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Inspired Entertainment, Inc. (INSE)
NASDAQ:INSE
Top Page
Inspired Entertainment
(NASDAQ:INSE)
60Neutral
Positive Factors
Earnings Beat
Inspired Entertainment reported 3Q24 EBITDA of $30M, beating consensus expectations by 3%.
Interactive Division Growth
Interactive division increased EBITDA by 47% and beat consensus by 13%.
Strategic Partnerships
The hybrid dealer product continued to make progress with a strategic partnership with FanDuel, one of the largest gaming operators in the United States.
Negative Factors
Gaming Segment Decline
Gaming 2Q revenues and EBITDA declined by 13% and 12% year-over-year.
Valuation Concerns
Shares of INSE are currently trading sub-5x EV/EBITDA, below peers, recent supplier M&A transactions, and its historic levels.
Virtual Sports Challenges
Virtual Sports continues to face headwinds resulting in EBITDA being 16% below consensus.
Inspired Entertainment (INSE) vs. S&P 500 (SPY)
Market Cap
$219.27M
Dividend YieldN/A
Average Volume (3M)172.18K
Price to Earnings (P/E)―
Beta (1Y)1.04
Revenue Growth-7.34%
EPS Growth-102.25%
CountryUS
Employees1,700
SectorConsumer Cyclical
Sector Strength50
IndustryHotels, Lodging & Leisure
Share Statistics
EPS (TTM)-0.01
Shares Outstanding26,578,302
10 Day Avg. Volume159,129
30 Day Avg. Volume172,184
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)0.76
Price to Cash Flow (P/CF)2.10
P/FCF Ratio2.90
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$14.00Price Target Upside69.70% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering1
Inspired Entertainment Business Overview & Revenue Model
Company DescriptionInspired Entertainment, Inc. is a global games technology company, which engages in the provision of virtual sports, mobile gaming, and server-based gaming systems. The company operates its business through the following segments: Virtual Sports and Server Based Gaming segment. The Virtual Sports segment offers ultra-high-definition games that create an always-on sports wagering experience. The Server Based Gaming segment offers more traditional casino games such as slots, roulette and other table games. Inspired Entertainment was founded in 2016 and is headquartered in New York, NY.
How the Company Makes MoneyInspired Entertainment generates revenue through multiple streams, primarily by providing gaming content and technology to regulated operators. The company earns money from the sale of gaming machines, licensing of virtual sports content, and offering interactive gaming solutions. Additionally, Inspired Entertainment benefits from recurring revenue models, such as participation fees and software licensing agreements with gaming operators who utilize their server-based gaming systems. Partnerships with leading gaming and lottery operators, as well as expansion into new markets and jurisdictions, are significant factors that contribute to the company's earnings.
Inspired Entertainment Financial Statement Overview
Summary
Inspired Entertainment's financial performance is mixed, with operational profitability but declining revenue growth and a high-leverage balance sheet with negative equity. Positive cash flow trends are present, yet consistent growth and financial stability are critical for future success.Income Statement
Inspired Entertainment's income statement shows moderate profitability with a gross profit margin of 57% and a net profit margin of 3.36% for TTM. The revenue growth rate is negative, indicating a 7.78% decline compared to the previous year, suggesting challenges in maintaining sales momentum. The EBIT margin stands at 9.8%, while the EBITDA margin is 25.75%, reflecting decent operational efficiency amidst the revenue decline. The historical trend shows fluctuating profitability, requiring focus on stabilizing revenue growth.65
Positive
Balance Sheet
The balance sheet highlights high leverage with a negative equity position, as evidenced by a debt-to-equity ratio that cannot be calculated due to negative equity. The company has a negative return on equity. The equity ratio is negative, further stressing the high-risk financial structure with liabilities exceeding assets. Improving the equity position is crucial for financial stability.45
Neutral
Cash Flow
Cash flow analysis reveals improvement with a positive free cash flow of $6 million TTM, recovering from negative levels. The operating cash flow to net income ratio is robust at 3.5, indicating strong cash conversion. However, the free cash flow growth rate is not applicable due to previous negative values, suggesting that consistent cash generation is still a challenge.55
Neutral
| Breakdown | |||||
| TTM | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 | Dec 2019 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 297.90M | 323.00M | 285.40M | 208.90M | 199.80M | 153.40M |
| Gross Profit | |||||
| 169.70M | 155.40M | 213.40M | 158.20M | 155.30M | 117.30M |
| EBIT | |||||
| 29.20M | 39.90M | 48.90M | 3.70M | 8.80M | -5.40M |
| EBITDA | |||||
| 76.70M | 84.00M | 90.70M | 53.90M | 53.00M | 32.50M |
| Net Income Common Stockholders | |||||
| 10.00M | 7.60M | 20.60M | -36.70M | -29.20M | -37.00M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 15.99M | 40.00M | 25.00M | 47.80M | 47.10M | 29.10M |
| Total Assets | |||||
| 186.62M | 340.90M | 309.40M | 331.70M | 324.10M | 327.40M |
| Total Debt | |||||
| 131.88M | 331.50M | 288.50M | 322.50M | 311.10M | 282.00M |
| Net Debt | |||||
| 115.89M | 291.50M | 263.50M | 274.70M | 264.00M | 252.90M |
| Total Liabilities | |||||
| 205.00M | 418.90M | 367.10M | 409.70M | 412.80M | 376.90M |
| Stockholders Equity | |||||
| -18.39M | -78.00M | -57.70M | -78.00M | -88.70M | -49.50M |
| Cash Flow | Free Cash Flow | ||||
| 6.00M | -2.30M | -5.00M | -19.20M | 23.00M | 3.20M |
| Operating Cash Flow | |||||
| 35.00M | 45.50M | 34.80M | 6.20M | 52.90M | 30.70M |
| Investing Cash Flow | |||||
| -46.20M | -48.40M | -40.40M | -37.90M | -29.90M | -133.40M |
| Financing Cash Flow | |||||
| 18.40M | 16.20M | -11.10M | 31.20M | -8.20M | 113.50M |
Inspired Entertainment Technical Analysis
Negative
8.25
Price Trends
9.79
Negative
9.67
Negative
9.33
Negative
Market Momentum
-0.35
Positive
22.96
Positive
7.46
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For INSE, the sentiment is Negative. The current price of 8.25 is below the 20-day moving average (MA) of 10.31, below the 50-day MA of 9.79, and below the 200-day MA of 9.33, indicating a bearish trend. The MACD of -0.35 indicates Positive momentum. The RSI at 22.96 is Positive, neither overbought nor oversold. The STOCH value of 7.46 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for INSE.
