Inspired reported a group revenue of $77.6 million for the three months ending September 30, a substantial increase from $60.1 million in the same period last year. The revenue breakdown reveals services contributed $68.7 million, reflecting a 23.6% rise, while product revenue nearly doubled, reaching $8.9 million.
For the first time, Inspired's leisure segment, which includes the Playnation brand and supplies gaming and arcade machines to the UK holiday and leisure market, emerged as the top revenue contributor. This segment generated $33.4 million, a remarkable 91.6% increase from 2020, driven by record income from holiday parks and the introduction of cashless solutions.
In contrast, revenue from Inspired's gaming segment fell by 10.0% to $27.6 million, partly due to a $9.8 million payment made to the company by a UK customer in Q3 2020 for its share of a value-added tax rebate.
Interactive gaming revenue soared by 109.6% to $6.1 million, while revenue from virtual sports grew by 26.5% to $10.5 million. Notably, US online gaming operator BetMGM launched Inspired’s virtual sports products in New Jersey during the quarter.
Lorne Weil, Chairman of Inspired, stated, "We believe the third quarter is a good indicator of the strength of each of our segments coming out of Covid-19. Looking out to 2022, we see continued growth across each of our segments, with our interactive and virtual sports segments increasing their relative contribution to overall results."
Expenses rose to $62.7 million, marking a 23.2% increase. Costs of services escalated by 27.8% to $13.8 million, while costs of product sales increased by 42.4% to $4.7 million. Selling, general, and administrative expenses surged by 48.3% to $33.0 million, even as depreciation and amortization costs fell to $11.2 million.
As a result, Inspired reported a net operating profit of $14.9 million, an increase of 81.7% compared to 2020. After accounting for net interest expenses of $7.2 million, but offset by a $17.3 million gain from changes in the fair value of warrants and $300,000 in other income, Inspired's pre-tax profit climbed to $25.3 million, a significant rise from the $500,000 reported in Q3 2020.
Additionally, the business recorded a $3.2 million gain from foreign currency fluctuations, plus $700,000 in actuarial gains and changes in the value from hedging instruments, bringing the total comprehensive profit to $28.9 million. This marks a sharp improvement from the $4.1 million loss sustained in 2020.
Weil expressed satisfaction with the third-quarter results, stating, "I am very pleased with our third quarter results, as they reflect that we have emerged from the pandemic a much stronger, leaner and more efficient company with significant momentum and increased growth opportunities."
He added that the company's evolution this year, in comparison to pre-pandemic periods, is fueled by consistent growth in their capital-efficient interactive and virtual sports segments, illustrating strong demand for their products and an acceleration of general industry trends.
Following the quarter, Inspired launched online lottery content for the first time, collaborating with Loto-Québec to introduce Scarab Treasures and Fruit Drop Scatterdrops in 2022.
