Motivated by its interactive expansion, the company achieved a revenue of $323 million in the 2023 fiscal year.
The company disclosed that its earnings for the 2023 fiscal year reached $323 million (£259.1 million/€303.6 million), fueled by the strong performance of its interactive branch.
The company published its fourth-quarter and full-year earnings report on Monday, April 15th, significantly later than initially projected. This came after the Nasdaq issued a warning to the company regarding delays in filing.
The Nasdaq had previously issued a warning to the company for delaying the filing of its third-quarter results, indicating that the delay violated their regulations.
The company attributed the new delay to a review of its accounting policies for the fourth quarter. The company announced plans to revise previously released financial statements after discovering errors in its financial statements dating back to January 1, 2021.
iGB has contacted the company for further details on the revised financial statements.
The company’s 2023 Revenue
Based on the company’s revised financial statements, its revenue increased by 14.7% compared to the 2022 fiscal year’s $281.6 million. Product sales increased by 86.1% year-over-year, from $33.2 million to $61.8 million, while service revenue increased from $248.4 million to $261.2 million.
Meanwhile, the company’s total adjusted EBITDA rose slightly from $99 million in 2022 to $100.5 million.
Although Inspired’s annual net income reached $76 million in 2023, a substantial jump from $20.6 million in 2022, its yearly net profit dropped by 63.1% to $7.6 million.
This decrease was primarily due to higher expenditures, with sales, general, and administrative costs skyrocketing from $101.9 million in 2022 to $115.5 million in 2023. The cost of items sold also surged from $21.9 million to $52.6 million.
Net earnings per share for fiscal 2023 declined 63.0% year-on-year, from $0.73 to $0.27, while net operating earnings also fell from $46 million to $39.9 million.
Furthermore, adjusted EBITDA margin decreased from 35% last year to 31%. During the investor conference call after the release of the results, Brooks Pierce, the company’s president and CEO, mentioned that the company is aiming for an adjusted EBITDA margin of 40%.
Despite record-breaking revenue and EBITDA in 2023, Inspired’s executive chairman, Lorne Weil, stated that the company is well-positioned to continue on an upward growth path in the coming years.
“As the global online gambling and gaming environment continues to evolve, with new markets opening up and consumer acceptance increasing, we see possibilities for continued growth,” Weil said.
“We are enthusiastic about the opportunities ahead as we seek to capitalize on the expanding global online gambling and gaming market.”
Inspired’s momentum in interactive growth has calmed market concerns about the company’s stagnant performance.
Although Inspired’s Gaming, Virtual Sports, and Leisure segments witnessed modest revenue gains of just 1%, 4%, and 1% annually, its Interactive division achieved remarkable success, with total revenue reaching $27.9 million, a substantial 35.4% jump from the $20.6 million recorded in the previous fiscal year.
The Interactive division’s adjusted EBITDA also saw a significant rise, climbing from $11.3 million to $15.4 million. In contrast, Gaming’s adjusted EBITDA experienced only a slight 0.7% growth to $44 million, while Virtual Sports saw a more moderate 6.2% increase, rising from $44.9 million to $47.7 million.
The Interactive division’s performance in the final quarter was particularly noteworthy, with revenue reaching $8 million, a remarkable 48.1% year-over-year surge. Its adjusted EBITDA also soared from $2.8 million in the previous year to $4 million.
Weil commended the company’s Interactive division’s performance in the fourth quarter, declaring: “Our fourth-quarter results marked the culmination of a successful year, driven by our strategic focus on expanding high-margin digital sectors, coupled with steady growth in our land-based operations.
“Our digital operations continued to be spearheaded by our Interactive division in the fourth quarter, with revenue and adjusted EBITDA increasing annually by approximately 41% and 39% at constant currency, as we continue to expand our reach through new customer launches and benefit from growth in our existing customer base.”
Inspired’s fourth-quarter cost increases were a key focus. While Inspired’s fourth-quarter revenue rose by 6.0% from $76 million to $81.2 million.
Even though the business brought in $6 million in income during the same time frame in 2022, rising expenses caused the company’s operating profit in the final quarter to drop to $9.3 million from $11.6 million in the final quarter of fiscal 2022.
The cost of goods sold in the final quarter increased slightly from $10.7 million to $10.8 million, while service expenses also climbed from $16.5 million to $18.2 million. The most notable increase was in sales, general, and administrative expenses, which grew by 18.0% year-over-year from $27.8 million to $32.8 million.
Inspired’s final quarter results also included a $5 million cost related to the restatement of its financial reports. For the entire year, Inspired’s enterprise segment reported a loss of $77.9 million, with an adjusted EBITDA loss of $26 million.
In addition, other total net expenses increased from $6.4 million to $7.1 million, and Inspired paid $2.2 million in income taxes in the final quarter, resulting in zero net income for the quarter.
Gaming Performance Remains Strong
Although gaming revenue grew by only $700,000 year-over-year in fiscal 2023, the segment remains vital for Inspired. The segment generated total revenue of $111.3 million, accounting for 39.6% of Inspired’s total revenue for the year, while adjusted EBITDA was $43.7 million, representing 34.1% of the company’s fiscal 2023 figures.
Virtual sports also performed well, with the segment generating total revenue of $54.2 million in fiscal 2023, accounting for 19.2% of the company’s total enterprise revenue for the year. In terms of its contribution to adjusted EBITDA, it also surpassed gaming, with the segment accounting for 40.4% of the full-year figures.
The interactive segment demonstrated strong performance in the previous fiscal year, but its contribution to Inspired’s overall annual income and adjusted earnings before interest, taxes, depreciation, and amortization remained limited at 7.3% and 9.6%, respectively.
**Inspired’s Future Prospects**
It’s important to emphasize that Inspired adheres to a policy of refraining from providing projections. However, during a recent conference call with investors, Weil indicated that the company is content with the overall market expectations for the upcoming year, which are anticipated to be slightly higher than the figures achieved in the current fiscal year.
Weil further expressed his belief that performance in the subsequent fiscal year will be concentrated in the latter half, with virtual sports experiencing a rebound following its recent downturn. He attributed this expectation to the time required for the company to fully execute its strategic initiatives.
Moreover, Weil highlighted that certain ongoing irregularities related to the accounting restatement, along with a backlog of product sales at the end of the year, could potentially influence the company’s financial performance in the upcoming fiscal year.
Sign up for the iGaming Newsletter