Core Viewpoint - Inspired Entertainment, Inc. has successfully completed a private placement of £270 million in senior secured notes due 2030 and established a new £17.8 million revolving credit facility, aimed at refinancing existing debt and supporting general corporate purposes [1][3]. Financing Details - The 2030 Senior Secured Notes will have a floating interest rate linked to SONIA, with a margin of 550 to 600 basis points, maturing on June 9, 2030 [2]. - The new Revolving Credit Facility will also have a floating interest rate based on SONIA, with a margin of 325 to 375 basis points, maturing on December 9, 2029 [2]. Use of Proceeds - Proceeds from the 2030 Senior Secured Notes will be used to redeem existing £235 million senior secured notes due June 1, 2026, repay £15 million in loans from the previous revolving credit facility, cover refinancing fees, and for general corporate purposes [3]. Company Overview - Inspired Entertainment, Inc. provides a diverse portfolio of gaming content, technology, hardware, and services across various regulated markets, operating in approximately 35 jurisdictions worldwide [6]. - The company supports around 50,000 gaming machines and offers virtual sports products through over 32,000 retail venues, along with interactive games for more than 170 websites [6].

Core Insights - Inspired Entertainment, Inc. has launched the Caesars Palace Wheel of Wins™ in Michigan and Ontario, expanding from its successful debut in New Jersey [1][5] - The game features a Hybrid Dealer experience, combining live hosts with computer-generated imagery to enhance online gaming [2][4] Group 1: Product Launch and Features - The Caesars Palace Wheel of Wins™ offers an immersive gaming experience set in the iconic Caesars Palace, featuring real hosts guiding players [2] - Players can enjoy various outcomes, including four bonus games: Caesars Choice, Colosseum Cash, Trevi Fortunes, and Palace Spins, along with wheel multipliers and dynamic leaderboards [3] - The game utilizes Inspired's proprietary Hybrid Dealer technology, merging live casino elements with RNG-driven gameplay for a unique experience [4] Group 2: Company Statements and Future Plans - Brooks Pierce, CEO of Inspired Entertainment, highlighted the successful performance of the game in New Jersey and expressed optimism for further market expansions in 2025 [5] - Matt Sunderland, Senior Vice President at Caesars Digital, emphasized the commitment to delivering elevated online gaming experiences through innovative titles like the Wheel of Wins™ [5] Group 3: Company Overview - Inspired Entertainment provides a diverse portfolio of gaming content, technology, and services across various regulated markets, operating in approximately 35 jurisdictions worldwide [8] - The company supports around 50,000 gaming machines and offers virtual sports products through over 32,000 retail venues, showcasing its extensive reach in the gaming industry [8]

Group 1 - The core viewpoint is that Inspired Entertainment (INSE) has significant upside potential, with a mean price target of $12.40 indicating a 56.6% increase from its current price of $7.92 [1] - Analysts have set short-term price targets ranging from $10 to $16, with the lowest estimate suggesting a 26.3% increase and the highest indicating a 102% upside [2] - The standard deviation of $2.30 among the price targets suggests a moderate level of agreement among analysts regarding the stock's potential movement [2] Group 2 - Analysts are optimistic about INSE's earnings prospects, as indicated by a positive trend in earnings estimate revisions, which historically correlates with stock price movements [4][11] - Over the last 30 days, the Zacks Consensus Estimate for the current year has increased by 78.3%, with two estimates moving higher and no negative revisions [12] - INSE holds a Zacks Rank 1 (Strong Buy), placing it in the top 5% of over 4,000 ranked stocks based on earnings estimates, indicating strong potential for near-term upside [13]

Core Viewpoint - The article emphasizes the importance of value investing and highlights Inspired Entertainment (INSE) as a strong candidate for value investors due to its favorable metrics and Zacks Rank [2][4][6]. Company Analysis - Inspired Entertainment (INSE) has a Zacks Rank of 1 (Strong Buy) and an A for Value, indicating strong potential for value investors [4]. - The stock has a Price-to-Earnings (P/E) ratio of 13.32, significantly lower than the industry average P/E of 25.02, suggesting it may be undervalued [4]. - INSE's Forward P/E has fluctuated between 8.19 and 33.98 over the past year, with a median of 12.64, further indicating its valuation dynamics [4]. - The Price-to-Sales (P/S) ratio for INSE is 0.76, compared to the industry average P/S of 1.77, reinforcing the notion of undervaluation [5]. Investment Outlook - The combination of INSE's favorable P/E and P/S ratios, along with a strong earnings outlook, positions it as an attractive value stock at the moment [6].

