%			16	%
Stock-based compensation			(0.2	)			(0.3	)			0.0				0.1				(33	)%			(33	)%
Depreciation and amortization			(4.3	)			(4.5	)			(0.2	)			0.4				9	%			4	%
Net operating income		$	2.8			$	4.9			$	0.2			$	(2.3	)			(47	)%			(43	)%
Exchange Rate - $ to £			1.27				1.21

 

Note: Exchange rate in the table is calculated by dividing the USD total revenue by the GBP total revenue, therefore this could be slightly different from the average rate during the period depending on timing of transactions.

 

All variances discussed in the Gaming results below are on a functional currency (at constant rate) basis, which excludes the impact of any changes in foreign currency exchange rates.

 

Gaming Revenue

 

During the three-month period ended March 31, 2024, Gaming revenue decreased by $4.1 million, or 15%. This was driven by a $2.4 million decrease in Service revenue and a $1.7 million decrease in Product revenue.

 

The decrease in Gaming Service revenue was mainly driven by the UK market, inclusive of shop closures in UK LBO and the expiry of historical amortized license revenues in Greece.

 

Product revenue decrease was primarily driven by lower product sales of $0.6 million in each of the UK and mainland Europe markets respectively.

 

Gaming Operating Income

 

Operating income decreased for the three-month period by $2.3 million. This was primarily due to the decrease in gross margin of $2.1 million and an increase of $0.7 million in SG&A driven by reduced labor and overhead absorption.

 

 

Virtual Sports

 

We generate revenue from our Virtual Sports segment through the on-premise solution and hosting of our products. We primarily receive fees on a participation basis. Our participation contracts are typically structured to pay us a percentage of net win (defined as net revenue to our operator customers, after deducting player winnings, free bets or plays and other promotional costs and any relevant regulatory levies) from Virtual Sports content placed on our customers’ websites or in our customers’ facilities. Typically, we recognize revenue from these arrangements on a daily basis over the term of the contract.

 

Revenue growth for our Virtual Sports segment is principally driven by the number of customers we have, the net win performance of the games and the net win percentage that we receive pursuant to our contracts with our customers.

 

Virtual Sports, Key Performance Indicators

 

		For the Three-Month Period ended								Variance
		March 31,				March 31,				2024 vs 2023
Virtuals		2024				2023								%
No. of Live Customers at the end of the period			55				58				(3	)			(5.2	)%
Average No. of Live Customers			54				58				(4	)			(6.9	)%
Total Revenue (£’m)		£	9.8			£	12.2			£	(2.4	)			(19.7	)%
Total Revenue £’m - Retail		£	2.3			£	2.5			£	(0.2	)			(8.0	)%
Total Revenue £’m - Online Virtuals		£	7.5			£	9.7			£	(2.2	)			(22.7	)%

 

In the table above:

 

“No. of Live Customers at the end of the period” and “Average No. of Live Customers” represent the number of customers from which there is Virtual Sports revenue at the end of the period and the average number of customers from which there is Virtual Sports revenue during the period, respectively.

 

“Total Revenue (£m)” represents total revenue for the Virtual Sports segment, including recurring and upfront service revenue. Total revenue is also divided between “Total Revenue (£m) – Retail,” which consists of revenue earned through players wagering at Virtual Sports venues, “Total Revenue (£m) – Online Virtuals,” which consists of revenue earned through players wagering on Virtual Sports online.

 

Virtual Sports, Recurring Revenue

 

Set forth below is a breakdown of our Virtual Sports recurring revenue, which consists of Retail Virtuals and Online Virtuals recurring revenue as well as long-term license amortization. See “Virtual Sports Segment Revenue” below for a discussion of Virtual Sports Service revenue between the periods under review.

 

		For the Three-Month Period ended								Variance
		March 31,				March 31,				2024 vs 2023
(In £ millions)		2024				2023								%
Virtual Sports Recurring Revenue
Total Virtual Sports Revenue		£	9.8			£	12.2			£	(2.4	)			(19.7	)%
Recurring Revenue - Retail Virtuals		£	2.3			£	2.5			£	(0.2	)			(8.0	)%
Recurring Revenue - Online Virtuals		£	7.3			£	9.6			£	(2.3	)			(24.0	)%
Total Virtual Sports Long-term license amortization		£	-			£	-			£	-				0.0	%
Total Virtual Sports Recurring Revenue		£	9.6			£	12.1			£	(2.5	)			(20.7	)%
Virtual Sports Recurring Revenue as a Percentage of Total Virtual Sports Revenue			98.0	%			99.1	%			(1.1	)%

 

“Recurring Revenue” includes our share of revenue generated from (i) our Virtual Sports products placed with operators; (ii) licensing our game content and intellectual property to third parties; and (iii) our games on third-party online gaming platforms that are interoperable with our game servers.

 

“Virtual Sports Long term license amortization” is the upfront license fee which is typically spread over the life of the contract.

 

 

Virtual Sports, Results of Operations

 

		For the Three-Month								Variance
(In millions)		Period ended								2024 vs 2023
		March 31, 2024				March 31, 2023				Variance Attributable to Currency Movement				Variance on a Functional currency basis				Total Functional Currency Variance %				Total Reported Variance %
Service Revenue		$	12.4			$	14.8			$	0.5			$	(2.9	)			(20	)%			(16	)%
Cost of Service			(0.4	)			(0.4	)			-				-				0	%			0	%
Selling, general and administrative expenses			(1.6	)			(1.7	)			(0.2	)			0.3				(18	)%			(6	)%
Stock-based compensation			(0.1	)			(0.2	)			-				0.1				(50	)%			(50	)%
Depreciation and amortization			(0.9	)			(0.8	)			(0.1	)			-				0	%			13	%
Net operating income		$	9.4			$	11.7			$	0.2			$	(2.5	)			(21	)%			(20	)%
Exchange Rate - $ to £			1.27				1.21

 

Note: Exchange rate in the table is calculated by dividing the USD service revenue by the GBP service revenue, therefore this could be slightly different from the average rate during the period depending on timing of transactions.

 

All variances discussed in the Virtual Sports results below are on a functional currency (at constant rate) basis, which excludes the impact of any changes in foreign currency exchange rates.

 

Virtual Sports revenue

 

During the three-month period, revenue decreased by $2.9 million, or 20%. This was driven by $2.6 million in Online Virtuals, primarily driven by a major customer optimizing their customer base, as well as decreases in Retail Virtuals of $0.3 million.

 

Virtual Sports operating income

 

Operating income decreased by $2.5 million in the three-month period. This was due to the decrease in revenue of $2.9 million, partly offset by a decrease of $0.3 million in SG&A costs.

 

Interactive

 

We generate revenue from our Interactive segment through the various games content made available via third party aggregation platforms with Inspired’s remote gaming server or directly on the Company’s remote gaming server platform, and services such as customer support, platform maintenance, updates and upgrades. Typically, we receive fees on a participation basis. Our participation contracts are usually structured to pay us a percentage of net win (defined as net revenue to our operator customers, after deducting player winnings, free bets or plays and other promotional costs and any relevant regulatory levies) from Interactive content placed on our customers’ websites. Typically, we recognize revenue from these arrangements on a daily basis over the term of the contract.

 

Revenue growth for our Interactive segment is principally driven by the number of customers we have, the number of live games, the net win performance of the games and the net win percentage that we receive pursuant to our contracts with our customers.

 

 

Interactive, Key Performance Indicators

 

		For the Three-Month Period ended								Variance
		March 31,				March 31,				2024 vs 2023
Interactive		2024				2023								%
No. of Live Customers at the end of the period			155				138				17				12.3	%
Average No. of Live Customers			154				135				19				14.1	%
No. of Games available at the end of the period			298				271				27				10.0	%
Average No. of Games available			296				270				26				9.6	%
No. of Live Games at the end of the period			283				247				36				14.6	%
Average No. of Live Games			275				246				29				11.8	%
Total Revenue (£’m)		£	6.3			£	4.9			£	1.4				28.6	%

 

In the table above:

 

“No. of Live Customers at the end of the period” and “Average No. of Live Customers” represent the number of customers from which there is Interactive revenue at the end of the period and the average number of customers from which there is Interactive revenue during the period, respectively.

 

“No. of Games available at the end of the period” and “Average No. of Games available” represents the number of games that are available for operators to deploy at the end of the period (including inactive legacy games still available and inactive new games that are available but have not yet gone live with any operators) and the average number of games that are available for operators to deploy during the period, respectively. This incorporates both live games and inactive games.

 

“No. of Live Games at the end of the period” and “Average No. of Live Games” represents the number of games from which there is Interactive revenue at the end of the period and the average number of games from which there is Interactive revenue during the period, respectively.

 

“Total Revenue (£m)” represents total revenue for the Interactive segment, including recurring and upfront service revenue.

 

Interactive, Results of Operations

 

		For the Three-Month								Variance
(In millions)		Period ended								2024 vs 2023
		March 31, 2024				March 31, 2023				Variance Attributable to Currency Movement				Variance on a Functional currency basis				Total Functional Currency Variance %				Total Reported Variance %
Service Revenue		$	8.1			$	5.9			$	0.4			$	1.8				31	%			37	%
Cost of Service			(0.6	)			(0.3	)			-				(0.3	)			100	%			100	%
Selling, general and administrative expenses			(3.1	)			(2.5	)			-				(0.6	)			24	%			24	%
Stock-based compensation			(0.1	)			(0.2	)			-				0.1				(50	)%			(50	)%
Depreciation and amortization			(1.2	)			(0.6	)			-				(0.6	)			100	%			100	%
Net operating income		$	3.1			$	2.3			$	0.4			$	0.4				17	%			35	%
Exchange Rate - $ to £			1.27				1.21

 

Note: Exchange rate in the table is calculated by dividing the USD service revenue by the GBP service revenue, therefore this could be slightly different from the average rate during the period depending on timing of transactions.

 

All variances discussed in the Interactive results below are on a functional currency (at constant rate) basis, which excludes the impact of any changes in foreign currency exchange rates.

 

Interactive revenue

 

During the three-month period ended March 31, 2024, revenue increased by $1.8 million, or 31% as compared to the three-month period ended March 31, 2023, primarily driven by revenue growth in the UK, Europe and Latin America due to the consistent launch of new content across the estate and increased promotional activity.

 

Interactive operating income

 

Operating income for the three-month period ended March 31, 2024 increased by $0.4 million. This increase was driven by the increase in revenue, partially offset by a $0.6 million increase in SG&A expenses driven by increased staff and IT costs, and a $0.6 million increase in depreciation and amortization expenses.

 

 

Leisure

 

We typically generate revenue from our Leisure segment through the supply of our gaming and amusement machines. We receive rental fees for machines, typically on a long-term contract basis, on both a participation and fixed fee basis. Our participation contracts are usually structured to pay us a percentage of net win (defined as net revenue to our operator customers, after deducting player winnings, free bets or plays, any relevant regulatory levies and minimum fixed incomes where applicable) from machines placed in our customers’ facilities. We generally recognize revenue from these arrangements on a daily basis over the term of the contract.

 

Revenue growth for our Leisure segment is principally driven by the number of customers we have, the number of machines in operation, the net win performance of the machines and the net win percentage that we receive pursuant to our contracts with our customers.

 

Leisure, Key Performance Indicators

 

		For the Three-Month Period ended								Variance
		March 31,				March 31,				2024 vs 2023
Leisure		2024				2023								%
End of period installed base Gaming machines (# of terminals)			10,675				10,811				(136	)			(1.3	)%
Average installed base Gaming machines (# of terminals)			10,677				10,821				(144	)			(1.3	)%
End of period installed base Other (# of terminals)			4,072				4,546				(474	)			(10.4	)%
Average installed base Other (# of terminals)			4,101				4,519				(418	)			(9.2	)%
Pub Digital Gaming Machines - Average installed base (# of terminals)			6,308				6,028				280				4.6	%
Pub Analogue Gaming Machines - Average installed base (# of terminals)			159				499				(340	)			(68.1	)%
MSA and Bingo Gaming Machines - Average installed base (# of terminals)(1)			3,057				3,089				(32	)			(1.0	)%
Inspired Leisure Revenue per Gaming Machine per week		£	70.2			£	66.4			£	3.8				5.7	%
Inspired Pub Digital Revenue per Gaming Machine per week		£	73.3			£	70.3			£	3.0				4.3	%
Inspired Pub Analogue Revenue per Gaming Machine per week		£	31.8			£	36.8			£	(5.0	)			(13.6	)%
Inspired MSA and Bingo Revenue per Gaming Machine per week		£	91.6			£	89.4			£	2.2				2.5	%
Inspired Other Revenue per Machine per week		£	23.9			£	20.1			£	3.8				18.9	%
Total Holiday Parks Revenue (Gaming and Non Gaming) (£’m)		£	3.2			£	2.9			£	0.3				10.3	%

 

(1)	Motorway Service Area machines

 

In the table above:

 

“End of period installed base Gaming” and “Average installed base Gaming” represent the number of gaming machines installed (excluding Holiday Park machines) that are Category B and Category C only, from which there is participation or rental revenue at the end of the period or as an average over the period.

