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Core Insights - Inspired Entertainment, Inc. (INSE) is targeting an EBITDA of $112 million to $118 million by 2026, with a digital revenue mix expected to exceed 60% [2] Management View - Executive Chairman A. Weil characterized Q4 2025 as a significant milestone in the company's ongoing transformation, highlighting the Interactive business which saw revenue growth of 53% and EBITDA growth of 60% in Q4 [2]

Weil said the transformation has been led by Interactive, which grew revenue and EBITDA by 53% and 60%, respectively, in the fourth quarter. President and CEO Brooks Pierce said Interactive has now delivered 10 straight quarters of more than 40% EBITDA growth and “shows no sign of slowing down.” He cited recent operating momentum, including the “single highest day” and “single highest weekend” of GGR for the segment in late February, followed by what he called the best week ever “based on this morning’s res ...

Financial Data and Key Metrics Changes - The company reported a full-year EBITDA of $111 million, an 11% increase over 2024, with an EBITDA margin of 37% [19] - The fourth quarter EBITDA margin reached a record 42%, the highest in the company's history [5] - The company is projecting 2026 EBITDA guidance of $112 million to $118 million, with a midpoint of $115 million representing low double-digit growth over 2025 [6][19] Business Line Data and Key Metrics Changes - The interactive business grew revenue and EBITDA by 53% and 60% respectively in the fourth quarter [4] - More than 80% of the company's revenue is recurring, indicating a stable revenue stream [9] - The digital business accounted for 51% of EBITDA in 2025 and is expected to grow to over 60% by 2027 [19][20] Market Data and Key Metrics Changes - The company is experiencing strong growth in the North American market, particularly with the launch of its Virtuals business with BetMGM [10] - iGaming is more than three times the size of sports betting in states where they compete head-to-head, presenting a significant opportunity for the company [12] Company Strategy and Development Direction - The company is focusing on an asset-light business model, which is positively impacting free cash flow and is expected to continue through 2026 [7][9] - The company plans to combine its gaming and remaining leisure businesses into one reporting entity called Retail Solutions, simplifying its story and reflecting its current management structure [20] - The company is targeting to de-leverage to 2.5-3 times net leverage by year-end 2026 [7] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ongoing momentum of the interactive business, with no signs of slowing down [11][35] - The company is optimistic about the potential for additional states to legalize iGaming, which could significantly enhance growth [12] - Management noted that the impact of tax changes in the UK is manageable and that operators are adjusting their strategies accordingly [24][25] Other Important Information - The company launched a cloud-based lottery platform, which is expected to generate significant revenue in the coming years, particularly outside the U.S. [61][63] - The company is focused on maintaining strong relationships with key customers, which is crucial for contract renewals and product innovation [9] Q&A Session Summary Question: Impact of UK tax changes on guidance - Management indicated that UK operators are adjusting their RTP and bonusing structures to mitigate the impact of tax changes, and they feel comfortable with the expected outcomes [24][25] Question: Capital allocation strategy amid changing valuations - Management acknowledged the potential for share repurchase but emphasized a focus on deleveraging, while also considering stock valuations in their asset allocation [29][30] Question: Expectations for iGaming market share growth - Management noted that the momentum in the interactive business is expected to continue, with strong performance from major customers [36][38] Question: Retail strategies in response to tax changes - Management stated that operators are looking to balance online and retail business to mitigate tax impacts, with some lower-performing shops being taken over by independent operators [42][45] Question: Virtual Sports revenue expectations - Management acknowledged a mixed performance in Virtual Sports but expressed confidence in margin sustainability and ongoing revenue growth initiatives [46][49]

