Group revenue for the three months to 30 September came to $77.6m, compared to $60.1m in the prior year period. Breaking this figure down, services brought in $68.7m, up 23.6%, while product revenue almost doubled to $8.9m.
For the first time, Inspired’s leisure segment – which includes the Playnation brand and provides gaming and arcade machines for the UK holiday and leisure industry – was the largest contributor to revenue. The segment brought in $33.4m, up 91.6% from 2020 thanks to record revenue from holiday parks and the rollout of new cashless solutions.
On the other hand, revenue from Inspired’s gaming segment declined, by 10.0% to $27.6m. This decline was exacerbated by the business receiving a $9.8m payment from a UK customer in Q3 2020, for its share of a value added tax (VAT) rebate.
Revenue from interactive gaming was up 109.6% to $6.1m, while virtual sports revenue grew 26.5% to $10.5m. During the quarter, US online gaming operator BetMGM went live with Inspired’s virtual sports products in New Jersey.
“We believe the third quarter is a good indicator of the strength of each of our segments coming out of Covid-19,” Inspired chairman Lorne Weil said. “Looking out to 2022, we see continued growth across each of our segments, with our interactive and virtual sports segments increasing their relative contribution to overall results.”
Expenses, meanwhile, came to $62.7m, a 23.2% increase. Costs of services were $13.8m, up 27.8%, while costs of product sales grew 42.4% to $4.7m. Selling, general and administrative expenses were up 48.3% to $33.0m, while depreciation and amortisation costs declined to $11.2m.
This meant that Inspired reported a net operating profit of $14.9m, 81.7% higher than in 2020.
After net interest expenses of $7.2m, more than offset by a $17.3m gain from changes in the fair value of warrants, plus $300,000 in other income, Inspired’s pre-tax profit was $25.3m. This was up significantly from the $500,000 Inspired made before tax in Q3 2020.
The business made an additional $3.2m gain from foreign currency changes, plus another $700,000 in actuarial gains and changes in value from hedging instruments, which led to a comprehensive profit of $28.9m. This was a stark difference from the $4.1m loss it made in 2020.
“I am very pleased with our third quarter results, as they reflect that we have emerged from the pandemic a much stronger, leaner and more efficient company with significant momentum and increased growth opportunities,” Weil said.
“Our evolution this year, compared to pre-pandemic periods, is being driven by consistent growth in the operating performance of our capital efficient interactive and virtual sports segments, demonstrating the substantial demand that exists for our products as well as an acceleration in general industry trends.”
After the quarter ended, Inspired launched online lottery content for the first time. An extension of its existing partnership with Loto-Québec will see Scarab Treasures and Fruit Drop Scatterdrops rolled out in 2022.