Core Insights - The article emphasizes the significant burden of debt on companies, indicating that it is excessive for sustainable financial health [1]. Company Analysis - The focus is on the restaurant sector, with a detailed analysis of various segments including QSR, fast casual, casual dining, fine dining, and family dining [1]. - The company employs advanced analytical models and specialized valuation techniques to provide insights and strategies for investors [1]. Industry Engagement - The company actively participates in academic and journalistic initiatives, contributing to institutions that promote economic freedom [1]. - Previous contributions included discussions on monetary policy, financial education, and financial modeling, aimed at making these topics accessible to a wider audience [1].

Core Insights - Inspired Entertainment, Inc. has launched V-Play Football Brazil in partnership with Kaizen Gaming, marking a significant expansion into the Brazilian market [1][4] - The game features hyper-realistic visuals and a fully localized experience tailored for Brazilian football fans [2] - V-Play Football Brazil is officially sponsored by Brasileirão Betano, enhancing its authenticity with official branding and logos [3] Company Overview - Inspired Entertainment provides a diverse portfolio of gaming content, technology, hardware, and services across regulated gaming and betting sectors globally [6] - The company operates in approximately 35 jurisdictions, supplying systems for around 50,000 gaming machines and virtual sports products through over 32,000 retail venues [6] - Inspired's offerings include digital games for more than 170 websites and amusement entertainment solutions with over 16,000 terminals installed [6] Partner Overview - Kaizen Gaming is recognized as one of the largest GameTech companies globally, focusing on technology and customer experience [8] - The company operates the Betano brand, which has a strong presence in Europe, the Americas, and Africa, employing over 2,700 people [9] - Kaizen Gaming has received multiple industry awards, including five trophies at the 2023 EGR Operator Awards, highlighting its leadership in the sports betting market [10]

Core Viewpoint - Inspired Entertainment (INSE) shows potential as a strong investment opportunity due to significant revisions in earnings estimates, indicating an improving earnings outlook [1][10] Earnings Estimate Revisions - The current quarter's earnings estimate is projected at $0.17 per share, reflecting a substantial increase of +142.86% compared to the previous year [6] - Over the last 30 days, the Zacks Consensus Estimate for the current quarter has risen by 73.68% due to one upward revision and one downward revision [6] - For the full year, the earnings estimate is expected to be $0.95 per share, which is a decrease of -57.78% from the prior year, but the trend remains positive with two upward revisions and no negative revisions, leading to a 71.82% increase in the consensus estimate [7][8] Zacks Rank and Performance - Inspired Entertainment has achieved a Zacks Rank 1 (Strong Buy), which is associated with a strong historical performance, as Zacks 1 Ranked stocks have averaged an annual return of +25% since 2008 [3][9] - The positive estimate revisions have contributed to a 12.9% increase in the stock price over the past four weeks, suggesting further upside potential [10]

Inspired Entertainment (INSE) closed the last trading session at $8.17, gaining 12.9% over the past four weeks, but there could be plenty of upside left in the stock if short-term price targets set by Wall Street analysts are any guide. The mean price target of $12.40 indicates a 51.8% upside potential.The average comprises five short-term price targets ranging from a low of $10 to a high of $16, with a standard deviation of $2.30. While the lowest estimate indicates an increase of 22.4% from the current pr ...

