The results demonstrate growth in the Company’s aggregate digital business, which includes the Virtual Sports and Interactive segments, and ongoing strength and resilience in the land-based businesses. After the result published by other companies, for example, IGT, it is clear that the global and European gaming market is trending upwards.
Total Revenue and Adjusted EBITDA for the fourth quarter and full year 2022 improved year-over-year in reported and functional currency. The company’s aggregate digital business contributed 53% of Adjusted EBITDA versus 46% in the prior-year period. Adjusted EBITDA Margin in Q4 2022 was 33%, consistent with Q4 2021. Net Income of $3.1 million, or $0.12 per basic share and $0.11 per diluted share, compared to a net loss of $1.2 million, or $0.05 per basic and diluted share, in the prior-year period.
“Our results are evidence of our ability to drive high double-digit growth in our high-margin, capital-efficient digital businesses, while managing our land-based businesses for modest growth, decreased capital intensity, and growing cash flow,” said Lorne Weil, Executive Chairman of Inspired.
The company’s digital businesses continued their impressive growth trajectory in the fourth quarter with Virtual Sports producing its sixth record-setting revenue quarter in a row, and online Virtual Sports nearly doubling year-over-year versus strong comparatives. Interactive also had a solid quarter, with double-digit growth in revenue (on a functional currency basis) and adjusted EBITDA (on a functional currency and reported basis), which has continued into the first quarter of 2023.
“Our land-based businesses remained stable and resilient, as consumers continue to frequent betting shops and pubs while staying local for holidays. Additionally, we continue to move toward a less capital-intensive business model. In the fourth quarter, we delivered our largest terminal order in North America into Saskatchewan, which was no easy feat given the winter temperatures. In addition to being a terrific sale, we anticipate that this placement will also serve as a means to promote our products within the larger Canadian replacement market.” said Weil.
Inspired’s total revenue for Q4 2022 was $78.6 million, compared to $67.0 million for the same period in 2021, an increase of 17% on a reported basis and 34% on a functional currency basis. Virtual Sports revenue was $14.9 million, which is a record, and increased 36% year-over-year on a reported basis and 56% on a functional currency basis.
Online Virtual Sports Revenue increased 83% year-over-year on a functional currency basis. Interactive Revenue of $6.3 million increased 9% year-over-year on a reported basis (+24% on a functional currency basis), with growth primarily driven by the U.S. and Canada. Gaming Revenue of $38.0 million increased 42% year-over-year on a reported basis (+61% on a functional currency basis) primarily driven by the increase in Gaming Product Revenue from the Company’s largest North American gaming machine order during the quarter.
Leisure Revenue of $19.4 million decreased 17% year-over-year on a reported basis (-4% on a functional currency basis) primarily due to a reduction in the number of machines operated in pubs (due primarily to a contract renewal award on a lower volume of machines per pub customer), a strategic asset sale in the prior quarter as well as a performance-related payment received in the prior-year period.