Triennial cut impacts Inspired performance

Industry virtual content supplier Inspired Entertainment has reported steady progress across the UK market, after revealing that it had offset the impact of the Triennial Review.

Publishing its results for the three-month period and fiscal year ended 31 December 2019, Inspired revealed a 10.4% drop in full-year EBITDA, dropping from $54.7m in 2018 to $49m.

Full-year total revenue was up 9% from 2018, increasing from $150.7m to $153.4m, while Q4 figures saw a 116.2% jump from $30.7m to $66.4m.

Service operations generated the majority of the company’s revenues, with revenue from this business unit amounting to $134.9m, an increase of 3.3% compared to 2018. Revenue from hardware sales meanwhile was up 83.2% year-on-year to $18.5m.

Net revenues for the pre-acquisition Inspired business increased 9.2% to $33.6m and adjusted EBITDA increased 16.5% to $12.2 million, despite the comparable period not including the reduction in maximum B2 stakes to £2 in the UK LBO market implemented on April 1, 2019.

Executive Chairman of Inspired Lorne Weil commented: “We are very pleased with our fourth quarter results, which demonstrate the excellent progress we’re making on our ongoing business strategy to (1) mitigate the effects of the Triennial Implementation through operational and cost-reduction efforts, (2) generate new business to offset the impact of the Triennial Implementation as we seek to return to pre-Triennial Adjusted EBITDA levels, (3) integrate and drive profitability in the newly Acquired Businesses through UK Pub and Leisure digitization and (4) maximize revenue and cost synergies between the complementary businesses.

“We are excited about the growth prospects we are seeing across the Company. We sold our first units in Illinois during the fourth quarter and have seen an outstanding performance with all completed trials having resulted in follow-on orders.

“Our Virtual Sports business had its strongest ever quarter and we saw growth across the board. The popularity of our Gaming and Virtuals content continues to fuel the growth in our Interactive business and we are seeing impressive results from the recent launch of six new Interactive customers in North America.”

Following its acquisition of Novomatic’s Gaming Technology Group subsidiary in October 2019, Inspired also recorded expenses of $6.7m as a result of both acquisition and integration. These increased costs resulted in Inspired’s net operating loss rising to $130m.

Q4 highlights included installing an additional 1,183 terminals in Greece via the agreement with OPAP, as well as the sale of 150 electronic table games to Genting UK. During the quarter, Inspired also saw the addition of six new interactive customers in North America and also signed a virtual sports content deal with Flutter Entertainment.

Weil continued: “We are optimistic about the positive trends in the Acquired Businesses as well, particularly in the Pub estate. The margins in the Pub business are showing continuing improvement with the steady conversion from analog to digital and we are seeing overall strengthening in the UK Pub industry, with the number of pubs and bars in the UK rising in 2019 for the first time in a decade.

“With the uncertainty surrounding the Triennial behind us, we are delighted to see these positive trends across our business thus far in 2020, where, in addition to the annualization of the Acquired Businesses, we continue to see upside from North American penetration, accelerated UK Pub and Leisure digitization, additional customers coming onboard in Virtual Sports and Interactive, as well as the realization of expected synergies.”

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