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Despite the effects of the COVID-19 pandemic, Inspired Entertainment Inc has released its financial results for the first quarter of 2021, with Executive Chairman Lorne Weil stating that the business will continue to expand in the North American market.
Despite reporting a net loss for the quarter, Weil was ‘encouraged’ by recent developments following the lifting of COVID restrictions.
Inspired reported overall revenue of $22.8 million for the three months ended March 31, down 56.4 percent from the $52.3 million reported in the first quarter of 2020.
The company also recorded a net loss of $16.7 million (Q1 2020: $9.8 million) and a net operating loss of $12.2 million (Q1 2020: $7.2 million). It also recorded adjusted EBITDA of $3.9 million, down 61.5 percent from the previous year’s $10.1 million.
Due to the ongoing pandemic, Inspired’s global land-based companies were almost entirely closed during the financial cycle. Its digital and online virtuals networks, on the other hand, continue to expand, with revenues of $10.7 million, up 90.0 percent year over year.
North America key focus
Lorne Weil, the company’s executive chairman, stated: “North America continues to be a key focus of our growth strategy and our footprint there continues to expand notwithstanding COVID. We placed our first Valor terminals with Western Canada Lottery Corporation (WCLC) in March 2021 and to date, they have performed well above estate average. This stellar performance mirrors what we have seen in Illinois, where Valor continues to gain popularity.
“Our Interactive business has continued its outstanding momentum into the second quarter where our entry into Michigan demonstrates the further progress we have made in our strategic expansion into new markets. We believe we are well-positioned to bring our products to customers in the US igaming market with an impressive roadmap of game launches and high-profile partners already in place.”
Gaming revenue was $10.8 million, down from $24.9 million in Q1 2020, and virtual sports revenue, which no longer includes digital but does include online virtual sports, was $6.3 million, down from $7.8 million in Q1 2020.
Its Interactive sales grew 143.2 percent to $5.2 million (Q1 2020: $2.1 million), owing to “the addition of new customers and territories” including BetMGM, Gamesys, and Interwetten, as well as “the consistent launch of new high-quality content and the growing migration of end users to online platforms.”
In addition, Inspired announced that its interactive channel’s net income grew from $0.1 million to $2.6 million year over year, with an operating margin growth from 2.7 percent to 50.0 percent. The adjusted EBITDA rose from $0.7 million to $3.4 million year over year, with an adjusted EBITDA margin of 34.6 percent to 65.1 percent.
The company’s leisure revenue in Q1 2021 was $0.5 million, down from $17.5 million in Q1 2020, owing to the closure of all major leisure sectors in the UK due to the pandemic, according to the company.
Encouraged by trends
Weil remarked: “We continue to be encouraged by the trends we are seeing across our business with the recent easing of COVID restrictions. While it has only been a couple of weeks since English betting shops reopened and we are restricted to two out of four machines per shop, our gross gaming revenue per operational machine in betting shops has performed above December 2020 levels when they were operating under the same conditions. In addition, we understand bookings for the UK holiday park business are at record levels and outdoor sales in UK pubs have been robust since reopening.”
Executive VP and CFO Stewart Baker added: “We have weathered the COVID-19 period to date and see the light at the end of the tunnel. We have effectively managed our liquidity position to be well prepared for our land-based businesses to return with a more streamlined operating structure and improved overall cost structure.
“We believe we are well-positioned to execute on our strategic plan to deliver profitable growth, increase cash flows and maximize shareholder value.”