INSE

Inspired’s second quarter results were met with a negative market reaction, as the company’s revenue came in below Wall Street expectations and declined significantly year-over-year. Management attributed this underperformance largely to the near doubling of the UK remote gaming duty, which took effect in April and had a substantial impact on the reported figures. Executive Chairman Lorne Weil described the UK tax change as “the main reason” for revenue and EBITDA pressure, explaining that although the company achieved notable growth in UK gross gaming revenue, this was offset by the tax increase. Management also highlighted the benefits of its recent business transformation, including the sale of the holiday parks business and restructuring of the pubs segment, which contributed to higher EBITDA margins and set the stage for a more digital-focused, less capital-intensive model. Is now the time to buy INSE? Find out in our full research report (it’s free). Revenue: $60.8 million vs analyst estimates of $62.45 million (24.3% year-on-year decline, 2.6% miss) Adjusted EPS: $0.05 vs analyst estimates of -$0.01 (significant beat) Adjusted EBITDA: $27.1 million vs analyst estimates of $26.68 million (44.6% margin, 1.6% beat) Operating Margin: 16.3%, up from 9.8% in the same quarter last year Market Capitalization: $164.2 million While we enjoy listening to the management’s commentary, our favorite part of earnings calls is the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention. Ryan Sigdahl (Craig-Hallum Capital Group) asked for details about Interactive segment growth outside the UK. CEO Brooks Pierce clarified that growth outside the UK outpaced UK performance, but higher UK taxes weighed on consolidated results. Matthew Maus (B. Riley Securities) questioned whether Q2 represented a trough for Interactive revenue. Executive Chairman Lorne Weil confirmed Q2 was uniquely impacted by tax changes and that sequential improvement is expected in the second half. Barry Jonas (Truist) inquired about sustainability of UK market share gains. Pierce highlighted ongoing investment in UK-specific content and the benefits of multi-channel presence, expressing confidence in continued share growth. Jordan Bender (Citizens JMP) asked about priorities between debt repayment, share buybacks, and M&A. Weil stated that debt reduction and share repurchases remain priorities, but accretive M&A could be considered if opportunities arise. Chad Beynon (Macquarie) sought clarity on Greek terminal deliveries and capex. Pierce confirmed that upcoming deliveries in Greece are part of ongoing refresh initiatives, and CFO Eric Carrera explained that customer-funded capex is excluded from reported capital expenditures. In the coming quarters, the StockStory team will be closely monitoring (1) sequential growth in Interactive and Virtual Sports segments as seasonal trends and new content releases take effect, (2) the execution of terminal refreshes in Greece and potential market entry in Chicago, and (3) management’s ability to sustain margin expansion amid regulatory changes. Developments in UK gaming tax policy and further digital adoption will also be key areas to watch. Inspired currently trades at $6.24, down from $6.95 just before the earnings. At this price, is it a buy or sell? See for yourself in our full research report (it’s free for active Edge members). ALSO WORTH WATCHING: Top 5 Momentum Stocks. The best time to own a great stock is when the market is finally noticing it. These aren’t just high-quality businesses. Something is happening with them right now. Elite fundamentals meet near-term momentum — both boxes checked at the same time. Find out which stocks our AI platform is flagging this week. See this week’s Strong Momentum stocks — FREE. Get Our Strong Momentum Stocks for Free HERE. Stocks that have made our list include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+214% between June 2020 and June 2025). Find your next big winner with StockStory today.

Image source: The Motley Fool. Wednesday, Aug. 5, 2026 at 4:30 p.m. ET Executive Chairman - Lorne Weil President and Chief Executive Officer - Brooks Pierce Operator: Good afternoon, everyone, and welcome to the Inspired Entertainment Second Quarter 2026 Conference Call. [Operator Instructions] Please note that today's event is being recorded. Before we begin, please refer to the company's forward-looking statements that appear in the second quarter 2026 earnings press release and in the accompanying slide presentation, both of which are available in the investor section of the company's website at www.inseinc.com. These also apply to today's conference call. Management will be making forward-looking statements within the meaning of United States securities laws. These statements are based on management's current expectations and beliefs and are subject to various risks, uncertainties, and other factors that may cause actual results to differ materially from those expressed or implied in such statements. For a discussion on these risks and uncertainties, please refer to the company's filings with the Securities and Exchange Commission. During today's call, the company will discuss both