Inspired Entertainment, Inc. · NASDAQ:INSE
Inspired Entertainment — Q3 2020 Earnings Presentation
29 slides from Inspired Entertainment's earnings presentation, Nov 12, 2020
Slide 1: Investor Presentation November 2020
4- INVESTOR PRESENTATION INSPIRED November 2020 ESSENTIAL ENTERTAINMENT
Slide 2: Safe Harbor / Non-GAAP Financial Disclosures
Safe Harbor / Non-GAAP Financial Disclosures Forward-Looking Statements This presentation includes forward-looking statements within the meaning ofthe Private Securities Litigation Reform Ac of 1995. These forward-looking statements include, but ar not limited to, statements regarding our business s
Slide 3: Proven and Experienced Management Team
Proven and Experienced Management Team Lorne Weil Brooks Pierce Daniel Silvers Stewart Baker Carys Damon President and Chief Operating Officer Executive Vice President Executive Vice President and Chief Strategy Officer and Chief Financial Officer General Counsel and Executive Chairman Corporate Sec
Slide 4: Highlights
Highlights Aleading presence in the UK, Greece and Italy with significant momentum in the US Combination of strong technology and top-performing content drive over 80% recurring revenue business” ago) A leading omni-channel B2B provider of Gaming, Virtual Sports and Leisure content globally KS Trans
Slide 5: Key Drivers in Inspired Businesses
Key Drivers in Inspired Businesses GAMING % OF PRO FORMA 2019 REVENUE” Regulated Gaming Globally af KEY BUSINESS Shifting Share Rapid Growth of Legalized. °verage Top Performing DRIVERS from Fewer casinos to Many Sports Betting Sontenuin| enka Caan inline Gaming and Lotter “Distributed” Venues Boa a
Slide 6: Recent Key Highlights
Recent Key Highlights Gaming + Inspired's first VLT sales into North America Entry into Illinois VLT market with 331 cabinets sold through Q3 2020 —Inspired cabinets have consistently outperformed competitors for Illinois trial customers Awarded first Canadian VLT allotment in August 2020 - 100 VLTs
Slide 7: Significant Momentum in Interactive and Virtual Sports
Significant Momentum in Interactive and Virtual Sports Q3 2020 Virtual Sports Revenues Up Over 30% Year Over Year ‘May 2019 September 2019 ‘April/May 2020 Announced Virtual Sports ‘Signed exclusive license ‘Signed contract with Draftkings, Fan Duel, GVC to provide V- products are live online deal wi
Slide 8: Recent Business Update
Recent Business Update e Inspired was able to return to growth in Q3 2020 after the summer COVID-19 lockdown in Europe due to our COVID-19 mitigation plan and the strength of the Virtual Sports and Interactive business — Worldwide media attention and brand awareness from high profile Virtual events
Slide 9: Gaming
GAMING e Gaming growth shifting from large casinos to many distributed venues e Inspired is a leader in server based gaming with 32,000+ machines live and top games in key jurisdictions, including UK, Greece, Italy and North America with its recent launch in Illinois e Revenue primarily generated th
Slide 10: Well Positioned for North America Route Markets
Well Positioned for North America Route Markets Bringing Innovation to Stagnant Marketplace e Inspired s Valor™ terminal commercially entered Illinois CUMULATIVE VALOR TERMINALS in Q4 2019 SOLD IN ILLINOIS — Over 330 Valor terminals sold since launching in Q4 2019 331 — Nearly every major Illinois o
Slide 11: Virtuals
VIRTUALS e Creator and world leader — Largest portfolio, including basketball, football, horse racing and soccer — Continual stream of fast-paced action, ultra-realistic player simulations and a tremendous breadth of bet types — Cross-over product between sports betting and casino gaming e High marg
Slide 12: Interactive
INTERACTIVE e Online gaming operators use our top-performing game titles and award-winning Virtual Sports content online and on mobile devices worldwide BETFRED | etses | CORAL* | bwin| >k kinarea + betfair e Expected to be a high-growth, high-margin recurring revenue business — Total Online! Revenu
Slide 13: Acquired Business
ACQUIRED BUSINESS e The Acquired Business is a leading supplier of gaming terminals to pubs, arcades, service areas and holiday resorts in the UK e Acquisition closed in a cash transaction for $120.0 million on October 1, 2019 e Combines complementary and non-overlapping businesses e Providing a str
Slide 14: Enlarged Business Positioned for Long-Term Growth
Enlarged Business Positioned for Long-Term Growth The Acquired Business extends Inspired's positioning in SBG through the combination of complementary and non-overlapping businesses ACQUIRED BUSINESS <@j, INSPIRED + ACQUISITION FYI9A Gaming: ~33,000" Gaming: ~19,000 / Non-Gaming: 35,000+ Gaming: 50,
Slide 15: Leader Across Multiple Complementary Product Verticals
