UK tax rebate helps Inspired recover its 2020 financial performance

Positive Q4 trading has helped Inspired Gaming to recover its financial position against COVID-19 headwinds – yet the company maintains diligence of market-by-market developments impacting its commercial pipeline. 

Publishing its Q4 trading statement, Inspired revealed that ‘Peak October’ trading had seen the company register group revenues of $72 million – up 8% on corresponding Q4 2019 results of $66 million.

“October was a stellar month, achieving a revenue of $21.2 million and Adjusted EBITDA of $6.8 million (32% of total revenues), results 20% above October 2019 and the highest monthly levels we experienced in 2020, excluding the VAT-related income,” said Lorne Weil, Executive Chairman of Inspired Gaming.

Further Q4 developments saw the Nasdaq firm benefit from a ‘UK LBO customer payment’ related to a tax rebate which saw Inspired double its adjusted EBITDA to $35 million (Q4 2019: $17.5m).

Despite its positive Q4 momentum, Inspired underlined that the firm’s performance was interrupted by the resumption of COVID-19 venue closures sanctioned from November and December onwards. 

A breakdown of Inspired units saw its ‘Gaming’ division register a 52% increase in revenues to $33 million, primarily attributed to its UK VAT client compensation.

However, mirroring industry competitors, Inspired could not escape COVID-19 headwinds as its land-based ‘Gaming Product’ unit reported a revenue decline to $6 million (Q4: 2019 $11 m).

Further COVID impacts saw Inspired’s ‘Leisure Gaming’ unit reduced to $7.7 million (Q42019: $22m) attributed to venue restrictions on pubs, clubs and wider hospitality businesses.

Implementing tight costs control during 2020 trading, Inspired underlined that it had decreased its group-wide operating expenses by $7.2 million.   

Revising its full-year performance, Inspired sees its corporate revenues increase by 33% to $200 million (FY2019: $153 m).

Meanwhile, improved Q4 results saw Inspired reverse its FY 2019 loss of $13 million with the company achieving a positive net income result of $6 million.

Closing its 2020 accounts, Inspired reduces its group-wide corporate losses to $29 million (FY2019: $37m).

Moving forward, Inspired’s future financial reports will feature a new ‘Segment Reporting Reclassification’ providing investors with deeper oversight of the firm unit performance.  

“While the UK is expected to remain in lockdown through the first quarter 2021 based on the UK Prime Minister’s public statement on February 22nd, assuming achievement of key goalposts the UK will ease lockdown restrictions in stages with LBOs reopening in April, pubs and holiday parks reopening in May and an end of the lockdown by June 21st,” Weil closed.

“By the end of the second quarter 2021, assuming the UK ends its lockdown, we would expect our UK business to be on a run rate similar to where we were in the third quarter 2020 when we generated $17.1 million6 in Adjusted EBITDA, excluding VAT-related income, at current exchange rates.”