GAAP and non-GAAP financial measures. Reconciliations of these non-GAAP measures to the most directly comparable GAAP measures can be found in today's earnings release and slide presentation, which are both available on the website. With that, I would now like to turn the call over to Lorne Weil, the Company's Executive Chairman. Mr. Weil, please go ahead. A. Weil: Thank you, operator. Good afternoon, and thank you for joining our second quarter conference call. I'll begin with some overarching comments, and will then hand it over to Brooks, who will discuss the business in significantly more detail. As you'll hear in a few minutes, there was a lot going on in the first half of the year. And there's even more in the second half. Revenue and EBITDA of $61 million and $27 million, respectively, in the quarter were about where we expected. And EBITDA was a little ahead of consensus. Comparison to the second quarter of 2025 isn't too meaningful because of the exclusion in 2026 of the divested holiday parks revenue and income, which were seasonally strong in 2025, as well as the impact of pubs restructuring. At the same time, however, it's instructive to compare the first and second quarters of 2026 to each other to get a sense of sequential momentum. In that case, second quarter revenue and EBITDA were 6% and 14% respectively from the first quarter, despite the impact of the near doubling of the UK remote gaming duty beginning in April, a subject to which I will return in a moment. As a result of the combined holiday parks sale and pubs restructuring, together with the momentum in our continuing digital and retail businesses, our EBITDA margin expanded by 1,000 basis points year-over-year to 45%. In parallel, we have year-to-date retired $23 million in debt, repurchased over 700,000 shares and reduced our net leverage to 3x. Slide 4 confirms our 2026 EBITDA target range of $112 million to $118 million and guides to free cash flow conversion for the year of 20%+ of EBITDA. For reasons I will explain more fully later on the call, the true operating free cash flow of the business in 2026 has in fact been significantly better than what can be seen from the reported results. And for the year, we expect that on a pro forma basis, it will be in excess of 25% versus the 20% shown on the slide. The impact of the increase in the UK gaming duty, which went into effect on April 1st, is something we need to unpack a little more fully in order to fully understand how the rest of the year will unfold. As illustrated on Slide 5, worldwide year-over-year growth in interactive revenue and EBITDA in the second quarter were 15% and 13% respectively. A decent but totally anomalous result, in that historically Interactive EBITDA has consistently grown meaningfully faster than revenue due to operating leverage in the business. The cause of the second quarter anomaly is of course the UK remote gaming duty. On Slide 5, we illustrate that our UK gross gaming revenue in the second quarter was 40% up year-over-year. I should emphasize this was our gross gaming revenue, not the gross gaming revenue of the U.K. market itself. But the near doubling of the tax largely negated this growth, thereby depressing the margin. The compounding effect of the increase in our GGR of 40% with the doubling of the tax rate meant that in absolute terms, our tax impact went up 2.5x from year to year. For the balance of the year, the anomaly will continue to distort year-to-year comparisons, but sequentially the situation will be quite different. In a moment, Brooks will show how in each of the last 3 years, consecutive second half interactive volume growth was well ahead of first half, with EBITDA growth even faster. Since the increased tax was fully in effect in this year's second quarter, we can anticipate that as we move through the balance of this year, the sequential relationship between EBITDA and revenue will revert to the historic pattern, showing operating leverage. And with that, I'll hand it over to Brooks. Brooks Pierce: Okay, thanks, Lorne. As usual, I'll provide more detail on our business segment in the second quarter and share an update on the key initiatives we're focused on for the second half of the year. Our Q2 results demonstrate continued progress in transforming the business into a more digital-led, less capital-intensive model, while increasing adjusted EBITDA, expanding EBITDA margins, generating stronger cash flow, and giving us the flexibility to continue deleveraging and repurchasing shares where appropriate. We discussed these priorities for some time and we are pleased to see the benefits coming through, particularly with EBITDA margin reaching 45% by the end of the second quarter, tracking in line with our full year guidance. Moving over to Slide 7, Retail Solutions performed very well in the quarter, executing against our margin expansion strategy following last year's sale of the holiday parks business and the restructuring of our pubs segment. And as a result, the business delivered Adjusted EBITDA margins before corporate allocation of more than 50% for the first time. Performance was driven by continued cash box growth across our U.K. retail businesses, including