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☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Date File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer”, “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of May 7, 2024, there were 26,571,308 shares of the Company’s common stock issued and outstanding.

References in this report to “we,” “us,” “our,” the “Company” and “Inspired” refer to Inspired Entertainment, Inc. and its subsidiaries unless the context suggests otherwise.

Certain statements and other information set forth in this report, including in Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere herein, may relate to future events and expectations, and as such constitute “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Section 27A of the Securities Act of 1933, as amended (the “Securities Act”). Our forward-looking statements include, but are not limited to, statements regarding our business strategy, plans and objectives and our expected or contemplated future operations, results, financial condition, beliefs and intentions. In addition, any statements that refer to projections, forecasts or other characterizations or predictions of future events or circumstances, including any underlying assumptions on which such statements are expressly or implicitly based, are forward-looking statements. The words “anticipate”, “believe”, “continue”, “can”, “could”, “estimate”, “expect”, “intend”, “may”, “might”, “plan”, “possible”, “potential”, “predict”, “project”, “scheduled”, “seek”, “should”, “would” and similar expressions, among others, and negatives expressions including such words, may identify forward-looking statements.

Our forward-looking statements reflect our current expectations about our future results, performance, liquidity, financial condition, prospects and opportunities, and are based upon information currently available to us, our interpretation of what we believe to be significant factors affecting our business and many assumptions regarding future events. Actual results, performance, liquidity, financial condition, prospects and opportunities could differ materially from those expressed in, or implied by, our forward-looking statements. This could occur as a result of various risks and uncertainties, including the following:

In light of these risks and uncertainties, and others discussed in this report, there can be no assurance that any matters covered by our forward-looking statements will develop as predicted, expected or implied. Readers should not place undue reliance on any forward-looking statements. Except as expressly required by the federal securities laws, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, changed circumstances or any other reason. We advise you to carefully review the reports and documents we file from time to time with the SEC.

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the financial statements and related notes thereto included elsewhere in this report. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual future results could differ materially from the historical results discussed below. Factors that could cause or contribute to such differences include, but are not limited to, those identified below and those referenced in the section titled “Risk Factors” included elsewhere in this report.

We make forward-looking statements in this Management’s Discussion and Analysis of Financial Condition and Results of Operations. For definitions of the term “forward-looking statements”, see the definitions provided in the Cautionary Note Regarding Forward-Looking Statements at the forepart of this report.

Our results of operations can fluctuate due to seasonal trends and other factors. Sales of our gaming machines can vary quarter-on-quarter due to both supply and demand factors. Player activity for our holiday parks is generally higher in the second and third quarters of the year, particularly during the summer months and slower during the first and fourth quarters of the year.

We generate revenue in four principal ways: (i) on a participation basis, (ii) on a fixed rental fee basis, (iii) through product sales, (iv) by services provided and (v) through software license fees. Participation revenue generally includes a right to receive a share of our customers’ gaming revenue, typically as a share of net win but sometimes as a share of the handle or “coin in” which represents the total amount wagered.

Geographically, the majority of our revenue is derived from, and the majority of our non-current assets are attributable to, our UK operations. The remainder of our revenue is derived from, and non-current assets attributable to, Greece and the rest of the world (including North America).

For the three months ended March 31, 2024 we derived approximately 75% of our revenue from the UK (including customers headquartered in the UK but whose revenue is generated globally), 10% from Greece, and the remaining 15% across the rest of the world. In the three-months ended March 31, 2023 we derived approximately 76% of our revenue from the UK (including customers headquartered in the UK but whose revenue is generated globally), 9% from Greece, and the remaining 15% across the rest of the world.

As of March 31, 2024, our non-current assets (excluding goodwill) were attributable as follows: 70% to the UK, 12% to Greece and 18% across the rest of the world. As of March 31, 2023 our non-current assets (excluding goodwill) were attributable as follows: 80% to the UK, 5% to Greece and 15% across the rest of the world.

Our results are affected by changes in foreign currency exchange rates as a result of the translation of foreign functional currencies into our reporting currency and the re-measurement of foreign currency transactions and balances. The impact of foreign currency exchange rate fluctuations represents the difference between current rates and prior-period rates applied to current activity. The geographic region in which the largest portion of our business is operated is the UK and the British pound sterling (“GBP”) is considered to be our functional currency. Our reporting currency is the U.S. dollar (“USD”). Our results are translated from our functional currency of GBP into the reporting currency of USD using average rates for profit and loss transactions and applicable spot rates for period-end balances. The effect of translating our functional currency into our reporting currency, as well as translating the results of foreign subsidiaries that have a different functional currency into our functional currency, is reported separately in Accumulated Other Comprehensive Income.

During the three months ended March 31, 2024 we derived approximately 25% of our revenue from sales to customers outside the UK. In the thee months ended March 31, 2023 we derived approximately 24% of our revenue from sales to customers outside the UK.

In the section “Results of Operations” below, currency impacts shown have been calculated as the current-period average GBP:USD rate less the equivalent average rate in the prior period, multiplied by the current period amount in our functional currency (GBP). The remaining difference, referred to as functional currency at constant rate, is calculated as the difference in our functional currency, multiplied by the prior-period average GBP:USD rate. This is not a U.S. GAAP measure, but is one which management believes gives a clearer indication of results. In the tables below, variances in particular line items from period to period exclude currency translation movements, and currency translation impacts are shown independently.

We use certain financial measures that are not compliant with U.S. GAAP (“Non-GAAP financial measures”), including EBITDA and Adjusted EBITDA, to analyze our operating performance. In this discussion and analysis, we present certain non-GAAP financial measures, define and explain these measures and provide reconciliations to the most comparable U.S. GAAP measures. See “Non-GAAP Financial Measures” below.

Our results are affected by changes in foreign currency exchange rates, primarily between our functional currency (GBP) and our reporting currency (USD). During the three months ended March 31, 2024 and March 31, 2023, the average GBP:USD rates for the periods 1.27 and 1.21, respectively.

The following discussion and analysis of our results of operations has been organized in the following manner:

In the discussion and analysis below, certain data may vary from the amounts presented in our consolidated financial statements due to rounding.

For all reported variances, refer to the overall company and segment tables shown below. All variances discussed in the overall company and segment results are on a functional currency (at constant rate) basis, which excludes the impact of any changes in foreign currency exchange rates.

During the three-month period ended March 31, 2024 in the Gaming segment, we completed over 240 B3 / Category C installations of Inspired’s new Vantage terminal into the Gaming estate.

During the three-month period ended March 31, 2024 the Interactive segment went live with four new operators including Winmasters, Midnite, Favbet, and OLG and bet365 in New Jersey.

Key agreements signed in the three-month period ended March 31, 2024 include a new contract with Kambi Group to integrate Inspired Virtual Sports products into the Kambi sportsbook platform, a new multi-year contract with Parkdean resorts for the sole supply of amusement and gaming machines to their holiday park estate of 64 sites nationwide in the UK and a new multi-year contract with Away Resorts for sole supply to 19 sites nationwide in the UK. We also secured an early contract extension with Hydes in the pubs business.

