Inspired Entertainment, Inc. (NASDAQ:INSE) Q1 2019 Earnings Conference Call - Final Transcript
Feb 11, 2019 • 09:30 am ET
A. Lorne Weil
that it has not been our practice to provide quarterly guidance, and indeed for reasons relating to the implementation of the Triennial regulations for April 2019 -- that will go into effect in April 2019, we have not provided guidance for the full year 2019 other than directionally. Given the somewhat modest growth recorded in December transitional quarter, we feel it's important to communicate where we expect to be in the first quarter, as we head into the regulatory changes. Many of you will also note that I tend generally to take a longer term view of things and to focus on relatively longer-term objectives.
So it's similarly aberrational for me to be talking about year-to-year changes and monthly performance but we are at an interesting and unusual juncture in the evolution of the business, and I think we need to be as clear as possible concerning where we are at this moment in time. Our adjusted EBITDA in the month of January grew by approximately 60% over January 2018, and we expect that adjusted EBITDA for the first quarter will be between $13.25 million and $14.25 million. Taking adjusted EBITDA at the midpoint of the range, first quarter adjusted EBITDA will be about 21% ahead of the comparable quarter last year in constant currency.
Underlying its projected performance are continued strong performances in Italy and Greece and growing backlog of recurring revenue interactive contracts and non-recurring hardware sales. Since our last conference call, we secured multi-year contracts with BetStars and bet365, signed a number of contracts for 2019 hardware sales and expanded our customer base across the board.
During the December quarter, as Brooks will discuss in a moment. We introduced a Virtual Football themed instant win game in Michigan, and a Virtual Football themed online slot game in the UK, each of which is performing very, very well, and underscores the increasing importance of selling our content across multiple channels and the impact that this has on both our growth and our margins.
Lastly, as we were on the eve of the Triennial implementation, a few related comments are appropriate. We continue to believe that the steady state impact on our business will be between $10 million and $11 million in adjusted EBITDA per year and that we are developing sufficient momentum in our other business lines to eventually offset this impact. We are also intensely focused on doing what we can to mitigate the impact of the Triennial itself, especially in the area of content development.
Accordingly, we've been working for quite some time on new content that provides players with an entertaining experience, which meets the new regulations and the core objectives behind these regulations. Our customers appear to be very pleased with the new games and the reaction at the most recent ICE Conference was excellent. It's hard to know exactly how customers and operators are going to respond on the whole till these games are rolled out and implemented, but we continue to feel