PART I. FINANCIAL INFORMATION [Financial Statements (Unaudited)](index=5&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS%20(Unaudited)) Inspired Entertainment reported Q1 2025 revenue of $60.4 million, significantly reduced net loss, and achieved strong operating cash flow [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets increased to $458.9 million as of March 31, 2025, while total liabilities also rose, and the stockholders' deficit improved Condensed Consolidated Balance Sheet Highlights (in millions) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Cash | $39.0 | $29.3 | | Total current assets | $161.8 | $159.9 | | Total assets | $458.9 | $438.4 | | **Liabilities & Stockholders' Deficit** | | | | Total current liabilities | $113.1 | $104.0 | | Long-term debt | $301.5 | $292.2 | | Total liabilities | $461.1 | $441.7 | | Total stockholders' deficit | $(2.2) | $(3.3) | [Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20(Loss)%20Income) Q1 2025 total revenue was $60.4 million, a decrease from prior year, but net operating income turned positive, and net loss significantly narrowed Q1 2025 vs Q1 2024 Statement of Operations (in millions, except per share data) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Total Revenue | $60.4 | $62.3 | | Net Operating Income (Loss) | $1.6 | $(2.1) | | Net Loss | $(0.1) | $(6.4) | | Net Loss per Share (basic and diluted) | $0.00 | $(0.22) | [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) In Q1 2025, the company generated **$25.5 million** in operating cash flow, a significant increase, ending the quarter with **$39.0 million** cash Q1 2025 vs Q1 2024 Cash Flow Summary (in millions) | Cash Flow Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $25.5 | $6.0 | | Net cash used in investing activities | $(15.1) | $(10.1) | | Net cash used in financing activities | $(1.7) | $(0.2) | | **Net increase (decrease) in cash** | **$9.7** | **$(4.7)** | | **Cash, end of period** | **$39.0** | **$35.3** | [Notes to Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes detail accounting policies, liquidity outlook, segment reporting, fixed-rate debt, debt covenant compliance, and a revision for immaterial lease classification errors - Management believes cash on hand, expected cash flows from operations, and available borrowings will be sufficient to fund requirements through May 2026[27](index=27&type=chunk) - Long-term debt consists of **£235.0 million ($303.4 million)** of Senior Secured Notes with a fixed interest rate of **7.875%**, maturing on June 1, 2026[37](index=37&type=chunk) - The company was in compliance with its RCF Financial Covenant as of March 31, 2025, with a net leverage of **2.9x** against a maximum of **5.50x**[38](index=38&type=chunk) - The company identified and corrected immaterial errors in its 2024 financial statements related to the classification of leases between operating and sales type[72](index=72&type=chunk)[73](index=73&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=21&type=section&id=ITEM%202.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Q1 2025 consolidated revenue decreased by 3% to $60.4 million, but net operating income improved, net loss narrowed, and Adjusted EBITDA reached $18.4 million, with solid liquidity [Overall Company Results](index=24&type=section&id=Overall%20Company%20Results) Q1 2025 total revenue decreased by 3% due to lower product sales, but reduced costs led to improved net operating income and a 95% reduction in net loss Overall Company Results - Q1 2025 vs Q1 2024 (in millions) | Metric | Q1 2025 | Q1 2024 | Variance (Functional Currency) | Variance % (Functional Currency) | | :--- | :--- | :--- | :--- | :--- | | Total Revenue | $60.4 | $62.3 | $(1.6) | (3)% | | Net Operating Income / (Loss) | $1.6 | $(2.1) | $3.6 | 171% | | Net Loss | $(0.1) | $(6.4) | $6.1 | 95% | - The decrease in revenue was driven by a **$2.8 million** decline in product sales, while service revenue saw a modest increase of **$1.2 million**[96](index=96&type=chunk)[100](index=100&type=chunk) - Cost of sales decreased by **$2.5 million (12%)**, driven by lower cost of product sales linked to decreased hardware sales[102](index=102&type=chunk) [Segment Results](index=26&type=section&id=Segment%20Results) Q1 2025 segment performance was mixed, with Interactive revenue up 51%, Gaming down 6%, Virtual Sports down 29%, and Leisure down 3% Segment Revenue - Q1 2025 vs Q1 2024 (in millions) | Segment | Q1 2025 Revenue | Q1 2024 Revenue | Change (Functional Currency) | | :--- | :--- | :--- | :--- | | Gaming | $21.7 | $23.2 | $(1.5) | | Virtual Sports | $8.7 | $12.4 | $(3.6) | | Interactive | $12.1 | $8.1 | $4.1 | | Leisure | $17.9 | $18.6 | $(0.6) | Segment Operating Income (Loss) - Q1 2025 vs Q1 2024 (in millions) | Segment | Q1 2025 Operating Income (Loss) | Q1 2024 Operating Income (Loss) | Change (Functional Currency) | | :--- | :--- | :--- | :--- | | Gaming | $4.2 | $2.1 | $1.9 | | Virtual Sports | $4.9 | $9.4 | $(4.3) | | Interactive | $6.9 | $3.1 | $4.0 | | Leisure | $(1.7) | $(1.3) | $(0.2) | [Non-GAAP Financial Measures](index=40&type=section&id=Non-GAAP%20Financial%20Measures) The company uses non-GAAP measures like Adjusted EBITDA, which increased to $18.4 million in Q1 2025, with reconciliation including standard adjustments Adjusted EBITDA Reconciliation Summary (in millions) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net Loss | $(0.1) | $(6.4) | | Adjustments (D&A, Interest, Tax, etc.) | $18.5 | $21.9 | | **Adjusted EBITDA** | **$18.4** | **$15.5** | - Adjusted EBITDA is defined as net income (loss) excluding