Three Months ended March 31, 2024, compared to Three Months ended March 31, 2023

See “Segments Results” below for a more detailed explanation of the significant changes in our components of revenue within the individual segment results of operations.

Revenue (for the three months ended March 31, 2024, compared to the three months ended March 31, 2023)

For the three months ended March 31, 2024, revenue on a functional currency (at constant rate) basis decreased by $4.4 million, or 7%.

For the three-month period, Gaming revenue declined by $4.1 million and Gaming service revenue declined by $2.4 million predominantly due to a decrease in the UK and Greek markets. Gaming Product revenue decreased by $1.7 million predominately due to UK and mainland Europe product sales. Virtual Sports declined by $3.0 million predominately due to reduced Online revenues. Interactive grew by $1.8 million, driven primarily by revenue growth in the UK, mainland Europe and Latin America. Leisure grew by $0.8 million, driven primarily by the increase in the revenue generated per machine in the Pubs and increased revenues in Holiday Parks.

Cost of sales, excluding depreciation and amortization, for the three months ended March 31, 2024, decreased by $2.2 million, or 10% compared to the three-month period ended March 31, 2023. The decrease was mainly driven by $2.5 million in cost of product related to the reduction in Gaming Product sales.

Selling, general and administrative (“SG&A”) expenses for the three months ended March 31, 2024 increased by $4.1 million, or 16% compared to the three-month period March 31,2024.

The increase was driven primarily by the cost of restatement work of $5.0 million (excluded from Adjusted EBITDA) as well as an increase in non-staff costs of $2.1 million, of which the largest proportion was driven by audit and accountancy costs of $0.7 million that were not incurred in the prior period. This was partially offset by $3.0 million for restructuring costs incurred in the prior year period that were not repeated in this period (removed from Adjusted EBITDA).

During the three months ended March 31, 2024, the Company recorded expenses of $2.3 million compared to expenses of $2.9 million for the three months ended March 31, 2023. All expenses were related to outstanding awards. The three months ended March 31, 2023 included an expense of $0.7 million relating to the group restructure.

Depreciation and amortization decreased for the three-month period by $0.1 million. This was driven by Gaming reduction of $0.4 million and Leisure reduction of $0.3 million due to assets being fully written down, partly offset by an increase of $0.6 million in Interactives.

During the three-month period ended March 31, 2024, net operating loss was $1.4 million, a decrease of $5.7 million compared to the prior year period. The decrease was attributable to the decrease in gross margin of $2.2 million and an increase in selling, general and administrative expenses of $4.1 million, including the cost of restatement and additional audit and accountancy fees, partially offset by the lower restructuring costs.

For the three-months ended March 31, 2024 net loss was $5.7 million, compared to a net loss of $1.4 million in the prior year period. The $3.8 million decline year-over-year was primarily due to the decline in net operating income of $5.7 million, partially offset by an increase in income tax benefit of $1.9 million.

The effective income tax rate for the three months ended March 31, 2024 and 2023 were 27.4% and 13.2%, respectively, resulting in a $2.2 million and $0.2 million income tax benefit respectively.

The effective tax rate reported in any given year will continue to be influenced by a variety of factors including the level of pre-tax income or loss, the income mix between jurisdictions, and any discrete items that may occur.

The Company recorded a valuation allowance against all of our deferred tax assets as of both March 31, 2024 and 2023. We intend to continue maintaining a full valuation allowance on our deferred tax assets until there is sufficient evidence to support the reversal of all or some portion of these allowances. However, given our current earnings and anticipated future earnings, we believe that there is a reasonable possibility that within the next 12 months, sufficient positive evidence may become available to allow us to reach a conclusion that a significant portion of the valuation allowance will no longer be needed. Release of the valuation allowance would result in the recognition of certain deferred tax assets and a decrease to income tax expense for the period the release is recorded. However, the exact timing and amount of the valuation allowance release are subject to change on the basis of the level of profitability that we are able to actually achieve.

Segment Results (for the three months ended March 31, 2024, compared to the three months ended March 31, 2023)

We generate revenue from our Gaming segment through the delivery of our gaming terminals preloaded with proprietary gaming software, server-based content, as well as services such as terminal repairs, maintenance, software upgrades and upgrades on a when and if available basis and content development. We receive rental fees for machines, typically in conjunction with long-term contracts, on both a participation and fixed fee basis. Our participation contracts are typically structured to pay us a percentage of net win (defined as net revenue to our operator customers, after deducting player winnings, free bets or plays and any relevant regulatory levies) from gaming terminals placed in our customers’ facilities. Typically, we recognize revenue from these arrangements on a daily basis over the term of the contract.

Revenue growth for our Gaming business is principally driven by changes in (i) the number of operator customers we have, (ii) the number of Gaming machines in operation, (iii) the net win performance of the machines and (iv) the net win percentage that we receive pursuant to our contracts with our customers.

“End of Period Installed Base” is equal to the number of deployed Gaming terminals at the end of each period that have been placed on a participation or fixed rental basis. Gaming participation revenue, which comprises the majority of Gaming Service revenue, is directly related to the participation terminal installed base. This is the medium by which our customers generate revenue and distribute a revenue share to the Company. To the extent all other key performance indicators (KPIs) and certain other factors remain constant, the larger the installed base, the higher the Company’s revenue would be for a given period. Management gives careful consideration to this KPI in terms of driving growth across the segment. This does not include Service Only terminals.

Revenue is derived from the performance of the installed base as described by the Gross and Net Win KPIs.

If the End of Period Installed Base is materially different from the Average Installed Base (described below), we believe this gives an indication as to potential future performance. We believe the End of Period Installed Base is particularly useful for assessing new customers or markets, to indicate the progress being made with respect to entering new territories or jurisdictions.

“Total Gaming - Average Installed Base” is the average number of deployed Gaming terminals during the period split by participation terminals and Fixed Rental terminals. Therefore, it is more closely aligned to revenue in the period. We believe this measure is particularly useful for assessing existing customers or markets to provide comparisons of historical size and performance. This does not include Service Only terminals.

“Participation - Average Installed Base” is the average number of deployed Gaming terminals that generated revenue on a participation basis.

“Fixed Rental - Average Installed Base” is the average number of deployed Gaming terminals that generated revenue on a fixed rental basis.

“Service Only - Average Installed Base” is the average number of terminals that generated revenue on a Service only basis.

“Customer Gross Win per unit per day” is a KPI used by our management to (i) assess impact on the Company’s revenue, (ii) determine changes in the performance of the overall market and (iii) evaluate the impacts of regulatory change and our new content releases on our customers. Customer Gross Win per unit per day is the average per unit cash generated across all Gaming terminals in which the Company takes a participation revenue share across all territories in the period, defined as the difference between the amounts staked less winnings to players divided by the Average Installed Base in the period, then divided by the number of days in the period.

Gaming revenue accrued in the period is derived from Customer Gross Win accrued in the period after deducting gaming taxes (defined as a regulatory levy paid by the Customer to government bodies) and applying the Company’s contractual revenue share percentage.

Our management believes Customer Gross Win measures are meaningful because they represent a view of customer operating performance that is unaffected by our revenue share percentage and allow management to (1) readily view operating trends, (2) perform analytical comparisons and benchmarking between customers and (3) identify strategies to improve operating performance in the different markets in which we operate.

