Inspired Entertainment, Inc. · NASDAQ:INSE
Inspired Entertainment — Investor Presentation (November 2019)
28 slides from Inspired Entertainment's investor presentation, Nov 12, 2019
Slide 1: Investor Presentation November 2019
INVESTOR PRESENTATION \ November 2019 INSPIRED ESSENTIAL ENTERTAINMENT
Slide 2: Legal Matters/Non-GAAP Financial Disclosures
Legal Matters/Non-GAAP Financial Disclosures Forward-Looking Statements ‘This presentation includes ferward/locking statements within the mesringof the Prwate Securities Litgaton Reform Act of 1995. These forward-looking statements include, but ae not limited to, staternents regarding our business s
Slide 3: Management Presenting
Management Presenting Lorne Weil Daniel Silvers Stewart Baker Brooks Pierce Executive Chairman EVP & Chief Strategy EVP & Chief President & Chief Officer Financial Officer Operating Officer 4 INSPIRED ;
Slide 4: Inspired's Historic Growth
Inspired's Historic Growth Historical Adjusted EBITDA (millions of US$) LTM December 31!) LTM September 30 40.1% 5 33.1% 34.3% 34.4% nae $52.9 $41.8 $42.1 $33.4 $37.2 FY15 cy16 cyi7 FY18 LTM Q319" mmm Constant Currency Adjusted EBITDA Margin @ Reported Adjusted EBITDA <4 Note: Canstant Currency figu
Slide 5: Highlights
Highlights Leading B2B provider of gaming, virtual sports, and leisure content across retail, online and mobile - growth vehicles for regulated lottery, betting and gaming operators worldwide. Recurring, participation-based long term contracts account for a substantial majority of revenue. 4 INSPIRE
Slide 6: Key Drivers in Inspired Businesses
Key Drivers in Inspired Businesses INTERACTIVE 4% of LIM Q3 2019 Reported Adjusted Revenue Key Business Drivers Venues 4 UNTAPPED POTENTIAL IN NORTH AMERICA v INSPIRED 3) dusidtoamelscasteds predominates 3) reported within the Virtual Sports segment. Shown here separately 4) NIG Acquistonclased on O
Slide 7: Gaming
GAMING Gaming growth shifting from large casinos to many distributed venues. Inspired is a leader in server based gaming with 32,000+ machines live and top games in key jurisdictions: UK Greece Italy US (recent launch in Illinois} Management team with combined 50+ years of experience growing North A
Slide 8: Triennial Implementation
Triennial Implementation * 2Q19 & 3Q19 -- Results negatively impacted by the reduction in max stakes in the UK LBO sector. * 4019 -- Seeing improvement with revenue redistribution and cost-cutting efforts associated with shop closures. Year-Over-Year Gross Win Per Unit Per Day Impact of Triennial Im
Slide 9: Inspired Outperforms in Greece
Inspired Outperforms in Greece = Xopap — True Comparison Between Suppliers Shows Inspired’s Relative Outperformance ¢ 2017 - 4 terminal suppliers installed machines at the same time in OPAP betting shops ¢ At launch, Inspired had: #1 PERFORMING GAME 9 OF THE TOP 10 GAMES ¢ Based on this performance,
Slide 10: Well Positioned for North America Route Markets
Well Positioned for North America Route Markets Bringing Innovation to Stagnant Marketplace ¢ Inspired's Valor™ terminal commercially entered North America in Q4 2019 ¢ — Trials launched in Illinois ¢ — New Illinois legislation allowing sixth machine per video gambling establishment (up from 5 machi
Slide 11: Virtuals
VIRTUALS e Creator and world leader in Virtual Sports ¢ Popular in betting shops in the UK, Italy and Greece ¢ Successful retail, online and mobile deployments ¢ Continuing North American expansion retail channels a wierd 100+ websites
Slide 12: Virtual Sports: Successful Launch as Virtuals Added $600 Million in Turnover in Greece
Virtual Sports: Successful Launch as Virtuals Added S600 Million in Additional Turnover in Greece ¢ — In May 2017, Inspired launched one Virtuals channel in ~4,500 venues ¢ Second channel added in December 2018 ¢ — In first 12 months since launch, Inspired Virtuals generated: S600M Additional turnov
Slide 13: Video: Best in Class Post-Launch Marketing Campaign
Video: Best in Class Post-Launch Marketing Campaign ae VIRTUAL SPORTS Pame Stoixima Virtual Sports is here. <4, INSPIRED
Slide 14: North American Opportunity
North American Opportunity Pennsylvania Lottery Launched Xpress Sports in August 2018 vs. S600M ANNUAL TURNOVER fe POPULATION: 12.8M POPULATION: 10.8M GDP: $752.1B GDP: $200.38 GDP PER CAPITA: $32,711 GDP PER CAPITA: $18,613 <4 9,000 RETAIL LOCATIONS 4,500 AGENCIES v (INSPIRED
Slide 15: Interactive
INTERACTIVE * Online gaming operators use our top performing game titles and award-winning Virtual Sports content online and on mobile devices worldwide. as ee Anticipated to be a high-growth, high-margin recurring revenue business, especially with addition of NTG content.
