AI Stock Memo: INSE - Inspired Entertainment - RankAlpha

INSE

Rating neutralAI MemoPost-earnings T+3

Inspired Entertainment

As of 2026-05-09/Post-earnings T+3/Confidence medium

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Data freshness

AI Memo

As of 2026-05-09 • Model: RankAlpha Sentiment Codex

Decision Panel

Action, confidence, horizon, and decision blockers at a glance.

Action

neutral

Confidence

medium

Horizon

—

Key catalyst

Second-half Virtual Sports and new customer rollout remain the key operating checkpoint • 2026-09-30

Expected move: +31%

Biggest risk

The print was still mixed because reported revenue fell 5%, Virtual Sports adjusted EBITDA dipped 3%, net loss persisted, interest expense rose to $10.5 million in Q1, and the company still needs second-half execution to validate management's expected sequential EBITDA growth [#8-K-2026-05-07] [#10-Q-2026-05-07].

Invalidation

Break below $6 or thesis failure.

What would change my mind?

The earnings release materially strengthened the profitability side of the thesis: Interactive revenue grew 38%, Interactive adjusted EBITDA grew 53%, total adjusted EBITDA rose 29%, full-year EBITDA guidance was reiterated, and the margin target increased to up to 45% despite the April 2026 UK tax change [#8-K-2026-05-07].

Research note

Recommendation

neutral

Confidence

medium

As of

2026-05-09

Base target

p=45%

Bull target

$12

p=30%

Bear target

p=25%

Key bullets

Fast scan of bull, bear, and watch items

BullKey bullets

Q1 profitability beat and reiterated 2026 EBITDA outlook need to hold through the next read-through
Free-cash-flow conversion and deleveraging are the longer-duration rerating test
The earnings release materially strengthened the profitability side of the thesis: Interactive revenue grew 38%, Interactive adjusted EBITDA grew 53%, total adjusted EBITDA rose 29%, full-year EBITDA guidance was reiterated, and the margin target increased to up to 45% despite the April 2026 UK tax change [#8-K-2026-05-07].

BearKey bullets

April 2026 UK online gaming tax changes could pressure the pace at which Interactive growth converts into full-year margin expansion.
Leverage is lower but still material: the 10-Q showed roughly $327.7 million of debt-related obligations net of cash metrics in the debt table, Q1 interest expense was $10.5 million, and covenant ceilings remain relevant [#10-Q-2026-05-07].
Management's second-half improvement case depends on broader Virtual Sports distribution, new product rollout and customer launches landing on schedule.

WatchKey bullets

Second-half Virtual Sports and new customer rollout remain the key operating checkpoint

Summary

High-level snapshot

Recommendation

neutral

Model confidence

medium

Timeframe

Asset

Equity

Trigger

Post-earnings T+3

Base case: $9 (p=45%)

Bull/Bear spread: +74% / -13%

Vs latest close: Bull +74% · Base +31% · Bear -13%

Scenario probabilities

Bull Target: $12 (p=30%)Base Target: $9 (p=45%)Bear Target: $6 (p=25%)

Commentary

This T+3 follow-up is stronger than the prior filing-monitoring view because it is anchored by the May 7, 2026 earnings release and 10-Q, but it still reads as a cautious monitoring setup rather than a clean rerating call. The immediate tape reaction was muted to slightly negative: the anchor price was $8.10 on 2026-05-07 and the latest quote checked was $7.96 on 2026-05-09. News flow was concentrated around earnings, while delayed analyst target or rating revisions were not clearly available from the sources checked, which keeps confidence moderate at best despite improved primary-source visibility.

As of 2026-05-09 • Updated bi-weekly / post-earningsSource: Internal modelMethodology

Analyst Summary

Thesis highlights from the latest analysis

Bull Case

Bear Case

Drivers

Scannable catalysts and supporting factors

Q1 profitability beat and reiterated 2026 EBITDA outlook need to hold through the next read-through
Free-cash-flow conversion and deleveraging are the longer-duration rerating test

Scenarios

Bull Target (Scenario probability)

$12 / p=30% prob

Base Target (Scenario probability)

$9 / p=45% prob

Bear Target (Scenario probability)

$6 / p=25% prob

Price $7 as of 2026-07-31

Nearest Scenario: Bear (∆ 13%)

Targets vs latest close: Bull +74% · Base +31% · Bear -13%

Sentiment & Exposure

News Sentiment (30d)

0.10

Social Sentiment (7d)

0.00

Events

Other notable items detected

EVENT2026-09-30
Second-half Virtual Sports and new customer rollout remain the key operating checkpoint
Management said Virtual Sports should improve in the second half of 2026 through broader distribution and rollout of the new Virtual Soccer product ahead of the World Cup, while the Q1 release also highlighted a Playtech SaaS distribution agreement, a planned Alberta iGaming launch in 3Q 2026, and a 300-unit Genting order expected in the second half [#8-K-2026-05-07].
Prob 57.00% • Move 15.00% • Priced-in 35.00%

Short-term Catalysts

Next few weeks

Q1 profitability beat and reiterated 2026 EBITDA outlook need to hold through the next read-through
2026-06-30
Inspired reported Q1 2026 adjusted EBITDA of $23.7 million, up 29% year over year, with a 41% adjusted EBITDA margin, reiterated full-year 2026 adjusted EBITDA of $112 million to $118 million, and raised its full-year margin target to up to 45%; the near-term question is whether Interactive growth and mix can keep offsetting the reported revenue decline and April 2026 UK online gaming tax changes [#8-K-2026-05-07].
Prob 68% • Move 13% • Priced-in 55%

Long-term Catalysts

Months to a year

Free-cash-flow conversion and deleveraging are the longer-duration rerating test
2026-12-31
Q1 free cash flow was $15.8 million, the company repaid $13.3 million of debt and repurchased $2.6 million of stock, while the 10-Q showed $42.3 million of cash and management said cash, operating cash flow and capital-project flexibility should fund requirements through May 2027; if that cash conversion persists, the digital-mix thesis can gain credibility, but leverage and covenant monitoring remain important [#8-K-2026-05-07] [#10-Q-2026-05-07].
Prob 52% • Move 28% • Priced-in 30%

Risks

April 2026 UK online gaming tax changes could pressure the pace at which Interactive growth converts into full-year margin expansion.
Leverage is lower but still material: the 10-Q showed roughly $327.7 million of debt-related obligations net of cash metrics in the debt table, Q1 interest expense was $10.5 million, and covenant ceilings remain relevant [#10-Q-2026-05-07].
Management's second-half improvement case depends on broader Virtual Sports distribution, new product rollout and customer launches landing on schedule.
Sell-side revision visibility remains thin, so missing analyst reaction should be treated as an evidence gap rather than a positive signal.
Working-capital timing remains volatile, especially around receivables, payables and hardware activity, which can distort quarter-to-quarter cash conversion [#10-Q-2026-05-07].

Peers

No peer data

Sources

Internal and external references used in this analysis

Model source: RankAlpha Sentiment Codex
Human targets: serper
Analysis date: 2026-05-09