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Inspired Entertainment, Inc. (INSE)·Q3 2025 Earnings Summary

Executive Summary

  • Revenue grew 12% year over year to $86.2M, with record Interactive revenue (+48% YoY), Adjusted EBITDA rose 11% to $32.3M, and adjusted diluted EPS increased to $0.28; GAAP EPS was a loss of $0.07 due to a $5.9M held-for-sale impairment tied to the holiday parks divestiture .
  • Management guided Q4 2025 Adjusted EBITDA to increase year over year and expects full-year 2025 Adjusted EBITDA to exceed $110M, underscoring continued digital-led momentum; detailed 2026 outlook to come with Q4 results .
  • Strategic actions: sale of UK holiday parks business closed Nov 7 for £18.6M cash, expected to reduce 2026 cash capex to $30–$35M and support deleveraging; board authorized a $25M share repurchase program through Nov 30, 2028 .
  • Operational catalysts: Interactive’s October was the largest revenue month ever; entry into West Virginia expands U.S. iGaming footprint; Hybrid Dealer won G2E Innovative Product of the Year and continues to scale with tier-1 partners .

What Went Well and What Went Wrong

What Went Well

  • Interactive delivered another record quarter: revenue +48% YoY to $15.1M and segment Adjusted EBITDA +55% YoY to $10.7M; October marked the segment’s largest revenue month ever, with market share gains across the U.S., U.K. and Greece .
  • Gaming strength: revenue +20% YoY to $27.1M and segment Adjusted EBITDA +33% YoY to $13.1M, supported by Vantage cabinet performance at William Hill and Greek estate refreshes; 98% of Illinois customers adopted GamePak subscriptions .
  • Strategic evolution: closed sale of UK holiday parks (Leisure) for £18.6M, lowering capital intensity and expected to reduce 2026 cash capex to $30–$35M; share repurchase authorization of $25M signals confidence in FCF trajectory .

What Went Wrong

  • GAAP results pressured by non-recurring items: $5.9M impairment on held-for-sale classification drove net loss of $1.9M (‑$0.07 diluted EPS) despite stronger operating metrics .
  • Virtual Sports remained below prior-year levels (revenue $9.3M, ‑17% YoY; Adjusted EBITDA $6.6M, ‑25% YoY), with Brazil tax headwinds continuing; management is adding customers and localized content to drive improvement in Q4 and 2026 .
  • Interest expense rose to $12.5M vs $7.5M prior year quarter following debt refinancing, tempering GAAP profitability despite improved adjusted performance .

Financial Results

Consolidated Performance vs Prior Periods

MetricQ3 2024Q1 2025Q2 2025Q3 2025
Revenue ($USD Millions)$77.2 $60.4 $80.3 $86.2
Net (Loss) Income ($USD Millions)$2.8 $(0.1) $(7.8) $(1.9)
GAAP Diluted EPS ($USD)$0.10 $0.00 $(0.27) $(0.07)
Adjusted EBITDA ($USD Millions)$29.2 $18.4 $28.4 $32.3
Adjusted EBITDA Margin (%)38% 30% 35% 37%
Adjusted Net Income ($USD Millions)$5.4 $3.8 $(5.6) $8.3
Adjusted Diluted EPS ($USD)$0.19 $0.13 $(0.19) $0.28

Segment Revenue

Segment Revenue ($USD Millions)Q3 2024Q1 2025Q2 2025Q3 2025
Gaming$22.5 $21.7 $27.2 $27.1
Virtual Sports$11.2 $8.7 $9.2 $9.3
Interactive$10.2 $12.1 $13.6 $15.1
Leisure$33.3 $17.9 $30.3 $34.7
Total$77.2 $60.4 $80.3 $86.2

Segment Adjusted EBITDA

Segment Adjusted EBITDA ($USD Millions)Q3 2024Q1 2025Q2 2025Q3 2025
Gaming$9.9 $9.3 $12.8 $13.1
Virtual Sports$8.8 $6.3 $6.6 $6.6
Interactive$6.9 $7.7 $9.1 $10.7
Leisure$10.2 $1.7 $7.7 $9.5
Corporate$(6.6) $(6.6) $(7.8) $(7.6)
Total Company$29.2 $18.4 $28.4 $32.3

Revenue Mix KPIs

Revenue Mix ($USD Millions)Q3 2024Q1 2025Q2 2025Q3 2025
Service Revenue$72.9 $57.0 $73.8 $79.4
Product Sales$4.3 $3.4 $6.5 $6.8

Non-GAAP notes: Adjusted EBITDA and Adjusted Net Income exclude items outside normal course (e.g., restructuring, restatement costs), legacy activities and tax impacts; Q3 included a $5.9M held-for-sale impairment charge related to the holiday parks business .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Adjusted EBITDA ($USD)Q4 2025N/AIncrease year over year vs Q4 2024 (management expectation) New/Positive
Adjusted EBITDA ($USD)FY 2025N/AExceed $110M New/Positive
Cash Capital Expenditures ($USD)FY 2026N/A$30–$35M expected (post holiday parks sale, pubs model shift) Lowered (vs prior run-rate)
2026 Outlook DetailFY 2026N/AWill be provided with Q4 2025 results Timing update
Share Repurchase AuthorizationThrough Nov 2028N/A$25M buyback authorized New

