Good morning, everyone, and welcome to the Inspired Entertainment Second Quarter 2021 Conference Call. I will start today's conference call by referring you to the company's safe harbor statement included in the second quarter 2021 earnings press release, which is also available on the Investors section of the company's website at www.inseinc.com. This safe harbor statement applies to today's conference call as the company's management will be making certain statements that will be considered forward-looking under securities laws and SEC rules. These statements are based on management's current expectations or beliefs and are subject to risks, uncertainties, and changes in circumstances. Additionally, please note that the company will discuss both GAAP and non-GAAP financial measures. A reconciliation is included in the earnings press release. With that completed, I would now like to turn the conference call over to Lorne Weil, the company's Executive Chairman. Mr. Weil, please go ahead.

Thank you, operator. Good morning, everyone, and thank you for dialing in to our second quarter conference call. I'm joined this morning, as usual, by Brooks Pierce; our CFO, Stewart Baker, who will, once again, have a speaking role; and Dan Silvers. We will try and keep our comments relatively brief so we have plenty of time for Q&A. Looking back on the second quarter, we can say with a modest degree of satisfaction that the narrative followed the script pretty well. Across both business units and geographies, our retail operations opened in stages during the quarter and by mid-July, we were pretty much operating full tilt, a couple of weeks later than we had originally expected. Notwithstanding the strong and immediate resurgence of our retail business, our online revenues continue to accelerate through the second quarter, most recently with iGaming establishing record revenue in July and performing very strong so far in August now. Going back over the last year or so, we've talked about looking to return to the earnings standard that we established in October 2020, which was both the peak profitability month following the Novomatic acquisition and, at the same time, the peak month prior to the November 2020 lockdown. At this point, we can say that July 2021 was solidly ahead of October 2020, despite July not having fully opened until July 19, and August is looking even stronger. Accordingly, midway through the third quarter, we're comfortable reaffirming our earlier third quarter EBITDA guidance of $28 million to $30 million. At the same time, we are committing increasing resources to our principal growth initiatives, including perhaps most importantly, our retail and online initiatives in North America, which Brooks will discuss in more detail. We're seeing impressive results in the iGaming, Virtual Sports, and video lottery channels, and quickly laying a strong foundation for an exciting new business in iLottery. As importantly, we achieved a couple of critically important financial milestones during the quarter. As Barry Jonas pointed out in his very thoughtful and comprehensive initiating report, we were one of the first gaming companies to go public through merging with a SPAC. Since the time of the SPAC merger, our largest shareholder Vitruvian, through its land game entity, has been an extraordinarily supportive shareholder as helpful and supportive of a major shareholder as anyone could want. The nature of the beast is that we struggled with the twin issues of the perceived Vitruvian overhang and the associated diminished liquidity. But as many of you know on this call, and we are enormously grateful for your enthusiasm and commitment, we were able to assist Vitruvian in selling their entire position thereby simultaneously eliminating a very large overhang and bringing in dozens of new institutional shareholders, which we think should greatly enhance our liquidity. We crossed another important financial milestone during the quarter as well, in this case with respect to our debt. When we acquired the Novomatic Technology business in the fourth quarter of 2019, we put in place a new debt facility that both 100% debt financed the acquisition and refinanced the debt we had at the time. Having now got to where the Novomatic businesses are operating at full potential, together with the projected synergies, we feel that both the acquisition itself and the associated financing are far more than justified. But, at the same time, particularly in the aftermath of the COVID shutdowns, that facility was less than optimal from several points of view. Our new facility positions us much more favorably. Stewart will address this in a little more detail in a moment. And with that, I'll hand it over to Brooks who will discuss in greater detail our operations, and I think you'll find this very interesting. Brooks?