the licensed betting offices, MSAs, pubs, AGCs, and bingo. As previously discussed, William Hill closed just over 200 shops during the quarter, and these closures were largely their lower performing locations, which improved the performance of the remaining William Hill estate. At the same time, we successfully redeployed the removed terminals across our broader estate with further placement opportunities still ahead. In Greece, we delivered year-over-year cash box growth and further expanded our market-leading share, supported by our latest Vantage cabinets and our best-in-class content. The Vantage Slant cabinet has delivered particularly strong gains in Greece, which were reinforced by Allwyn's additional order of more than 2,000 replacement machines. We expect to begin delivering those units in the fourth quarter of this year as part of the ongoing refresh of our Greek estate, with 32% of our 9,000 terminals yet to be refreshed. We also installed 125 terminals for AGLC in Alberta this quarter, further strengthening our position in the important Canadian VLT market. A key part of our Retail Solutions strategy is continually refreshing content to keep players engaged. And during the quarter, we sold subscription game packs to both AGLC and to more than 92% of our Illinois terminal base, which has driven the best performance in that market we've seen to date. We're also leveraging our omnichannel strategy by bringing successful online titles into retail and early results are encouraging. Wolf It Up has proven to be a top game in multiple retail markets in the UK and North America, demonstrating our ability to translate online game success into retail performance. Moving over to Slide 8. The Interactive business continued to perform well with adjusted EBITDA growing approximately 13% year-over-year despite the impact of the U.K. remote gaming taxes nearly doubling from 21% to 40% beginning on April 1st. We continued to gain market share in the U.K., which helped offset some of the tax impact we had previously guided to. As Lorne mentioned, U.K. gross gaming revenue grew 40% year-over-year in the second quarter, underscoring the strength of our content and the continued demand for our games. On this slide, you'll see the pattern of Interactive plays over the last four years and how each year the lines overlay one another in virtually the same way. As you can see, that pattern didn't change in 2026, despite the introduction of the U.K. tax changes on April 1st. If this historical pattern continues for the remainder of 2026, as it has in prior years, we expect the second half of the year to grow in a similar trajectory, giving us confidence in our second half targets. We've also continued to gain share in North America, led by the performance of our Cash Bank family games across operator customers. We took advantage of the World Cup fever and released several soccer-themed skins on our most popular franchise brands. And these games kept players as engaged as the World Cup did for fans across the globe. In July, we launched on day one of Alberta's newly regulated market with all major operators, and we're very excited about this market. As we see further opportunity to leverage content that has already proven successful throughout Alberta through AGLC and also Ontario and expand our presence over time. Hybrid Dealer is also gaining momentum with turnover increasing 13% and GGR increasing 25% from Q1 to Q2. In Q2, we launched our branded Wolf It Up! Roulette game with DraftKings and added key U.K. operators such as Betfred, which contributed to this growth. We're also developing a bespoke BetMGM game based on The Price Is Right license for delivery by the end of the year. While Hybrid Dealer may not become as large as we originally anticipated, it certainly represents a focused opportunity within Interactive and we continue to see attractive growth potential as we expand our offerings and add new customers. And finally, we've committed significant resources to expanding our iLottery eInstants capabilities and expect to begin delivering games into that vertical next year with plans that further leverage our content creation capabilities in all of these areas. Moving over to Slide 9, we continue to invest in our content creation capabilities, including the building out of our newest content studio in Manchester. Bee Reel Games is generating a lot of buzz. Sorry about that. I couldn't help it. It is expected to launch its first game by year-end. As I've said before, the feedback we hear most often from operator customers is that they love our content, they just want more of it. So our new studio is expected to produce 1 additional game per month with a focus on developing more market-specific content that complements and expands our portfolio of franchise brands. Moving to Slide 10, we anticipate stronger momentum across Interactive in the second half, which is traditionally higher than the first half due to our seasonal holiday game releases, one of our key strengths. The fourth quarter in particular has been our strongest period with last year's revenue increasing by over 17% and adjusted EBITDA increasing 23% compared with the third