UK – Inspired down three per cent but virtual sports produce record quarterBy Phil - 15 November 2022
Inspired Entertainment has reported revenues of $74.9m for the three months ended September 30, 2022, down three per cent from last year, which it says is an indicator of the strength of the underlying operating results.
Third quarter underlying results reflect growth in the Company’s aggregate online business, which includes the Virtual Sports and Interactive segments, and ongoing strength in the Gaming and Leisure segments. Total Revenue and Adjusted EBITDA improved year-over-year in functional currency, however, reported results reflect significant strengthening of the USD (versus GBP) on a year-over-year basis.
Virtual Sports generated a record $14.6m, marking an increase of 39 per cent year-over-year on a reported basis. Online Virtual Sports revenue more than doubled year-over-year on a functional currency basis. Interactive revenue came in at $5.7m, seeing a decreased of six per cent year-over-year on a reported basis, with growth in business volumes primarily driven by the US and Canada. October Interactive revenue increased 14 per cent year-over-year on a functional currency basis, as more operators and game titles launch in Pennsylvania.
Gaming revenue of $24.1m decreased 12 per cent year-over-year and leisure revenue of $30.5m decreased nine per cent year-over-year. Inspired reported that momentum in the gaming and leisure businesses is continueing as significant UK contracts/extensions were signed with Betfred, Marston’s, Butlins and Bourne Leisure subsequent to the end of the quarter.
“This quarter’s underlying operating performance was strong, with third quarter Adjusted EBITDA exceeding last year’s record performance on a functional currency basis5. This reflects a continuation of the trend we have seen in recent quarters, with the resiliency of our diversified business model as well as what we perceive to be the continued strength in consumer spending across our segments – notwithstanding perceived ongoing macro trends,” said Lorne Weil, Executive Chairman of Inspired. “Virtual Sports continued its impressive growth trajectory, producing its fifth record-setting Revenue and Adjusted EBITDA quarter in a row, with online Virtual Sports doubling year-over-year versus strong comparatives. Growth in Interactive Revenue was modest, however, the addition of new content and customers in Pennsylvania has led to an acceleration in Interactive growth rates in October.
“As our online business continues its growth trajectory, our land-based business has held strong, with consumers continuing to frequent betting shops and pubs and staying local for holidays, and we continue to move towards a less capital-intensive business model, signing a milestone contract with Betfred subsequent to the end of the quarter for the sale of 5,000 terminals and the provision of fully integrated managed services for their entire estate,” said Weil.
“The recent successes of this year’s Global Gaming Expo (G2E) tradeshow in Las Vegas and World Lottery Summit in Vancouver were a testament to the growing awareness of Inspired’s unique product portfolio in North America. The level of interest from Gaming, Lottery and Sports betting operators was encouraging and underpins our confidence that our innovative products can offer compelling new revenue sources for our customers, and we anticipate increased proliferation given the current macroeconomic environment. With the growing popularity of our content, increased brand awareness and rapid speed to market, we are confident we are well-positioned to capitalize on this opportunity. In addition, we have an exciting pipeline of new products and further enhancements, opening potentially significant new avenues of growth, that we look forward to showcasing in the coming months,” Weil continued.