Inspired Entertainment Risk Analysis
Inspired Entertainment disclosed 50 risk factors in its most recent earnings report. Inspired Entertainment reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Inspired Entertainment Peers Comparison
Overall Rating
UnderperformOutperform
Sector (59)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
74 Outperform | $5.60B | 10.72 | 34.76% | 1.02% | 5.13% | 2.04% | |
71 Outperform | $3.44B | 10.35 | 8.08% | 4.53% | -22.16% | 123.24% | |
62 Neutral | $1.18B | 79.65 | 6.23% | ― | -6.97% | -81.42% | |
60 Neutral | $219.27M | ― | -12.77% | ― | -7.34% | -102.25% | |
59 Neutral | $12.41B | 10.34 | 1.32% | 3.61% | 1.65% | -18.04% | |
49 Neutral | $5.78B | ― | -6.38% | ― | -2.45% | -135.17% |
* Consumer Cyclical Sector Average
Performance Comparison
INSE
Inspired Entertainment
8.58
-0.57
-6.23%
BYD
Boyd Gaming
67.21
4.97
7.99%
EVRI
Everi Holdings
13.58
4.54
50.22%
IGT
International Game Technology
16.84
-3.82
-18.49%
CZR
Caesars Entertainment
27.32
-14.29
-34.34%
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Inspired Entertainment Earnings Call Summary
Earnings Call Date: Nov 7, 2024 | % Change Since: -18.72% | Next Earnings Date: Mar 17, 2025
Earnings Call Sentiment Positive
The earnings call discussed strong growth in the Interactive segment and an improved cash position, but highlighted challenges in the Virtual Sports segment due to customer decline and integration delays. Overall, the company shows positive performance trends despite some ongoing challenges.Highlights
EBITDA Growth and Margin Improvement
Overall year-to-year EBITDA growth in the third quarter was 13% and EBITDA margins are reaching closer to the 40% target, currently at 38.6%.
Strong Interactive Segment Performance
Interactive business revenue increased by 40% over Q3 2023 and EBITDA increased by 47% year-over-year. Adjusted EBITDA margin in this segment is now up to 67.6%.
Cash Position Improvement
Cash balance increased to $36.5 million at the end of the third quarter, up from $23.5 million at the end of the second quarter.
New Markets and Content Expansion
Expected to add Peru and South Africa to the Interactive segment in the fourth quarter, with a strong lineup of seasonal games contributing to growth.
Gaming Segment Growth
Gaming segment revenue, excluding low-margin sales, increased by 4% year-over-year, with EBITDA increasing by 29% year-over-year.
New CFO Appointment
James Richardson joining as new CFO starting January 1, 2025, expected to bring strong financial reporting and governance expertise.
Lowlights
Challenges in Virtual Sports
Virtual Sports segment impacted by the decline of the largest customer. Delays in customer resource issues, technical integrations, and regulatory approvals have slowed growth.
Slow Progress with NFL Product
Only live with 2 customers for the NFL product, with significant delays in reaching North American markets.
Company Guidance
During the Inspired Entertainment Third Quarter 2024 earnings call, the management provided guidance focusing on several key metrics and growth areas. The company's EBITDA grew by 13% year-over-year, nearing a 40% margin target, with Interactive revenue increasing by 40% and EBITDA by 47%, reaching an adjusted EBITDA margin of 67.6%. The cash balance rose to $36.5 million at the end of Q3, up from $23.5 million in Q2, with expectations to reach between $50 million and $55 million by Q1 2025. The gaming segment saw a modest revenue increase of 4%, with EBITDA rising 29% year-over-year. The Leisure segment's revenue grew by 5%, and EBITDA by 17%, demonstrating operational leverage. The company expects various strategic initiatives, including product refreshes and new market entries, to continue driving growth, with Q4 and 2025 projections indicating an optimistic outlook.Inspired Entertainment Corporate Events
Executive/Board ChangesBusiness Operations and Strategy
Inspired Entertainment Appoints New Chief Financial Officer
Positive
Nov 12, 2024
Inspired Entertainment has appointed James Richardson as its new Chief Financial Officer, effective January 1, 2025. Richardson brings nearly 30 years of financial leadership experience, having held senior roles at Manchester Airports Group and William Hill plc. His appointment coincides with Inspired’s strategic growth in the online gaming sector, positioning him to drive further innovation and value creation for the company and its shareholders.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.