This week, Inspired Entertainment was among the newest gaming companies to report its Q3 results, demonstrate growth and the company said, demonstrate the long-term health of its market.
Total sales grew to $60.1m in the period, from $15.6m in Q2 2020 and $26.6 million in Q3 2019. Third quarter 2020 sales included a payment of $9.3 million from a UK LBO customer linked to its contracted revenue share of the VAT refund of a customer and $24.3 million from the Novomatic Gaming Technology Community purchased on October 1, 2019 by Inspired.
Adjusted EBITDA rose from $2.1m in Q2 2020 and $8.8m year-on-year to $25m. Adjusted EBITDA for the third quarter of 2020 contained $9.1m in VAT-related sales and $5.1m for the acquired companies. Except these the legacy company’s adjusted EBITDA was $10.9m, up from $8.7m year-on-year by 24.7 percent.
Total online sales, meanwhile, increased to $7.8 million, up 74.7 percent on a pro forma basis from the third quarter of 2019, reflecting, Inspired said the increasing presence and popularity of its online offerings through online gaming and virtual sports platforms.
Lorne Weil, Executive Chairman, stated: “This quarter’s impressive results demonstrate the long-term health of our business and the resiliency of our recurring revenue stream. We have proven in the third quarter that our retail business is well-positioned to recover from COVID-19-related impacts at the same time as we have benefitted from our growing online presence.
“Despite the challenges of COVID-19 in the quarter, our SBG retail business largely returned to its pre-pandemic performance and our online business grew 75 percent year-over-year even with the return of sports and retail. The acquired businesses were slower to rebound from the COVID-19 summer lockdown but were able to ramp up throughout the quarter.”
Executive Vice President and CFO Stewart Baker commented: “In addition to our operational results, we have successfully improved our overall cost structure and streamlined our operations as exhibited by our third quarter margin improvements and increased free cash flow.
“Bolstering this strong recovery, we received a VAT-related income payment of $9.3m from a customer during the third quarter and have received $32.5m so far in the fourth quarter, with an incremental $4.1m in recoveries anticipated. We expect to use these receipts to pay down debt and further improve our liquidity position.”
The company also issued a COVID-19 management commentary in which it recognised that the ongoing pandemic continues to impact trading, with its various businesses and geographies being affected to varying degrees.
Weil concluded: “As we look ahead, we remain focused and disciplined on emerging from this pandemic even stronger and we expect to continue to build the foundation for future growth through the expansion of our online business, further development of our North American customer base and the acceleration of our UK Pub and Leisure digitisation.”