Slide 16: Novomatic Technology Group (NTG) Acquisition
NOVOMATIC TECHNOLOGY GROUP ["NTG") ACQUISITION NTG is a leading supplier of gaming terminals to pubs, arcades, motorway service areas and holiday resorts In the UK. ° — Effective October 1, 2019, Inspired closed its acquisition of NTG in a cash transaction for $120.0 million. * — Combines complement
Slide 17: Strategic Rationale for NTG Acquisition
Strategic Rationale for NTG Acquisition nY Greater Scale and Stronger Platform to Position for Growth <4, INSPIRED ¥..) Minimal Customer Overlap and Increased Diversification ta) Potential for Digital Transition to Drive Improved Economics Leverage Top Performing Content Across Platforms Diversifies
Slide 18: Increased Diversification
Increased Diversification B2B Customer Split - 2018A [ Inspired Pre-Transaction } | NTG Pre-Transaction | | Pro Forma Online Gaming a 8% Other Adult Gaming Centers 8% Pubs a Betting Adult x Centers 31% oe Shops 14% Services 33% 10% ony / ony / Online Gaming 1% Online Gaming 10% Holiday Ww Holiday Re
Slide 19: Analog to Digital Conversion
Analog to Digital Conversion Conversion to digital has improved revenue and margins historically at NTG. DIGITAL MACHINES Remote updates ANALOG MACHINES Manual yt 1 game per machine US Lower daily cash box “~ =a oon Higher daily cash box Multiple games per machine Manual cash box collection BEE E <4
Slide 20: Potential Revenue Opportunities
Potential Revenue Opportunities a Inspired Customers . \/ Accelerate NTG's Leverage top NTG titles | development initiatives NTG top performing ames ae Bring virtual sports to : : across Inspired’s UK to transition the pub ; ome ieee mnie SBG customers gaming sector from NTG's customer base ploy ana
Slide 21: Market Capitalization
Market Capitalization Icap Table As of November 8th, 2019 (unaudited) ‘Actual Transaction Pro Forma (US$ in millions, except per share data) 9/30/19 Adi. 9/30/19 Cash $20.6 (68.7) $20.9 Revolver 90 69) 34 Term Loans!” 144.2 126.4 270.6 Capital Lease, Pension Liabilty & Other Liabilities” 1.0 49 59 T
Slide 22: Appendix
4, ss m ee INSPIRED Appendix
Slide 23: Financial Summary
Financial Summary < v INSPIRED ‘Twelve Months Ende a paved . ish aa soe Corporate Total Revenue 320 35.7 - MaT Cost of Sales, excluding D&A (23.3) 66) ~ 268) Gross Profit 58.7 322 > 909 Selling, general and administrative expenses @9) 3) @92)—«GA3) Stock-based compensation expense (08) (06) 6.8) @2
Slide 24: Virtual Sports and Gaming KPIs
Virtual Sports and Gaming KPls vig CAGR: 1: Bh ep 38-580 100 102 74 #° 54 64 : | LU J [ Sep'13 Sep'14 Sep'l5 Dec'l6 Dec'l7 Dec'18 —Sep'19 SBG: End of Period Installed Base 14g - Sep 19 CRORES Sep. PEE 34,578 32,084 23,236 25,612 26/374 26,823 <4 v Sep'l3 Sep'14 Sep'l5 Dec'l6 Dec'l7 Dec'l8 —Sep'19 ne
Slide 25: Historical Consolidated Income Statement
Historical Consolidated Income Statement <4 v INSPIRED u™ USS millions 9130/19 20180 20478 2016 Revenue: Senice 1103 1306 1126 107.4 Hardware 75 104 143 86 Total revenue 447.7 740.7. 126.9 716.0 Cost of sales, excluding depreciation and amortization: Cost of service (21.4) (23.4) (17.3) (16.0) Cost
Slide 26: Non-GAAP Reconciliation: Adjusted EBITDA
Non-GAAP Reconciliation: Adjusted EBITDA < v INSPIRED LT™ US$ millions LTM 9/30/19 2018A 2017A 2016A Net Loss (28.9) (21.2) (30.9) (65.4) Items Relating to Legacy Activities Profit attributable to discontinued analogue activities - - - 0.0 Pension Charges. 05 05 06 06 (Credit) / Costs Relating to Fo
Slide 27: Non-GAAP Reconciliation: Adjusted Revenue and SBG
Non-GAAP Reconciliation: Adjusted Revenue and SBG Adjusted Revenue Non-GAAP Reconciliation: Adjusted Revenue L™ US$ millions LTM 9/30/19. 2018A 2017A 2016A Reported Revenue per Financial Statements 417.7 140.7 126.9 116.0 Less Nil Margin Sales = (4.0) (4.8) (05) Less Analogue Revenues 7 - 7 0.0 Adju
Slide 28: Inspired Essential Entertainment
<4. INSPIRED ESSENTIAL ENTERTAINMENT
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