Financial Performance - For the year ended December 31, 2025, Inspired Entertainment generated total revenue of $304.1 million and adjusted EBITDA of $111.4 million[20]. - The Gaming segment generated revenue of $112.3 million and adjusted EBITDA of $55.0 million for the year ended December 31, 2025, compared to $110.6 million and $45.3 million in 2024[31]. - The Virtual Sports segment generated revenue of $36.6 million and adjusted EBITDA of $26.8 million for the year ended December 31, 2025, down from $45.4 million and $36.1 million in 2024[38]. - The Interactive segment generated revenue of $58.6 million and adjusted EBITDA of $40.6 million for the year ended December 31, 2025, compared to $39.3 million and $25.6 million in 2024[43]. - The Leisure segment generated revenue of $96.6 million and Adjusted EBITDA of $21.2 million for the year ended December 31, 2025, compared to $101.8 million and $23.3 million in 2024, representing a decline of approximately 5.5% in revenue and 9.0% in Adjusted EBITDA[48]. - Recurring revenue represented approximately 92% of total revenue for the year ended December 31, 2025, up from 86% in 2024, highlighting the growth in stable revenue streams[52]. Market Presence and Operations - Approximately 69% of Inspired's revenue for the year ended December 31, 2025, was generated from UK operations, with the remainder from Greece, North America, and other regions[18]. - The company sold approximately 5,500 gaming terminal units in 2025, an increase of approximately 2,300 units from the previous year[30]. - The company has an installed base of over 32,000 digital terminals in the Gaming segment and approximately 5,500 gaming terminals in the Leisure segment, indicating a strong market presence[50]. - Inspired's Virtual Sports products are available in approximately 25,000 retail venues and through multiple online platforms across over 25 gaming jurisdictions[33]. Recurring Revenue and Contracts - Approximately 87% of service revenue for the Gaming segment was recurring in nature in 2025, derived under long-term contracts[30]. - Approximately 94% of service revenue in the Gaming segment is recurring, derived from long-term contracts typically between three to five years[108]. - The Virtual Sports segment generates approximately 99% of total revenue on a recurring basis under long-term contracts averaging three to four years, with a 100% renewal rate over the last three years[110]. - The Interactive segment's revenue is also approximately 100% recurring, derived from long-term contracts averaging three years, with a 100% renewal rate for continuing customers[112]. Regulatory Environment - The UK, Italy, and Greece are the primary jurisdictions contributing significant recurring revenue, with the UK regulated by the Gambling Commission and Italy by L'Agenzia delle dogane e dei Monopoli[82]. - The Gambling Act 2005 governs both land-based and online gambling in the UK, with specific licensing requirements for gaming machine suppliers[84]. - In Italy, the company operates three gaming businesses, providing platforms for video lottery terminals and online casino games, all requiring compliance with local regulations[89]. - The company's platforms in Italy must connect to ADM servers for real-time monitoring of gaming sessions and tax verification[90]. - The regulatory landscape includes extensive licensing and suitability requirements across jurisdictions, with increased scrutiny on ownership structures and financing arrangements[98]. - The company must comply with various operational requirements, including social responsibility measures and reporting of key events to regulators[91]. Strategic Initiatives and Growth - The company aims to expand into new markets, particularly in North and South America, where it sees significant growth opportunities[65]. - The management team has extensive experience in the gaming industry, which is expected to support the company’s strategic objectives and growth initiatives[60]. - The company is pursuing targeted mergers and acquisitions to enhance its product portfolio and distribution capabilities, aiming to strengthen its competitive position[69]. - The Interactive business has experienced a compound annual growth rate of approximately 53% from 2019 to 2024, driven by a content library of over 340 games[55]. Risks and Challenges - Labor shortages and increased labor costs due to inflation and regulatory changes may adversely affect the company's operations and profitability[135]. - The company operates in a highly competitive industry, facing intense price-based competition that could impact contract profitability[139]. - The company is dependent on renewing long-term contracts, with initial terms typically ranging from three to five years, which could lead to substantial revenue loss if not renewed[142]. - Changes in gaming tax regimes and local fiscal measures could result in reduced profitability and revenue for the company[144]. - Cybersecurity risks remain a major concern, with potential incidents leading to operational delays and reputational harm[153][156]. - The company faces strict government regulations that could limit operations and affect growth potential in various jurisdictions[173][174]. Financial Management and Compliance - The company has identified material weaknesses in its internal control over financial reporting, which it aims to remediate by December 31, 2026[127]. - The company has implemented new financial systems and enhanced controls to address previously identified material weaknesses in financial reporting[127]. - Tax laws and regulations are subject to interpretation, and discrepancies could adversely affect the company's financial results[191]. - The company derives all operating income from its subsidiaries, which may limit its ability to meet debt service obligations if subsidiaries cannot pay dividends[197].