 

“End of period installed base Other” and “Average installed base Other” represent the number of all other category machines installed (excluding Holiday Park machines) from which there is participation or rental revenue at the end of the period or as an average over the period.

 

“Revenue per machine unit per week” represents the average weekly participation or rental revenue recognized during the period.

 

 

Leisure, Results of Operations

 

		For the Three-Month								Variance
(In millions)		Period ended								2024 vs 2023
		March 31, 2024				March 31, 2023				Variance Attributable to Currency Movement				Variance on a Functional currency basis				Total Functional Currency Variance %				Total Reported Variance %
Revenue:
Service		$	18.0			$	16.6			$	0.7			$	0.7				4	%			8	%
Product			0.6				0.5				-				0.1				20	%			20	%
Total revenue			18.6				17.1				0.7				0.8				5	%			9	%
Cost of Sales, excluding depreciation and amortization:
Cost of Service			(9.1	)			(8.4	)			(0.4	)			(0.3	)			4	%			8	%
Cost of Product			(0.2	)			(0.9	)			0.1				0.6				(67	)%			(78	)%
Total cost of sales			(9.3	)			(9.3	)			(0.3	)			0.3				(3	)%			0	%
Selling, general and administrative expenses			(7.5	)			(6.9	)			(0.4	)			(0.2	)			3	%			9	%
Stock-based compensation			(0.1	)			(0.1	)			-				-				0	%			0	%
Depreciation and amortization			(3.0	)			(3.1	)			(0.2	)			0.3				(10	)%			(3	)%
Net operating loss			(1.3	)			(2.3	)		$	(0.2	)		$	1.2				(52	)%			(44	)%
Exchange Rate - $ to £			1.27				1.21

 

Note: Exchange rate in the table is calculated by dividing the USD total revenue by the GBP total revenue, therefore this could be slightly different from the average rate during the period depending on the timing of transactions.

 

All variances discussed in the Leisure results below are on a functional currency (at constant rate) basis, which excludes the impact of any changes in foreign currency exchange rates.

 

Leisure Revenue

 

For the three-month period, revenue increased by $0.8 million, primarily in Pubs due to the Vantage rollout and Holiday Parks due to increased bookings.

 

Leisure Operating Income/ (Loss)

 

Operating loss for the three-month period was $1.3 million compared to a loss of $2.3 million during the prior year period. This was primarily due to the increase in revenue, partially offset by a decrease in cost of product.

 

 

Non-GAAP Financial Measures

 

We use certain non-GAAP financial measures, including EBITDA, to analyze our operating performance. We use these financial measures to manage our business on a day-to-day basis. We believe that these measures are also commonly used in our industry to measure performance. For these reasons, we believe that these non-GAAP financial measures provide expanded insight into our business, in addition to standard U.S. GAAP financial measures. There are no specific rules or regulations for defining and using non-GAAP financial measures, and as a result the measures we use may not be comparable to measures used by other companies, even if they have similar labels. The presentation of non-GAAP financial information should not be considered in isolation from, or as a substitute for, or superior to, financial information prepared and presented in accordance with U.S. GAAP. You should consider our non-GAAP financial measures in conjunction with our U.S. GAAP financial measures.

 

We define our non-GAAP financial measures as follows:

 

EBITDA is defined as net income (loss) excluding depreciation and amortization, interest expense, interest income and income tax expense.

 

Adjusted EBITDA is defined as net income (loss) excluding depreciation and amortization, interest expense, interest income and income tax expense, and other additional exclusions and adjustments (see Adjusted EBITDA reconciliation table). Such additional excluded amounts include stock-based compensation U.S. GAAP charges where the associated liability is expected to be settled in stock, and changes in the value of earnout liabilities and income and expenditure in relation to legacy portions of the business (being those portions where trading no longer occurs) including closed defined benefit pension schemes. Additional adjustments are made for items considered outside the normal course of business, including but not limited to (1) restructuring costs, which include charges attributable to employee severance, impairments, management changes, restructuring, dual running costs, costs related to facility closures and integration costs, (2) merger and acquisition costs and (3) gains or losses not in the ordinary course of business.

 

We believe Adjusted EBITDA, when considered along with other performance measures, is a particularly useful performance measure, because it focuses on certain operating drivers of the business, including sales growth, operating costs, selling and administrative expense and other operating income and expense. We believe Adjusted EBITDA can provide a more complete understanding of our operating results and the trends to which we are subject, and an enhanced overall understanding of our financial performance and prospects for the future. Adjusted EBITDA is not intended to be a measure of liquidity or cash flows from operations or a measure comparable to net income or loss, because it does not take into account certain aspects of our operating performance (for example, it excludes non-recurring gains and losses which are not deemed to be a normal part of underlying business activities). Our use of Adjusted EBITDA may not be comparable to the use by other companies of similarly termed measures. Management compensates for these limitations by using Adjusted EBITDA as only one of several measures for evaluating our operating performance. In addition, capital expenditures, which affect depreciation and amortization, interest expense, and income tax benefit (expense), are evaluated separately by management.

 

Functional Currency at Constant rate. Currency impacts discussed have been calculated as the current-period average GBP: USD rate less the equivalent average rate in the prior period, multiplied by the current period amount in our functional currency (GBP). The remaining difference, referred to as functional currency at constant rate, is calculated as the difference in our functional currency, multiplied by the prior-period average GBP: USD rate, as a proxy for functional currency at constant rate movement.

 

Currency Movement represents the difference between the results in our reporting currency (USD) and the results on a functional currency (at constant rate) basis.

 

 

Reconciliations from net loss, as shown in our Consolidated Statements of Operations and Comprehensive Income (Loss), to Adjusted EBITDA are shown below.

 

Reconciliation to Adjusted EBITDA by segment for the Three Months ended March 31, 2024

 

		For the Three-Month Period ended
		March 31,
(In millions)		2024
		Total				Gaming				Virtual Sports				Interactive				Leisure				Corporate
Net Income/ (loss)		$	(5.7	)		$	2.8			$	9.4			$	3.1			$	(1.3	)		$	(19.7	)
Items Relating to Legacy Activities:
Pension charges (1)			0.3																				0.3
Items outside the normal course of business:
Cost of Group Restructure (2)			0.2																				0.2
Cost of Group Restatement (3)			5.0																				5.0
Stock-based compensation expense (4)			2.3				0.2				0.1				0.1				0.1				1.8
Depreciation and amortization (4)			9.9				4.3				0.9				1.2				3.0				0.5
Interest expense net (4)			6.6																				6.6
Other finance expenses / (income) (4)			(0.1	)																			(0.1	)
Income tax (4)			(2.2	)																			(2.2	)
Adjusted EBITDA		$	16.3			$	7.3			$	10.4			$	4.4			$	1.8			$	(7.6	)
Adjusted EBITDA		£	12.7			£	5.9			£	8.0			£	3.5			£	1.3			£	(6.0	)
Exchange Rate - $ to £ (5)			1.27

 

Note: Certain unallocated corporate function costs have not been allocated to the Company’s reportable operating segments because these costs are not allocable and to do so would not be practical; these are shown in the Corporate category.

 

 

Reconciliation to Adjusted EBITDA by segment for the Three Months ended March 31, 2023

 

		For the Three-Month Period ended
		March 31,
(In millions)		2023
		Total				Gaming				Virtual Sports				Interactive				Leisure				Corporate
Net Income/ (loss)		$	(1.4	)		$	4.9			$	11.7			$	2.3			$	(2.3	)		$	(18.0	)
Items Relating to Legacy Activities:
Pension charges (1)			0.2																				0.2
Items outside the normal course of business:
Cost of Group restructure (2)			3.0																				3.0
Stock-based compensation expense (4)			2.9				0.3				0.2				0.2				0.1				2.1
Depreciation and amortization (4)			9.4				4.5				0.8				0.6				3.1				0.4
Interest expense net (4)			6.3																				6.3
Other finance expenses / (income) (4)			(0.1	)																			(0.1	)
Income tax (4)			(0.2	)																			(0.2	)
Adjusted EBITDA		$	20.1			$	9.7			$	12.7			$	3.1			$	0.9			$	(6.3	)
Adjusted EBITDA		£	16.5			£	8.0			£	10.4			£	2.5			£	0.8			£	(5.2	)
Exchange Rate - $ to £ (5)			1.21

 

Note: Certain unallocated corporate function costs have not been allocated to the Company’s reportable operating segments because these costs are not allocable and to do so would not be practical; these are shown in the Corporate category.

 

Notes to Adjusted EBITDA reconciliation tables above:

 

(1)	“Pension charges” are profit and loss charges included within selling, general and administrative expenses, relating to a defined benefit scheme which was closed to new entrants in 1999 and to future accrual in 2010. As well as the amortization of net loss, the figure also includes charges relating to the Pension Protection Fund (which were historically borne by the pension scheme) and a small amount of associated professional services expenses. These costs are included within Corporate Functions.
(2)	“Cost of Group Restructure”.includes redundancy costs, Payment in lieu of Notice costs and any associated employer taxes. To qualify as being an adjusting item, costs must be part of a large restructuring project, which will net save ongoing future costs or be in relation to the exit of an executive.
(3)	“Cost of Group Restatement” includes accounting advice associated with the restatement of the 2020, 2021 and 2022 annual accounts plus the refiling of the 2023 Q1 and Q2 interim accounts. To qualify as being an adjusting item, costs must be specific to the event and be neither normal nor recurring in nature.

 

 

(4)	Stock-based compensation expense, Depreciation and amortization, Total other expense, net and Income tax are as described above in the Results of Operations line item discussions. Total expense, net includes interest income, interest expense, change in fair value of earnout liability, change in fair value of derivative liability and other finance income.
(5)	Exchange rate in the table is calculated by dividing the USD Adjusted EBITDA by the GBP Adjusted EBITDA, therefore this could be slightly different from the average rate during the period depending on timing of transactions.

 

Liquidity and Capital Resources

 

Three Months ended March 31, 2024, compared to Three Months ended March 31, 2023

 

		Three Month Period ended								Variance
(in millions)		March 31,				March 31,
		2024				2023				2024 to 2023
Net loss		$	(5.7	)		$	(1.4	)		$	(4.3	)
Amortization of debt fees			0.2				0.3				(0.1	)
Change in fair value of derivative liabilities and stock-based compensation expense			2.3				3.1				(0.8	)
Depreciation and amortization (incl RoU assets)			11.0				10.2				0.8
Contract cost additions			(2.4	)			(2.6	)			0.2
Other net cash (utilized)/generated by operating activities			(1.8	)			2.0				(3.8	)
Net cash inflow provided by operating activities			3.6				11.6				(8.0	)
Net cash used in investing activities			(7.7	)			(8.9	)			1.2
Net cash used by financing activities			(0.2	)			(0.5	)			0.3
Effect of exchange rates on cash			(0.4	)			0.6				(1.0	)
Net (decrease)/increase in cash		$	(4.7	)		$	2.8			$	(7.5	)

 

Net cash provided by operating activities

 

For the three months ended March 31, 2024, net cash inflow provided by operating activities was $3.6 million, compared to an $11.6 million inflow for the three months ended March 31, 2023, representing a $8.0 million decrease in cash generation from operating activities. This decrease was driven primarily through a higher net loss in the three months ended March 31, 2024 and the three months ended March 31, 2023 benefitted from favorable receipts due to the timing of sales.

 

 

Change in fair value of derivative liabilities and stock-based compensation expense decreased by $0.8 million to $2.3 million due to a $0.6 million reduction in the stock-based compensation expense and a $0.2 million reduction in the recycling of the terminated currency swaps which ended on September 30, 2023.

 

Depreciation and amortization increased by $0.8 million, to $11.0 million, with increases of $0.8 million and $0.3 million for amortization of intangible and of right of use assets offset by a $0.4 million decrease in machine depreciation.

 

Contract cost additions decreased by $0.2 million to $2.4 million for the three months ended March 31, 2024 compared to the three months ended March 31, 2023.

 

Other net cash generated/(utilized) by operating activities decreased by $3.8 million, to a $1.8 million outflow. The relative movements between the three months ended March 31, 2024 and the three months ended March 31, 2023 resulted in a $5.6 million decrease from receivables due to a large machine sale receipt in the three months ended March 31, 2023 and a $6.1 million decrease from accounts payable and accruals relating to timing. These were offset by favorable movements in inventory $3.9 million, prepaid expenses and other current assets $3.3 million and deferred revenue creditors $0.8 million.