Leader Across Multiple Complementary Product Verticals 14,000+ 8400+ 7,000+ UK LBO UK Pubs UK Holiday Parks, AGCs and MSAs Installed Base Installed Base Installed Base 8,900+ #1 SBG sree oma Greece VLT Game $10 billion+ Installed Base in Greece by Customer Win per Day Virtual Sports Wagers per Year
Slide 16: Substantial Recurring Revenue Supported by Long-Term Participation-Based Contracts
Substantial Recurring Revenue Supported by Long-Term Participation-Based Contracts Inspired PF FY2019 Recurring Revenue") Large installed base S65MM . spe) Inspired Participation-driven model Immediate revenue generation once retail venues reopen a .\ NX ASN Retail customers who are better situated
Slide 17: Long-Standing Customer Relationships
Long-Standing Customer Relationships Representative Customers Under Contract (Length of Relationship] Wil AL SvalTe@CH ¥* Sisal ® LOTTOMATICA 15+ years 7 years 9 years 7 years 15+ years 15 years 9 years EXSy 9 xopap = GVG~ Beodere TI+ years 3 years T+ years 15+ years Strong customer retention across
Slide 18: Proven Track-Record of Strong Content Development
Proven Track-Record of Strong Content Development Named 2019 Virtual Sports supplier of the year at ICE 2019 and by EGR Virtual Sports Gaming / Interactive Content Gaming Cabinets Valor Prismatic Prismatic Community $10 billions 100+ 330+ Valor™ Cabinets Sold in IL Since Q419 Launch Inspired's omni-
Slide 19: Multiple Levers of Growth - Momentum Outside the UK
Multiple Levers of Growth - Momentum Outside the UK Greece Commentary Regulated Greek segment has been the fastest growing gaming machines segment in Europe Inspired now has the largest machine installed base in the country United States Greece Gaming Machines Gross Win (Regulated markets, $ in mill
Slide 20: Multiple Levers of Growth - Conversion from Analog to Digital
Multiple Levers of Growth - Conversion from Analog to Digital Digital machines generally attract a higher revenue per machine due to (i) increased engagement from consumers; (ii) attracting a wider demographic than the traditional analog machines; and (iii) multiple games per machine + Inspired has
Slide 21: Market Capitalization
Market Capitalization As of November 11th, 2020 (unaudited) Actual (US$ in millions, except per share data) 9/30/20 Cash $43.9 Senior Bank Debt” 310.6 Accrued Interest, Capital Lease, Pension Liability & Other ” 20.8 Total Debt $331.4 Net Debt (a) $287.5 Number of Shares (in millions) 22.405 Share P
Slide 22: Appendix
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Slide 23: Financial Summary
Financial Summary Unaudited Seming Sports Business Eliminations comPorate Total USS millions Revenue 71.2 39.2 86.4 (2.4) = 194.4 Cost of Sales, excluding D&A (21.5) (4.0) (23.2) 22 - (46.5) Gross Profit 49.8 35.2 63.2 (0.2) - 147.9 Selling, general and administrative expenses (16.8) (6.6) (62.7) -
Slide 24: Historical Consolidated Income Statement
Historical Consolidated Income Statement ‘Year Ended December 31st, USS millions LTM 9/30/20 20190 20180 20170 Revenue: Service 169.5 134.9 130.6 112.6 Hardware 24.9 18.4 40.4 143 Total revenue 194.4 153.4 4140.7. 126.9 ‘Cost of sales, excluding depreciation and amortization: Cost of service (28.9)
Slide 25: Non-GAAP Reconciliation: LTM Adjusted EBITDA as of September 30, 2020
Non-GAAP Reconciliation: LTM Adjusted EBITDA as of September 30, 2020 12M Ended US$ millions 9/30/2020 Net Loss (54.4) Items Relating to Legacy Activities Pension Charges 0.7 Items to Be Considered to Be Exceptional in Nature Costs of Company Restructure 0.9 Italian Tax Related Costs 0.4 Transaction
Slide 26: Non-GAAP Reconciliation: 2019 Adjusted EBITDA Pro Forma for Acquired Business
Non-GAAP Reconciliation: 2019 Adjusted EBITDA Pro Forma for Acquired Business 12M Ended US$ millions 12/31/2019 Net Loss (37.0) Pension Charges 0.6 Items to Be Considered to Be Exceptional in Nature Costs of Company Restructure 3.3 ltalian Tax Related Costs 04 Transaction Expenses 6.7 Stock-Based Co
Slide 27: Non-GAAP Reconciliation: Acquired Business Pro Forma Adjusted EBITDA
Non-GAAP Reconciliation: Acquired Business Pro Forma Adjusted EBITDA 9M Ended US$ millions 9/30/2019 Net Income 6.0 Results of Operations not Included in Proposed Transaction Astra carve-out adjustment (6.8) Pass-through margin (0.1) Items to Be Considered to Be Exceptional in Nature Investment in a
Slide 28: Pro Forma Reconciliation: 2019 Revenue Pro Forma for Acquired Business
Pro Forma Reconciliation: 2019 Revenue Pro Forma for Acquired Business 12M Ended US$ millions 12/31/2019 Inspired Revenue 12 months ended 12/31/19 153.4 NTG Revenue 9 months ended 9/30/19 107.1 Intergroup eliminations 9 months ended 9/30/19 (3.8) Pro Forma Revenue ($) 256.7 Pro Forma Revenue (£) 200
Slide 29: Inspired Essential Entertainment
Sp INSPIRED ESSENTIAL ENTERTAINMENT
Inspired Entertainment — Q3 2020 Earnings Presentation on 6ix