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Revenue growth driven by leisure and interactive in Q3

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Inspired Entertainment’s revenues were up by 29.0% during the third quarter, as growth in leisure and online gaming divisions more than offset declines in land-based games.

The group revenue in the quarter ending 30 September was $77.6m compared with $60.1m the year before. This figure is broken down into services, which brought in $68.7m (up 23.6%), and product revenues, which almost doubled at $8.9m.

The largest revenue contributor was Inspired’s Leisure segment, which comprises the Playnation and offers gaming and arcade machine for UK holidays and leisure. This segment generated $33.4m in revenue, up by 91.6% compared to 2020. The record revenues from UK holiday parks as well as the introduction of cashless payment solutions were responsible for this increase.

The revenue of Inspired’s gaming division, however, declined by 10% to $27.6m. The decline in revenue was further accentuated when the company received a $9.8m payment for its portion of VAT rebate from a UK client during Q3 2020.

Virtual sports revenues grew by 26.5%, to $10.50m. Interactive gaming revenue was up 109.6% at $6.1m. In the third quarter, US-based online gambling operator BetMGM launched Inspired’s Virtual Sports products in New Jersey.

Lorne WEIL, chairman of Inspired said: “We think the third quarter will be a good indication of how each of our segments is going to perform after Covid-19.” Looking forward to 2022 we expect continued growth in each of our business segments. Our interactive and virtual sports segments will contribute more to the overall results.

The expenses, on the other hand, reached $62.7m. This represents a growth of 23.2%. The cost of service was $13.8m up by 27.8% while the costs of sales of products grew to $4.7m. Selling, general, and administrative costs increased by 48.3%, to $33.0m. Depreciation, and amortization costs decreased to $11.2m.

Inspired’s net operating profit was $14.9m in 2019, an 81.7% increase over 2020.

Inspired made a pre-tax gain of $25.3m after net interest costs of $7.2m were offset by $17.3m in gains from the changes in fair value warrants and $300,000 of other income. Inspired’s pre-tax profit was $25.3m, a significant increase from $500,000 it made in Q3 of 2020.

This was a stark contrast to the $4.1m loss it made in 2020. The company also gained an extra $3.2m from changes in foreign currencies, as well as another $700k in actuarial gain and value changes from hedging tools. The business made a $4.1m profit in 2020.

Weil stated, “I’m very happy with the third-quarter results. They reflect how we emerged stronger and leaner from this pandemic, with increased momentum and growth opportunities.”

Our evolution in comparison to the pre-pandemic period is driven by the consistent growth of our interactive and virtual sport segments. This shows the significant demand for our products, as well as the acceleration of general industry trends.

Inspired released its first online lottery after the end of the quarter. In 2022, Scarab Treasures Scatterdrops and Fruit Drop Scatterdrops will be rolled out as part of the existing partnership between Loto-Quebec.

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