 

Net cash used in investing activities

 

Net cash utilized in investing activities reduced by $1.2 million, to $7.7 million during the three months ended March 31, 2024 as compared to the three months ended March 31, 2023. This was due to the prior year including $0.6 million relating to the acquisition of a third-party company trade and assets and higher spend on plant, property and equipment $1.1 million which were partly offset by a $0.5 million increase in spend on capitalized software in the three months ended March 31, 2024.

 

Net cash (used)/generated by financing activities

 

During the three months ended March 31, 2024, net cash utilized by financing activities was $0.2 million relating to finance lease spend compared to $0.5 million during the three months ended March 31, 2023.

 

Funding Needs and Sources

 

To fund our obligations, we have historically relied on a combination of cash flows provided by operations and the incurrence of additional debt or the refinancing of existing debt. As of March 31, 2024, we had liquidity consisting of $35.3 million in cash and a further $6.3 million of undrawn revolver facility. This compares to $27.8 million of cash as of March 31, 2023, with a further $24.7 million of revolver facilities undrawn. We had a working capital outflow of $1.8 million for the three months ended March 31, 2024, compared to a $2.0 million inflow for the three months ended March 31, 2023.

 

The level of our working capital surplus or deficit varies with the level of machine production we are undertaking and our capitalization as well as the seasonality evident in some of the businesses. In periods with minimal machine volumes and capital spend, our working capital is typically more stable. In periods where significant numbers of machines are being produced, the levels of inventory and creditors are typically higher and there is a natural timing difference between converting the stock into sellable or capitalized plant and settling payments to suppliers. These factors, along with movements in trading activity levels can result in significant working capital volatility. In periods of low activity, our working capital volatility is reduced. Working capital is reviewed and managed with the aim of ensuring that current liabilities are covered by the level of cash held and the expected level of short-term receipts.

 

Some of our business operations require cash to be held within the machines. As of March 31, 2024, $6.1 million of our $35.3 million of cash were held as operational floats within the machines. At March 31, 2023, $5.5 million of our $27.8 million of cash were held as operational floats within the machines.

 

Management currently believes that the Company’s cash balances on hand, cash flows expected to be generated from operations, and the ability to control and defer capital projects will be sufficient to fund the Company’s net cash requirements through May 2025.

 

 

Long Term and Other Debt

 

(In millions)		March 31, 2024								March 31, 2023
Cash held		£	28.0			$	35.3			£	22.5			$	27.8
Revolver drawn			(15.0	)			(18.9	)			-				-
Original principal senior debt			(235.0	)			(296.9	)			(235.0	)			(290.6	)
Cash interest accrued			(6.6	)			(8.4	)			(6.1	)			(7.6	)
Finance lease creditors			(2.7	)			(3.4	)			(1.4	)			(1.7	)
Total		£	(231.3	)		$	(292.3	)		£	(220.0	)		$	(272.1	)

 

Debt Covenants

 

Under our debt facilities in place as of March 31, 2024, we are not subject to covenant testing on the Senior Secured Notes. We are, however, subject to covenant testing at the level of Inspired Entertainment Inc., the ultimate holding company, on our Super Senior Revolving Credit Facility which requires the Company to maintain a maximum consolidated senior secured net leverage ratio of 6.0x on March 31, 2022, stepping down to 5.75x on March 31, 2023 and 5.50x from March 31, 2024 and thereafter (the “RCF Financial Covenant”). The RCF Financial Covenant is calculated as the ratio of consolidated senior secured net debt to consolidated pro forma EBITDA (defined as net loss excluding depreciation and amortization, interest expense, interest income and income tax expense) for the 12-month period preceding the relevant quarterly testing date and is tested quarterly on a rolling basis, subject to the Initial Facility (as defined in the RCF Agreement) being drawn on the relevant test date. The RCF Financial Covenant does not include a minimum interest coverage ratio or other financial covenants. Covenant testing at March 31, 2024 showed covenant compliance with a net leverage of 2.9x.

 

There were no breaches of the debt covenants in the periods ended March 31, 2024 or March 31, 2023.

 

Liens and Encumbrances

 

As of March 31, 2024, our senior bank debt was secured by the imposition of a fixed and floating charge in favor of the lender over all the assets of the Company and certain of the Company’s subsidiaries.

 

Share Repurchases

 

The Board of Directors has authorized that the Company may use up to $25.0 million to repurchase Inspired shares of common stock, subject to repurchases being effected on or before May 10, 2025. Management has discretion as to whether to repurchase shares of the Company. There were no repurchases in the three months ended March 31, 2024. As of March 31, 2024 the Company has repurchased an aggregate of 1,193,118 shares of our common stock at an aggregate cost of $12.0 million.

 

Contractual Obligations

 

As of March 31, 2024, our contractual obligations were as follows:

 

						Less than												More than
Contractual Obligations (in millions)		Total				1 year				1-2 years				3-5 years				5 years
Operating activities
Interest on long term debt		$	58.4			$	23.4			$	23.3			$	11.7			$	-
Financing activities
Revolver repayment			19.9				19.9				-				-				-
Senior bank debt - principal repayment			296.9				-				-				296.9				-
Finance lease payments			3.4				0.9				1.2				1.3				-
Operating lease payments			15.6				5.1				3.5				4.5				2.5
Interest on non-utilization fees			0.5				0.3				0.2				-				-
Total		$	394.7			$	49.6			$	28.2			$	314.4			$	2.5

 

 

Off-Balance Sheet Arrangements

 

As of March 31, 2024, there were no off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of Regulation S-K, promulgated by the SEC.

 

Critical Accounting Policies and Accounting Estimates

 

The preparation of our audited consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions. We exercise considerable judgment with respect to establishing sound accounting policies and in making estimates and assumptions that affect the reported amounts of our assets and liabilities, our recognition of revenue and expenses, and our disclosure of commitments and contingencies at the date of the consolidated financial statements. On an on-going basis, we evaluate our estimates and judgments. We base our estimates and judgments on a variety of factors, including our historical experience, knowledge of our business and industry and current and expected economic conditions, that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. We periodically re-evaluate our estimates and assumptions with respect to these judgments and modify our approach when circumstances indicate that modifications are necessary. While we believe that the factors we evaluate provide us with a meaningful basis for establishing and applying sound accounting policies, we cannot guarantee that the results will always be accurate. Since the determination of these estimates requires the exercise of judgment, actual results could differ from such estimates.

 

A description of our critical accounting estimates was provided in item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the year ended December 31, 2023. There were no changes in the determination of these estimates during the first three months of 2024.

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

Our principal market risks are our exposure to changes in foreign currency exchange rates.

 

Interest Rate Risk

 

Following the Company’s refinancing of its debt in May 2021, the external borrowings of £235.0 million ($296.9 million) are provided at a fixed rate. Therefore, movements in rates such as LIBOR do not impact on the current borrowings and the only fluctuation that is expected to be reported will be that solely caused by movements in the exchange rates between the Company’s functional currency and its reporting currency.

 

Foreign Currency Exchange Rate Risk

 

Our operations are conducted in various countries around the world, and we receive revenue and pay expenses from these operations in a number of different currencies. As such, our earnings are subject to movements in foreign currency exchange rates when transactions are denominated in (i) currencies other than GBP, which is our functional currency, or (ii) the functional currencies of our subsidiaries, which is not necessarily GBP. To estimate our foreign currency exchange rate risk, we identify material Euro and USD trading and balance sheet amounts and recalculate the result using a 10% movement in the GBP:USD exchange rate. For the trading figures the 10% movement is based on the average exchange rate throughout the reported period and for the balance sheet figures the 10% movement is based on the exchange rate used at March 31, 2024.

 

Excluding intercompany balances, our Euro functional currency net assets total approximately $17.3 million, and our USD functional currency net assets total approximately $6.7 million. We use a sensitivity analysis model to measure the impact of a 10% adverse movement of foreign currency exchange rates against the USD. A hypothetical 10% adverse change in the value of the Euro and the USD relative to GBP as of March 31, 2024, would result in translation adjustments of approximately $1.6 million favorable and $0.7 million unfavorable, respectively, recorded in other comprehensive loss.

 

Included within our trading results are earnings outside of our functional currency. Retained gains from Euro based entities earned in Euros and retained losses from USD based entities earned in USD in the three months ended March 31, 2024, were €3.4 million and $8.6 million, respectively. A hypothetical 10% adverse change in the value of the Euro and the USD relative to GBP as of March 31, 2024, would result in translation adjustments of approximately $0.3 million favorable and $0.8 million unfavorable, respectively, recorded in trading operations.

 

The majority of the Company’s trading is in GBP, the functional currency, although the reporting currency of the Company is the USD. As such, changes in the GBP:USD exchange rate have an effect on the Company’s results. A 10% weakening of GBP against the USD would change the trading operational results favorably by approximately $0.1 million and would result in unfavorable translation adjustments of approximately $9.4 million, recorded in other comprehensive loss.

 

 

ITEM 4. CONTROLS AND PROCEDURES

 

Evaluation of Disclosure Controls and Procedures

 

Disclosure controls and procedures are controls and other procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is accumulated and communicated to management, including our Certifying Officers, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure.

 

Under the supervision and with the participation of our management, including our principal executive officer and our principal financial officer (together, the “Certifying Officers”), we carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based on the foregoing, our Certifying Officers concluded that our disclosure controls and procedures were not effective at the reasonable assurance level as of March 31, 2024, due to the material weaknesses described in Item 9A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on April 15, 2024. Management is redesigning and implementing existing and additional controls to remediate these material weaknesses.

 

Notwithstanding the identified material weaknesses and management’s assessment that our disclosure controls and procedures were not effective at the reasonable assurance level as of March 31, 2024, management believes that the interim consolidated financial statements and footnote disclosures included in this Quarterly Report on Form 10-Q fairly present, in all material respects, our financial condition, results of operations, cash flows and disclosures as of and for the periods presented in accordance with generally accepted accounting principles.

 

Changes in Internal Control over Financial Reporting

 

Other than the control changes to remediate the identified material weaknesses, there were no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

 

PART II - OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS

 

Securities Matters Arising From the Company’s Restated Financial Statements and Related Matters

 

On March 12, 2024, the Company received a subpoena from the SEC seeking documents concerning, among other things, the Company’s recently restated financial statements. The Company intends to comply with the subpoena and is cooperating with the SEC’s inquiry.

 

The Company cannot predict the ultimate outcome or timing of the SEC investigation, what if any actions may be taken by the SEC, or the effect that such actions may have on the business, prospects, operating results and financial condition. The resolution of the SEC investigation may result in substantial monetary penalties or settlement costs.  However, at this time, Management believes that the ultimate outcome and timing of the SEC investigation remains uncertain and is not estimable given the broad range of potential outcomes.

 

From time to time, the Company is involved in legal matters arising in the ordinary course of business. While the Company believes that such matters are currently not material, there can be no assurance that matters arising in the ordinary course of business for which the Company is, or could be, involved in litigation, will not have an adverse effect on its business, financial condition or results of operations.

 

ITEM 1A. RISK FACTORS

 

Our business is subject to a high degree of risk. You should carefully consider the risk factors discussed in Part I, Item 1A of our Annual Report on Form 10-K for our fiscal year ended December 31, 2023, filed with the SEC on April 15, 2024. Any of these risks could materially and adversely affect our business, operating results, financial condition and prospects, and cause the value of our common stock to decline, which could cause investors in our common stock to lose all or part of their investments.

 

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

 

None.

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

 

None.

 

ITEM 4. MINE SAFETY DISCLOSURES

 

Not applicable.

 

ITEM 5. OTHER INFORMATION

 

None.