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2 and Q-1)Current Period (Q3 2025)Trend
Interactive growth & scalingQ1: +49% revenue, +75% Adj. EBITDA; margin expansion to ~64% . Q2: +45% revenue, +49% Adj. EBITDA; margin ~67% .Record quarter; +48% revenue, +55% Adj. EBITDA; October largest revenue month; expanding in U.S. (WV) .Strengthening
Virtual Sports trajectoryQ1: hit by Brazil tax; stabilization emerging . Q2: sequential growth; localized Brazil content, Turkey launches .Stabilized; targeting YoY growth in Q4; adding Brazil operators and content streams in Turkey .Improving
Hybrid Dealer innovationQ1/Q2: rollout with tier-1s; traction building .Won G2E Product Innovation of the Year; strong William Hill-branded roulette performance; next phase to highlight proprietary franchises .Accelerating adoption
Regulatory outlook (UK)Limited prior discussion; Brazil regulatory noted .Addressed potential UK budget/tax changes; confident in mitigation via levers and experience .Heightened monitoring
Capital allocation & leverageQ2: completed £270M notes refinancing .£18.6M holiday parks sale closed; deleveraging focus; opportunistic $25M buyback plan .Balance sheet strengthening
North America expansionQ2: momentum in Interactive, Ontario virtuals .Entered West Virginia; targeting BetMGM for U.S. virtuals as catalyst .Expanding footprint
M&A postureNo major prior commentary.Preference for tuck-ins with clear synergies (e.g., interactive studio/content); avoid large diversification deals .Opportunistic

Management Commentary

  • “Inspired delivered a strong quarter driven by strategic execution, digital expansion, and product innovation… Our sustained momentum in Interactive continues to build, delivering another record quarter.” — Brooks Pierce, President & CEO .
  • “The divestiture of our holiday parks business marks the next step in our strategic evolution… we expect digital mix to increase and Adjusted EBITDA margins to expand, more than offsetting the Adjusted EBITDA reduction from the divestiture.” — Lorne Weil, Executive Chairman .
  • “October is now complete and is the single largest revenue month for [Interactive] in our history… market share gains across our key geographies in both the U.K. and North America.” — Brooks Pierce .
  • “We’re projecting… Adjusted EBITDA margin to grow by 10 percentage points from 35%–45%… and net leverage to decline to under 2x [by 2027].” — Lorne Weil .

Q&A Highlights

  • Revenue trajectory post-divestiture: Management clarified that headline revenue may reflect the removal of holiday parks, while core segments (Interactive, Gaming, Virtuals) are expected to grow; focus is on margin expansion and FCF .
  • Virtual Sports recovery: Confidence in Q4 YoY growth driven by adjustments with the largest customer, six new Brazil operators, and new content in Turkey; targeting >$7.2M Q4 2024 EBITDA comp .
  • Buyback philosophy: Plan is opportunistic rather than programmatic, balanced with deleveraging and potential tuck-in M&A; attractive valuation and stronger cash generation underpin decision .
  • U.S. Virtuals pipeline: BetMGM expected to be first major North American operator beyond Ontario, with licensed NFL/NBA/NHL content; management sees a catalyst for broader adoption among tier-1s .
  • Regulatory risk commentary: UK budget tax concerns addressed with mitigation levers; historical resilience to major regulatory changes (e.g., 2019 triennial) cited .

Estimates Context

S&P Global consensus estimates for Q3 2025 and forward quarters were unavailable via our tool at the time of analysis; as a result, we cannot determine beat/miss versus Street for revenue or EPS. Values retrieved from S&P Global.*

MetricQ3 2025Q4 2025Q1 2026
Primary EPS Consensus Mean ($USD)Unavailable*Unavailable*Unavailable*
Revenue Consensus Mean ($USD Millions)Unavailable*Unavailable*Unavailable*
EBITDA Consensus Mean ($USD Millions)Unavailable*Unavailable*Unavailable*
Target Price Consensus Mean ($USD)Unavailable*——
Consensus Recommendation (Text)Unavailable*——

Key Takeaways for Investors

  • Mix shift to digital continues to drive margin and FCF: Q3 Adjusted EBITDA up 11% YoY with 37% margin; management targets ~10ppt margin expansion by 2027 via higher digital mix, divestiture, and operational re-engineering .
  • Interactive is the growth engine: +48% YoY revenue; October was record, with expansion into West Virginia and tier-1 traction; expect continued gains as new titles, Player Link mechanics, and studio capacity scale .
  • Virtual Sports turning the corner: Stabilization achieved; Q4 YoY growth targeted with customer additions in Brazil/Turkey and potential U.S. catalyst via BetMGM; watch for sequential momentum .
  • Strategic portfolio realignment: Closed holiday parks sale (£18.6M) reduces capital intensity; 2026 cash capex guided to $30–$35M; expect deleveraging and improved free cash flow conversion .
  • Capital returns signal confidence: $25M buyback authorization through 2028 provides downside support and capital allocation flexibility amid growth investments .
  • Near-term catalysts: Q4 YoY EBITDA growth and detailed 2026 outlook with Q4 results; watch UK budget/tax updates and U.S. virtuals rollout .
  • Medium-term thesis: Scaling digital IP across omnichannel (Interactive, Hybrid Dealer) with operational efficiency, reducing capex, and pursuing tuck-in M&A to reinforce content breadth and distribution .