quarter. And we expect a similar seasonal uplift in 2026. In addition, we have several upfront custom game development payments scheduled for the fourth quarter, which we expect will provide an additional incremental benefit. Moving over to Slide 11, our Virtual Sports segment delivered another quarter of stable results supported by several key initiatives launched late in the quarter that we expect to drive growth in the second half of the year. BetMGM now has a fully integrated sportsbook solution in New Jersey and Ontario and turnover increased 50% from Q1 to Q2 with early July results showing continued growth. We also launched with BetMGM in Alberta and with other key customers there, including bet365. Overall Virtual Sports revenue increased 3% sequentially, driven in part by the rollout of our Soccer 4.0 with the Bet Builder feature to key customers, as you can see in the slide, including Allwyn in Greece and Betano across Latin America. During the World Cup period, these customers saw a 6% increase in turnover generated from this product, and we'll continue to roll this product out to additional customers on a worldwide basis. Momentum is also building through the broader distribution of our Virtual Sports portfolio to sportsbook providers such as Playtech, where we recently just went live with the Malta Lottery. Moving over to Latin America, our partnership with Altenar delivered significant growth with turnover up 55% and GGR up 61% from Q1 to Q2 while adding several new customers and building a strong pipeline. We're also expanding in the lottery space with a Q3 launch anticipated with the Mass Lottery through our partnership with Aristocrat Interactive, which will bring us to being live in 4 lottery states. We expect to update the market later this year on a few key customer additions and product enhancements. Virtual Sports remains a unique, differentiated product with high margins and significant barriers to entry, and we continue to view it as an important part of our digital strategy. Overall, we're pleased with the second quarter and the first half results, and we look forward to updating you on our continued progress in the second half. And with that, I'll hand it back over to Lorne. A. Weil: Thanks, Brooks. That was a great deep dive into the range of initiatives going on throughout the company. On Slide 12, we summarize the transformation we anticipate playing out through the end of 2027. The midpoint of EBITDA and EBITDA margins are expected to reach $130 million and 47% respectively. Leverage is projected to decline to under 2.5x. And free cash flow conversion should comfortably be between 25% and 30%. Let me now return to the subject of pro forma free cash flow that I referenced earlier on. As a result of the contractual working capital adjustments associated with the restructuring of our pubs business, we had a one-time non-recurring cash outflow in the first half of 2026 of approximately $7 million, which is fully reflected in the reported free cash flow numbers. In that case, the free cash flow projection for the year of $23 million, shown on Slide 13, becomes $30 million on a pro forma basis, or over 25% of EBITDA. As our business mix swings more towards less capital intensity and our declining leverage generates interest savings, we can expect that the conversion percentage will continue to improve from 25%. And then finally on Slide 14, not to beat a dead horse, but all this comes together in the slide where we reprise the elements of the '26, '27 plan. I think that speaks for itself and it really doesn't require much comment. And with that, we can turn to the operator to Q&A, please. Operator: We will now begin the question and answer session. [Operator Instructions] Your first question comes from the line of Ryan Sigdahl with Craig-Hallum Capital Group. Ryan Sigdahl: I want to start on Interactive, staring at Slide 5, but the growth decelerated pretty substantially. You explained that U.K. tax increase and the flow-through of that, just given your share of gaming revenue there. But curious if you can double-click into that what the U.K. revenue performance was versus elsewhere or what the mix of the U.K. is or somehow to try and get a better underlying performance of ex U.S. or ex U.K., excuse me, from an interactive standpoint? Brooks Pierce: Yes, I'll try to answer the question and see if this is what you're looking for. You know, obviously, as we put with the statistics on here, the GGR in the U.K. specifically was up 40%, but obviously the impact of the tax had the negative impact that you've seen on the revenue and EBITDA performance. In terms of gaming, in essence, we think we gained share in the second quarter in the U.K. The official UKGC numbers. aren't out yet, but certainly in our conversation with some of our biggest operators -- operator customers, they've said to us that we're continuing to kind of climb the ladder of performance with them. So even though the tax had obviously a pretty negative impact, frankly no more than what we had originally anticipated or guided to. But in essence, we're continuing to grow in both the North American and the U.K. markets. Ryan Sigdahl: Are you able to