“Customer Net Win per unit per day” is Customer Gross Win per unit per day after giving effect to the deduction of gaming taxes.

“Inspired Blended Participation Rate” is the Company’s average revenue share percentage across all participation terminals where revenue is earned on a participation basis, weighted by Customer Net Win per unit per day.

“Inspired Fixed Rental Revenue per Gaming Machine per week” is the Company’s average fixed rental amount across all fixed rental terminals where revenue is generated on a fixed fee basis, per unit per week.

“Inspired Service Rental Revenue per Gaming Machine per week” is the Company’s average service rental amount across all service only rental terminals where revenue is generated on a service only fixed fee basis, per unit per week.

“Gaming Long-term license amortization” is the upfront license fee per terminal which is typically spread over the life of the terminal.

Our overall Gaming revenue from terminals placed on a participation basis can therefore be calculated as the product of the Participation - Average Installed Base, the Customer Net Win per unit per day, the number of days in the period, and the Inspired Blended Participation Rate, which is equal to “Participation Revenue”.

“Number of Machine sales” is the number of terminals sold during the period.

“Average selling price per terminal” is the total revenue in GBP of the Gaming terminals sold divided by the “number of Machine sales”.

Set forth below is a breakdown of our Gaming recurring revenue. Gaming recurring revenue principally consists of Gaming participation revenue and fixed rental revenue.

“Gaming Participation Revenue” includes our share of revenue generated from (i) our Gaming terminals placed in gaming and lottery venues; and (ii) licensing of our game content and intellectual property to third parties.

“Gaming Other Fixed Fee Recurring Revenue” includes service revenue in which the Company earns a periodic fixed fee on a contracted basis.

“Gaming Project Recurring Revenue” relates specifically to a single customer for machine estate upgrades and distribution.

“Gaming Long term license amortization” – see the definition provided above.

“Total Gaming Recurring Revenue” is equal to Gaming Participation Revenue plus Gaming Other Fixed Fee Recurring Revenue.

Set forth below is a breakdown of our Gaming service revenue by geographic region. Gaming Service revenue consists principally of Gaming participation revenue, Gaming other fixed fee revenue, Gaming long-term license amortization and Gaming other non-recurring revenue. See “Gaming Segment Revenue” below for a discussion of gaming service revenue between the periods under review.

Note: Exchange rate in the table is calculated by dividing the USD total service revenue by the GBP total service revenue, therefore this could be slightly different from the average rate during the period depending on timing of transactions.

Note: Exchange rate in the table is calculated by dividing the USD total revenue by the GBP total revenue, therefore this could be slightly different from the average rate during the period depending on timing of transactions.

All variances discussed in the Gaming results below are on a functional currency (at constant rate) basis, which excludes the impact of any changes in foreign currency exchange rates.

During the three-month period ended March 31, 2024, Gaming revenue decreased by $4.1 million, or 15%. This was driven by a $2.4 million decrease in Service revenue and a $1.7 million decrease in Product revenue.

The decrease in Gaming Service revenue was mainly driven by the UK market, inclusive of shop closures in UK LBO and the expiry of historical amortized license revenues in Greece.

Product revenue decrease was primarily driven by lower product sales of $0.6 million in each of the UK and mainland Europe markets respectively.

Operating income decreased for the three-month period by $2.3 million. This was primarily due to the decrease in gross margin of $2.1 million and an increase of $0.7 million in SG&A driven by reduced labor and overhead absorption.

We generate revenue from our Virtual Sports segment through the on-premise solution and hosting of our products. We primarily receive fees on a participation basis. Our participation contracts are typically structured to pay us a percentage of net win (defined as net revenue to our operator customers, after deducting player winnings, free bets or plays and other promotional costs and any relevant regulatory levies) from Virtual Sports content placed on our customers’ websites or in our customers’ facilities. Typically, we recognize revenue from these arrangements on a daily basis over the term of the contract.

Revenue growth for our Virtual Sports segment is principally driven by the number of customers we have, the net win performance of the games and the net win percentage that we receive pursuant to our contracts with our customers.

“No. of Live Customers at the end of the period” and “Average No. of Live Customers” represent the number of customers from which there is Virtual Sports revenue at the end of the period and the average number of customers from which there is Virtual Sports revenue during the period, respectively.

“Total Revenue (£m)” represents total revenue for the Virtual Sports segment, including recurring and upfront service revenue. Total revenue is also divided between “Total Revenue (£m) – Retail,” which consists of revenue earned through players wagering at Virtual Sports venues, “Total Revenue (£m) – Online Virtuals,” which consists of revenue earned through players wagering on Virtual Sports online.

Set forth below is a breakdown of our Virtual Sports recurring revenue, which consists of Retail Virtuals and Online Virtuals recurring revenue as well as long-term license amortization. See “Virtual Sports Segment Revenue” below for a discussion of Virtual Sports Service revenue between the periods under review.

“Recurring Revenue” includes our share of revenue generated from (i) our Virtual Sports products placed with operators; (ii) licensing our game content and intellectual property to third parties; and (iii) our games on third-party online gaming platforms that are interoperable with our game servers.

“Virtual Sports Long term license amortization” is the upfront license fee which is typically spread over the life of the contract.

Note: Exchange rate in the table is calculated by dividing the USD service revenue by the GBP service revenue, therefore this could be slightly different from the average rate during the period depending on timing of transactions.

All variances discussed in the Virtual Sports results below are on a functional currency (at constant rate) basis, which excludes the impact of any changes in foreign currency exchange rates.

During the three-month period, revenue decreased by $2.9 million, or 20%. This was driven by $2.6 million in Online Virtuals, primarily driven by a major customer optimizing their customer base, as well as decreases in Retail Virtuals of $0.3 million.

Operating income decreased by $2.5 million in the three-month period. This was due to the decrease in revenue of $2.9 million, partly offset by a decrease of $0.3 million in SG&A costs.

We generate revenue from our Interactive segment through the various games content made available via third party aggregation platforms with Inspired’s remote gaming server or directly on the Company’s remote gaming server platform, and services such as customer support, platform maintenance, updates and upgrades. Typically, we receive fees on a participation basis. Our participation contracts are usually structured to pay us a percentage of net win (defined as net revenue to our operator customers, after deducting player winnings, free bets or plays and other promotional costs and any relevant regulatory levies) from Interactive content placed on our customers’ websites. Typically, we recognize revenue from these arrangements on a daily basis over the term of the contract.

Revenue growth for our Interactive segment is principally driven by the number of customers we have, the number of live games, the net win performance of the games and the net win percentage that we receive pursuant to our contracts with our customers.

“No. of Live Customers at the end of the period” and “Average No. of Live Customers” represent the number of customers from which there is Interactive revenue at the end of the period and the average number of customers from which there is Interactive revenue during the period, respectively.

“No. of Games available at the end of the period” and “Average No. of Games available” represents the number of games that are available for operators to deploy at the end of the period (including inactive legacy games still available and inactive new games that are available but have not yet gone live with any operators) and the average number of games that are available for operators to deploy during the period, respectively. This incorporates both live games and inactive games.

