Revenue for the three months to 31 March amounted to $22.8m (£16.2m/€18.7m), down 59.4% from $52.3m in the corresponding period last year.
Inspired put this down to restrictions on land-based gambling in a number of its markets throughout Q1, with many facilities having to remain closed or operate at limited capacity in line with local Covid-19 regulations.
However, Inspired said that as some of these restrictions are set to be lifted, it expects some recovery in Q2, with further improvement in Q3. The UK allowed betting shops to reopen last month, with casinos and adult gaming centres to follow next week, while Greece’s betting shops also began to reopen in April.
Closure of land-based facilities meant gaming revenue in Q1 was down 56.6% from $24.9m in Q1 of 2020 to $10.8m this year. Gaming service revenue declined 66.3% to $5.6m, while gaming product revenue fell 37.4% to $5.2m.
Lockdown rules also meant leisure revenue plummeted 97.1% to $500,000, as pubs, holiday parks, motorway service areas and bingo halls remained closed throughout the entire first quarter.
Inspired’s virtual sports business, which no longer includes interactive but does include online virtual sports, saw revenue drop 19.2% to $6.3m. This decline was less steep due to the migration to gaming online, with online virtual sports revenue climbing to $1.8m.
More players gambling online saw interactive revenue increase by 143.2% year-on-year to $5.2m, with this also driven by the addition of new customers and territories, and the launch of new content.
“We continue to be encouraged by the trends we are seeing across our business with the recent easing of Covid restrictions,” Inspired executive chairman Lorne Weil said.
“While it has only been a couple of weeks since English betting shops reopened and we are restricted to two out of four machines per shop, our gross gaming revenue per operational machine in betting shops has performed above December 2020 levels when they were operating under the same conditions.
“Our interactive business has continued its outstanding momentum into the second quarter where our entry into Michigan demonstrates the further progress we have made in our strategic expansion into new markets.”
Turning to expenses and Inspired was able to make savings across the board, with services costs down 75.3% to $2.1m and product sales spend 48.4% lower at $3.2m. Selling and administrative costs were also reduced by 45.7% to $15.2m.
Acquisition and integration-related transaction expenses were more than halved to $1.4m, though depreciation and amortisation spending edged up 4.0% to $13.1m.
However, reduced spending was not enough to offset the decline in revenue in Q1, with operating losses for the period reaching $12.2m, compared to a $7.2m loss last year. Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) were also 61.5% lower at $3.9m.
Inspired also noted $8.6m in interest expenses and a $3.0m impact of change in the fair value of warrant liabilities, though this was partially offset by $6.4m in other finance income, leaving a net of $5.2m in other costs for the quarter.
The supplier’s loss before tax was $17.4m, greater than $9.6m in 2020, while after receiving $700,000 in tax benefits, this left a net loss of $16.7m, compared to $9.8m last year.
Inspired was able to recoup some losses with $4.6m in actuarial gains on its pension plan, but still ended the quarter with a total comprehensive loss of $12.1m, compared to the $3.4m loss it posted in Q1 of 2020.
“We have weathered the Covid-19 period to date and see the light at the end of the tunnel,” Inspired’s chief financial officer and executive vice president Stewart Baker said. “We have effectively managed our liquidity position to be well prepared for our land-based businesses to return with a more streamlined operating structure and improved overall cost structure.
“We believe we are well positioned to execute on our strategic plan to deliver profitable growth, increase cash flows and maximise shareholder value.”