Total revenue for the three months to 30 September amounted to $60.1m, up 125.9% from $26.6m in the corresponding quarter last year.
Service revenue in Q3 stood at $56.4m, an increase of 137.0% on last year, while hardware revenue was also up by 32.1% from $2.8m to $3.7m.
Breaking this down by business segment, server-based gaming (SBG) revenue climbed 39.0% to $25.5m, due in part to the $9.3m VAT refund.
SBG service revenue jumped 53.1% to $23.7m, helped by the VAT payment, as well as growth within its Greek estate, though this was partially offset by higher taxes, new card reader and recovery of incomes after the novel coronavirus (Covid-19) lockdown in Italy, as well as a reduced UK estate.
In contrast, SBG Hardware revenue fell from $2.8m to $1.8m in Q3, with revenue in this area drawn from the sale of Valor terminals and additional Sabre Hydra electronic table games.
Virtual sports revenue, which included the Inspired interactive segment, was up by 31.6% to $10.9m, helped by Covid-19 stay-at-home orders and also growing migration to gambling online.
In terms of acquired businesses service revenue – from the Gaming Technology Group business purchased from Novomatic in June 2019 – this stood at $22.4m in Q3.
Revenue from pubs, leisure parks, motorway service areas and adult gaming centres was lower than last year as a result of Covid-19 restrictions and the staggered reopening of facilities after lockdown.
As such, pub revenue slipped 24.4% to $5.9m, leisure park revenue fell 48.9% to $7.2m, while motorway service area and adult gaming centre was down 25.0% year-on-year to $4.5m. Acquired businesses hardware revenue also fell 63.5% to $1.9m.
“This quarter’s impressive results demonstrate the long-term health of our business and the resiliency of our recurring revenue stream,” Inspired executive chairman Lorne Weil said.
“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% 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.”
Looking at costs for the quarter and selling, general and administrative expenses increased by 90.5% to $21.9m. Cost of sales climbed 138.3% to $11.2m and cost of hardware edged up 8.7% to $2.5m.
Acquisition and integration related transaction expenses were down to $1.2m, but amortisation and depreciation costs jumped 68.7% to $14.0m.
Despite higher spending overall, Inspired posted an operating profit of $8.2m, compared to a $5.7m loss in Q3 of last year. When accounting for $7.9m in other expenses, including $8.3m in interest costs, and the fact that Inspired did not pay tax in Q3, this left a net profit of $300,000, up from an $8.5m loss in 2019.
However, Inspired also noted $4.6m in other comprehensive loss, primarily due to $4.2m in foreign currency translation loss, which led to a comprehensive loss of $4.3, though this was still an improvement on an $11.4m loss last year.
“I am very pleased with the third quarter results and proud of the Inspired team for their collective efforts during these challenging times,” Weil said.
“Whilst we anticipate a negative impact in the fourth quarter due to the recent resurgence of Covid-19-driven measures in parts of Europe, we believe we are well-positioned to recover quickly.
“This is due to the fundamentally local nature of our business comprised of small venues in comparison to destination resorts, the ability for our machines in the field to be turned on immediately when venues reopen, and the fact that the vast majority of our business is driven by contracted, recurring revenue which means our backlog remains intact post-lockdown.”
As to how Q3 impacted Inspired’s year-to-date performance, revenue in the nine months to the end of September was $128.0m, 47.1% higher than at the same point last year.
However, higher spending in the three quarters left an operating loss of $12.9m, compared to $10.9m in 2019. Other expenses totalling $28.4m meant a $41.3m loss before tax, and income tax payments of $300,000 led to a $41.6m net loss.
When also including $7.0m in other comprehensive loss, again primarily due to foreign currency translation loss, this left a comprehensive loss of $48.6m for the period, compared to $28.8m last year.
“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,” Weil said.