Inspired Entertainment, Inc. (NASDAQ:INSE) Q1 2019 Earnings Conference Call - Final Transcript
Feb 11, 2019 • 09:30 am ET
(Operator Instructions) The first question comes from Chad Beynon with Macquarie. Please go ahead.
Chad C. Beynon
Hi, good morning, all. Thanks for taking my questions. Wanted to start first on the UK service revenue in the quarter and then just talk a little bit more about some of your commentary. So Stewart you mentioned that there was a customer service contract that expired, looks like overall UK service revenue was down about $0.5 million in constant currency, a little bit more using USD. But was this mainly just this service contract or were there preemptive moves from some of your partners in the market and then when we think about the steady state, could there potentially be some additional impact from just what's going on in the market outside of what you've kind of outlined in the Triennial review? And then the third part of that question is, can you just provide a little bit more high level in terms of when you could reach this steady state? Is that kind of mid-year 2020, just any more color? I know you're not giving guidance, but that's it on UK. Three parts there. Thanks.
Yeah, thanks, Chad. So I'll take the first part of the question, and then Brooks, please chip in as necessary. So in terms of the first question, you asked that, Chad, on the reduction in UK service revenue. Yeah, it's primarily that, the loss of that service contract. So what we're seeing on a volume level is that there is a handful of store closures going on right now, but volumes are pretty much in line, and then income levels are pretty much in line with prior year as well. So there is nothing big going on in either of those income levels or volumes.
Chad C. Beynon
And then on the steady state, please?
Well, Stewart, so in terms of steady state, a couple of things. The numbers thus far seem to be trending about where we expected. Interestingly, Chad, you know that this weekend was the first impact of the equine flu that had no horseracing in the UK and the numbers that we saw over the weekend actually were surprisingly solid. So quite frankly, we see the numbers kind of in a steady state mode until Triennial. As you may or may not know, we're actually going to have a small test in Birmingham in cooperation with everyone, both operators and suppliers, where we will go to the GBP2 stake in Birmingham and some of the content innovation that Lorne referenced. So I think we'll have a very good idea of what we think the impact will be really starting in March in advance of the April one cutover to the whole stake.
Chad C. Beynon
Great, thank you. And then moving onto Virtuals, can you just talk high level in terms of potential markets, new customer opportunities within those markets, just kind of maybe a two to three-year TAM, as we think about this business growing. Obviously, you've begun in the United