 

ITEM 6. EXHIBITS

 

The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q:

 

Exhibit Number		Description
10.1#		Letter Agreement, dated April 12, 2024, between Inspired Entertainment, Inc. and Marilyn Jentzen (incorporated herein by reference to Exhibit 10.19 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on April 15, 2024).
10.2#		Amendment to Employment Agreement, dated March 13, 2024, by and between Inspired Gaming (UK) Limited and Carys Damon (incorporated herein by reference to Exhibit 10.28 to the Annual Report on Form 10-K of the Company for the year ended December 31, 2023, filed with the SEC on April 15, 2024).
31.1*		Certification of Principal Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a).
31.2*		Certification of Principal Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a).
32.1**		Certification of Principal Executive Officer required by Rule 13a-14(b) or Rule 15d-14(b) and 18 U.S.C. 1350.
32.2**		Certification of Principal Financial Officer required by Rule 13a-14(b) or Rule 15d-14(b) and 18 U.S.C. 1350.
101.INS*		Inline XBRL Instance Document
101.SCH*		Inline XBRL Taxonomy Extension Schema
101.CAL*		Inline XBRL Taxonomy Extension Calculation Linkbase
101.DEF*		Inline XBRL Taxonomy Extension Definition Linkbase
101.LAB*		Inline XBRL Taxonomy Extension Label Linkbase
101.PRE*		Inline XBRL Taxonomy Extension Presentation Linkbase
104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

#	Indicates management contract or compensatory plan.
*	Filed herewith.
**	Furnished herewith.

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

	INSPIRED ENTERTAINMENT, INC.
Date: May 10, 2024		/s/ A. Lorne Weil
	Name:	A. Lorne Weil
	Title:	Executive Chairman
		(Principal Executive Officer)
Date: May 10, 2024		/s/ Marilyn Jentzen
	Name:	Marilyn Jentzen
	Title:	Interim Chief Financial Officer
		(Principal Financial and Accounting Officer)

 

 

EXHIBIT 31.1

 

CERTIFICATION OF THE PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO RULE 13a-14(a) AND RULE 15d-14(a)

UNDER THE SECURITIES EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

 

I, A. Lorne Weil, certify that:

 

1. I have reviewed this Quarterly Report on Form 10-Q of Inspired Entertainment, Inc.;

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

 

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.

 

Date: May 10, 2024	/s/ A. Lorne Weil
	A. Lorne Weil
	Executive Chairman
	(Principal Executive Officer)

 

 

 

EXHIBIT 31.2

 

CERTIFICATION OF THE PRINCIPAL FINANCIAL OFFICER

PURSUANT TO RULE 13a-14(a) AND RULE 15d-14(a)

UNDER THE SECURITIES EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

 

I, Marilyn Jentzen, certify that:

 

1. I have reviewed this Quarterly Report on Form 10-Q of Inspired Entertainment, Inc.;

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

 

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.

 

Date: May 10, 2024	/s/ Marilyn Jentzen
	Marilyn Jentzen
	Interim Chief Financial Officer
	(Principal Financial and Accounting Officer)

 

 

 

EXHIBIT 32.1

 

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the Quarterly Report of Inspired Entertainment, Inc. (the “Company”) on Form 10-Q for the fiscal period ended March 31, 2024, as filed with the Securities and Exchange Commission (the “Report”), I, A. Lorne Weil, Executive Chairman of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

 

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

2. To my knowledge, the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of and for the period covered by the Report.

 

Dated: May 10, 2024	By:	/s/ A. Lorne Weil
		A. Lorne Weil
		Executive Chairman
		(Principal Executive Officer)

 

A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

 

 

 

EXHIBIT 32.2

 

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the Quarterly Report of Inspired Entertainment, Inc. (the “Company”) on Form 10-Q for the fiscal period ended March 31, 2024, as filed with the Securities and Exchange Commission (the “Report”), I, Marilyn Jentzen, Interim Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

 

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

2. To my knowledge, the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

Dated: May 10, 2024	By:	/s/ Marilyn Jentzen
		Marilyn Jentzen
		Interim Chief Financial Officer
		(Principal Financial and Accounting Officer)

 

A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

 

 

v3.24.1.1.u2

Cover - shares	3 Months Ended
	Mar. 31, 2024	May 07, 2024
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Mar. 31, 2024
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2024
Current Fiscal Year End Date	--12-31
Entity File Number	001-36689
Entity Registrant Name	INSPIRED ENTERTAINMENT, INC.
Entity Central Index Key	0001615063
Entity Tax Identification Number	47-1025534
Entity Incorporation, State or Country Code	DE
Entity Address, Address Line One	250 West 57th Street
Entity Address, Address Line Two	Suite 415
Entity Address, City or Town	New York
Entity Address, State or Province	NY
Entity Address, Postal Zip Code	10107
City Area Code	(646)
Local Phone Number	565-3861
Title of 12(b) Security	Common stock, par value $0.0001 per share
Trading Symbol	INSE
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		26,571,308

v3.24.1.1.u2

Condensed Consolidated Balance Sheets - USD ($) $ in Millions	Mar. 31, 2024	Dec. 31, 2023
Assets
Cash	$ 35.3	$ 40.0
Accounts receivable, net	37.5	40.6
Inventory, net	31.7	32.3
Prepaid expenses and other current assets	39.6	39.6
Total current assets	144.1	152.5
Property and equipment, net	63.2	62.8
Software development costs, net	21.9	21.8
Other acquired intangible assets subject to amortization, net	12.9	13.4
Goodwill	58.3	58.8
Operating lease right of use asset	15.2	14.2
Costs of obtaining and fulfilling customer contracts, net	9.7	9.4
Other assets	5.8	8.0
Total assets	331.1	340.9
Current liabilities
Accounts payable and accrued expenses	57.6	60.8
Corporate tax and other current taxes payable	3.2	6.3
Deferred revenue, current	4.9	5.6
Operating lease liabilities	5.1	4.7
Current portion of long-term debt	18.9	19.1
Other current liabilities	4.4	4.2
Total current liabilities	94.1	100.7
Long-term debt	293.3	295.6
Finance lease liabilities, net of current portion	2.5	1.6
Deferred revenue, net of current portion	8.0	7.1
Operating lease liabilities	10.5	9.8
Other long-term liabilities	3.9	4.1
Total liabilities	412.3	418.9
Commitments and contingencies
Stockholders’ deficit
Preferred stock; $0.0001 par value; 1,000,000 shares authorized, no shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively.
Common stock; $0.0001 par value; 49,000,000 shares authorized; 26,559,756 shares and 26,219,021 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively
Additional paid in capital	387.3	386.1
Accumulated other comprehensive income	45.8	44.5
Accumulated deficit	(514.3)	(508.6)
Total stockholders’ deficit	(81.2)	(78.0)
Total liabilities and stockholders’ deficit	$ 331.1	$ 340.9

v3.24.1.1.u2

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Mar. 31, 2024	Dec. 31, 2023
Statement of Financial Position [Abstract]
Preferred stock, par value	$ 0.0001	$ 0.0001
Preferred stock, shares authorized	1,000,000	1,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 0.0001	$ 0.0001
Common stock, shares authorized	49,000,000	49,000,000
Common stock, shares issued	26,559,756	26,219,021
Common stock, shares outstanding	26,559,756	26,219,021

v3.24.1.1.u2

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited) - USD ($) $ in Millions		3 Months Ended
		Mar. 31, 2024	Mar. 31, 2023
Revenue:
Total revenue		$ 63.1	$ 64.9
Cost of sales:
Cost of service	[1]	(15.9)	(15.0)
Cost of product sales		(4.5)	(6.7)
Selling, general and administrative expenses		(34.2)	(29.2)
Depreciation and amortization		(9.9)	(9.4)
Net operating (loss) income		(1.4)	4.6
Other expense
Interest expense, net		(6.6)	(6.3)
Other finance income		0.1	0.1
Total other expense, net		(6.5)	(6.2)
Loss before income taxes		(7.9)	(1.6)
Income tax benefit		2.2	0.2
Net loss		(5.7)	(1.4)
Other comprehensive income (loss):
Foreign currency translation gain (loss)		1.0	(2.9)
Reclassification of loss on hedging instrument to comprehensive income			0.2
Actuarial gains on pension plan		0.3	0.2
Other comprehensive income (loss)		1.3	(2.5)
Comprehensive loss		$ (4.4)	$ (3.9)
Earnings Per Share, Basic		$ (0.20)	$ (0.05)
Earnings Per Share, Diluted		$ (0.20)	$ (0.05)
Weighted average number of shares outstanding during the period - basic		28,603,734	27,974,182
Weighted average number of shares outstanding during the period - diluted		28,603,734	27,974,182
Stock-based compensation included in:
Selling, general and administrative expenses		$ (2.3)	$ (2.9)
Service [Member]
Revenue:
Total revenue		57.1	57.5
Product Sales [Member]
Revenue:
Total revenue		$ 6.0	$ 7.4
[1] Excluding depreciation and amortization

v3.24.1.1.u2

Condensed Consolidated Statements of Stockholders' Deficit (Unaudited) - USD ($)	Common Stock [Member]	Additional Paid-in Capital [Member]	AOCI Attributable to Parent [Member]	Retained Earnings [Member]	Total
Balance at Dec. 31, 2022		$ 378,200,000	$ 50,800,000	$ (514,600,000)	$ (85,600,000)
Balance, shares at Dec. 31, 2022	25,909,516
Foreign currency translation adjustments			(2,900,000)		(2,900,000)
Actuarial gains on pension plan			200,000		200,000
Issuances under stock plans
Issuances under stock plans, shares	353,554
Stock-based compensation expense		3,000,000.0			3,000,000.0
Net loss				(1,400,000)	(1,400,000)
Reclassification of loss on hedging instrument to comprehensive income			200,000		200,000
Balance at Mar. 31, 2023		381,200,000	48,300,000	(516,000,000.0)	(86,500,000)
Balance, shares at Mar. 31, 2023	26,263,070
Balance at Dec. 31, 2023		386,100,000	44,500,000	(508,600,000)	(78,000,000.0)
Balance, shares at Dec. 31, 2023	26,219,021
Foreign currency translation adjustments			1,000,000.0		1,000,000.0
Actuarial gains on pension plan			300,000		300,000
Issuances under stock plans		(800,000)			(800,000)
Issuances under stock plans, shares	340,735
Stock-based compensation expense		2,000,000.0			2,000,000.0
Net loss				(5,700,000)	(5,700,000)
Balance at Mar. 31, 2024		$ 387,300,000	$ 45,800,000	$ (514,300,000)	$ (81,200,000)
Balance, shares at Mar. 31, 2024	26,559,756

v3.24.1.1.u2

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Cash flows from operating activities:
Net loss	$ (5.7)	$ (1.4)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	9.9	9.4
Amortization of right of use asset	1.1	0.8
Stock-based compensation expense	2.3	2.9
Contract cost expense	(2.4)	(2.6)
Reclassification of loss on hedging instrument to comprehensive income		0.2
Non-cash interest expense relating to senior debt	0.2	0.3
Changes in assets and liabilities:
Accounts receivable	2.7	8.3
Inventory	0.4	(3.5)
Prepaid expenses and other assets	4.3	1.0
Corporate tax and other current taxes payable	(6.3)	(6.2)
Accounts payable and accrued expenses	(2.6)	3.5
Deferred revenues and customer prepayment	0.6	(0.2)
Operating lease liabilities	(1.0)	(0.9)
Other long-term liabilities	0.1
Net cash provided by operating activities	3.6	11.6
Cash flows from investing activities:
Purchases of property and equipment	(4.4)	(5.5)
Acquisition of third-party company trade and assets		(0.6)
Purchases of capital software	(3.3)	(2.8)
Net cash used in investing activities	(7.7)	(8.9)
Cash flows from financing activities:
Repayments of finance leases	(0.2)	(0.5)
Net cash used in financing activities	(0.2)	(0.5)
Effect of exchange rate changes on cash	(0.4)	0.6
Net (decrease) increase in cash	(4.7)	2.8
Cash, beginning of period	40.0	25.0
Cash, end of period	35.3	27.8
Supplemental cash flow disclosures
Cash paid during the period for interest	0.1	0.1
Cash paid during the period for income taxes		0.1
Cash paid during the period for operating leases	2.1	2.1
Supplemental disclosure of noncash investing and financing activities
Additional paid in capital from net settlement of RSUs	(0.8)
Lease liabilities arising from obtaining right of use assets	(2.2)	(0.1)
Property and equipment acquired through finance lease	$ 1.3

v3.24.1.1.u2

Nature of Operations, Management’s Plans and Summary of Significant Accounting Policies	3 Months Ended
	Mar. 31, 2024
Accounting Policies [Abstract]
Nature of Operations, Management’s Plans and Summary of Significant Accounting Policies	1. Nature of Operations, Management’s Plans and Summary of Significant Accounting Policies   Company Description and Nature of Operations   We are a global gaming technology company, supplying content, platform, gaming terminals and other products and services to online and land-based regulated lottery, betting and gaming operators worldwide through a broad range of distribution channels, predominantly on a business-to-business basis. We provide end-to-end digital gaming solutions (i) on our own proprietary and secure network, which accommodates a wide range of devices, including land-based gaming machine terminals, mobile devices and online computer applications and (ii) through third party networks. Our content and other products can be found through the consumer-facing portals of our interactive customers and, through our land-based customers, in licensed betting offices, adult gaming centers, pubs, bingo halls, airports, motorway service areas and leisure parks.   Liquidity Discussions   As of March 31, 2024, the Company’s cash on hand was $35.3 million, and the Company had working capital in addition to cash of $14.7 million. The Company recorded a net loss of $5.7 million and $1.4 million for the three months ended March 31, 2024 and 2023, respectively. Net income/losses include non-cash stock-based compensation of $2.3 million and $2.9 million for the three months ended March 31, 2024 and 2023, respectively. Historically, the Company has generally had positive cash flows from operating activities and has relied on a combination of cash flows provided by operations and the incurrence of debt and/or the refinancing of existing debt to fund its obligations. Cash flows provided by operations amounted to $3.6 million and $11.6 million for the three months ended March 31, 2024 and 2023, respectively.   Management currently believes that the Company’s cash balances on hand, cash flows expected to be generated from operations, ability to control and defer capital projects and amounts available from the Company’s external borrowings will be sufficient to fund the Company’s net cash requirements through May 2025.   Basis of Presentation   The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and pursuant to the applicable rules and regulations of the SEC. Certain information or footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly, they do not include all the information and footnotes necessary for a comprehensive presentation of financial position, results of operations, or cash flows. It is management’s opinion, however, that the accompanying unaudited interim condensed consolidated financial statements include all adjustments, consisting of a normal recurring nature, which are necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented.   The accompanying unaudited interim condensed consolidated financial statements should be read in conjunction with the Company’s consolidated financial statements and notes thereto for the years ended December 31, 2023 and 2022. The financial information as of December 31, 2023 is derived from the audited consolidated financial statements presented in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on April 15, 2024. The financial information for the three months ended March 31, 2023 is derived from the unaudited consolidated financial statements presented in the Company’s Annual Report on Form 10-Q/A for the three months ended March 31, 2023 filed with the SEC on February 27, 2024. The interim results for the three months ended March 31, 2024 are not necessarily indicative of the results to be expected for the year ending December 31, 2024 or for any future interim periods.

