Inspired Entertainment has published its financial results for the three-month period ended September 30, describing its underlying operating performance as “strong”.
There was a decline in some areas of operations, though, as the lottery and gaming provider’s total revenue fell 3% year-on-year to $74.9m, compared to $77.6m in the same period last year.
This contributed to a 59.2% decrease in its net income to $10.2m (Q3 2021: $25m), while adjusted EBITDA of $27.8m was 8% down from last year’s figure of $30.1m.
Interactive revenue of $5.7m was a 6% decrease YoY on a reported basis (increased 10% on a functional currency basis), with growth in business volumes primarily driven by the US and Canada.
“This quarter’s underlying operating performance was strong, with third quarter adjusted EBITDA exceeding last year’s record performance on a functional currency basis,” said Lorne Weil, Executive Chairman of Inspired.
“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.
“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.”
Meanwhile, gaming revenue in Q3 decreased 12% year-on-year to $24.1m, while leisure revenue decreased 9% year-on-year to $30.5m.
However, Inspired’s virtual sports revenue of a record $14.6m was a 39% increase YoY, boosted by the launch of the online and mobile variants of Race2Riches with Intralot and DC Lottery on the latter’s website and mobile app via Inspired’s multi-streaming platform.
Furthermore, Inspired signed a new contract with Scientific Games in Q3 for the provision of virtual sports to be sold to the Netherlands Lottery, while the firm also agreed a deal with the Moroccan Lottery to provide virtuals online.
Weil continued: “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.”
Looking ahead, Inspired has already made significant moves in Q4, such as the Loto Quebec-led launch of its second ilottery title, Explosion de fruits reaction, earlier this month.
Inspired is also in the process of delivering 820 Valor terminals to Western Canada Lottery Corporate (WCLC), a transaction that will see the firm take back the original 100 terminals to redeploy in another North American territory.
Stewart Baker, Executive Vice President and Chief Financial Officer, added his verdict on the company’s Q3 results: “We are pleased to report another strong quarter in the face of an uncertain economic environment.
“Our online business was relatively [unaffected] by inflation or supply chain issues, however, we did experience significant cost pressures in the Holiday Parks business. We have experience reducing costs significantly when we have needed to and will do so again here as we are highly focused on mitigating the impact and improving our cost efficiency.
“Our underlying business remains strong and produces substantial free cash flow, allowing us to buy back more than $10m of our common stock so far this year.
“We are focused on delivering sustained efficiencies across our business and are confident in our strategy and our ability to deliver consistent results in the current economic environment in order to maximise shareholder value.”