Inspired Entertainment Announces Full Year 2017 Results
Inspired Entertainment, Inc, has reported financial results for the fiscal year ended September 30, 2017.
“Our full year results are reflective of the strides the business has made operationally since the merger,” said Inspired Executive Chairman Lorne Weil. Mr. Weil continued, “through our SBG and Virtual Sports rollouts in Greece, our progress in gaining market acceptance of Virtual Sports in North America and the integration of our worldwide team, we believe Inspired is poised for its next stage of growth.”
“We are pleased with our full year results,” said Inspired President and Chief Executive Officer, Luke Alvarez. Mr. Alvarez continued, “We delivered solid growth in both of our key business lines, we added new US and European customers and we launched into multiple new geographies.
We are particularly pleased with our results in Greece, where our SBG terminals and games are amongst the strongest in the market and our Virtual Sports have created a large new source of regulated income for our lottery customer.” Mr. Alvarez concluded, “During fiscal year 2017 we signed our first US lottery contract for Virtual Sports, and in the last few days we have gone live with our first online Virtual Sports deployments in New Jersey.
At G2E, we announced our new 1st Down Virtual Football game, which we expect to launch with key US customers in 2018. Progress across all our business is strong – UK, rest-of-world and US; land-based and mobile; SBG; and Virtual Sports – and we are optimistic about our prospects for fiscal 2018.”
From 2016 to 2017, total revenue increased by $2.8 million, or 2.3%, to $122.5 million. Adverse currency movements had an impact of $16.6 million, resulting in a constant currency increase of $19.4 million, or 16.2%.
SBG revenue, which is included in total revenue, increased by $14.6 million, or 16.9%, on a constant currency basis, comprised of growth in hardware sales of $9.4 million and service revenue of $5.3 million. On a reported basis, SBG revenue increased by $2.6 million, or 3.0%, due to adverse currency movements.
SBG hardware revenue growth was driven by SBG sales in the Greek, UK and Colombian markets of $6.1 million, $2.5 million and $3.7 million respectively. SBG hardware revenue grew by $9.4 million on a constant currency basis, or 123.8%. On a reported basis, SBG hardware revenue increased by $7.5 million, or 98.7%, due to adverse currency movements.
SBG service revenue increased by $5.3 million on a constant currency basis, or 6.7%, as a result of the rollout of terminals in Greece, growth in Gross Win per unit per day incomes for UK LBOs, increased volume for non-UK LBOs and a software license sale into the Greek market (“Gross Win per unit per day” is defined as stake less amounts returned to the player in prize, before gaming tax deductions). These increases were partially offset by changes in contract terms for two key UK customers in conjunction with extensions to the end dates of those contracts without the need to make further capital investments. On a reported basis, SBG service revenue declined by $4.8 million, or 6.1%, due to adverse currency movements.
Virtual Sports revenue increased by $4.7 million on a constant currency basis, or 14.2%, driven mainly by a new customer in Greece, along with new customers in Italy, Poland and the UK, and an increase in revenue from existing customers. On a reported basis, Virtual Sports revenue was unchanged.
Reported net operating profit declined from a loss of $1.3 million to a loss of $11.9 million, due primarily to transaction expenses related to Inspired’s acquisition by Hydra Industries Acquisition Corp. on December 23, 2016 and increases in stock-based compensation expense.
Net loss for the year from continuing operations improved from $59.9 million to $49.1 million, principally reflecting a reduction in interest expense and an offsetting increase in earnout liability pursuant to the aforementioned acquisition by Hydra Industries Acquisition Corp.
Adjusted EBITDA, which the Company considers an important underlying business performance measure, increased by 10.6% on a constant currency basis, or (2.3%) after foreign currency impact; after adjusting for incremental SG&A costs associated with the merger with Hydra Industries Acquisition Corp., Adjusted EBITDA increased by 22.0% on a constant currency basis, or 7.8% after foreign currency impact.