Financial Data and Key Metrics Changes - The company reported a full-year EBITDA of $111 million, an 11% increase over 2024, with an EBITDA margin of 37% [19] - The fourth quarter EBITDA margin reached a record 42%, marking a significant improvement [5] - The company is projecting 2026 EBITDA guidance of $112 million to $118 million, indicating low double-digit growth over 2025 [5][19] Business Line Data and Key Metrics Changes - The interactive business grew revenue and EBITDA by 53% and 60% respectively in the fourth quarter [4] - The digital business accounted for 51% of EBITDA, with expectations to grow to over 60% by 2026 [19] - The company is focusing on a CapEx-light business model, which is expected to improve cash flow significantly [9] Market Data and Key Metrics Changes - The company is optimistic about expanding its footprint in North America, particularly in Illinois, where it has strong relationships with key customers [12] - iGaming is projected to be more than three times the size of sports betting in states where they compete directly, presenting a significant opportunity [18] Company Strategy and Development Direction - The company is transforming towards a higher growth, higher margin, and less capital-intensive business model [21] - A new cloud-based lottery platform has been launched, with plans to expand its market presence outside the U.S. [63] - The company is combining its gaming and leisure businesses into one reporting entity called Retail Solutions to reflect its current management structure [20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustaining growth momentum, particularly in the interactive segment, with no signs of slowing down [34][70] - The company is prepared for potential impacts from tax changes in the UK, with strategies in place to mitigate effects [25] - Management remains optimistic about the company's ability to navigate challenges in the operating environment, including geopolitical factors [56] Other Important Information - The company is targeting to reduce net leverage to 2.5-3 times by year-end 2026, which may lead to lower interest rates and better financing options [6] - The company has secured long-term contracts with major customers like bet365 and Entain, ensuring a stable revenue stream [48] Q&A Session Summary Question: Impact of UK tax changes on guidance - Management indicated that customers are adjusting their RTP and bonusing structures to mitigate tax impacts, and they feel comfortable with the expected outcomes [25] Question: Capital allocation strategy amid changing valuations - Management acknowledged the potential for stock repurchase or acquisitions but emphasized a focus on deleveraging at present [28] Question: Expectations for digital business growth - Management confirmed ongoing momentum in the interactive business and highlighted opportunities in new markets like Brazil [34] Question: Retail vs. online marketing strategies - Management noted that operators are looking to balance their marketing strategies between retail and online to mitigate tax impacts [44] Question: Performance of Virtual Sports and Bet Builder product - Management reported modest growth in the Bet Builder product and acknowledged some softening in the Brazil market, but remains optimistic about margin sustainability [50]

Inspired Entertainment (INSE) came out with a quarterly loss of $0.18 per share versus the Zacks Consensus Estimate of $0.25. This compares to earnings of $2.33 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of -172.00%. A quarter ago, it was expected that this company would post earnings of $0.3 per share when it actually produced earnings of $0.28, delivering a surprise of -6.67%.Over the last four quarters, the company has su ...

Fourth Quarter 2025 Earnings MARCH 10, 2026 Safe Harbor / Non-GAAP Financial Disclosures Forward-Looking Statements This presentation includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, statements regarding our business strategy, plans and objectives and our expected or contemplated future operations, results, financial condition, beliefs and intentions. In addition, any statements t ...