Thank you, Lorne. And I'll update on the progress that we're seeing across the four segments of our business and the momentum we're carrying forward in each of these into the third quarter. So starting with the gaming business. We're back to operating in full with no restrictions now and are encouraged by the results that we're seeing. In the U.K., our LBO gaming machine performance is back to pre-COVID levels. In Greece, we've seen the business return as well with performance actually exceeding pre-COVID levels. And Italy is also showing positive trends with our plan still intact to transition to a game and content provider only model by the end of the year. In North America, we continue to see strength in our game performance and pipeline in Illinois market. We're proud of the performance of the terminals delivered previously to WCLC, Western Canada, and are encouraged by the game performance in that market and believe it bodes well for further penetration into the Canadian VLT market. As we've said on previous calls, we expect to enter other VLT markets this year and early in FY '22, and have just recently hired a very experienced VP of North American Sales to help drive our growth plans. Moving over to the Interactive business, as you'll have seen in the release that we are continuing to see tremendous growth in this part of the business, 69% year-over-year. I think it's important to note that we are really in the early days of the story. To give you some context, North America has vaulted to our second largest market behind the U.K., and that is with only approximately 65% customer penetration in New Jersey, only approximately 40% penetration with just two customers in Michigan, and we're not licensed yet in Pennsylvania and would hope to be yet this year. Additionally, we see opportunities on the horizon in Canada, where we already supply content to a lot of Quebec very successfully, as well as additional states like Connecticut once the regulatory framework is finalized. We are continuing to release high-performing content with our games making the top list of a number of operators and consistently releasing up to four or five new games each month. We just released our first online separate game in New Jersey called Bullion Bars – Grab the Gold, and it's doing amazing numbers thus far. As mentioned in the release, July was our highest revenue number in the Interactive segment in a month in our history, and we're confident that we can continue to grow this business, not only in North America, but in the U.K., Greece, Italy, and some future markets such as Spain, Holland, and Romania. Moving over to Virtual Sports. Our strategy has been to continue to innovate the product with our existing customers to drive player engagement and to get wider distribution of our product, particularly in North America. The results in our existing business that we're seeing in the last two months of the second quarter and the first month of the third quarter are very encouraging as our retail segment is coming back strong and growing, while the online part of our virtuals are maintained and even slightly growing over the same period, producing overall growth in revenue, EBITDA, and margin percentage. The second quarter and the first part of the third quarter were exciting with the launch of the VPP product with BetMGM in New Jersey and with plans to take this product to their market in Michigan. We also have contracts and expect to launch with Caesars, FanDuel Resorts, and others in New Jersey yet this year. We worked with our operators to build player awareness and acceptance of this product. As most of you know, it's fairly new in North America. And we will continue to report on the progress of these initiatives. We've launched some new products into Italy, Greece, and Turkey, and the early results are extremely encouraging. Also mentioned on the product side, we started to show our Home Run Derby product and think that this will be a popular addition to our lineup of Virtual Sports, particularly in markets like Latin America and Asia as well as North America. Finally, we continue to show double-digit percentage growth in our Derby Cash product with Pennsylvania Lottery, but our launch with the DC Lottery, which we had hoped would be the third quarter, has now been delayed until the fourth quarter. In summary, we feel very good about the growth and development of this segment of the business, particularly on the online side with all our new customers being added. Moving over to the Leisure business. It's showing progress as we've been talking about for some time with the restrictions finally lifting in full on July 19. The holiday parks, in particular, have had their best month since 2019 in July and we've seen that continuing to build as we are heading into the busiest month of the year, August, of course, for that part of the business. The staycation phenomenon in the U.K. has really helped both our holiday parks as well as our motorway services business. We're very encouraged by the trends we are seeing in the pub sector post the elimination of the social distancing requirements, and we can see a direct correlation in machine performance. Second half of July and the first two weeks of August have seen significant improvements in footfall, both in pubs and in our machine income. As Lorne mentioned, we also have plans – we've spoken about our plans to enter the iLottery market, and we've made very good progress on that front in the second quarter. We've demonstrated several games and game concepts to a number of potential lottery customers and have received some very positive feedback. Still early days for this segment, but our experience in the lottery world, alongside our strong game development capabilities and positive feedback, makes us feel very bullish on this opportunity over the next 12 to 18 months. In summary, we believe that the strategy and operating plans that we've been discussing on these calls over the last few quarters is coming clearly to fruition, and we look forward to reporting back as we progress on these initiatives. With that, I'll hand it over to Stewart.