“No. of Live Games at the end of the period” and “Average No. of Live Games” represents the number of games from which there is Interactive revenue at the end of the period and the average number of games from which there is Interactive revenue during the period, respectively.

“Total Revenue (£m)” represents total revenue for the Interactive segment, including recurring and upfront service revenue.

All variances discussed in the Interactive results below are on a functional currency (at constant rate) basis, which excludes the impact of any changes in foreign currency exchange rates.

During the three-month period ended March 31, 2024, revenue increased by $1.8 million, or 31% as compared to the three-month period ended March 31, 2023, primarily driven by revenue growth in the UK, Europe and Latin America due to the consistent launch of new content across the estate and increased promotional activity.

Operating income for the three-month period ended March 31, 2024 increased by $0.4 million. This increase was driven by the increase in revenue, partially offset by a $0.6 million increase in SG&A expenses driven by increased staff and IT costs, and a $0.6 million increase in depreciation and amortization expenses.

We typically generate revenue from our Leisure segment through the supply of our gaming and amusement machines. We receive rental fees for machines, typically on a long-term contract basis, on both a participation and fixed fee basis. Our participation contracts are usually structured to pay us a percentage of net win (defined as net revenue to our operator customers, after deducting player winnings, free bets or plays, any relevant regulatory levies and minimum fixed incomes where applicable) from machines placed in our customers’ facilities. We generally recognize revenue from these arrangements on a daily basis over the term of the contract.

Revenue growth for our Leisure segment is principally driven by the number of customers we have, the number of machines in operation, the net win performance of the machines and the net win percentage that we receive pursuant to our contracts with our customers.

“End of period installed base Gaming” and “Average installed base Gaming” represent the number of gaming machines installed (excluding Holiday Park machines) that are Category B and Category C only, from which there is participation or rental revenue at the end of the period or as an average over the period.

“End of period installed base Other” and “Average installed base Other” represent the number of all other category machines installed (excluding Holiday Park machines) from which there is participation or rental revenue at the end of the period or as an average over the period.

“Revenue per machine unit per week” represents the average weekly participation or rental revenue recognized during the period.

All variances discussed in the Leisure results below are on a functional currency (at constant rate) basis, which excludes the impact of any changes in foreign currency exchange rates.

For the three-month period, revenue increased by $0.8 million, primarily in Pubs due to the Vantage rollout and Holiday Parks due to increased bookings.

Operating loss for the three-month period was $1.3 million compared to a loss of $2.3 million during the prior year period. This was primarily due to the increase in revenue, partially offset by a decrease in cost of product.

We use certain non-GAAP financial measures, including EBITDA, to analyze our operating performance. We use these financial measures to manage our business on a day-to-day basis. We believe that these measures are also commonly used in our industry to measure performance. For these reasons, we believe that these non-GAAP financial measures provide expanded insight into our business, in addition to standard U.S. GAAP financial measures. There are no specific rules or regulations for defining and using non-GAAP financial measures, and as a result the measures we use may not be comparable to measures used by other companies, even if they have similar labels. The presentation of non-GAAP financial information should not be considered in isolation from, or as a substitute for, or superior to, financial information prepared and presented in accordance with U.S. GAAP. You should consider our non-GAAP financial measures in conjunction with our U.S. GAAP financial measures.

EBITDA is defined as net income (loss) excluding depreciation and amortization, interest expense, interest income and income tax expense.

Adjusted EBITDA is defined as net income (loss) excluding depreciation and amortization, interest expense, interest income and income tax expense, and other additional exclusions and adjustments (see Adjusted EBITDA reconciliation table). Such additional excluded amounts include stock-based compensation U.S. GAAP charges where the associated liability is expected to be settled in stock, and changes in the value of earnout liabilities and income and expenditure in relation to legacy portions of the business (being those portions where trading no longer occurs) including closed defined benefit pension schemes. Additional adjustments are made for items considered outside the normal course of business, including but not limited to (1) restructuring costs, which include charges attributable to employee severance, impairments, management changes, restructuring, dual running costs, costs related to facility closures and integration costs, (2) merger and acquisition costs and (3) gains or losses not in the ordinary course of business.

We believe Adjusted EBITDA, when considered along with other performance measures, is a particularly useful performance measure, because it focuses on certain operating drivers of the business, including sales growth, operating costs, selling and administrative expense and other operating income and expense. We believe Adjusted EBITDA can provide a more complete understanding of our operating results and the trends to which we are subject, and an enhanced overall understanding of our financial performance and prospects for the future. Adjusted EBITDA is not intended to be a measure of liquidity or cash flows from operations or a measure comparable to net income or loss, because it does not take into account certain aspects of our operating performance (for example, it excludes non-recurring gains and losses which are not deemed to be a normal part of underlying business activities). Our use of Adjusted EBITDA may not be comparable to the use by other companies of similarly termed measures. Management compensates for these limitations by using Adjusted EBITDA as only one of several measures for evaluating our operating performance. In addition, capital expenditures, which affect depreciation and amortization, interest expense, and income tax benefit (expense), are evaluated separately by management.

Functional Currency at Constant rate. Currency impacts discussed have been calculated as the current-period average GBP: USD rate less the equivalent average rate in the prior period, multiplied by the current period amount in our functional currency (GBP). The remaining difference, referred to as functional currency at constant rate, is calculated as the difference in our functional currency, multiplied by the prior-period average GBP: USD rate, as a proxy for functional currency at constant rate movement.

Currency Movement represents the difference between the results in our reporting currency (USD) and the results on a functional currency (at constant rate) basis.

Reconciliations from net loss, as shown in our Consolidated Statements of Operations and Comprehensive Income (Loss), to Adjusted EBITDA are shown below.

Reconciliation to Adjusted EBITDA by segment for the Three Months ended March 31, 2024

Note: Certain unallocated corporate function costs have not been allocated to the Company’s reportable operating segments because these costs are not allocable and to do so would not be practical; these are shown in the Corporate category.

Reconciliation to Adjusted EBITDA by segment for the Three Months ended March 31, 2023

Three Months ended March 31, 2024, compared to Three Months ended March 31, 2023

For the three months ended March 31, 2024, net cash inflow provided by operating activities was $3.6 million, compared to an $11.6 million inflow for the three months ended March 31, 2023, representing a $8.0 million decrease in cash generation from operating activities. This decrease was driven primarily through a higher net loss in the three months ended March 31, 2024 and the three months ended March 31, 2023 benefitted from favorable receipts due to the timing of sales.

Change in fair value of derivative liabilities and stock-based compensation expense decreased by $0.8 million to $2.3 million due to a $0.6 million reduction in the stock-based compensation expense and a $0.2 million reduction in the recycling of the terminated currency swaps which ended on September 30, 2023.

Depreciation and amortization increased by $0.8 million, to $11.0 million, with increases of $0.8 million and $0.3 million for amortization of intangible and of right of use assets offset by a $0.4 million decrease in machine depreciation.

Contract cost additions decreased by $0.2 million to $2.4 million for the three months ended March 31, 2024 compared to the three months ended March 31, 2023.