v3.24.1.1.u2

Allowance for Credit Losses	3 Months Ended
	Mar. 31, 2024
Receivables [Abstract]
Allowance for Credit Losses	2. Allowance for Credit Losses   Changes in the allowance for credit losses are as follows:   Schedule of Changes in Allowance for Credit Losses     March 31, 2024     December 31, 2023       (in millions)   Beginning balance   $ (1.1 )   $ (1.4 ) Additional allowance for credit losses     —       (0.2 ) Recoveries     —       0.2   Write offs     —       0.4   Foreign currency translation adjustments     —       (0.1 ) Ending balance   $ (1.1 )   $ (1.1 )

v3.24.1.1.u2

Inventory	3 Months Ended
	Mar. 31, 2024
Inventory Disclosure [Abstract]
Inventory	3. Inventory   Inventory consists of the following: Schedule of Inventory      March 31, 2024     December 31, 2023       (in millions)   Component parts   $ 22.5     $ 23.3   Work in progress     1.0       0.4   Finished goods     8.2       8.6   Total inventories   $ 31.7     $ 32.3     Component parts include parts for gaming terminals. Our finished goods inventory primarily consists of gaming terminals which are ready for sale.

v3.24.1.1.u2

Accounts Payable and Accrued Expenses	3 Months Ended
	Mar. 31, 2024
Payables and Accruals [Abstract]
Accounts Payable and Accrued Expenses	4. Accounts Payable and Accrued Expenses   Accounts payable and accrued expenses consist of the following:  Schedule of Accounts Payable and Accrued Expenses     March 31, 2024     December 31, 2023       (in millions)   Accounts payable   $ 35.2     $ 41.9   Interest payable     8.4       —   Payroll and related costs     5.1       5.5   Cost of sales including inventory     5.0       6.4   Other creditors     3.9       7.0   Total accounts payable and accrued expenses   $ 57.6     $ 60.8

v3.24.1.1.u2

Contract Related Disclosures	3 Months Ended
	Mar. 31, 2024
Revenue from Contract with Customer [Abstract]
Contract Related Disclosures	5. Contract Related Disclosures   The following table summarizes contract related balances: Schedule of Contract Related Balances      Accounts Receivable     Unbilled Accounts Receivable     Right to recover asset     Deferred Income     Customer Prepayments and Deposits       (in millions)   At March 31, 2024   $ 36.7     $ 20.5     $ 0.6     $ (12.9 )   $ (3.1 ) At December 31, 2023   $ 42.8     $ 24.0     $ 0.6     $ (12.7 )   $ (2.9 )   Revenue recognized that was included in the deferred income balance at the beginning of the period amounted to $1.9 million and $1.2 million for the three months ended March 31, 2024 and 2023, respectively.   For the periods ended March 31, 2024 and 2023 respectively, there was no significant amounts of revenue recognized as a result of changes in contract transaction price related to performance obligations that were satisfied in the respective prior periods.   Transaction Price Allocated to Remaining Performance Obligations   At March 31, 2024, the transaction price allocated to unsatisfied performance obligations for contracts expected to be greater than one year, or performance obligations for which we do not have a right to consideration from the customer in the amount that corresponds to the value to the customer for our performance completed to date, variable consideration which is not accounted for in accordance with the sales-based or usage-based royalties guidance, or contracts which are not wholly unperformed, is approximately $102.6 million. Of this amount, we expect to recognize as revenue approximately 30% through December 31, 2024, approximately 50% through December 31, 2026, and the remaining 20% through December 31, 2029.

v3.24.1.1.u2

Stock-Based Compensation	3 Months Ended
	Mar. 31, 2024
Share-Based Payment Arrangement [Abstract]
Stock-Based Compensation	6. Stock-Based Compensation   A summary of the Company’s restricted stock unit (“RSU”) activity during the three months ended March 31, 2024 is as follows: Schedule of Restricted Stock Unit Activity      Number of Shares           Unvested Outstanding at January 1, 2024 (1)     1,242,175   Granted (2)     604,709   Forfeited     (29,599 ) Vested     (10,166 ) Unvested Outstanding at March 31, 2024     1,807,119     (1) The amount shown as “unvested outstanding at January 1, 2024” does not include certain tranches of Adjusted EBITDA RSUs that have performance criteria for annual periods later than 2023 (an aggregate of 312,500 RSUs, including 62,500 subject to 2024 criteria), which were part of sign-on tranches approved for our Executive Chairman and our Chief Executive Officer during the years 2021 and 2023, as the applicable performance targets were not set by January 1, 2024 (and, accordingly, the accounting grant dates had not yet occurred for the tranches). Such tranches had previously been included in the amounts shown as unvested outstanding since the initial approval date for the tranches.   (2) The amount shown as “granted” includes 245,694 performance-based target RSUs for 2024 as to which the number that ultimately vests would range from 0% to 200% of the target amount of RSUs (a maximum of 491,388 RSUs based on attainment of Adjusted EBITDA targets for 2024). The amount shown also includes a tranche of 62,500 Adjusted EBITDA RSUs (subject to performance criteria for 2024) which can be earned at up to 100% of the target amount of RSUs; such tranche was part of a sign-on award of multiple tranches approved in 2021 for our Executive Chairman with respect to which the accounting grant date for the 2024 tranche did not occur until the targets were set in February 2024.   The Company issued a total of 340,735 shares during the three months ended March 31, 2024, in connection with the Company’s equity-based plans, which included an aggregate of 333,161 shares issued in connection with the net settlement of RSUs that vested during the prior year (on December 29, 2023).

v3.24.1.1.u2

Accumulated Other Comprehensive Loss (Income)	3 Months Ended
	Mar. 31, 2024
Equity [Abstract]
Accumulated Other Comprehensive Loss (Income)	7. Accumulated Other Comprehensive Loss (Income)   The accumulated balances for each classification of comprehensive loss (income) are presented below: Schedule of Accumulated Other Comprehensive Loss (Income)      Foreign Currency Translation Adjustments     Change in Fair Value of Hedging Instrument     Unrecognized Pension Benefit Costs     Accumulated Other Comprehensive (Income)       (in millions)   Balance at January 1, 2024   $ (78.3 )   $ —     $ 33.8     $ (44.5 ) Change during the period     (1.0 )     —       (0.3 )     (1.3 ) Balance at March 31, 2024   $ (79.3 )   $ —     $ 33.5     $ (45.8 )       Foreign Currency Translation Adjustments     Change in Fair Value of Hedging Instrument     Unrecognized Pension Benefit Costs     Accumulated Other Comprehensive (Income)       (in millions)   Balance at January 1, 2023   $ (84.2 )   $ 0.3     $ 33.1     $ (50.8 ) Change during the period     2.9       (0.2 )     (0.2 )     2.5   Balance at March 31, 2023   $ (81.3 )   $ 0.1     $ 32.9     $ (48.3 )   In connection with the issuance of Senior Secured Notes and the entry into a Revolving Credit Facility (“RCF”) Agreement (the “RCF Agreement”), on May 19, 2021, the Company terminated all of its interest rate swaps. Accordingly, hedge accounting is no longer applicable. The amounts previously recorded in Accumulated Other Comprehensive Income are amortized into Interest expense over the terms of the hedged forecasted interest payments. Losses reclassified from Accumulated Other Comprehensive Income into Interest expense in the Consolidated Statements of Operations and Income for the three months ended March 31, 2024 and March 31, 2023 amounted to $0.0 million and $0.2 million, respectively.

v3.24.1.1.u2

Net Earnings (Loss) per Share	3 Months Ended
	Mar. 31, 2024
Earnings Per Share [Abstract]
Net Earnings (Loss) per Share	8. Net Earnings (Loss) per Share   Basic income/loss per share (“EPS”) is computed by dividing net income/loss attributable to common stockholders by the weighted-average number of common shares outstanding during the period, excluding the effects of any potentially dilutive securities. Diluted EPS gives effect to all dilutive potential shares of common stock outstanding during the period, including stock options and RSUs, unless the inclusion would be anti-dilutive.   The computation of diluted EPS excludes the common stock equivalents of the following potentially dilutive securities because they were either contingently issuable shares or because their inclusion would be anti-dilutive: Schedule of Anti-dilutive Securities Excluded from Computation of Earnings per Share      2024     2023       Three Months Ended March 31,       2024     2023   RSUs   $ 1,807,119     $ 1,917,231     There were no reconciling items for the three months ended March 31, 2024 or March 31, 2023.   The calculation of Basic EPS includes the effects of 1,840,165 and 1,893,136 shares for the three months ended March 31, 2024 and 2023, respectively, with respect to RSU awards that have vested but have not yet been issued.

v3.24.1.1.u2

Other Finance Income (Expense)	3 Months Ended
	Mar. 31, 2024
Other Income and Expenses [Abstract]
Other Finance Income (Expense)	9. Other Finance Income (Expense)   Other finance income (expense) consisted of the following: Schedule of Other Finance Income (Expense)                        Three Months Ended March 31,       2024     2023       (in millions)   Pension interest cost   $ (0.9 )   $ (0.8 ) Expected return on pension plan assets     1.0       0.9   Other finance income (Costs)   $ 0.1     $ 0.1

v3.24.1.1.u2

Income Taxes	3 Months Ended
	Mar. 31, 2024
Income Tax Disclosure [Abstract]
Income Taxes	10. Income Taxes   The effective income tax rate for the three months ended March 31, 2024 and 2023 was 27.4% and 13.2%, respectively, resulting in a $2.2 million and $0.2 million income tax benefit, respectively.   The effective tax rate reported in any given year will continue to be influenced by a variety of factors, including the level of pre-tax income or loss, the income mix between jurisdictions, and any discrete items that may occur.   The Company recorded a valuation allowance against all of our deferred tax assets as of both March 31, 2024 and 2023. We intend to continue maintaining a full valuation allowance on our deferred tax assets until there is sufficient evidence to support the reversal of all or some portion of these allowances. However, given our current earnings and anticipated future earnings, we believe that there is a reasonable possibility that within the next 12 months, sufficient positive evidence may become available to allow us to reach a conclusion that a significant portion of the valuation allowance will no longer be needed. Release of the valuation allowance would result in the recognition of certain deferred tax assets and a decrease to income tax expense for the period the release is recorded. However, the exact timing and amount of the valuation allowance release are subject to change on the basis of the level of profitability that we are able to actually achieve.