Thanks, Brooks. So I won't run through all the numbers and explanations in the quarter because the answer will inevitably be due to the nature and timing of lockdowns in either the current period or the comparative period. But I did want to give a little bit more detail on three areas. Firstly, the ramp-up during the quarter. Just to give you a bit more color here. So April was mainly locked down with the only meaningful land-based revenue coming from gaming machines and betting offices in the U.K. for the second half of the month. But even these were operating with a number of restrictions, including only two of the four machines available to play. However, we did need to incur most of the costs. So April was a breakeven month from an EBITDA point of view. May was a month where in the U.K., most of the machines were turned on partway through the month and EBITDA was approximately $2 million. And this leaves June with EBITDA of about $6 million. And I think it's important to understand this was still not a normal month. Although we needed to incur the majority of the costs, not all the markets were fully open for the whole of June or they were operating with restrictions, which have now fallen away. For example, Italy reopened in stages during the month, and the pubs and holiday parks in the U.K. still have a number of machines turned off. So as Brooks mentioned, it was only really from the 19th of July, that restrictions fully dropped away, and we consider this to be the point where we fully opened up. Secondly, in June, product sales were lower than we would believe the normalized level is. As we saw last year, these take a little bit longer to ramp up to normal levels, a bit longer than the recurring income. But the visibility in the pipeline gives us confidence that they will actually and indeed are returning to normalized levels. The second topic I wanted to briefly touch on with the net loss for the three months of nearly $44 million, which is approximately $25 million higher than we would have expected on the suppressed level of revenue we saw in the quarter. Now strangely or perversely, the two items which led to the accounting charges totaling this amount were actually driven by positive events. Firstly, the charge in relation to the increased warrant liability of about $11 million. This is a little strange and the better we do as a company, the higher the stock price, the higher the liability, and the higher the P&L charge. Secondly, whilst the refinance results in a reduced cost of capital, pushes out maturity, and removes a number of restrictions, it does mean that we needed to write off the fees in relation to the old financing of approximately $14 million, the majority of which were structuring fees. The final topic I wanted to talk about was cash, which at the start of the quarter was about $41 million and at the end was approximately $25 million, a reduction of about $16 million. Now quarterly cash flows are naturally susceptible to small changes in timing of payments in and out and this quarter was no different. So I think it makes a bit more sense to look at the six months as a whole, and these decreased by about $22.5 million. Now the refinance in the quarter was broadly net neutral after repaying off the prior debt, the swap, and the legal fees. But the timing did mean that we paid about eight months of interest during the first half, which totaled about $17.5 million. In addition, we didn't see much benefit in terms of receipts from opening up partway through the quarter, given the time taken between revenue and then receiving the cash. However, we did have a lot of the cash expenditure given the nature of the large proportion of our cost base being staff costs, which are obviously incurred in month. After cash flows approximating to about six months of lockdown, we are confident now that we're going to be in a period of positive cash flows going forward. And whilst we don't typically give cash forecasts, I will say that we are projecting the cash position at the end of the quarter we're now in to be in the mid- to high $30 million. So hopefully, that explains a bit why we're confident, adjusted EBITDA, accounting profit, and cash flows are all very much on an upward trajectory with some large negative headwinds in the quarter we're reporting on today. So with that, I'll hand back to Lorne for closing remarks before we open up to Q&A.

And the first question comes from Barry Jonas with Truist.

Wanted to start with the COVID resurgence that we've been seeing. Guidance reiteration, I think, is very positive. But how should we think about your positioning across the segments in light of some of the resurgence we're seeing?

Brooks, do you want to try that?

Could you please elaborate on what you mean by positioning across the segments?

As you evaluate your various business units, how do you believe the business can adapt to the rise in Delta COVID cases? Ideally, we hope to avoid full lockdowns. However, if we do see more restrictions, how should we consider that impacting the business? Do you believe you can manage any additional requirements, such as masks or other restrictions that may arise in your units?

