Despite showing significant losses in its Q2 2020 financial update, Inspired Entertainment remains positive on its performance having been buoyed by gains in its online business.
The financial results for the second quarter ended June 30, 2020 revealed revenue and adjusted EBITDA of $15.6m and $2.1m in the second quarter of 2020 versus $26.7m and $8.8m respectively year-on-year.
The company’s total online business across its gaming and Virtual Sports online channels, however, has shown some strength and resilience in the quarter with revenues increasing by $4.9m from the second quarter of 2019 on a pro forma basis.
Server-based gaming (SBG) revenue was $4m, a decrease of 77.1% compared to $17.5m year-on-year, primarily due to the adverse impact of the COVID-19 disruptions and the related closures of land-based gaming venues for the majority of Q2 2020. SBG Service Revenue was $3.6m compared to $16.4m year-on-year.
Virtual Sports Revenue, which includes Interactive, increased 6.4% to $9.8m from $9.2m in the second quarter 2019.
“We are pleased with the fundamentals of our business as we have navigated the impact of the COVID-19 closures,” said Executive Chairman Lorne Weil.
He continued: “Given these closures, we expected a negative impact in the second quarter, however the implementation of aggressive cost-savings measures and the strong demand in our online business, which more than doubled on a pro forma basis versus last year’s second quarter, helped to compensate for the retail closures and we were able to achieve EBITDA profitability during the quarter.
“At this point, many of our customers’ retail venues have reopened and we are encouraged by the initial results. Server Based Gaming retail recovered faster than we had expected with July customer gross win per unit per day tracking ahead of year-over-year comparisons and at or above pre-COVID levels, however the number of machines in use is still below pre-COVID levels.”
Updating investors on more recent trading and the US business, Weil noted: “Subsequent to the end of the quarter, the performance of the online business continues to exhibit resiliency, with July revenues across our online channels increasing by approximately 82% year over year.
“We have recently signed agreements with several new customers, including DraftKings, FanDuel and the Oregon Lottery, which has advanced our North American footprint and represents an attractive monetization opportunity going forward.”