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NEW YORK, Nov. 9, 2022 /PRNewswire/ -- Inspired Entertainment, Inc. (INSE) ("Inspired" or the "Company") (NASDAQ: INSE), a leading B2B provider of gaming content, technology, hardware and services, today reported unaudited financial results for the three-month period ended September 30, 2022. Third quarter underlying results reflect growth in the Company's aggregate online business, which includes the Virtual Sports and Interactive segments, and ongoing strength in the Gaming and Leisure segments. Total Revenue and Adjusted EBITDA improved year-over-year in functional currency, however, reported results reflect significant strengthening of the USD (versus GBP) on a year-over-year basis.
1 "Adjusted EBITDA" and "Adjusted EBITDA Margin" are non-GAAP financial measures defined below under "Non-GAAP Financial Measures" and reconciled to the most directly comparable GAAP measures in the accompanying supplemental table. Adjusted EBITDA Margin is calculated as a percent of Revenue.
2 Aggregate online business Adjusted EBITDA contribution is calculated using the sum of the Virtual Sports and Interactive segment-level Adjusted EBITDA deducted by an allocated corporate expense pro-rated by the segment revenue contribution as a percent of Total Revenue. The Company's definition may not be comparable to measures of other companies. See supplemental table below.
3 Before trading expenses
4 Reported income statement results assume GBP:USD exchange rate was GBP 1.18: USD 1.00 for the three months ended September 30, 2022 and GBP 1.38: USD 1.00 for the three months ended September 30, 2021.
"This quarter's underlying operating performance was strong, with third quarter Adjusted EBITDA exceeding last year's record performance on a functional currency basis5. This reflects a continuation of the trend we have seen in recent quarters, with the resiliency of our diversified business model as well as what we perceive to be the continued strength in consumer spending across our segments – notwithstanding perceived ongoing macro trends," said Lorne Weil, Executive Chairman of Inspired. "Virtual Sports continued its impressive growth trajectory, producing its fifth record-setting Revenue and Adjusted EBITDA quarter in a row, with online Virtual Sports doubling year-over-year versus strong comparatives. Growth in Interactive Revenue was modest, however, the addition of new content and customers in Pennsylvania has led to an acceleration in Interactive growth rates in October.
"As our online business continues its growth trajectory, our land-based business has held strong, with consumers continuing to frequent betting shops and pubs and staying local for holidays, and we continue to move towards a less capital-intensive business model, signing a milestone contract with Betfred subsequent to the end of the quarter for the sale of 5,000 terminals and the provision of fully integrated managed services for their entire estate," said Weil.
"The recent successes of this year's Global Gaming Expo ("G2E") tradeshow in Las Vegas and World Lottery Summit in Vancouver were a testament to the growing awareness of Inspired's unique product portfolio in North America. The level of interest from Gaming, Lottery and Sports betting operators was encouraging and underpins our confidence that our innovative products can offer compelling new revenue sources for our customers, and we anticipate increased proliferation given the current macroeconomic environment. With the growing popularity of our content, increased brand awareness and rapid speed to market, we are confident we are well-positioned to capitalize on this opportunity. In addition, we have an exciting pipeline of new products and further enhancements, opening potentially significant new avenues of growth, that we look forward to showcasing in the coming months," Weil continued.
Excluding VAT-related revenue and income.
"Looking forward, we continue to see solid results from our retail and digital businesses, demonstrating the strength and resilience of our business. We remain mindful of the potential for a shifting macro environment, and are diligently managing cost containment efforts, but rely on the healthy underlying momentum, diversification of our business model and our strong development pipeline and believe we are well positioned to deliver further progress against our strategy," Weil concluded.