Inspired Entertainment, Inc.

What they do

Inspired provides gaming terminals, virtual sports, and interactive games on a participation, fixed rental, product sale, or software license fee basis. The majority of revenue is derived from UK operations, with significant contributions from Greece and the rest of the world, including North America.

Revenue drivers

• Retail Solutions — Revenue from gaming terminals installed in retail locations, operating on participation or fixed rental fees. Strong performance in North American retail sales and continued strength in the UK drove another strong quarter.
• Interactive — Revenue from online gaming content and virtual sports, delivered via software licenses and participation agreements. Revenue increased 15% year-over-year in Q2 2026, reflecting market share gains despite the UK remote gaming duty increase.
• UK Operations — The UK generated approximately 57% of revenue in Q2 2026. This includes customers headquartered in the UK whose revenue is generated globally, contributing the majority of total revenue.
• Greece and Rest of World — Greece contributed 11% of Q2 2026 revenue, with the rest of the world (excluding UK and USA) contributing 22%. These regions offer installed base refresh opportunities and geographic expansion potential.

Recent performance

In Q2 2026, revenue was $60.8 million, up 6% sequentially from $57.2 million in Q1 2026. Net income was $0.2 million, with Adjusted EBITDA of $27.1 million, a company-record 45% margin. For the full year 2025, revenue was $304.1 million with a net loss of $17.0 million, compared to $297.1 million and net income of $64.8 million in 2024. The balance sheet shows total assets of $392.9 million, total liabilities of $408.5 million, and negative shareholder equity of $15.6 million as of June 30, 2026.

Strategy

Management is focused on portfolio optimization, including the divestiture of the UK holiday parks business and restructuring of the pubs business, which reduced revenue by approximately 30% year-over-year. The company is prioritizing higher-margin growth segments, expanding into new geographies, and leveraging a SaaS agreement with Playtech to deliver Virtuals across Playtech's operator network. Material weaknesses in internal control over financial reporting were disclosed, with an adverse opinion from the auditor in the 10-K/A.

Risks

• UK remote gaming duty increase — A higher UK remote gaming duty took effect April 1, 2026, which could pressure margins and demand in the Interactive segment.
• Negative shareholder equity — As of June 30, 2026, shareholder equity was negative $15.6 million, indicating accumulated losses exceeding assets.
• Internal control material weaknesses — The audit opinion expressed an adverse opinion on the effectiveness of internal control over financial reporting due to material weaknesses, increasing the risk of financial misstatements.
• Foreign exchange exposure — With GBP as functional currency and USD reporting, fluctuations in GBP/USD rates can materially impact reported financials.

Outlook

Management reiterated FY2026 Adjusted EBITDA target range of $112 million to $118 million, assuming GBP/USD rates remain broadly in line with current levels. They updated the free cash flow conversion outlook to 20%+ and expect momentum to build in the second half of 2026 and into 2027, driven by product launches, geographic expansion, and a new content studio in Q4 2026.