Sure. Sure. Well, I think in terms of, again, assuming all of the venues are open, we've seen in the past where our customers have had to wear masks and it hasn't had a meaningful impact on the business. So I think the only way it would really have a meaningful impact on the business is if some of the operations were shut down. Stewart's probably as good an expert on the U.K., but I think all of us have probably read about how the U.K., in particular, is doing extremely well as it relates to COVID, and that's obviously a big portion of our market. But I think for us, what we've done is we've built a ton of resilience, and with the growth of our online businesses across the geographies certainly, what we're seeing is even when the retail business has come back in full, there's no diminishing of the online business. So I think we've built what we feel is both in terms of geography, but in product mix and everything else, a very sustainable business regardless of what happens with COVID.

Great. That's really helpful. And then I wanted to touch on virtuals. What do you think needs to happen in the U.S. for virtuals to hit the same penetration levels as maybe you've seen in European countries like Greece? Any structural reason it can't get there over time?

Well, I think it's your turn, Lorne.

You go ahead, Brooks, and I'll jump in there.

Sure. I believe the most important aspect is the customer education process because there isn't as much familiarity with it in the U.S. as there is in Europe. We're still in the early stages with BetMGM, but we're seeing a positive trend as they promote the product and introduce it to their players. We're noticing significant daily increases as people become accustomed to it. BetMGM has effectively integrated it into both their casino and sports tabs, actively marketing and promoting it while trying to cross-sell with sports betting. I'm optimistic about the initial figures we're seeing from BetMGM and expect that other operators will follow suit.

What I would add to that, Barry, it's Lorne, is I think it's just going to take a little bit of time for both the operators, as Brooks said, and the players to understand what the distinct advantages of Virtual Sports is. And it might be worth taking a second just to talk about that because there are three or four that I think are very important that are clearly understood in other parts of the world, and we're just getting there in the state. But the first, obviously, is it's great because it can be bet on at any time, whether there is live sports or not. So if it's late in the evening or a dark day for live sports, there is an infinite number of things to bet on. And for people who happen to love baseball or football, you could bet on it any time during the year, not just in the natural season. The second is that from the point of view of the operators, they can set the margin anywhere they want. And there is absolutely no risk. So unlike betting on live sports, which can be very competitive in terms of margins. And clearly, there's always a risk that the outcome of the games is not where the line predicted, there are none of these issues with Virtual Sports. So from a financial point of view, it's a tremendous product for operators. And there are a number of people who really like the idea of watching a sporting event and betting on it, but they're intimidated by what they think is the complexity of sports betting and the fact that they're playing in a pool with players who are much better informed and are much more sophisticated than they are, whereas in Virtual Sports none of this comes into play. So it's a much more comforting product for sports fans who may not be mathematicians. And so I think as people start to get this, and we're already beginning to see it, the product will get more and more traction in North America.

And the next question comes from Chad Beynon with Macquarie.

Regarding your Interactive success, you noted that you're expanding with new customers. And I believe you said you're deploying four to five new games per month. Can you just talk about how you're leveraging the studios or these games that are working in the land-based environment and how this should look going forward? And then maybe just talk a little bit more about how we should think about the momentum given that you're still getting started in some states and with some key partners?

Sure. Brooks?

Yes, I believe we are leveraging our strategy effectively. We have a real omnichannel approach. Interestingly, in North America, while our presence in the gaming machine market is still growing, current data indicates that we produce more interactive content than any competitors outside the big four gaming suppliers. Our content is gaining traction in markets where we haven't established retail presence, unlike in the U.K., Greece, or Italy, where players are familiar with our products and brands through retail shops. This bodes well for our growth potential in North America. Additionally, as highlighted by our success in retail locations in Illinois and Western Canada, our game designers and developers are focused on crafting tailored content for the North American market. For instance, the stepper game may not be as well-received in Europe, but it is performing exceptionally in North America. So, it involves several factors, and we feel optimistic about the progress we're making in that segment of our business.

