Gaming content and technology provider Inspired has reported its third-quarter results. For the period ended September 30, the company has delivered total revenue of $74.9 million, down 3%. Net income for the quarter amounted to $10.2 million, down from $25 million in the same three-month period last year. Most overall revenue was from services, which came to $69.2 million, while product sales made up the remaining amount at $5.7million.
Despite those losses, the company delivered record Virtual Sports revenue of $14.6 million in Q3, 39% up year-on-year. The firm highlighted the growth of its online business, which includes the Virtual Sports and Interactive segments; and ongoing strength in the Gaming and Leisure segments, the latter accounting for the highest portion of the revenue, at $30.5 million, although this was down by 8.6%.
“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.”
Virtual Sports produced its fifth record-setting revenue and Adjusted EBITDA quarter in a row, with online Virtual Sports doubling year-over-year versus strong comparatives. In contrast, 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, noted Weil.
Inspired's stand at G2E this year
“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,” he added.
However, despite these advances, company officials said Inspired is set to cut costs in its Leisure division. Stewart Baker, Executive Vice President and Chief Financial Officer, said that while the quarter had been strong, the business faced “significant cost pressures” in the Holiday Parks business, which supplies gaming and amusement machines across the UK.
“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,” Baker noted. Still, Inspired’s underlying business remains “strong” and produces substantial free cash flow, he noted, allowing to buy back more than $10 million of common stock so far this year.
“Looking forward, we continue to see solid results from our retail and digital businesses, demonstrating the strength and resilience of our business,” Weil concluded. “We remain mindful of the potential for a shifting macro environment, and are diligently managing cost containment efforts, but rely on the healthy underlying momentum, diversification of our business model and our strong development pipeline.”
