Inspired Entertainment was among the latest gaming firms this week to publish its Q3 results, showing growth and, said the firm, demonstrating the long-term health of its business.
Total revenue in the quarter increased to $60.1m, from $15.6m in Q2 2020 and $26.6 million in Q3 2019. Third quarter 2020 revenue included a $9.3m payment from a UK LBO customer related to its contractual revenue share of a customer’s VAT rebate and $24.3m from the Novomatic Gaming Technology Group that Inspired acquired on October 1, 2019.
Adjusted EBITDA increased to $25m, from $2.1m in Q2 2020 and $8.8m year-on-year. Third quarter 2020 adjusted EBITDA included $9.1m of VAT-related income and $5.1m for the acquired businesses. Excluding these, the legacy business adjusted EBITDA was $10.9m, an increase of 24.7% from $8.7m year-on-year.
Total online revenue, meanwhile, increased to $7.8m, up 74.7% from third quarter 2019 on a pro forma basis demonstrating, said Inspired, the growing presence and popularity of its online offerings across gaming and Virtual Sports online channels.
Executive Chairman Lorne Weil stated: “This quarter’s impressive results demonstrate the long-term health of our business and the resiliency of our recurring revenue stream. We have proven in the third quarter that our retail business is well-positioned to recover from COVID-19-related impacts at the same time as we have benefitted from our growing online presence.
“Despite the challenges of COVID-19 in the quarter, our SBG retail business largely returned to its pre-pandemic performance and our online business grew 75% year-over-year even with the return of sports and retail. The acquired businesses were slower to rebound from the COVID-19 summer lockdown but were able to ramp up throughout the quarter.”
Stewart Baker, Executive Vice President and CFO, commented: “In addition to our operational results, we have successfully improved our overall cost structure and streamlined our operations as exhibited by our third quarter margin improvements and increased free cash flow.
“Bolstering this strong recovery, we received a VAT-related income payment of $9.3m from a customer during the third quarter and have received $32.5m so far in the fourth quarter, with an incremental $4.1m in recoveries anticipated. We expect to use these receipts to pay down debt and further improve our liquidity position.”
The firm also delivered a management commentary regarding COVID-19 in which it acknowledged that the ongoing pandemic continues to impact trading, with its different businesses and geographies affected to varying degrees.
Weil concluded: “As we look ahead, we remain focused and disciplined on emerging from this pandemic even stronger and we expect to continue to build the foundation for future growth through the expansion of our online business, further development of our North American customer base and the acceleration of our UK Pub and Leisure digitization.”