D&A, interest, taxes, and other adjustments like stock-based compensation, restructuring costs, and M&A costs[178](index=178&type=chunk) [Liquidity and Capital Resources](index=43&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity improved in Q1 2025, with cash increasing to $39.0 million and operating cash flow rising to $25.5 million, with management believing liquidity is sufficient through May 2026 - Net cash inflow from operating activities increased to **$25.5 million** in Q1 2025 from **$6.0 million** in Q1 2024, a **$19.5 million** improvement[189](index=189&type=chunk)[190](index=190&type=chunk) - As of March 31, 2025, the company had liquidity of **$39.0 million** in cash and a **$6.5 million** undrawn revolver facility[197](index=197&type=chunk) - The Board authorized a **$25.0 million** share repurchase program, with **$13.0 million** remaining available as of March 31, 2025[205](index=205&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=47&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) The company's primary market risk is foreign currency exchange rate fluctuations between GBP and USD, with minimal interest rate risk due to fixed-rate debt - The primary market risk is foreign currency exchange rate fluctuation, as the company's functional currency is GBP but it reports in USD[211](index=211&type=chunk)[213](index=213&type=chunk) - Interest rate risk is low because the company's **£235.0 million** in external borrowings are at a fixed rate[212](index=212&type=chunk) [Controls and Procedures](index=47&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) Management concluded that disclosure controls and procedures were not effective as of March 31, 2025, due to material weaknesses, though financial statements are believed to be fairly presented - Certifying Officers concluded that disclosure controls and procedures were not effective as of March 31, 2025[218](index=218&type=chunk) - The ineffectiveness is due to material weaknesses described in the Annual Report on Form 10-K for the year ended December 31, 2024[218](index=218&type=chunk) - Notwithstanding the material weaknesses, management believes the interim financial statements are fairly presented in all material respects[219](index=219&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings](index=49&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) The SEC concluded its investigation into the company's restated financial statements without recommending enforcement action, and other legal matters are not currently material - On January 28, 2025, the SEC staff notified the Company that it had concluded its investigation regarding restated financial statements and did not intend to recommend an enforcement action[221](index=221&type=chunk) [Risk Factors](index=49&type=section&id=ITEM%201A.%20RISK%20FACTORS) No new risk factors are presented in this report, with the company referring to those discussed in its Annual Report on Form 10-K - The company directs investors to consider the risk factors discussed in its Annual Report on Form 10-K for the fiscal year ended December 31, 2024[223](index=223&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=49&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) None - None[224](index=224&type=chunk) [Defaults Upon Senior Securities](index=49&type=section&id=ITEM%203.%20DEFAULTS%20UPON%20SENIOR%20SECURITIES) None - None[225](index=225&type=chunk) [Mine Safety Disclosures](index=49&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES) Not applicable - Not applicable[226](index=226&type=chunk) [Other Information](index=49&type=section&id=ITEM%205.%20OTHER%20INFORMATION) None - None[227](index=227&type=chunk) [Exhibits](index=49&type=section&id=ITEM%206.%20EXHIBITS) This section lists exhibits filed with the Form 10-Q, including executive employment agreements and required certifications by officers - Exhibits filed include addendums to employment agreements for A. Lorne Weil and Brooks H. Pierce, and a new employment agreement for James Richardson[228](index=228&type=chunk) - Required certifications under Rule 13a-14(a) and 13a-14(b) by the Principal Executive Officer and Principal Financial Officer are filed as exhibits[228](index=228&type=chunk)

Group 1: Earnings Performance - Inspired Entertainment reported break-even quarterly earnings per share, surpassing the Zacks Consensus Estimate of a loss of $0.14, compared to a loss of $0.02 per share a year ago, representing an earnings surprise of 100% [1] - The company posted revenues of $60.4 million for the quarter ended March 2025, missing the Zacks Consensus Estimate by 6.85%, and down from year-ago revenues of $63.1 million [2] - Over the last four quarters, the company has surpassed consensus EPS estimates two times and topped consensus revenue estimates two times [2] Group 2: Stock Performance and Outlook - Inspired Entertainment shares have lost about 17.5% since the beginning of the year, while the S&P 500 has declined by 4.3% [3] - The company's earnings outlook is mixed, with the current consensus EPS estimate at $0.09 on $75.1 million in revenues for the coming quarter and $0.53 on $305.12 million in revenues for the current fiscal year [7] - The current Zacks Rank for the stock is 3 (Hold), indicating expected performance in line with the market in the near future [6] Group 3: Industry Context - The Technology Services industry, to which Inspired Entertainment belongs, is currently in the top 27% of over 250 Zacks industries, suggesting a favorable outlook compared to the bottom 50% [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]