give what growth was ex U.K.? Brooks Pierce: I don't think we break that out. Eric? Eric Carrera: We don't break it out, but we can get back to you. Brooks Pierce: Why don't we get back to you, Ryan, on that on the absolute numbers. So we don't give you a number 100%. A. Weil: We know for sure that the revenue growth outside of the U.K. was significantly higher than it was in the U.K., just because the increase in the tax, I mean, if the tax had doubled from 5% to 10%, that would have been relatively insignificant. When the tax doubles from 20% to 40%, if you go through the algebra, the -- what would have been a 20 -- I'm just indexing it, $20 tax becomes almost a $60 tax. And that comes straight off the top in terms of revenue. So the revenue was positive in the U.K., which is a miracle. Most operators had obviously significantly declining revenues, but it was less than the 15% global Interactive. Now the point that I was making in my remarks, Ryan, is that once we lap the second quarter, so when we get to next year, then the year-to-year comparisons will have the same tax rate. So if our GGR continues to grow 40%, our revenues will continue to grow 40%, and we'll see a re-acceleration back to where we were before. But unfortunately, we have to suck it up for the balance of this year. Ryan Sigdahl: Sticking on taxes, I think -- yes, sticking on taxes, I think in the U.K., they've recommended increased tax on online gambling last year. Now they're backing an increase to B2 gaming machines in this year's budget. Curious, what you guys are hearing boots on the ground there and any thoughts you may have around that. Brooks Pierce: Yes, well, I think one of the things that we're hearing is that the industry probably in the online gaming tax, there was -- you probably will know that there were a bunch of different factions. Horse racing had one view, the betting shops had another view, and the AGCs had yet another view. I think seeing how draconian the measures were and doubling of the tax rate, I think everyone in the industry now feels like they need to be aligned against this. And you've probably read -- obviously, you read one side about increasing the taxes, but you obviously see on the industry side what the potential job loss and high street kind of decimation could be if the taxes were going up like this group had suggested. So, look, it's impossible to predict, but we're certainly hearing and hopeful that it will be -- if there's any increase in tax, it will be measured and not what that group has suggested. Operator: Your next question comes from the line of Matthew Maus with B. Riley Securities. Matthew Maus: Hi, this is Matthew on for Josh. So I had a similar kind of question on Interactive. I'm just wondering, it stepped down -- revenue stepped down sequentially slightly. I'm wondering, is this more of the trough for the year? And how are you thinking about the sequential path from here into the seasonally strong fourth quarter? Brooks Pierce: Yes, I mean, I think the view is that -- and we tried to illustrate this in the slide with some of the history is that we think sequentially, the Interactive business historically over the last few years has grown. The third quarter is better than the second quarter. The fourth quarter is better than the third quarter, and we see nothing to change our views on that. So we expect it to grow sequentially quarter over quarter. A. Weil: I mean, the key thing just to come back to your observation is the second quarter sequential observation you made is completely due to the tax. The underlying business is growing like crazy. So now that the tax is in the calculation in the second quarter, the third quarter will reflect the full growth in the GGR because there'll be no increase in the tax to offset it. So it's -- the second quarter is definitely a [ trough ]. And the third and fourth quarter should look very good. Matthew Maus: Great. Sounds good. Last question for me is mainly just on free cash flow conversion. I mean, you're guiding to 20% plus this year. I'm wondering what carries the conversion higher in the back half? And as leverage approaches closer to 2.5x, does that open a refinancing that brings down the cash interest you're paying? A. Weil: Yes, so the main difference is that, as I mentioned in my remarks, that in the first half, we had the $7 million working capital adjustment associated with the restructuring and shutting down of part of our pubs business. And that was pure cash outflow that directly impacted the free cash flow in the first half, which we don't expect to see in the second half. Well, we know we won't see it in the second half. So without overly complicating it, that's the main reason. Operator: Your next question comes from the line of Barry Jonas with Truist. Barry Jonas: Hey guys apologies if this was addressed, but the U.K. growth offsetting the U.K. tax increase, very impressive. Help us understand how do you think those gains will be sustainable? I mean is this really just content driven or do you think once you lap the William Hill reallocations, market share gains will potentially slow? A. Weil: Well, the William Hill reallocations -- the William Hill allocations