Inspired returns to profit in Q1 as all segments experience growth
Inspired’s gaming division remained the largest source of revenue in Q1, as takings from this area tripled year-on-year to £23.2m.
Leisure, meanwhile, experienced the fastest growth. After Covid-19 related restrictions meant leisure revenue was only £500,000 in Q1 of 2021, it came to £19.6m in Q1 of 2022.
“Our gaming and leisure results were particularly strong, demonstrating the full recovery of our land-based customers, as gaming recurring revenues returned to pre-Covid levels and leisure benefited from an extended holiday season,” Inspired executive chairman Lorne Weil said.
Despite not being affected by Covid-19 in Q1 of 2021, virtual sports also experienced a fast rise in revenue, by 84.0% to £11.6m.
“Our virtual sports experienced a record quarter with an impressive 54% year-on-year increase in online virtuals on difficult comparatives.”
Inspired’s interactive division, on the other hand, experienced much slower growth, with revenue ticking up from £5.2m to £5.3m.
The business also made £900,000 in VAT rebate payments, down from £3.1m in 2021, after a court ruling about how the tax is applied to B2C gaming machines.
Almost all of Inspired’s £60.6m in revenue came from services, which brought in £57.0m, while £3.6m came from product sales.
The business then paid £11.8m in costs of services, up 461.9%, while costs of product sales were down 34.5% to £2.1m.
Selling, general and administrative expenses almost doubled to £29.6m, but acquisition costs dropped from £1.4m to only £100,000 and depreciation costs were down 22.9% to £10.9m.
As a result, Inspired reported £6.5m in operating income.
The business paid £6.5m in interest expenses, which was 24.4% less than in Q1 of 2021.
In addition, it made £900,000 from disposal of a subsidiary, and £300,000 in other finance income.
As a result, its pre-tax income was £1.6m, compared to a £17.4m loss the year before. After paying £100,000 in tax, Inspired’s net profit was £1.5m, compared to a £16.7m loss the year before.
After accounting for £2.4m in foreign currency gains, an area where the business made a loss in 2021, plus £200,000 in the reclassification of losses from hedging instruments and £700,000 from actuarial gains on its pension plans, Inspired made a comprehensive loss of £4.8m in Q1. This compared to a £12.1m loss the year before.
“We have had a strong start to the year, generating year-on-year revenue growth across our business units, while also laying the groundwork for the long-term growth and profitability of our business,” Weil said.
Looking ahead, Weil said that North America represented a great opportunity for Inspired, with virtual spots already posting impressive results in Ontario since that market opened on 4 April.
“The North American online market remains a tremendous opportunity for Inspired and we expect to continue to progress on the same growth trajectory with the continued addition of new customers and markets in the second half of the year,” Weil said.