Other net cash generated/(utilized) by operating activities decreased by $3.8 million, to a $1.8 million outflow. The relative movements between the three months ended March 31, 2024 and the three months ended March 31, 2023 resulted in a $5.6 million decrease from receivables due to a large machine sale receipt in the three months ended March 31, 2023 and a $6.1 million decrease from accounts payable and accruals relating to timing. These were offset by favorable movements in inventory $3.9 million, prepaid expenses and other current assets $3.3 million and deferred revenue creditors $0.8 million.

Net cash utilized in investing activities reduced by $1.2 million, to $7.7 million during the three months ended March 31, 2024 as compared to the three months ended March 31, 2023. This was due to the prior year including $0.6 million relating to the acquisition of a third-party company trade and assets and higher spend on plant, property and equipment $1.1 million which were partly offset by a $0.5 million increase in spend on capitalized software in the three months ended March 31, 2024.

During the three months ended March 31, 2024, net cash utilized by financing activities was $0.2 million relating to finance lease spend compared to $0.5 million during the three months ended March 31, 2023.

To fund our obligations, we have historically relied on a combination of cash flows provided by operations and the incurrence of additional debt or the refinancing of existing debt. As of March 31, 2024, we had liquidity consisting of $35.3 million in cash and a further $6.3 million of undrawn revolver facility. This compares to $27.8 million of cash as of March 31, 2023, with a further $24.7 million of revolver facilities undrawn. We had a working capital outflow of $1.8 million for the three months ended March 31, 2024, compared to a $2.0 million inflow for the three months ended March 31, 2023.

The level of our working capital surplus or deficit varies with the level of machine production we are undertaking and our capitalization as well as the seasonality evident in some of the businesses. In periods with minimal machine volumes and capital spend, our working capital is typically more stable. In periods where significant numbers of machines are being produced, the levels of inventory and creditors are typically higher and there is a natural timing difference between converting the stock into sellable or capitalized plant and settling payments to suppliers. These factors, along with movements in trading activity levels can result in significant working capital volatility. In periods of low activity, our working capital volatility is reduced. Working capital is reviewed and managed with the aim of ensuring that current liabilities are covered by the level of cash held and the expected level of short-term receipts.

Some of our business operations require cash to be held within the machines. As of March 31, 2024, $6.1 million of our $35.3 million of cash were held as operational floats within the machines. At March 31, 2023, $5.5 million of our $27.8 million of cash were held as operational floats within the machines.

Management currently believes that the Company’s cash balances on hand, cash flows expected to be generated from operations, and the ability to control and defer capital projects will be sufficient to fund the Company’s net cash requirements through May 2025.

Under our debt facilities in place as of March 31, 2024, we are not subject to covenant testing on the Senior Secured Notes. We are, however, subject to covenant testing at the level of Inspired Entertainment Inc., the ultimate holding company, on our Super Senior Revolving Credit Facility which requires the Company to maintain a maximum consolidated senior secured net leverage ratio of 6.0x on March 31, 2022, stepping down to 5.75x on March 31, 2023 and 5.50x from March 31, 2024 and thereafter (the “RCF Financial Covenant”). The RCF Financial Covenant is calculated as the ratio of consolidated senior secured net debt to consolidated pro forma EBITDA (defined as net loss excluding depreciation and amortization, interest expense, interest income and income tax expense) for the 12-month period preceding the relevant quarterly testing date and is tested quarterly on a rolling basis, subject to the Initial Facility (as defined in the RCF Agreement) being drawn on the relevant test date. The RCF Financial Covenant does not include a minimum interest coverage ratio or other financial covenants. Covenant testing at March 31, 2024 showed covenant compliance with a net leverage of 2.9x.

There were no breaches of the debt covenants in the periods ended March 31, 2024 or March 31, 2023.

As of March 31, 2024, our senior bank debt was secured by the imposition of a fixed and floating charge in favor of the lender over all the assets of the Company and certain of the Company’s subsidiaries.

The Board of Directors has authorized that the Company may use up to $25.0 million to repurchase Inspired shares of common stock, subject to repurchases being effected on or before May 10, 2025. Management has discretion as to whether to repurchase shares of the Company. There were no repurchases in the three months ended March 31, 2024. As of March 31, 2024 the Company has repurchased an aggregate of 1,193,118 shares of our common stock at an aggregate cost of $12.0 million.

As of March 31, 2024, there were no off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of Regulation S-K, promulgated by the SEC.

The preparation of our audited consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions. We exercise considerable judgment with respect to establishing sound accounting policies and in making estimates and assumptions that affect the reported amounts of our assets and liabilities, our recognition of revenue and expenses, and our disclosure of commitments and contingencies at the date of the consolidated financial statements. On an on-going basis, we evaluate our estimates and judgments. We base our estimates and judgments on a variety of factors, including our historical experience, knowledge of our business and industry and current and expected economic conditions, that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. We periodically re-evaluate our estimates and assumptions with respect to these judgments and modify our approach when circumstances indicate that modifications are necessary. While we believe that the factors we evaluate provide us with a meaningful basis for establishing and applying sound accounting policies, we cannot guarantee that the results will always be accurate. Since the determination of these estimates requires the exercise of judgment, actual results could differ from such estimates.

A description of our critical accounting estimates was provided in item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the year ended December 31, 2023. There were no changes in the determination of these estimates during the first three months of 2024.

Our principal market risks are our exposure to changes in foreign currency exchange rates.

Following the Company’s refinancing of its debt in May 2021, the external borrowings of £235.0 million ($296.9 million) are provided at a fixed rate. Therefore, movements in rates such as LIBOR do not impact on the current borrowings and the only fluctuation that is expected to be reported will be that solely caused by movements in the exchange rates between the Company’s functional currency and its reporting currency.

Our operations are conducted in various countries around the world, and we receive revenue and pay expenses from these operations in a number of different currencies. As such, our earnings are subject to movements in foreign currency exchange rates when transactions are denominated in (i) currencies other than GBP, which is our functional currency, or (ii) the functional currencies of our subsidiaries, which is not necessarily GBP. To estimate our foreign currency exchange rate risk, we identify material Euro and USD trading and balance sheet amounts and recalculate the result using a 10% movement in the GBP:USD exchange rate. For the trading figures the 10% movement is based on the average exchange rate throughout the reported period and for the balance sheet figures the 10% movement is based on the exchange rate used at March 31, 2024.

Excluding intercompany balances, our Euro functional currency net assets total approximately $17.3 million, and our USD functional currency net assets total approximately $6.7 million. We use a sensitivity analysis model to measure the impact of a 10% adverse movement of foreign currency exchange rates against the USD. A hypothetical 10% adverse change in the value of the Euro and the USD relative to GBP as of March 31, 2024, would result in translation adjustments of approximately $1.6 million favorable and $0.7 million unfavorable, respectively, recorded in other comprehensive loss.

Included within our trading results are earnings outside of our functional currency. Retained gains from Euro based entities earned in Euros and retained losses from USD based entities earned in USD in the three months ended March 31, 2024, were €3.4 million and $8.6 million, respectively. A hypothetical 10% adverse change in the value of the Euro and the USD relative to GBP as of March 31, 2024, would result in translation adjustments of approximately $0.3 million favorable and $0.8 million unfavorable, respectively, recorded in trading operations.