Great. And then, Lorne, I know you're not giving annual guidance. I know before you had talked about an $80 million number post synergies. I think that was given pre-COVID. So given that you're reiterating the 28 to 30 in the third quarter, you talked about August potentially being a record, is there any reason why on a forward TTM basis, those prior goals may actually be conservative here? Just any color around how to think about seasonality and kind of the go-forward there.

I think you need to be cautious because we haven't typically provided annual guidance. However, based on what we're observing, the resurgence of our retail business hasn't diminished the growth of our online business or the other trends that Brooks mentioned. I'm cautiously optimistic considering our current situation and being aware of Barry Jonas' concerns about the possible effects of COVID. Overall, I feel confident that moving forward, just as July has significantly exceeded October 2019 in our key earnings month, we believe we're also surpassing the $80 million annual target.

The next question comes from Ryan Sigdahl with Craig-Hallum Capital Group.

One follow-up on that last question. But given the U.K. didn't fully reopen until mid-July, and we're still kind of working through the reopenings, it seems like early in the quarter. Is it reasonable to assume that that normal for Q3 would actually be better than where you guided to?

Well, certainly, the logic would say that, yes. I mean, if we weren't fully open until the 19th of July, but we're still comfortable with 28 to 30, then I think you could deduce that had July been opened for the entire month, that we would be running ahead. I just think that that's kind of the math, right? Yes.

Fair enough. And then just as you look at retail across countries, are you seeing greater upside in the return of foot traffic and players? Or is it really the average play per player? Or is it both?

Brooks.

Yes, I'll give it a try, and Stewart can add if he wants. What we're observing, particularly in the U.K., is that the number of people coming in hasn't changed much in the betting shop business. However, they are staying longer and playing more. In pubs, there is a direct correlation to foot traffic. Before July 19, you had to reserve a table and couldn't get a drink at the bar. But after July 19, the numbers clearly show an increase in foot traffic at the pubs, allowing people to move around. The income from machines is improving week by week. So, I think it’s a combination of both factors, but mainly foot traffic in pubs and player spending in the betting shops.

And then as it relates to Greece, you said above pre-COVID levels. Do you think that's pent-up demand? Or do you think there's structural reasons that can be sustainable?

Yes, I believe there is some pent-up demand, but due to COVID and regulatory restrictions, we hadn't been able to introduce new content in Greece. Now that we have, we've observed a clear link between the new content and increased engagement. This trend appears to be sustainable.

Brooks, you might want to add to that, the fact that every so often in Greece in the machine side of our business, which is a critically important component of what we're doing in Greece, they reallocate the number of machines to all the suppliers based upon the performance in the preceding x period of time. And as a result of this last go around, even though we already are by a considerable margin, the largest supplier in Greece, we're going to get an increased allocation. So further reinforcing what's happening with the player base will be the fact that we will have a greater number of machines operating in Greece as well.

Great. One more for me. I think you mentioned 65% online penetration in New Jersey, 40% in Michigan. First, did I get those right? And then second, what's the main constraint there of getting closer to 100%?

Yes, you got those numbers correct, and it mainly relates to customers and some timing issues. The largest customer with whom we have a signed contract but haven't integrated yet is FanDuel. So FanDuel is the most significant customer we haven't onboarded yet, although we have a contract with them, and we will also be adding Rush Street. I believe that by the end of the third quarter, Rush Street will be operational in the markets, and hopefully, FanDuel will follow shortly after. Once these integrations occur, we should be much closer to 100% in both markets.

This concludes our question-and-answer session. I would like to turn the conference back over to Lorne Weil for any closing remarks.

Thank you, operator. Thank you, everybody, again for joining this morning. I hope at least some part of our enthusiasm has been contagious. I think we're as positive about the business right now as we could possibly be. The outlook, I think, is terrific. All the businesses are operating as well as they possibly can. And we look forward to speaking to you all again in another quarter, at which point, hopefully, the outlook that we've been talking about today will become even more positive and more clear. So thank you very much. Operator, I think we're done. Thanks.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.