v3.24.1.1.u2

Related Parties	3 Months Ended
	Mar. 31, 2024
Related Party Transactions [Abstract]
Related Parties	11. Related Parties   Macquarie Corporate Holdings Pty Limited (UK Branch) (“Macquarie UK”) (an arranger and lending party under our RCF Agreement) is an affiliate of MIHI LLC, which beneficially owned approximately 11.4% of our common stock as of March 31, 2024. Macquarie UK held $2.1 million of the total $18.9 million of RCF drawn at March 31, 2024 and December 31, 2023, respectively. Macquarie UK did not hold any of the Company’s aggregate senior debt at March 31, 2024 or December 31, 2023. Interest expense payable to Macquarie UK for the three months ended March 31, 2024 and 2023 amounted to $0.1 million and $0.0 million, respectively. MIHI LLC is also a party to a stockholders agreement with the Company and other stockholders, dated December 23, 2016, pursuant to which, subject to certain conditions, MIHI LLC, jointly with Hydra Industries Sponsor LLC, are permitted to designate two directors to be nominated for election as directors of the Company at any annual or special meeting of stockholders at which directors are to be elected, until such time as MIHI LLC and Hydra Industries Sponsor LLC in the aggregate hold less than 5% of the outstanding shares of the Company.   On December 31, 2021, the Company entered into a consultancy agreement with Richard Weil, the brother of A. Lorne Weil, our Executive Chairman, under which Richard Weil received a success fee for services provided in connection with our acquisition of Sportech Lotteries, LLC. The success fee was paid during the year ended December 31, 2022. Under the agreement, as extended in November 2022 and in July 2023 and December 2023, he will provide consulting services to the Company relating to the lottery in the Dominican Republic through December 31, 2024, for which he was compensated at a rate of $10,000 per month in consulting fees through to June 30, 2023, and at a rate of $12,500 per month for the remainder of the term of the agreement. The aggregate amount incurred by the Company in consulting fees was $37,500 and $30,000 for the three months ended March 31, 2024 and 2023, respectively.

v3.24.1.1.u2

Leases	3 Months Ended
	Mar. 31, 2024
Leases [Abstract]
Leases	12. Leases   Certain of our arrangements include leases for equipment installed at customer locations. As the lessor, we combine lease and non-lease components for all classes of underlying assets in arrangements that involve operating leases. The single combined component is accounted for under ASC 606, Revenue from Contracts with Customers based on the consideration that the non-lease components are the predominant items in the arrangements. If a component cannot be combined, the consideration is allocated between the lease component and the non-lease component based on relative standalone selling price. The lease component is accounted for under ASC 842, Leases and the non-lease component is accounted for under ASC 606.   Lease income from operating leases and from sales type leases is not material for any of the periods presented.

v3.24.1.1.u2

Commitments and Contingencies	3 Months Ended
	Mar. 31, 2024
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	13. Commitments and Contingencies   Employment Agreements   We are party to employment agreements with our executive officers and other employees of the Company and our subsidiaries which contain, among other terms, provisions relating to severance and notice requirements.   Legal Matters   From time to time, the Company may become involved in lawsuits and legal matters arising in the ordinary course of business. While the Company believes that, currently, it has no such matters that are material, there can be no assurance that existing or new matters arising in the ordinary course of business will not have a material adverse effect on the Company’s business, financial condition or results of operations.

v3.24.1.1.u2

Pension Plan	3 Months Ended
	Mar. 31, 2024
Retirement Benefits [Abstract]
Pension Plan	14. Pension Plan   We operate a defined contribution plan in the US, and both defined benefit and defined contribution pension schemes in the UK. The defined contribution scheme assets are held separately from those of the Company in independently administered funds.   Defined Benefit Pension Scheme   The defined benefit scheme has been closed to new entrants since April 1, 1999 and closed to future accruals for services rendered to the Company for the entire financial statement periods presented. The Actuarial Valuation of the scheme as at March 31, 2021, determined that the statutory funding objective was not met, i.e., there were insufficient assets to cover the scheme’s technical provisions and there was a funding shortfall.   In June 2022, a recovery plan was put in place to eliminate the funding shortfall. The plan expects the shortfall to be eliminated by October 31, 2026.   The following table presents the components of our net periodic pension cost: Schedule of Net Periodic Pension Cost                        Three Months Ended March 31,       2024     2023       (in millions)   Components of net periodic pension cost:             Interest cost   $ 0.9     $ 0.8   Expected return on plan assets     (1.0 )     (0.9 ) Amortization of net loss     0.3       0.2   Net periodic cost   $ 0.2     $ 0.1

v3.24.1.1.u2

Segment Reporting and Geographic Information	3 Months Ended
	Mar. 31, 2024
Segment Reporting [Abstract]
Segment Reporting and Geographic Information	15. Segment Reporting and Geographic Information   The Company operates its business along four operating segments, which are segregated on the basis of revenue stream: Gaming, Virtual Sports, Interactive and Leisure. The Company believes this method of segment reporting reflects both the way its business segments are managed and the way the performance of each segment is evaluated.   The following tables present revenue, cost of sales, excluding depreciation and amortization, selling, general and administrative expenses, depreciation and amortization, stock-based compensation expense and acquisition related transaction expenses, operating profit/(loss), and total capital expenditures for the periods ended March 31, 2024 and March 31, 2023, respectively, by business segment. Certain unallocated corporate function costs have not been allocated to the Company’s reportable operating segments because these costs are not allocable and to do so would not be practical. Corporate function costs consist primarily of selling, general and administrative expenses, depreciation and amortization and capital expenditures relating to corporate/shared functions.   Segment Information Schedule of Segment Reporting Information by Segment  Three Months Ended March 31, 2024       Gaming     Virtual Sports     Interactive     Leisure     Corporate Functions     Total       (in millions)   Revenue:                                     Service   $ 18.6     $ 12.4     $ 8.1     $ 18.0     $ —     $ 57.1   Product sales     5.4       —       —       0.6       —       6.0   Total revenue     24.0       12.4       8.1       18.6       —       63.1   Cost of sales, excluding depreciation and amortization:                                                 Cost of service     (5.8 )     (0.4 )     (0.6 )     (9.1 )     —       (15.9 ) Cost of product sales     (4.3 )     —       —       (0.2 )     —       (4.5 ) Selling, general and administrative expenses     (6.6 )     (1.6 )     (3.1 )     (7.5 )     (13.1 )     (31.9 ) Stock-based compensation expense     (0.2 )     (0.1 )     (0.1 )     (0.1 )     (1.8 )     (2.3 ) Depreciation and amortization     (4.3 )     (0.9 )     (1.2 )     (3.0 )     (0.5 )     (9.9 ) Segment operating income (loss)     2.8       9.4       3.1       (1.3 )     (15.4 )     (1.4 )                                                   Net operating loss                                           $ (1.4 )                                                   Total capital expenditures for the three months ended March 31, 2024   $ 2.0     $ 1.2     $ 0.5     $ 4.9     $ 0.5     $ 9.1       Three Months Ended March 31, 2023       Gaming     Virtual Sports     Interactive     Leisure     Corporate Functions     Total       (in millions)   Revenue:                                                 Service   $ 20.2     $ 14.8     $ 5.9     $ 16.6     $ —     $ 57.5   Product sales     6.9       —       —       0.5       —       7.4   Total revenue     27.1       14.8       5.9       17.1       —       64.9   Cost of sales, excluding depreciation and amortization:                                                 Cost of service     (5.9 )     (0.4 )     (0.3 )     (8.4 )     —       (15.0 ) Cost of product sales     (5.8 )     —       —       (0.9 )     —       (6.7 ) Selling, general and administrative expenses     (5.7 )     (1.7 )     (2.5 )     (6.9 )     (9.5 )     (26.3 ) Stock-based compensation expense     (0.3 )     (0.2 )     (0.2 )     (0.1 )     (2.1 )     (2.9 ) Acquisition and integration related transaction expenses     —       —       —       —       —       —   Depreciation and amortization     (4.5 )     (0.8 )     (0.6 )     (3.1 )     (0.4 )     (9.4 ) Segment operating income (loss)     4.9       11.7       2.3       (2.3 )     (12.0 )     4.6                                                     Net operating income                                           $ 4.6                                                     Total capital expenditures for the three months ended March 31, 2023   $ 2.4     $ 0.4     $ 1.1     $ 5.2     $ 0.5     $ 9.6     Geographic Information   Geographic information for revenue is set forth below: Schedule of Geographic Information                        Three Months Ended March 31,       2024     2023       (in millions)   Total revenue                 UK   $ 47.2     $ 49.0   Greece     6.1       5.6   Rest of world     9.8       10.3   Total   $ 63.1     $ 64.9   Total revenue   $ 63.1     $ 64.9     UK revenue includes revenue from customers headquartered in the UK, but whose revenue is generated globally.   Geographic information of our non-current assets excluding goodwill is set forth below:       March 31, 2024     December 31, 2023       (in millions)   UK   $ 90.0     $ 91.9   Greece     14.7       15.3   Rest of world     24.0       22.4   Total   $ 128.7     $ 129.6   Total non- current assets excluding goodwill   $ 128.7     $ 129.6     Software development costs are included as attributable to the market in which they are utilized.

v3.24.1.1.u2

Customer Concentration	3 Months Ended
	Mar. 31, 2024
Risks and Uncertainties [Abstract]
Customer Concentration	16. Customer Concentration   During the three months ended March 31, 2024, there was one customer that represented at least 10% of the Company’s revenues, accounting for approximately 11% of the Company’s revenues. This customer was served by the Virtual Sports and Interactive segments. During the three months ended March 31, 2023, there was one customer that represented at least 10% of the Company’s revenues, accounting for approximately 15% of the Company’s revenues. This customer was served by the Virtual Sports and Interactive segments.   At March 31, 2024 no customers represented at least 10% of the Company’s accounts receivable. At December 31, 2023, there was one customer that represented at least 10% of the Company’s accounts receivable, accounting for approximately 24% of the Company’s accounts receivable.

v3.24.1.1.u2

Subsequent Events	3 Months Ended
	Mar. 31, 2024
Subsequent Events [Abstract]
Subsequent Events	17. Subsequent Events   The Company evaluates subsequent events and transactions that occur after the balance sheet date up to the date that the financial statements were issued. The Company did not identify subsequent events that would have required adjustment or disclosure in the consolidated financial statements.

v3.24.1.1.u2

Nature of Operations, Management’s Plans and Summary of Significant Accounting Policies (Policies)	3 Months Ended
	Mar. 31, 2024
Accounting Policies [Abstract]
Company Description and Nature of Operations	Company Description and Nature of Operations   We are a global gaming technology company, supplying content, platform, gaming terminals and other products and services to online and land-based regulated lottery, betting and gaming operators worldwide through a broad range of distribution channels, predominantly on a business-to-business basis. We provide end-to-end digital gaming solutions (i) on our own proprietary and secure network, which accommodates a wide range of devices, including land-based gaming machine terminals, mobile devices and online computer applications and (ii) through third party networks. Our content and other products can be found through the consumer-facing portals of our interactive customers and, through our land-based customers, in licensed betting offices, adult gaming centers, pubs, bingo halls, airports, motorway service areas and leisure parks.
Liquidity Discussions	Liquidity Discussions   As of March 31, 2024, the Company’s cash on hand was $35.3 million, and the Company had working capital in addition to cash of $14.7 million. The Company recorded a net loss of $5.7 million and $1.4 million for the three months ended March 31, 2024 and 2023, respectively. Net income/losses include non-cash stock-based compensation of $2.3 million and $2.9 million for the three months ended March 31, 2024 and 2023, respectively. Historically, the Company has generally had positive cash flows from operating activities and has relied on a combination of cash flows provided by operations and the incurrence of debt and/or the refinancing of existing debt to fund its obligations. Cash flows provided by operations amounted to $3.6 million and $11.6 million for the three months ended March 31, 2024 and 2023, respectively.   Management currently believes that the Company’s cash balances on hand, cash flows expected to be generated from operations, ability to control and defer capital projects and amounts available from the Company’s external borrowings will be sufficient to fund the Company’s net cash requirements through May 2025.
Basis of Presentation	Basis of Presentation   The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and pursuant to the applicable rules and regulations of the SEC. Certain information or footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly, they do not include all the information and footnotes necessary for a comprehensive presentation of financial position, results of operations, or cash flows. It is management’s opinion, however, that the accompanying unaudited interim condensed consolidated financial statements include all adjustments, consisting of a normal recurring nature, which are necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented.   The accompanying unaudited interim condensed consolidated financial statements should be read in conjunction with the Company’s consolidated financial statements and notes thereto for the years ended December 31, 2023 and 2022. The financial information as of December 31, 2023 is derived from the audited consolidated financial statements presented in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on April 15, 2024. The financial information for the three months ended March 31, 2023 is derived from the unaudited consolidated financial statements presented in the Company’s Annual Report on Form 10-Q/A for the three months ended March 31, 2023 filed with the SEC on February 27, 2024. The interim results for the three months ended March 31, 2024 are not necessarily indicative of the results to be expected for the year ending December 31, 2024 or for any future interim periods.

