Inspired Entertainment, Inc. (NASDAQ:INSE) Q2 2020 Earnings Conference Call - Final Transcript
Aug 13, 2020 • 09:00 am ET
Good morning, everyone, and welcome to the Inspired Entertainment Second Quarter 2020 Conference Call. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. Please note, today's event is being recorded.
I'll begin today's conference call by referring you to the Company's safe harbor statement that appears in the second quarter 2020 earnings press release, which is also available in the Investors section of the Company's website at www.inseinc.com. This safe harbor statement also 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 rules of the SEC. These statements are based on management's current expectations or beliefs and are subject to risks, uncertainties and changes in circumstances.
In addition, 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.
A. Lorne Weil
Thank you, operator. Good morning, everybody, and thanks, once again, for joining our second quarter conference call. With me this morning, as usual, are Brooks Pierce, Dan Silvers and Stewart Baker.
It would be an understatement to say that the second quarter of this year forced us to adapt to circumstances that hopefully only come once in a lifetime or maybe even less often than that. For years, we have adhered to the paradigm articulated many years ago by Jack Welch that it's easy to make money if you don't have to grow, and it's easy to grow if you don't have to make money, but the real test of the management team is its ability to be able to do both. So just when we thought we had it figured out the first time, we were hit by the impact of the Triennial Review. And then when, as, I think, clearly evidenced by our strong performance in the fourth quarter of 2019, so two quarters ago, we thought we had it figured out a second time. And then, of course, we encountered COVID. So temporarily, the paradigm had become, not can you make money and grow at the same time.
Comparatively speaking, that's actually, right now, looking to be pretty easy, but can you still make money while with virtually no warning, your revenue suddenly shrink by 75%. We think of the fourth quarter of 2019 as an effect, our benchmark quarter because it was the first quarter in which we had integrated the Novomatic acquisition and its attendant revenue and full cost structure, but, also, unfortunately, the last quarter that was unimpacted by COVID. Between the fourth quarter of 2019 and the second quarter of 2020, our revenues declined indeed by 75% from about $66 million in the fourth quarter of 2019 to $16.5 million two quarters later. So a drop in quarterly revenue of $50 million.
And yet I think actually somewhat miraculously, we were