Inspired sees revenue drop as losses widen in Q4
Inspired Entertainment has reported a year-on-year decline in revenue for the fourth quarter, with losses also widening in what was a transitional period due to a change in fiscal year end.
Revenue in the three months to December 31, 2018, totalled $30.7m (£23.9m/€27.2m), down from $31.4m in the corresponding period in 2017.
Inspired, which provides virtual sports, mobile gaming and server-based gaming systems to the market, put this decline down to lower hardware sales, mainly in the UK. Total hardware sales fell from $1.0m in Q4 of 2017 to $686,000.
The tech provider also said a drop in Greek software licence sales contributed to the overall decline in revenue. Overall services revenue slipped from $30.4m to $30.0m.
Net loss for the quarter grew from $4.2m in Q4 2017 to $4.7m, mainly due to higher cost of sales, as well as depreciation and amortisation. However, Inspired noted that net operating loss for the period was reduced from $4.4m to $2.4m, helped by a reduction in staff numbers, saving the company $1.8m.
As a result of net loss increasing, net loss per common share, both on a basic and diluted basis, also worsened from $0.20 to $0.23.
However, Inspired was boosted by an improvement in EBITDA, which climbed from $7.3m to $8.2m in Q4. Inspired put this down to overhead savings, again due to lower staff-related costs.
Inspired executive chairman, Lorne Weil, remained upbeat about the results, highlighting that Q4 was a transitional period for the company. Inspired will switch its fiscal year end from September 30 to December 31 from 2019, with the results for the first quarter of this new calendar expected in May.
“As we complete our transition to a traditional calendar year reporting cycle, we're expecting good performance in the first quarter of 2019 driven by continued growth in Greece and Italy, as well as interactive and additional hardware sales opportunities in conjunction with a reduced overhead expense base,” Weil said.
Weil also spoke of his confidence about how Inspired will deal with upcoming changes to regulations surrounding fixed-odds betting terminals in the UK. The maximum stake on the machines will be cut from £100 to £2 from April 1, while Remote Gaming Duty will also rise from 15% to 21%.
“As we move from the first quarter into the second quarter, we expect to begin to see the impact of the implementation of new regulations as a result of the Triennial,” he said.
“We have been investing in the resources necessary to satisfy the new requirements and meet player needs in the UK and we are extremely optimistic about our strategy to mitigate a portion of any potential impact.”
Weil also referenced Inspired’s expansion plans in North America, saying that the company is seeking out opportunities to drive growth in the region.
“We continue to believe our content and solutions provide an ideal platform for growth and, based on our proven success throughout Europe, we see a unique opportunity to build our VLT, virtual sports and interactive businesses in North America,” he said.