v3.24.1.1.u2

Allowance for Credit Losses (Tables)	3 Months Ended
	Mar. 31, 2024
Receivables [Abstract]
Schedule of Changes in Allowance for Credit Losses	Changes in the allowance for credit losses are as follows:   Schedule of Changes in Allowance for Credit Losses     March 31, 2024     December 31, 2023       (in millions)   Beginning balance   $ (1.1 )   $ (1.4 ) Additional allowance for credit losses     —       (0.2 ) Recoveries     —       0.2   Write offs     —       0.4   Foreign currency translation adjustments     —       (0.1 ) Ending balance   $ (1.1 )   $ (1.1 )

v3.24.1.1.u2

Inventory (Tables)	3 Months Ended
	Mar. 31, 2024
Inventory Disclosure [Abstract]
Schedule of Inventory	Inventory consists of the following: Schedule of Inventory      March 31, 2024     December 31, 2023       (in millions)   Component parts   $ 22.5     $ 23.3   Work in progress     1.0       0.4   Finished goods     8.2       8.6   Total inventories   $ 31.7     $ 32.3

v3.24.1.1.u2

Accounts Payable and Accrued Expenses (Tables)	3 Months Ended
	Mar. 31, 2024
Payables and Accruals [Abstract]
Schedule of Accounts Payable and Accrued Expenses	Accounts payable and accrued expenses consist of the following:  Schedule of Accounts Payable and Accrued Expenses     March 31, 2024     December 31, 2023       (in millions)   Accounts payable   $ 35.2     $ 41.9   Interest payable     8.4       —   Payroll and related costs     5.1       5.5   Cost of sales including inventory     5.0       6.4   Other creditors     3.9       7.0   Total accounts payable and accrued expenses   $ 57.6     $ 60.8

v3.24.1.1.u2

Contract Related Disclosures (Tables)	3 Months Ended
	Mar. 31, 2024
Revenue from Contract with Customer [Abstract]
Schedule of Contract Related Balances	The following table summarizes contract related balances: Schedule of Contract Related Balances      Accounts Receivable     Unbilled Accounts Receivable     Right to recover asset     Deferred Income     Customer Prepayments and Deposits       (in millions)   At March 31, 2024   $ 36.7     $ 20.5     $ 0.6     $ (12.9 )   $ (3.1 ) At December 31, 2023   $ 42.8     $ 24.0     $ 0.6     $ (12.7 )   $ (2.9 )

v3.24.1.1.u2

Stock-Based Compensation (Tables)	3 Months Ended
	Mar. 31, 2024
Share-Based Payment Arrangement [Abstract]
Schedule of Restricted Stock Unit Activity	A summary of the Company’s restricted stock unit (“RSU”) activity during the three months ended March 31, 2024 is as follows: Schedule of Restricted Stock Unit Activity      Number of Shares           Unvested Outstanding at January 1, 2024 (1)     1,242,175   Granted (2)     604,709   Forfeited     (29,599 ) Vested     (10,166 ) Unvested Outstanding at March 31, 2024     1,807,119     (1) The amount shown as “unvested outstanding at January 1, 2024” does not include certain tranches of Adjusted EBITDA RSUs that have performance criteria for annual periods later than 2023 (an aggregate of 312,500 RSUs, including 62,500 subject to 2024 criteria), which were part of sign-on tranches approved for our Executive Chairman and our Chief Executive Officer during the years 2021 and 2023, as the applicable performance targets were not set by January 1, 2024 (and, accordingly, the accounting grant dates had not yet occurred for the tranches). Such tranches had previously been included in the amounts shown as unvested outstanding since the initial approval date for the tranches.   (2) The amount shown as “granted” includes 245,694 performance-based target RSUs for 2024 as to which the number that ultimately vests would range from 0% to 200% of the target amount of RSUs (a maximum of 491,388 RSUs based on attainment of Adjusted EBITDA targets for 2024). The amount shown also includes a tranche of 62,500 Adjusted EBITDA RSUs (subject to performance criteria for 2024) which can be earned at up to 100% of the target amount of RSUs; such tranche was part of a sign-on award of multiple tranches approved in 2021 for our Executive Chairman with respect to which the accounting grant date for the 2024 tranche did not occur until the targets were set in February 2024.

v3.24.1.1.u2

Accumulated Other Comprehensive Loss (Income) (Tables)	3 Months Ended
	Mar. 31, 2024
Equity [Abstract]
Schedule of Accumulated Other Comprehensive Loss (Income)	The accumulated balances for each classification of comprehensive loss (income) are presented below: Schedule of Accumulated Other Comprehensive Loss (Income)      Foreign Currency Translation Adjustments     Change in Fair Value of Hedging Instrument     Unrecognized Pension Benefit Costs     Accumulated Other Comprehensive (Income)       (in millions)   Balance at January 1, 2024   $ (78.3 )   $ —     $ 33.8     $ (44.5 ) Change during the period     (1.0 )     —       (0.3 )     (1.3 ) Balance at March 31, 2024   $ (79.3 )   $ —     $ 33.5     $ (45.8 )       Foreign Currency Translation Adjustments     Change in Fair Value of Hedging Instrument     Unrecognized Pension Benefit Costs     Accumulated Other Comprehensive (Income)       (in millions)   Balance at January 1, 2023   $ (84.2 )   $ 0.3     $ 33.1     $ (50.8 ) Change during the period     2.9       (0.2 )     (0.2 )     2.5   Balance at March 31, 2023   $ (81.3 )   $ 0.1     $ 32.9     $ (48.3 )

v3.24.1.1.u2

Net Earnings (Loss) per Share (Tables)	3 Months Ended
	Mar. 31, 2024
Earnings Per Share [Abstract]
Schedule of Anti-dilutive Securities Excluded from Computation of Earnings per Share	The computation of diluted EPS excludes the common stock equivalents of the following potentially dilutive securities because they were either contingently issuable shares or because their inclusion would be anti-dilutive: Schedule of Anti-dilutive Securities Excluded from Computation of Earnings per Share      2024     2023       Three Months Ended March 31,       2024     2023   RSUs   $ 1,807,119     $ 1,917,231

v3.24.1.1.u2

Other Finance Income (Expense) (Tables)	3 Months Ended
	Mar. 31, 2024
Other Income and Expenses [Abstract]
Schedule of Other Finance Income (Expense)	Other finance income (expense) consisted of the following: Schedule of Other Finance Income (Expense)                        Three Months Ended March 31,       2024     2023       (in millions)   Pension interest cost   $ (0.9 )   $ (0.8 ) Expected return on pension plan assets     1.0       0.9   Other finance income (Costs)   $ 0.1     $ 0.1

v3.24.1.1.u2

Pension Plan (Tables)	3 Months Ended
	Mar. 31, 2024
Retirement Benefits [Abstract]
Schedule of Net Periodic Pension Cost	The following table presents the components of our net periodic pension cost: Schedule of Net Periodic Pension Cost                        Three Months Ended March 31,       2024     2023       (in millions)   Components of net periodic pension cost:             Interest cost   $ 0.9     $ 0.8   Expected return on plan assets     (1.0 )     (0.9 ) Amortization of net loss     0.3       0.2   Net periodic cost   $ 0.2     $ 0.1

v3.24.1.1.u2

Segment Reporting and Geographic Information (Tables)	3 Months Ended
	Mar. 31, 2024
Segment Reporting [Abstract]
Schedule of Segment Reporting Information by Segment	Segment Information Schedule of Segment Reporting Information by Segment  Three Months Ended March 31, 2024       Gaming     Virtual Sports     Interactive     Leisure     Corporate Functions     Total       (in millions)   Revenue:                                     Service   $ 18.6     $ 12.4     $ 8.1     $ 18.0     $ —     $ 57.1   Product sales     5.4       —       —       0.6       —       6.0   Total revenue     24.0       12.4       8.1       18.6       —       63.1   Cost of sales, excluding depreciation and amortization:                                                 Cost of service     (5.8 )     (0.4 )     (0.6 )     (9.1 )     —       (15.9 ) Cost of product sales     (4.3 )     —       —       (0.2 )     —       (4.5 ) Selling, general and administrative expenses     (6.6 )     (1.6 )     (3.1 )     (7.5 )     (13.1 )     (31.9 ) Stock-based compensation expense     (0.2 )     (0.1 )     (0.1 )     (0.1 )     (1.8 )     (2.3 ) Depreciation and amortization     (4.3 )     (0.9 )     (1.2 )     (3.0 )     (0.5 )     (9.9 ) Segment operating income (loss)     2.8       9.4       3.1       (1.3 )     (15.4 )     (1.4 )                                                   Net operating loss                                           $ (1.4 )                                                   Total capital expenditures for the three months ended March 31, 2024   $ 2.0     $ 1.2     $ 0.5     $ 4.9     $ 0.5     $ 9.1       Three Months Ended March 31, 2023       Gaming     Virtual Sports     Interactive     Leisure     Corporate Functions     Total       (in millions)   Revenue:                                                 Service   $ 20.2     $ 14.8     $ 5.9     $ 16.6     $ —     $ 57.5   Product sales     6.9       —       —       0.5       —       7.4   Total revenue     27.1       14.8       5.9       17.1       —       64.9   Cost of sales, excluding depreciation and amortization:                                                 Cost of service     (5.9 )     (0.4 )     (0.3 )     (8.4 )     —       (15.0 ) Cost of product sales     (5.8 )     —       —       (0.9 )     —       (6.7 ) Selling, general and administrative expenses     (5.7 )     (1.7 )     (2.5 )     (6.9 )     (9.5 )     (26.3 ) Stock-based compensation expense     (0.3 )     (0.2 )     (0.2 )     (0.1 )     (2.1 )     (2.9 ) Acquisition and integration related transaction expenses     —       —       —       —       —       —   Depreciation and amortization     (4.5 )     (0.8 )     (0.6 )     (3.1 )     (0.4 )     (9.4 ) Segment operating income (loss)     4.9       11.7       2.3       (2.3 )     (12.0 )     4.6                                                     Net operating income                                           $ 4.6                                                     Total capital expenditures for the three months ended March 31, 2023   $ 2.4     $ 0.4     $ 1.1     $ 5.2     $ 0.5     $ 9.6
Schedule of Geographic Information	Geographic Information   Geographic information for revenue is set forth below: Schedule of Geographic Information                        Three Months Ended March 31,       2024     2023       (in millions)   Total revenue                 UK   $ 47.2     $ 49.0   Greece     6.1       5.6   Rest of world     9.8       10.3   Total   $ 63.1     $ 64.9   Total revenue   $ 63.1     $ 64.9     UK revenue includes revenue from customers headquartered in the UK, but whose revenue is generated globally.   Geographic information of our non-current assets excluding goodwill is set forth below:       March 31, 2024     December 31, 2023       (in millions)   UK   $ 90.0     $ 91.9   Greece     14.7       15.3   Rest of world     24.0       22.4   Total   $ 128.7     $ 129.6   Total non- current assets excluding goodwill   $ 128.7     $ 129.6

v3.24.1.1.u2

Nature of Operations, Management’s Plans and Summary of Significant Accounting Policies (Details Narrative) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023	Dec. 31, 2023
Accounting Policies [Abstract]
Cash on hand	$ 35.3		$ 40.0
Additional working capital	14.7
Net loss	5.7	$ 1.4
Stock-based compensation	2.3	2.9
Net cash provided by operating activities	$ 3.6	$ 11.6

v3.24.1.1.u2

Schedule of Changes in Allowance for Credit Losses (Details) - USD ($) $ in Millions	3 Months Ended	12 Months Ended
	Mar. 31, 2024	Dec. 31, 2023
Receivables [Abstract]
Beginning balance	$ (1.1)	$ (1.4)
Additional allowance for credit losses		(0.2)
Recoveries		0.2
Write offs		0.4
Foreign currency translation adjustments		(0.1)
Ending balance	$ (1.1)	$ (1.1)

v3.24.1.1.u2

Schedule of Inventory (Details) - USD ($) $ in Millions	Mar. 31, 2024	Dec. 31, 2023
Inventory Disclosure [Abstract]
Component parts	$ 22.5	$ 23.3
Work in progress	1.0	0.4
Finished goods	8.2	8.6
Total inventories	$ 31.7	$ 32.3

v3.24.1.1.u2

Schedule of Accounts Payable and Accrued Expenses (Details) - USD ($) $ in Millions	Mar. 31, 2024	Dec. 31, 2023
Payables and Accruals [Abstract]
Accounts payable	$ 35.2	$ 41.9
Interest payable	8.4
Payroll and related costs	5.1	5.5
Cost of sales including inventory	5.0	6.4
Other creditors	3.9	7.0
Total accounts payable and accrued expenses	$ 57.6	$ 60.8