The majority of the Company’s trading is in GBP, the functional currency, although the reporting currency of the Company is the USD. As such, changes in the GBP:USD exchange rate have an effect on the Company’s results. A 10% weakening of GBP against the USD would change the trading operational results favorably by approximately $0.1 million and would result in unfavorable translation adjustments of approximately $9.4 million, recorded in other comprehensive loss.

Disclosure controls and procedures are controls and other procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is accumulated and communicated to management, including our Certifying Officers, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure.

Under the supervision and with the participation of our management, including our principal executive officer and our principal financial officer (together, the “Certifying Officers”), we carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based on the foregoing, our Certifying Officers concluded that our disclosure controls and procedures were not effective at the reasonable assurance level as of March 31, 2024, due to the material weaknesses described in Item 9A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on April 15, 2024. Management is redesigning and implementing existing and additional controls to remediate these material weaknesses.

Notwithstanding the identified material weaknesses and management’s assessment that our disclosure controls and procedures were not effective at the reasonable assurance level as of March 31, 2024, management believes that the interim consolidated financial statements and footnote disclosures included in this Quarterly Report on Form 10-Q fairly present, in all material respects, our financial condition, results of operations, cash flows and disclosures as of and for the periods presented in accordance with generally accepted accounting principles.

Other than the control changes to remediate the identified material weaknesses, there were no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Securities Matters Arising From the Company’s Restated Financial Statements and Related Matters

On March 12, 2024, the Company received a subpoena from the SEC seeking documents concerning, among other things, the Company’s recently restated financial statements. The Company intends to comply with the subpoena and is cooperating with the SEC’s inquiry.

The Company cannot predict the ultimate outcome or timing of the SEC investigation, what if any actions may be taken by the SEC, or the effect that such actions may have on the business, prospects, operating results and financial condition. The resolution of the SEC investigation may result in substantial monetary penalties or settlement costs. However, at this time, Management believes that the ultimate outcome and timing of the SEC investigation remains uncertain and is not estimable given the broad range of potential outcomes.

From time to time, the Company is involved in legal matters arising in the ordinary course of business. While the Company believes that such matters are currently not material, there can be no assurance that matters arising in the ordinary course of business for which the Company is, or could be, involved in litigation, will not have an adverse effect on its business, financial condition or results of operations.

Our business is subject to a high degree of risk. You should carefully consider the risk factors discussed in Part I, Item 1A of our Annual Report on Form 10-K for our fiscal year ended December 31, 2023, filed with the SEC on April 15, 2024. Any of these risks could materially and adversely affect our business, operating results, financial condition and prospects, and cause the value of our common stock to decline, which could cause investors in our common stock to lose all or part of their investments.

The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q:

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Delaware		47-1025534
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification Number)

250 West 57th Street, Suite 415
New York, NY		10107
(Address of principal executive offices)		(Zip Code)

Large accelerated filer ☐		Accelerated filer ☒
Non-accelerated filer ☐		Smaller reporting company ☐
		Emerging growth company ☐

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common stock, par value $0.0001 per share		INSE		The NASDAQ Stock Market LLC

PART I.	FINANCIAL INFORMATION	1

ITEM 1.	FINANCIAL STATEMENTS	1

	Condensed Consolidated Balance Sheets	1

	Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income	2

	Condensed Consolidated Statement of Stockholders’ Deficit	3

	Condensed Consolidated Statements of Cash Flows	5

	Notes to Condensed Consolidated Financial Statements	6

ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	14

ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	33

ITEM 4.	CONTROLS AND PROCEDURES	34

PART II.	OTHER INFORMATION	35

ITEM 1.	LEGAL PROCEEDINGS	35

ITEM 1A.	RISK FACTORS	35

ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	35

ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	35

ITEM 4.	MINE SAFETY DISCLOSURES	35

ITEM 5.	OTHER INFORMATION	35

ITEM 6.	EXHIBITS	35

SIGNATURES		36

	●	government regulation of our industries;

	●	our ability to compete effectively in our industries;

	●	the effect of evolving technology on our business;

	●	our ability to renew long-term contracts and retain customers, and secure new contracts and customers;

	●	our ability to maintain relationships with suppliers;

	●	our ability to protect our intellectual property;

	●	our ability to protect our business against cybersecurity threats;

	●	our ability to successfully grow by acquisition as well as organically;

	●	fluctuations due to seasonality;

	●	our ability to attract and retain key members of our management team;

	●	our need for working capital;

	●	our ability to secure capital for growth and expansion;

	●	changing consumer, technology and other trends in our industries;

	●	our ability to successfully operate across multiple jurisdictions and markets around the world;

	●	changes in local, regional and global economic and political conditions; and

	●	other factors described in the reports and documents we file from time to time with the U.S. Securities and Exchange Commission (the “SEC”).

	March 31, 2024			December 31, 2023
	(Unaudited)
Assets
Cash	$	35.3		$	40.0
Accounts receivable, net		37.5			40.6
Inventory, net		31.7			32.3
Prepaid expenses and other current assets		39.6			39.6
Total current assets		144.1			152.5

Property and equipment, net		63.2			62.8
Software development costs, net		21.9			21.8
Other acquired intangible assets subject to amortization, net		12.9			13.4
Goodwill		58.3			58.8
Operating lease right of use asset		15.2			14.2
Costs of obtaining and fulfilling customer contracts, net		9.7			9.4
Other assets		5.8			8.0
Total assets	$	331.1		$	340.9

Liabilities and Stockholders’ Deficit
Current liabilities
Accounts payable and accrued expenses	$	57.6		$	60.8
Corporate tax and other current taxes payable		3.2			6.3
Deferred revenue, current		4.9			5.6
Operating lease liabilities		5.1			4.7
Current portion of long-term debt		18.9			19.1
Other current liabilities		4.4			4.2
Total current liabilities		94.1			100.7

Long-term debt		293.3			295.6
Finance lease liabilities, net of current portion		2.5			1.6
Deferred revenue, net of current portion		8.0			7.1
Operating lease liabilities		10.5			9.8
Other long-term liabilities		3.9			4.1
Total liabilities		412.3			418.9

Commitments and contingencies		-			-

Stockholders’ deficit
Preferred stock; $0.0001 par value; 1,000,000 shares authorized, no shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively.		—			—
Common stock; $0.0001 par value; 49,000,000 shares authorized; 26,559,756 shares and 26,219,021 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively		—			—
Additional paid in capital		387.3			386.1
Accumulated other comprehensive income		45.8			44.5
Accumulated deficit		(514.3	)		(508.6	)
Total stockholders’ deficit		(81.2	)		(78.0	)
Total liabilities and stockholders’ deficit	$	331.1		$	340.9

	2024			2023
	Three Months Ended March 31,
	2024			2023
Revenue:
Service	$	57.1		$	57.5
Product sales		6.0			7.4
Total revenue		63.1			64.9

Cost of sales:
Cost of service ⁽¹⁾		(15.9	)		(15.0	)
Cost of product sales		(4.5	)		(6.7	)
Selling, general and administrative expenses		(34.2	)		(29.2	)
Depreciation and amortization		(9.9	)		(9.4	)
Net operating (loss) income		(1.4	)		4.6

