Revenue for the three months ending on March 31 was $22.8 million, a decrease of 59.4% compared to the same period last year. This decline is attributed to the impact of Covid-19 restrictions on land-based gambling in various markets. Many facilities were forced to close or operate at limited capacity in compliance with local regulations. However, as some of these restrictions are expected to be lifted, Inspired anticipates a recovery in the second and third quarters. Betting shops in the UK reopened last month, with casinos and adult gaming centres set to follow next week. Greece also started reopening its betting shops in April.
The closure of land-based facilities resulted in a 56.6% decrease in gaming revenue from $24.9 million in Q1 2020 to $10.8 million this year. Gaming service revenue declined by 66.3% to $5.6 million, while gaming product revenue fell by 37.4% to $5.2 million. Leisure revenue plummeted by 97.1% to $500,000 due to the closure of pubs, holiday parks, motorway service areas, and bingo halls throughout the entire first quarter.
The virtual sports business of Inspired, which now includes online virtual sports, experienced a 19.2% drop in revenue to $6.3 million. This decline was partially offset by the increase in online virtual sports revenue, which reached $1.8 million due to the migration to online gaming. Interactive revenue saw a significant increase by 143.2% year-on-year to $5.2 million. This growth was driven by the addition of new customers and territories, as well as the launch of new content.
Inspired was able to reduce expenses across the board. Service costs decreased by 75.3% to $2.1 million, product sales spend was 48.4% lower at $3.2 million, and selling and administrative costs were reduced by 45.7% to $15.2 million. However, despite these cost-cutting measures, the decline in revenue resulted in operating losses of $12.2 million for the quarter, compared to a $7.2 million loss last year. Adjusted earnings before interest, tax, depreciation, and amortization (EBITDA) also decreased by 61.5% to $3.9 million.
Inspired reported $8.6 million in interest expenses and a $3.0 million impact of change in the fair value of warrant liabilities, offset partially by $6.4 million in other finance income. This led to a net other cost of $5.2 million for the quarter. The company’s loss before tax was $17.4 million, higher than the loss of $9.6 million in 2020. After accounting for tax benefits of $700,000, the net loss for the quarter was $16.7 million, compared to $9.8 million last year.
Inspired recorded actuarial gains of $4.6 million on its pension plan but still ended the quarter with a total comprehensive loss of $12.1 million, compared to a $3.4 million loss in Q1 2020. The company’s chief financial officer and executive vice president, Stewart Baker, expressed optimism and confidence in the company’s ability to navigate the challenges posed by the Covid-19 pandemic and achieve profitable growth, increased cash flow, and enhanced shareholder value through strategic planning and cost management.