v3.24.1.1.u2

Schedule of Contract Related Balances (Details) - USD ($) $ in Millions	Mar. 31, 2024	Dec. 31, 2023
Revenue from Contract with Customer [Abstract]
Accounts receivable	$ 36.7	$ 42.8
Unbilled accounts receivable	20.5	24.0
Right to recover asset	0.6	0.6
Deferred income	(12.9)	(12.7)
Customer prepayments and deposits	$ (3.1)	$ (2.9)

v3.24.1.1.u2

Contract Related Disclosures (Details Narrative) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Revenue recognized in deferred income	$ 1.9	$ 1.2
Remaining performance obligations	$ 102.6
Through December 31, 2024 [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Revenue percentage	30.00%
Through December 31, 2026 [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Revenue percentage	50.00%
Through December 31, 2029 [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Revenue percentage	20.00%

v3.24.1.1.u2

Schedule of Restricted Stock Unit Activity (Details) - shares		3 Months Ended
		Mar. 31, 2024	Mar. 31, 2023
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Number of Shares, Vested		(1,840,165)	(1,893,136)
Incentive Plan [Member] | Restricted Stock Units (RSUs) [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Number of Shares, Unvested Outstanding	[1]	1,242,175
Number of Shares, Granted	[2]	604,709
Number of Shares, Forfeited		(29,599)
Number of Shares, Vested	[2]	(10,166)
Number of Shares, Unvested Outstanding		1,807,119
[1] The amount shown as “unvested outstanding at January 1, 2024” does not include certain tranches of Adjusted EBITDA RSUs that have performance criteria for annual periods later than 2023 (an aggregate of 312,500 RSUs, including 62,500 subject to 2024 criteria), which were part of sign-on tranches approved for our Executive Chairman and our Chief Executive Officer during the years 2021 and 2023, as the applicable performance targets were not set by January 1, 2024 (and, accordingly, the accounting grant dates had not yet occurred for the tranches). Such tranches had previously been included in the amounts shown as unvested outstanding since the initial approval date for the tranches. [2] The amount shown as “granted” includes 245,694 performance-based target RSUs for 2024 as to which the number that ultimately vests would range from 0% to 200% of the target amount of RSUs (a maximum of 491,388 RSUs based on attainment of Adjusted EBITDA targets for 2024). The amount shown also includes a tranche of 62,500 Adjusted EBITDA RSUs (subject to performance criteria for 2024) which can be earned at up to 100% of the target amount of RSUs; such tranche was part of a sign-on award of multiple tranches approved in 2021 for our Executive Chairman with respect to which the accounting grant date for the 2024 tranche did not occur until the targets were set in February 2024.

v3.24.1.1.u2

Schedule of Restricted Stock Unit Activity (Details) (Parenthetical)	3 Months Ended
	Mar. 31, 2024 shares
Restricted Stock Units (RSUs) [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Unvested outstanding of shares	312,500
Restricted Stock Units (RSUs) [Member] | Maximum [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Restricted stock shares granted	491,388
Restricted Stock Units (RSUs) [Member] | Share-Based Payment Arrangement, Tranche One [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Unvested outstanding of shares	62,500
Performance Shares [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Restricted stock shares granted	245,694
Performance Shares [Member] | RSU [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Restricted stock shares granted	100.00%
Performance Shares [Member] | Chief Executive Officer [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Restricted stock shares granted	62,500
Performance Shares [Member] | Minimum [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Share based compensation arrangement,vesting percentage	0.00%
Performance Shares [Member] | Maximum [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Share based compensation arrangement,vesting percentage	200.00%

v3.24.1.1.u2

Stock-Based Compensation (Details Narrative) - Restricted Stock Units (RSUs) [Member] - Share-Based Payment Arrangement, Tranche One [Member] - shares		3 Months Ended
	Dec. 29, 2023	Mar. 31, 2024
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Share-based payment award, shares issued in period		340,735
Number of shares issued RUSs	333,161

v3.24.1.1.u2

Schedule of Accumulated Other Comprehensive Loss (Income) (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Equity [Abstract]
Foreign currency translation adjustments, beginning balance	$ (78.3)	$ (84.2)
Change in fair value of hedging instrument, beginning balance		0.3
Unrecognized pension benefit costs, beginning balance	33.8	33.1
Accumulated other comprehensive (income), beginning balance	(44.5)	(50.8)
Foreign currency translation adjustments, change during the period	(1.0)	2.9
Change in fair value of hedging instrument, change during the period		(0.2)
Unrecognized pension benefit costs, change during the period	(0.3)	(0.2)
Accumulated other comprehensive (Income), change during the period	(1.3)	2.5
Foreign currency translation adjustments, ending balance	(79.3)	(81.3)
Change in fair value of hedging instrument, ending balance		0.1
Unrecognized pension benefit costs, ending balance	33.5	32.9
Accumulated other comprehensive (income), ending balance	$ (45.8)	$ (48.3)

v3.24.1.1.u2

Accumulated Other Comprehensive Loss (Income) (Details Narrative) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Equity [Abstract]
Interest expenses	$ 0.0	$ 0.2

v3.24.1.1.u2

Schedule of Anti-dilutive Securities Excluded from Computation of Earnings per Share (Details) - shares	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Restricted Stock Units (RSUs) [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
RSUs	1,807,119	1,917,231

v3.24.1.1.u2

Net Earnings (Loss) per Share (Details Narrative) - shares	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Earnings Per Share [Abstract]
Effect of RSU awards vested	1,840,165	1,893,136

v3.24.1.1.u2

Schedule of Other Finance Income (Expense) (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Other Income and Expenses [Abstract]
Pension interest cost	$ (0.9)	$ (0.8)
Expected return on pension plan assets	1.0	0.9
Other finance income (Costs)	$ 0.1	$ 0.1

v3.24.1.1.u2

Income Taxes (Details Narrative) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Income Tax Disclosure [Abstract]
Effective income tax rate	27.40%	13.20%
Income tax benefit	$ 2.2	$ 0.2

v3.24.1.1.u2

Related Parties (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended		12 Months Ended
	Mar. 31, 2024	Mar. 31, 2023	Dec. 31, 2023	Jun. 30, 2023	Dec. 31, 2023
Consultancy Agreement [Member]
Related Party Transaction [Line Items]
Consulting fees	$ 37,500	$ 30,000
Consultancy Agreement [Member] | Richard Weil [Member]
Related Party Transaction [Line Items]
Consulting fees			$ 12,500	$ 10,000
Macquarie Corporate Holdings Pty Limited [Member]
Related Party Transaction [Line Items]
Related party beneficially owned	11.40%
Proceeds from lines of credit	$ 2,100,000				$ 18,900,000
Interest and debt expense	$ 100,000	$ 0.0
Outstanding shares percentage	5.00%

v3.24.1.1.u2

Schedule of Net Periodic Pension Cost (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Retirement Benefits [Abstract]
Interest cost	$ 0.9	$ 0.8
Expected return on plan assets	(1.0)	(0.9)
Amortization of net loss	0.3	0.2
Net periodic cost	$ 0.2	$ 0.1

v3.24.1.1.u2

Schedule of Segment Reporting Information by Segment (Details) - USD ($) $ in Millions		3 Months Ended
		Mar. 31, 2024	Mar. 31, 2023
Segment Reporting Information [Line Items]
Total revenue		$ 63.1	$ 64.9
Cost of service	[1]	(15.9)	(15.0)
Cost of product sales		(4.5)	(6.7)
Selling, general and administrative expenses		(31.9)	(26.3)
Stock-based compensation expense		(2.3)	(2.9)
Depreciation and amortization		(9.9)	(9.4)
Segment operating income (loss)		(1.4)	4.6
Net operating income		(1.4)	4.6
Total capital expenditures		9.1	9.6
Acquisition and integration related transaction expenses
Service [Member]
Segment Reporting Information [Line Items]
Total revenue		57.1	57.5
Product Sales [Member]
Segment Reporting Information [Line Items]
Total revenue		6.0	7.4
Gaming [Member]
Segment Reporting Information [Line Items]
Total revenue		24.0	27.1
Cost of service		(5.8)	(5.9)
Cost of product sales		(4.3)	(5.8)
Selling, general and administrative expenses		(6.6)	(5.7)
Stock-based compensation expense		(0.2)	(0.3)
Depreciation and amortization		(4.3)	(4.5)
Segment operating income (loss)		2.8	4.9
Total capital expenditures		2.0	2.4
Acquisition and integration related transaction expenses
Gaming [Member] | Service [Member]
Segment Reporting Information [Line Items]
Total revenue		18.6	20.2
Gaming [Member] | Product Sales [Member]
Segment Reporting Information [Line Items]
Total revenue		5.4	6.9
Virtual Sports [Member]
Segment Reporting Information [Line Items]
Total revenue		12.4	14.8
Cost of service		(0.4)	(0.4)
Cost of product sales
Selling, general and administrative expenses		(1.6)	(1.7)
Stock-based compensation expense		(0.1)	(0.2)
Depreciation and amortization		(0.9)	(0.8)
Segment operating income (loss)		9.4	11.7
Total capital expenditures		1.2	0.4
Acquisition and integration related transaction expenses
Virtual Sports [Member] | Service [Member]
Segment Reporting Information [Line Items]
Total revenue		12.4	14.8
Virtual Sports [Member] | Product Sales [Member]
Segment Reporting Information [Line Items]
Total revenue
Interactive [Member]
Segment Reporting Information [Line Items]
Total revenue		8.1	5.9
Cost of service		(0.6)	(0.3)
Cost of product sales
Selling, general and administrative expenses		(3.1)	(2.5)
Stock-based compensation expense		(0.1)	(0.2)
Depreciation and amortization		(1.2)	(0.6)
Segment operating income (loss)		3.1	2.3
Total capital expenditures		0.5	1.1
Acquisition and integration related transaction expenses
Interactive [Member] | Service [Member]
Segment Reporting Information [Line Items]
Total revenue		8.1	5.9
Interactive [Member] | Product Sales [Member]
Segment Reporting Information [Line Items]
Total revenue
Leisure [Member]
Segment Reporting Information [Line Items]
Total revenue		18.6	17.1
Cost of service		(9.1)	(8.4)
Cost of product sales		(0.2)	(0.9)
Selling, general and administrative expenses		(7.5)	(6.9)
Stock-based compensation expense		(0.1)	(0.1)
Depreciation and amortization		(3.0)	(3.1)
Segment operating income (loss)		(1.3)	(2.3)
Total capital expenditures		4.9	5.2
Acquisition and integration related transaction expenses
Leisure [Member] | Service [Member]
Segment Reporting Information [Line Items]
Total revenue		18.0	16.6
Leisure [Member] | Product Sales [Member]
Segment Reporting Information [Line Items]
Total revenue		0.6	0.5
Corporate Functions [Member]
Segment Reporting Information [Line Items]
Total revenue
Cost of service
Cost of product sales
Selling, general and administrative expenses		(13.1)	(9.5)
Stock-based compensation expense		(1.8)	(2.1)
Depreciation and amortization		(0.5)	(0.4)
Segment operating income (loss)		(15.4)	(12.0)
Total capital expenditures		0.5	0.5
Acquisition and integration related transaction expenses
Corporate Functions [Member] | Service [Member]
Segment Reporting Information [Line Items]
Total revenue
Corporate Functions [Member] | Product Sales [Member]
Segment Reporting Information [Line Items]
Total revenue
[1] Excluding depreciation and amortization

v3.24.1.1.u2

Schedule of Geographic Information (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023	Dec. 31, 2023
Revenues from External Customers and Long-Lived Assets [Line Items]
Total revenue	$ 63.1	$ 64.9
Total non- current assets excluding goodwill	128.7		$ 129.6
UNITED KINGDOM
Revenues from External Customers and Long-Lived Assets [Line Items]
Total revenue	47.2	49.0
Total non- current assets excluding goodwill	90.0		91.9
GREECE
Revenues from External Customers and Long-Lived Assets [Line Items]
Total revenue	6.1	5.6
Total non- current assets excluding goodwill	14.7		15.3
Rest of World [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Total revenue	9.8	$ 10.3
Total non- current assets excluding goodwill	$ 24.0		$ 22.4

v3.24.1.1.u2

Customer Concentration (Details Narrative) - Customer Concentration Risk [Member] - Customer One [Member]	3 Months Ended		12 Months Ended
	Mar. 31, 2024	Mar. 31, 2023	Dec. 31, 2023
Revenue Benchmark [Member]
Concentration Risk [Line Items]
Concentration risk, percentage	11.00%	15.00%
Accounts Receivable [Member]
Concentration Risk [Line Items]
Concentration risk, percentage			24.00%

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