Other expense
Interest expense, net		(6.6	)		(6.3	)
Other finance income		0.1			0.1

Total other expense, net		(6.5	)		(6.2	)

Loss before income taxes		(7.9	)		(1.6	)
Income tax benefit		2.2			0.2
Net loss		(5.7	)		(1.4	)

Other comprehensive income (loss):
Foreign currency translation gain (loss)		1.0			(2.9	)
Reclassification of loss on hedging instrument to comprehensive income		—			0.2
Actuarial gains on pension plan		0.3			0.2
Other comprehensive income (loss)		1.3			(2.5	)

Comprehensive loss	$	(4.4	)	$	(3.9	)

Net loss per common share – basic and diluted	$	(0.20	)	$	(0.05	)

Weighted average number of shares outstanding during the period – basic and diluted		28,603,734			27,974,182
Supplemental disclosure of stock-based compensation expense
Stock-based compensation included in:
Selling, general and administrative expenses	$	(2.3	)	$	(2.9	)

	Shares		Amount		capital			income		deficit			deficit
	Common stock				Additional paid in			Accumulated other comprehensive		Accumulated			Total stockholders’
	Shares		Amount		capital			income		deficit			deficit

Balance as of December 31, 2023		26,219,021		—		386.1			44.5		(508.6	)		(78.0	)
Foreign currency translation adjustments		—		—		—			1.0		—			1.0
Actuarial gains on pension plan		—		—		—			0.3		—			0.3
Issuances under stock plans		340,735		—		(0.8	)		—		—			(0.8	)
Stock-based compensation expense		—		—		2.0			—		—			2.0
Net loss		—		—		—			—		(5.7	)		(5.7	)
Balance as of March 31, 2024		26,559,756	$	—	$	387.3		$	45.8	$	(514.3	)	$	(81.2	)

	March 31, 2024			December 31, 2023
	(in millions)
Beginning balance	$	(1.1	)	$	(1.4	)
Additional allowance for credit losses		—			(0.2	)
Recoveries		—			0.2
Write offs		—			0.4
Foreign currency translation adjustments		—			(0.1	)
Ending balance	$	(1.1	)	$	(1.1	)

	Accounts Receivable		Unbilled Accounts Receivable		Right to recover asset		Deferred Income			Customer Prepayments and Deposits
	(in millions)
At March 31, 2024	$	36.7	$	20.5	$	0.6	$	(12.9	)	$	(3.1	)
At December 31, 2023	$	42.8	$	24.0	$	0.6	$	(12.7	)	$	(2.9	)

	Number of Shares

Unvested Outstanding at January 1, 2024 ⁽¹⁾		1,242,175
Granted ⁽²⁾		604,709
Forfeited		(29,599	)
Vested		(10,166	)
Unvested Outstanding at March 31, 2024		1,807,119

	Foreign Currency Translation Adjustments			Change in Fair Value of Hedging Instrument		Unrecognized Pension Benefit Costs			Accumulated Other Comprehensive (Income)
	(in millions)
Balance at January 1, 2024	$	(78.3	)	$	—	$	33.8		$	(44.5	)
Change during the period		(1.0	)		—		(0.3	)		(1.3	)
Balance at March 31, 2024	$	(79.3	)	$	—	$	33.5		$	(45.8	)

	Gaming			Virtual Sports			Interactive			Leisure			Corporate Functions			Total
	(in millions)
Revenue:
Service	$	18.6		$	12.4		$	8.1		$	18.0		$	—		$	57.1
Product sales		5.4			—			—			0.6			—			6.0
Total revenue		24.0			12.4			8.1			18.6			—			63.1
Cost of sales, excluding depreciation and amortization:
Cost of service		(5.8	)		(0.4	)		(0.6	)		(9.1	)		—			(15.9	)
Cost of product sales		(4.3	)		—			—			(0.2	)		—			(4.5	)
Selling, general and administrative expenses		(6.6	)		(1.6	)		(3.1	)		(7.5	)		(13.1	)		(31.9	)
Stock-based compensation expense		(0.2	)		(0.1	)		(0.1	)		(0.1	)		(1.8	)		(2.3	)
Depreciation and amortization		(4.3	)		(0.9	)		(1.2	)		(3.0	)		(0.5	)		(9.9	)
Segment operating income (loss)		2.8			9.4			3.1			(1.3	)		(15.4	)		(1.4	)

Net operating loss																$	(1.4	)

Total capital expenditures for the three months ended March 31, 2024	$	2.0		$	1.2		$	0.5		$	4.9		$	0.5		$	9.1

	●	a discussion and analysis of the Company’s results of operations for the three-month period ended March 31, 2024, compared to the same period in 2023; and

	●	a discussion and analysis of the results of operations for each of the Company’s segments (Gaming, Virtual Sports, Interactive and Leisure) for the three-month periods ended March 31, 2024, compared to the same period in 2023, including key performance indicator (“KPI”) analysis.

	For the Three-Month						Variance
(In millions)	Period ended						2024 vs 2023
	March 31, 2024			March 31, 2023			Variance Attributable to Currency Movement			Variance on a Functional currency basis			Total Functional Currency Variance %			Total Reported Variance %
Revenue:
Service	$	57.1		$	57.5		$	2.4		$	(2.8	)		(5	)%		(1	)%
Product		6.0			7.4			0.2			(1.6	)		(22	)%		(19	)%
Total revenue		63.1			64.9			2.6			(4.4	)		(7	)%		(3	)%
Cost of Sales, excluding depreciation and amortization:
Cost of Service		(15.9	)		(15.0	)		(0.6	)		(0.3	)		2	%		6	%
Cost of Product		(4.5	)		(6.7	)		(0.3	)		2.5			(37	)%		(33	)%
Selling, general and administrative expenses		(31.9	)		(26.3	)		(1.5	)		(4.1	)		16	%		21	%
Stock-based compensation		(2.3	)		(2.9	)		(0.1	)		0.7			(24	)%		(21	)%
Depreciation and amortization		(9.9	)		(9.4	)		(0.4	)		(0.1	)		1	%		5	%
Net operating (loss) income		(1.4	)		4.6			(0.3	)		(5.7	)		(124	)%		(130	)%
Other expense
Interest expense, net		(6.6	)		(6.3	)		(0.3	)		-			0	%		5	%

Other finance income		0.1			0.1			(0.0	)		-			0	%		0	%
Total other expense, net		(6.5	)		(6.2	)		(0.3	)		-			0	%		5	%
Loss before income taxes		(7.9	)		(1.6	)		(0.6	)		(5.7	)		356	%		394	%
Income tax expense		2.2			0.2			0.1			1.9			950	%		1000	%

Net loss	$	(5.7	)	$	(1.4	)	$	(0.5	)	$	(3.8	)		271	%		307	%

Exchange Rate - $ to £		1.27			1.21

	For the Three-Month Period ended						Variance
							2024 vs 2023
Gaming	March 31, 2024			March 31, 2023						%

