Revenue for the three months ending 30th September 2023 surged to $97.5 million (£77.0m/€90.1m).
However, heightened expenditure across various sectors resulted in Inspired concluding Q3 with diminished net profits.
The Q3 outcomes have been released several months behind schedule.
The figures were anticipated in late 2023, but Inspired postponed publication due to several issues.
These encompassed accounting discrepancies concerning compliance with US GAAP, linked to accounting policies for capitalising software development costs.
This, incidentally, prompted Nasdaq to reach out to Inspired in November.
It cautioned that the delayed filing places the company in violation of its regulations.
The stock exchange granted Inspired until 22nd January to furnish a plan to restore compliance, or face potential delisting of its shares.
Inspired submitted its plan in January, which was subsequently accepted by Nasdaq earlier this month.
Consequently, executive chairman Lorne Weil asserts that Inspired has averted any further repercussions over the matter.
He further adds that the group is now focused on moving forward.
“We have completed the financial restatement process and, as of today, all amended filings are complete,” Weil said.
Interactive performance emerges as the primary positive in Q3, with gaming and virtuals experiencing a decline.
Reflecting on the quarter, Weil was eager to underscore the ongoing success of the Interactive business at Inspired.
The division witnessed double-digit percentage growth and helped mitigate some of the decline in the Gaming and Virtual Sports segments.
“Interactive results reflect another quarterly record,” Weil said.
“We continue to benefit from an increased footprint through new customer launches, the consistent deployment of new content, and increased promotional activity through exclusive deals with tier-one customers, as well as revenue growth from existing customers.”
This stands in contrast to its Gaming and Virtual segments. Despite both witnessing a drop in revenue, Weil remains optimistic about the future prospects for these segments.
“In the last two to three years, we’ve seen extraordinary growth in our Virtual Sports business, driven by new products and market expansions,” Weil said.
“We believe we are heading into another strong growth phase, driven by our exciting new content partnerships with the NFL and NBA.
We have two major markets with substantial growth opportunity, North America and Latin America.
“In our land-based operations, which includes our Gaming and Leisure segments, we’ve completed the deployment of our new ‘Vantage’ cabinet across two of our largest licensed betting shop customers, recording another $22.7m of low margin terminal sales in Q3.
“We continue to see approximately 11% year-over-year revenue per machine increases with these new terminal deployments.
In our pubs business, we’ve deployed ‘Vantage’ across approximately 20% of our customer estate and have experienced approximately 20% year-over-year growth in revenue per machine.
“This gives us confidence that we are seeing a reacceleration across our land-based businesses.”
Breaking down the Q3 results, some $70.7m of all revenue came from service, an increase of 3.1%.
The remaining $26.8m was generated from product sales, up 378.6%, as a result of low-margin gaming hardware sales.
As for segmental performance, Leisure remained the primary source of revenue at $31.7m, up 3.9%. Elsewhere in the land-based segment, Gaming revenue slipped 6.7% to $22.4m.
However, Inspired also notes an additional $22.7m in low-margin gaming hardware sales. As stated by Weil, this improved overall land-based performance.
Meanwhile, virtual sports revenue fell 6.9% to $13.4m in Q3.
This was offset by the 37.7% increase in Interactive revenue to a record $7.3m.
Turning to spending, expenses were higher across the board.
The main outgoing was selling, general, and administrative costs at $26.9m, up 6.0%.
However, the largest increase was with the cost of product sales, which hiked 551.2% to $26.7m.
Inspired also reported an additional $6.8m in finance costs, primarily interest expenses. As such, pre-tax profit amounted to $5.4m, down 41.9%.
Inspired paid $2.0m in tax but was helped by a $3.8m positive gain from foreign exchange and a $200,000 gain on its pension plan. However, net profit for Q3 was still down 58.6% to $7.2m.
In addition, adjusted EBITDA slipped 2.2% to $26.7m.
Regarding how Q3 impacted Inspired in the year to date, revenue during the nine months to 30th September grew 18.0% to $241.8m.
Service revenue climbed 3.7% to $195.7m and product sales 182.8% to $46.1m, on the back of Q3 low-margin gaming hardware sales.
Spending was higher in almost all areas in the nine-month period. As was the case in Q3, selling, general, and administrative costs were the main outgoing at $82.7m.
Finance expenses reached $20.2m, leaving a pre-tax profit of $10.4m, down 40.6% from the same point in 2022.
Inspired paid $2.8m in tax, but its $20m negative impact from foreign exchange negated this.
The latter was partly offset by $1.0m net gain from its pension plan and the reclassification of loss on hedging instrument to comprehensive income.
This meant net loss for the period reached $1.0m, compared to a $20.4m profit in the previous year. However, adjusted EBITDA crept up 1.1% to $74.0m.
“Fundamentally, our business remains very strong, which was reflected in our repurchase of $1.5m of our stock during Q3,” Weil said.
“We are optimistic about the compelling digital growth dynamics of the business, as a wider audience engages with online betting and gaming while new jurisdictions continue to launch.
“Combined with a resilient land-based business, our diversification and expansion ability reinforce our omnichannel strategy combining our high-margin, capital efficient digital businesses with our steady land-based businesses.”