Inspired Entertainment Faces Q4 Delay amid Accounting Review
LISTEN TO THIS ARTICLE:Inspired Entertainment has said that it expects its revenue and adjusted EBITDA to be in line with its guidance for Q4. However, publication of the results will be delayed as the company conducts a review of its accounting policies.
The company has said that it hopes to publish Q4 results next month and that it will file its Form 10-K by April 15. In the meantime, it has filed Form 12-b-25, Notification of Late Filing, with the US Securities and Exchange Commission.
Inspired has said that it is devoting “considerable” resources to its review of accounting policies, which is why the results have been delayed. The review is related to restatements of previously reported financial results, which also delayed the company’s Q3 results.
During Q4, Inspired was warned by Nasdaq that its late filing was a breach of the rules and the company was given until 22 January to submit a plan to regain compliance. Inspired duly did this and the plan was accepted by Nasdaq in February.
The Scope of Inspired’s Accounting Review
Inspired announced a delay in November due to errors in applying accounting standards to projects. These mistakes were identified in financial statements starting from January 1, 2021, making these statements unreliable and in need of restatement.
Inspired acknowledged “material weaknesses” in its financial reporting controls and committed to making the necessary changes to address these issues. The company assured investors that these adjustments would not affect its cash position or business strategy.
Mixed Q3 Results at Inspired
The delayed Q3 results were mixed. Revenue increased by 30.9% to $97.5 million, but higher expenses led to a 58.6% decrease in net profit to $7.2 million and a slight 2.2% drop in adjusted EBITDA to $26.7 million.
Over the first nine months, revenue grew by 18.0% to $241.8 million. However, increased expenses across various areas resulted in a net loss of $1.0 million for this period, a downturn from the previous year's $20.4 million profit. On a positive note, adjusted EBITDA saw a slight increase of 1.1% to $74.0 million.
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