Inspired optimistic about future following ‘solid’ Q2 business growth

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Inspired Entertainment has highlighted “solid underlying fundamentals” in its second quarter financial report as revenues across all business lines grew in comparison to the previous year.

Reflecting on the results, Executive Chairman Lorne Weil noted that the company believes it is in the “early stages of an expanding global opportunity” and that there is strong long-term optimism about the business’s health.

Publishing its Q2 results, Inspired declared a total revenue of $80.4m, a 13 per cent improvement year-over-year (Q2 2022: $71.3m) following gains across all business units. Q2’s revenue was also an increase on Q1’s $66m.

Net income dropped in comparison to the previous year to $4.1m (2022: $7.2m) following “increases in selling, general and administrative expenses, depreciation and amortization expense, interest expense and income tax expense”.

Adjusted EBITDA stayed constant YoY at $26.2m with the company’s digital businesses generating a 57 per cent contribution (2022: 51 per cent). Adjusted EBITDA margin stood at 33 per cent (2022: 37 per cent).

Weil commented: “Revenue grew in each of our business lines during the second quarter reflecting solid underlying fundamentals. The digital businesses once again generated record reported quarterly revenue and are steadily contributing a greater proportion of our earnings and cash flow.”

Per segment, interactive underwent the biggest increase YoY, rising by 28 per cent to $7.4m (2022: $5.8m), driven by customer base growth in the UK, US and Canada as new content was introduced steadily and exclusive tier-one customer deals and customer launches rose.

During Q2, Inspired launched igaming content with Caesars Sportsbook & Casino in Pennsylvania and with FanDuel in Michigan and Pennsylvania. The company also went live with nine operators including Soaring Eagle in Michigan, Eurobet in Italy and DAZN Bet in the UK.

Gaming revenue grew by 24 per cent to $31.5m. Excluding low margin hardware sales, revenue rose by 6 per cent to $27.1m (2022: $25.5m), supported by an increase in UK product revenue as well as North American and UK service revenue, partially offset by lower Greece revenue after long-term license revenue fell due to the expiration of software licenses for terminals installed in 2018.

During the quarter, Inspired began installing over 950 Vantage terminals in venues of three major customers and it also announced the launch of a new VLT system for Codere in partnership with Cristaltec.

Elsewhere, virtual sports revenue rose by 7 per cent YoY to $15m (2022: $14m) following growth from existing online customers and an increase in retail virtuals, while leisure revenue improved by 2 per cent to $26.5m (2022: $26m) as holiday parks revenue increased by $1.1m, but pubs revenue dropped by $500,000.

In virtual sports, long term deals were signed with Paddy Power and bet365, the product went live in Turkey with Milli Piyango in partnership with Sisal Sans, content rolled out with Netherlands Lottery and Re-Play eSports was introduced featuring Counter-Strike: Global Offensive in partnership with GRID.

Looking ahead, Weil is optimistic about the future direction of Inspired, noting that the long-term fundamentals and health of the business remains “very strong”.

He concluded: “We are optimistic about the compelling growth dynamics in our digital markets as a wider audience engages with online betting and gaming and new jurisdictions continue to open up.

“Combined with a resilient land-based business and retail customer base, our diversification and proven ability to expand our business will enable us to deliver further progress against our omni-channel strategy combining our high-margin, capital-efficient digital businesses with our steady land-based businesses.”