In an update that caught the attention of investors and analysts, Inspired has announced that it foresees achieving its financial objectives in terms of revenue and earnings for the fourth quarter. However, it is important to note that Inspired has yet to disclose specific figures at this juncture. The company has expressed its intent to release its Q4 results in the coming month, with a commitment to file its Form 10-K no later than April 15.
The timing of this filing falls significantly beyond the original date anticipated for the report on Inspired’s Q4 performance. Consequently, the company has submitted a Form 12b-25, also known as a Notification of Late Filing, with the US Securities and Exchange Commission, indicating a forthcoming delay.
The cause of this postponement stems from a comprehensive review of the company’s accounting policies conducted during the last quarter. According to Inspired, appreciable resources have been allocated to this thorough analysis, thus impacting the timeline for the release of results.
The review is related to the need for restatements of previously issued financial statements, a situation which also contributed to the lag in reporting Q3 results. Identified discrepancies are tied to the compliance with US generally accepted accounting principles, specifically concerning policies for capitalizing software development costs.
During the middle of Q4, the Nasdaq stock exchange issued a notice to Inspired regarding the late filing, warning that it was in breach of Nasdaq’s listing rules. Subsequent to this, Nasdaq granted Inspired a deadline until January 22 to submit a plan to regain compliance or face the possibility of its shares being de-listed.
Fortunately, Inspired complied by submitting its plan within the allotted timeframe in January, which was accepted by Nasdaq the following month. This move has, for the time being, saved Inspired from any further punitive measures concerning the matter.
In its initial public acknowledgement of the delayed filings back in November, Inspired shed light on various errors related to the application of pertinent accounting standards within its projects. The company noted that these inaccuracies were present in financial statements starting from January 1, 2021, and as a result, declared that these statements were unreliable and necessitated restatement.
Inspired’s internal examination revealed one or more “material weaknesses” in internal control over financial reporting. In response, Inspired has made a commitment to enforce changes that would rectify these internal control weaknesses, including the restatement of financial statements for the periods in question.
In an effort to assuage investor concerns, Inspired emphasized that these rectifications are expected to have no adverse impact on its cash position or the overarching business plan.
Despite the restatement process, Inspired did manage to release its Q3 results, which presented a mixed financial picture. Revenue surged by 30.9% to $97.5m for the quarter ending September 30, 2023. Yet, higher expenditures across various sectors led to a decrease in net profit, which fell by 58.6% to $7.2m, and a slight decline of 2.2% in adjusted EBITDA to $26.7m.
When viewed from a year-to-date perspective, the company’s revenue experienced an 18.0% increase to $241.8m for the nine months ending September 30. However, this period saw elevated spending across nearly all categories, culminating in a net loss of $1.0m, which stands in stark contrast to the $20.4m profit reported in the previous year.
On a brighter note, Inspired reported a modest rise of 1.1% in adjusted EBITDA to $74.0m across this nine-month timeframe. The company is expected to further elaborate on these financial aspects and its future outlook when the delayed Q4 results are finally published.
