Inspired Entertainment Inc (INSE) Reports Q3 2023 Earnings: Interactive Segment and Hardware ...
Revenue: Reported a 31% increase to $97.5 million, with significant contributions from the Interactive segment and Low Margin Gaming Hardware Sales.
Adjusted EBITDA: Reached $26.7 million, with a margin of 27%, or 36% excluding Low Margin Gaming Hardware Sales.
Net Income: Declined to $3.4 million, or $0.12 per diluted share, compared to $9.2 million, or $0.32 per diluted share in the prior year.
Share Repurchase: Repurchased 121,847 shares, totaling approximately 1.2 million shares since the Share Repurchase Program began in May 2022.
Strategic Partnerships: Unveiled Hybrid Dealer and entered into an agreement with the NBA to develop NBA-themed Virtual Sports games.
On February 27, 2024, Inspired Entertainment Inc (NASDAQ:INSE) released its 8-K filing, announcing its financial results for the third quarter ended September 30, 2023. The company, a leading gaming technology provider, operates through segments including Gaming, Virtual Sports, Interactive, and Leisure, with the Gaming segment being the largest revenue contributor.
The quarter saw a significant revenue increase of 31% to $97.5 million, bolstered by the Interactive segment and Low Margin Gaming Hardware Sales. The company's strategic focus on high-margin, scalable digital business is evident in the 58% contribution of Adjusted EBITDA from the digital business year to date, compared to 50% in the prior year period.
Financial Performance and Challenges
Adjusted EBITDA for Q3 was reported at $26.7 million, with a margin of 27%. Excluding Low Margin Gaming Hardware Sales, the margin was a robust 36%. However, net income saw a significant decline to $3.4 million, or $0.12 per diluted share, from $9.2 million, or $0.32 per diluted share in the prior year. This decrease was attributed to the timing of one-time sales and a ransomware attack that impacted results. The company's restatement of previously issued financial statements had a minimal impact on Adjusted EBITDA, with a less than 1% decrease for the full year 2022.
Strategic Developments and Outlook
Inspired Entertainment's digital business, particularly the Interactive segment, demonstrated strong performance with a 28% revenue increase and a 55% Adjusted EBITDA increase year-over-year on a constant currency basis. The company unveiled Hybrid Dealer, a new iGaming product, and entered into an agreement with the NBA to develop themed Virtual Sports games. These strategic moves are expected to contribute to the company's growth trajectory.
Despite the challenges faced, Inspired Entertainment remains optimistic about its digital growth dynamics and the resilience of its land-based business. The company's omni-channel strategy, combining high-margin digital businesses with steady land-based operations, positions it well for future growth.
Segment Financial Results
The company's Gaming segment, excluding Low Margin Gaming Hardware Sales, saw a 7% decrease in revenue, while the Virtual Sports segment experienced a 7% decline. The Interactive segment, however, reported a 38% increase in revenue. The Leisure segment saw a modest 4% increase.
Overall, the company's financial achievements, including the share repurchase program and strategic partnerships, underscore its commitment to delivering value to shareholders and enhancing its market position in the gaming technology industry.
For a detailed analysis of Inspired Entertainment Inc (NASDAQ:INSE)'s financial performance and future outlook, investors are encouraged to review the full earnings report and listen to the earnings call.
Explore the complete 8-K earnings release (here) from Inspired Entertainment Inc for further details.
This article first appeared on GuruFocus.