Financial Performance - Fourth quarter revenue reached $77.2 million, primarily driven by record Interactive revenue, which increased by 53% year-over-year[5] - Adjusted EBITDA for the fourth quarter was $32.3 million, up 5% from the prior year, resulting in a record Adjusted EBITDA margin of 42%[5] - The company reported a net loss of $7.2 million for the fourth quarter, compared to a net income of $67.0 million in the same period last year[5] - Total revenue for Q4 2025 was $77.2 million, a decrease of 6.9% compared to $83.0 million in Q4 2024[33] - Service revenue increased to $68.4 million in Q4 2025 from $64.7 million in Q4 2024, representing a growth of 5.7%[33] - Product sales decreased significantly to $8.8 million in Q4 2025 from $18.3 million in Q4 2024, a decline of 52.0%[33] - Adjusted Net Income per diluted share for Q4 2025 was $(0.25), compared to $2.29 in Q4 2024[33] - Net loss for the year ended December 31, 2025, was $17.0 million, a significant decline from a net income of $64.8 million in 2024[37] - Total revenue for the twelve months ended December 31, 2025, was $304.1 million, a slight increase from $297.1 million in 2024[47][48] - Adjusted EBITDA for 2025 was $111.4 million, compared to $100.1 million in 2024, reflecting a year-over-year growth of 11.9%[47][48] - Net loss for the twelve months ended December 31, 2025, was $17.0 million, an increase from a net income of $64.8 million in 2024[41][43] Segment Performance - Interactive segment revenue for the full year 2025 was $58.6 million, a 49% increase compared to $39.3 million in 2024[15] - The gaming segment contributed $112.3 million to total revenue in 2025, accounting for 36.9% of total revenue[47] - The sports segment generated $36.6 million in revenue, representing 12.0% of total revenue for 2025[47] - Adjusted EBITDA for the gaming segment was $55.0 million, while the sports segment reported $26.8 million in adjusted EBITDA for 2025[47] Debt and Cash Management - The company repaid approximately $13 million of debt and repurchased shares, strengthening its balance sheet[3] - Long-term debt increased to $345.2 million in 2025 from $292.2 million in 2024, representing an 18.1% rise[35] - The company incurred $365.7 million in proceeds from long-term debt in 2025, with repayments totaling $338.6 million[37] - Cash and restricted cash at the end of the period totaled $43.3 million, up from $29.3 million in 2024, reflecting a 47.8% increase[37] - Net cash provided by operating activities rose to $52.0 million in 2025, compared to $31.7 million in 2024, marking a 64.4% increase[37] Operational Changes and Future Outlook - The company plans to streamline its reporting structure by merging Gaming and Leisure into a single "Retail Solutions" segment starting in 1Q 2026[14] - The company expects first quarter 2026 Adjusted EBITDA to increase by at least 20% year-over-year, with full year 2026 Adjusted EBITDA projected to be between $112 million and $118 million[10] - The new Virtual Soccer BetBuilder product in Greece is already driving increases in total bet volume and gross win, with plans for broader rollout ahead of the 2026 World Cup[3] - The company expanded into South Africa and launched new customer Jenningsbet with 470 terminals installed in 4Q 2025[14] - The company remains focused on capital allocation to high-return opportunities while improving profitability and financial flexibility[9] - The company plans to host a conference call on March 10, 2026, to discuss financial results and business trends[26] - Forward-looking statements indicate expectations for future product launches and market expansion, though subject to risks and uncertainties[30] Cost Management - Selling, general and administrative expenses remained stable at $34.3 million in Q4 2025, slightly down from $34.4 million in Q4 2024[33] - Interest expense increased to $10.7 million in Q4 2025 from $8.8 million in Q4 2024, reflecting a rise of 21.6%[33] - The company incurred $10.1 million in costs related to group restructuring during 2025[41] Asset Management - Total assets increased to $439.9 million in 2025 from $438.4 million in 2024, reflecting a growth of 0.34%[35] - Accounts receivable decreased to $43.9 million in 2025 from $65.4 million in 2024, a decline of 32.9%[35] - Total current liabilities decreased to $70.8 million in 2025 from $104.0 million in 2024, a reduction of 32.0%[35] Exchange Rates - The exchange rate for converting USD to GBP was 1.32 for the twelve months ended December 31, 2025[47]

Transition Underway to More Digital, Scalable, Higher Margin Business Fourth quarter Revenue of $77.2 million driven primarily by record Interactive revenue, up 53% year-over-yearFourth quarter Net Operating Income of $11.2 million, Net Loss of $7.2 million and Adjusted Net Loss of $5.1 millionAdjusted EBITDA of $32.3 million, up 5% from prior year, generating a record 42% Adjusted EBITDA Margin, driven by all-time-high Interactive Adjusted EBITDA, up 60% year-over-yearFirst quarter 2026 Adjusted EBITDA exp ...