that's all the retail thing, Barry. So that wouldn't have anything to do with the digital market. Brooks Pierce: But I can answer -- go ahead, Barry. I'm sorry. Barry Jonas: No, apologies there. Yes, just how we understand the sustainability of these market share gains. Brooks Pierce: Yes, I mean, I think, look, we've shown pretty consistent growth in the U.K. Over the last few years, I think we've gone from kind of 3% or 4% to over 11%, approaching 12%. And I think as we talked about in the second quarter, where a lot of people might be kind of exiting the market because of some of these constraints, we're pretty much doubling down in the U.K. And part of our new content will be producing games not only for North America but for the U.K. as well. So we're confident that we'll continue to grow our share in the U.K. A. Weil: The other point to add to that, Barry, is that in the U.K., is the one market where we have a very significant retail machine estate. And we know one of the major drivers of online performance is the multi-channel effect of people seeing the games in betting shops and arcades and so forth. And then when they [ leave ] playing those games on their phone or on their computer. So, as we introduce more and more new games into the retail market, in addition to the introduction of games just for online, we're creating that push for our games. Brooks Pierce: Yes, I think that Lorne is right. And that probably goes also a way in validating the kind of disparities between our market share and the U.K. versus, what we're getting in North America. Our U.K. share is more than double what we have in North America. Both are growing nicely. But Lorne is right. The footprint where you go any place in the U.K. where there's a gaming machine, you're going to see our games. And naturally, people play them online. Obviously, we get that same benefit in Greece. Barry Jonas: Got it. Just for a follow-up question. You repaid debt and bought back stock in the quarter. How are you thinking about capital allocation priorities from here? A. Weil: We're thinking about it in the same way. We think there's clearly benefit to debt reduction because, obviously, it not only produces a dollar-for-dollar absolute reduction in interest costs, it helps the computation of the stock value. And as we hit leveraging points, our spread declines. So we get a double or even a triple whammy for paying down debt. On the other hand, you don't have to be a financial genius to believe that at the kind of levels of stock price where we are now, there's tremendous benefit to allocating stock to -- allocating cash to share repurchase. So I think we're certainly going to allocate all of our excess cash one way or another to debt repayment stock repurchases and the proportions will probably shift from quarter-to-quarter depending upon specifically what we're trying to accomplish, but we certainly intend to continue to do both. Operator: Your next question comes from Jordan Bender with Citizens JMP. Jordan Bender: Maybe just follow up on Barry's question a little bit. There's a provision that as your leverage gets lower, your interest rates drop on your debt and you kind of just talked about the mix between buying back stock and paying down debt, but is it kind of fair to assume then that M&A just could be off the table for the time being as you kind of seek lower leverage levels? A. Weil: No, I wouldn't ever put M&A off the table. We have a pretty carefully designed template in terms of how we think about M&A. But if we have an M&A opportunity that has significant synergies with our existing business and which can immediately be accretive, then we'll definitely consider it. So yes, I mean, certainly to give the full picture of capital allocation, we would consider debt reduction, share repurchase, and potential acquisitions. But when we get that question on these kinds of calls about capital allocation, I don't want to speak for Barry, but normally the question asker is referring to debt reduction and share repurchase. Jordan Bender: Understood. Okay. And then in the slides here you have -- on the Interactive slide you have higher incremental margin as Interactive scales, which obviously makes sense. We can kind of look back historically. We kind of talked about the Interactive EBITDA margin in the quarter that somewhat took a step down. But with margins with -- in that business kind of sitting here and here and near all-time highs, like realistically, where can we kind of get EBITDA margins to over the next couple years? Brooks Pierce: Just to be sure I'm answering that question, Jordan, are you talking about overall or just Interactive? Jordan Bender: Just your Interactive margins. Brooks Pierce: Yes. I mean, look, obviously, with the scaling opportunities, we think we can increase those margins of several points, but I don't think it's going to be -- this is not going to be a 10% or 15% swing. This is -- I think the Interactive margins are close to 70% now already, which is pretty healthy. Jordan Bender: Okay. Yes, the question, I guess, would have been, are we near kind of that ceiling? But you did answer that the way I was trying to ask it. So I appreciate