End of period installed base (# of terminals) ⁽²⁾		34,924			34,711			213			0.6	%
Total Gaming - Average installed base (# of terminals) ⁽²⁾		34,783			34,778			5			0.0	%
Participation - Average installed base (# of terminals) ⁽²⁾		29,834			30,793			(959	)		(3.1	)%
Fixed Rental - Average installed base (# of terminals)		4,949			3,985			964			24.2	%
Service Only - Average installed base (# of terminals)		7,848			14,160			(6,312	)		(44.6	)%
Customer Gross Win per unit per day ^{(1) (2)}	£	98.8		£	98.3		£	0.5			0.5	%
Customer Net Win per unit per day ^{(1) (2)}	£	72.2		£	71.5		£	0.7			1.0	%
Inspired Blended Participation Rate		5.4	%		5.8	%		(0.4	)%
Inspired Fixed Rental Revenue per Gaming Machine per week	£	41.5		£	49.6		£	(8.1	)		(16.3	)%
Inspired Service Rental Revenue per Gaming Machine per week	£	5.1		£	5.1		£	-			0.0	%
Gaming Long term license amortization (£’m)	£	0.5		£	0.8		£	(0.3	)		(37.5	)%
Number of Machine sales		589			688			(99	)		(14.4	)%
Average selling price per terminal	£	7,196		£	7,880		£	(684	)		(8.7	)%

⁽¹⁾	Includes all server-based gaming terminals in which the Company takes a participation revenue share across all territories.

⁽²⁾	Includes approximately 2,500 lottery terminals where the share is on handle instead of net win.

	For the Three-Month Period ended						Variance
	March 31,			March 31,			2023 vs 2022
(In £ millions)	2024			2023						%
Gaming Recurring Revenue
Total Gaming Revenue	£	18.9		£	22.3		£	(3.4	)		(15.3	)%

Gaming Participation Revenue	£	10.5		£	11.5		£	(1.0	)		(8.7	)%
Gaming Other Fixed Fee Recurring Revenue	£	3.2		£	3.6		£	(0.4	)		(11.1	)%
Gaming Project Recurring Revenue	£	0.2		£	0.2		£	-			0.0	%
Gaming Long-term license amortization	£	0.5		£	0.8		£	(0.3	)		(37.5	)%
Total Gaming Recurring Revenue	£	14.4		£	16.1		£	(1.7	)		(10.6	)%
Gaming Recurring Revenue as a % of Total Gaming Revenue		76.2	%		72.2	%		4.0	%

(1)	“Pension charges” are profit and loss charges included within selling, general and administrative expenses, relating to a defined benefit scheme which was closed to new entrants in 1999 and to future accrual in 2010. As well as the amortization of net loss, the figure also includes charges relating to the Pension Protection Fund (which were historically borne by the pension scheme) and a small amount of associated professional services expenses. These costs are included within Corporate Functions.

(2)	“Cost of Group Restructure”.includes redundancy costs, Payment in lieu of Notice costs and any associated employer taxes. To qualify as being an adjusting item, costs must be part of a large restructuring project, which will net save ongoing future costs or be in relation to the exit of an executive.

(3)	“Cost of Group Restatement” includes accounting advice associated with the restatement of the 2020, 2021 and 2022 annual accounts plus the refiling of the 2023 Q1 and Q2 interim accounts. To qualify as being an adjusting item, costs must be specific to the event and be neither normal nor recurring in nature.

(4)	Stock-based compensation expense, Depreciation and amortization, Total other expense, net and Income tax are as described above in the Results of Operations line item discussions. Total expense, net includes interest income, interest expense, change in fair value of earnout liability, change in fair value of derivative liability and other finance income.

(5)	Exchange rate in the table is calculated by dividing the USD Adjusted EBITDA by the GBP Adjusted EBITDA, therefore this could be slightly different from the average rate during the period depending on timing of transactions.

	Three Month Period ended						Variance
(in millions)	March 31,			March 31,
	2024			2023			2024 to 2023
Net loss	$	(5.7	)	$	(1.4	)	$	(4.3	)
Amortization of debt fees		0.2			0.3			(0.1	)
Change in fair value of derivative liabilities and stock-based compensation expense		2.3			3.1			(0.8	)
Depreciation and amortization (incl RoU assets)		11.0			10.2			0.8

Contract cost additions		(2.4	)		(2.6	)		0.2
Other net cash (utilized)/generated by operating activities		(1.8	)		2.0			(3.8	)
Net cash inflow provided by operating activities		3.6			11.6			(8.0	)

Net cash used in investing activities		(7.7	)		(8.9	)		1.2
Net cash used by financing activities		(0.2	)		(0.5	)		0.3
Effect of exchange rates on cash		(0.4	)		0.6			(1.0	)
Net (decrease)/increase in cash	$	(4.7	)	$	2.8		$	(7.5	)

			Less than						More than
Contractual Obligations (in millions)	Total		1 year		1-2 years		3-5 years		5 years
Operating activities
Interest on long term debt	$	58.4	$	23.4	$	23.3	$	11.7	$	-
Financing activities
Revolver repayment		19.9		19.9		-		-		-
Senior bank debt - principal repayment		296.9		-		-		296.9		-
Finance lease payments		3.4		0.9		1.2		1.3		-
Operating lease payments		15.6		5.1		3.5		4.5		2.5
Interest on non-utilization fees		0.5		0.3		0.2		-		-
Total	$	394.7	$	49.6	$	28.2	$	314.4	$	2.5

Exhibit Number		Description

10.1#		Letter Agreement, dated April 12, 2024, between Inspired Entertainment, Inc. and Marilyn Jentzen (incorporated herein by reference to Exhibit 10.19 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on April 15, 2024).
10.2#		Amendment to Employment Agreement, dated March 13, 2024, by and between Inspired Gaming (UK) Limited and Carys Damon (incorporated herein by reference to Exhibit 10.28 to the Annual Report on Form 10-K of the Company for the year ended December 31, 2023, filed with the SEC on April 15, 2024).
31.1*		Certification of Principal Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a).
31.2*		Certification of Principal Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a).
32.1**		Certification of Principal Executive Officer required by Rule 13a-14(b) or Rule 15d-14(b) and 18 U.S.C. 1350.
32.2**		Certification of Principal Financial Officer required by Rule 13a-14(b) or Rule 15d-14(b) and 18 U.S.C. 1350.
101.INS*		Inline XBRL Instance Document
101.SCH*		Inline XBRL Taxonomy Extension Schema
101.CAL*		Inline XBRL Taxonomy Extension Calculation Linkbase
101.DEF*		Inline XBRL Taxonomy Extension Definition Linkbase
101.LAB*		Inline XBRL Taxonomy Extension Label Linkbase
101.PRE*		Inline XBRL Taxonomy Extension Presentation Linkbase
104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

#	Indicates management contract or compensatory plan.

*	Filed herewith.

**	Furnished herewith.

	INSPIRED ENTERTAINMENT, INC.

Date: May 10, 2024		/s/ A. Lorne Weil
	Name:	A. Lorne Weil
	Title:	Executive Chairman
		(Principal Executive Officer)

Date: May 10, 2024		/s/ Marilyn Jentzen
	Name:	Marilyn Jentzen
	Title:	Interim Chief Financial Officer
		(Principal Financial and Accounting Officer)