it. Operator: Your next and final question comes from Chad Beynon of Macquarie. Chad Beynon: I wanted to start with Retail Solutions. So you talked about in the presentation, the 2,000 terminals that'll be delivered in Greece. Wanted to confirm that those are kind of the standard rev share that you already have out there. And then I'm assuming the capex for the year the $30 million to $35 million. Is it fair to assume that a good amount of that comes from this deliverable? I'll start with that one, and then I have a couple follow-ups. Brooks Pierce: Well, in regards to the terms, yes, there's nothing changing from the kind of last batch. The only thing I would say is the Slant terminal that's kind of doing extraordinarily well. It's probably going to be more of the mix, a, because that's the stuff that's probably makes the most sense to replace and because it's higher performing from a yield management standpoint. They're going to take more Slant terminals than they are our uprights. But just in terms of the capex, Eric, you want to... Eric Carrera: Yes, sure. Just that capex, we referenced cash CapEx. So it excludes any CapEx that is customer funded, which would be Greece, among some other businesses. So that excludes it, just to answer your question, Chad. Chad Beynon: Also on Retail Solutions, it sounds like Chicago, the process continues to move along. I think there's been a few dozen applications and potential licenses at this point. Is this factored into the fourth quarter? And how are you thinking about the opportunity for Chicago VLTs? Brooks Pierce: Well, if it gives you any indication, I'll be in Chicago all next week. So I think you can read from that, that I think it's a pretty important market for us. I know Accel reported earlier and they talked about having the Chicago maybe actually going in the fourth quarter where they had originally said it was the first quarter of 2027. We're kind of dependent on -- it's obviously dominated by 2 big operators, J&J and Accel, who we have very good relationships with both. So we're monitoring it close. We still think Chicago is going to be a very strong market whether it's fourth quarter of this year or moving into 2027, kind of hard to tell. My guess is if I had to guess, I would say we'll get some this year, but probably more next year. Chad Beynon: And then lastly, around just the World Cup exposure with your virtual product, I know the placement with BetMGM was improved, but just any commentary in terms of if there was more penetration, more exposure to customers, either in the United States or in some of the bigger European markets. Brooks Pierce: Yes, I wouldn't say it was more exposure per se, although obviously BetMGM, this was the first time with the World Cup that we would have had them where the other customers, bet365 and Betano. We would have had that in the past. I think we've -- we said in the slide presentation, we had an uplift of about 6%. Some of that was World Cup, but some of that was also probably the product, this Soccer 4.0, which is the latest greatest graphics and included the Bet Builder functionality, which is essentially, like, same-game parlay. So I think some combination of all of those helped us for the World Cup, and it'll be interesting to see as we go through the year, particularly now with MGM. We've been saying for a long time we really wanted a big sports betting operator in the States to be having a fully integrated virtual package and now MGM does, and we would hope that some of the others will come along with that. But I'll be very interested to see how when football season starts, American football for anyone who's questioning whether that's soccer or football, to see if we're getting some continued uplift that we saw that came out of the World Cup. So, yes, pretty excited about a number of things in the second half of the year for Virtual Sports. Operator: There are no further questions at this time. I will now turn the call back to Lorne Weil, Executive Chairman, for closing remarks. A. Weil: Thank you, operator. And again, everyone, thank you for taking the time to listen to the call. I think we're pretty much on the trajectory that we've been talking about for some time. We're -- as I think should have been clear from my remarks and Brooks', we're very sanguine about the third and fourth quarter and as we move into 2027. And we're excited to meet with you again in 3 months and tell you how we're doing. So thanks again. Operator: This concludes today's call. Thank you for attending. 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Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Management attributes the 1,000 basis point EBITDA margin expansion to the strategic divestiture of holiday parks and the restructuring of the pubs segment, shifting toward a less capital-intensive model. The near doubling of the UK remote gaming duty (from 21% to 40%) created a significant performance anomaly, where a 40% increase in UK gross gaming revenue was largely offset by a 2.5x increase in absolute tax impact. Sequential momentum remains positive, with Q2 revenue and EBITDA growing 6% and 14% respectively over Q1, despite the full impact of the new UK tax rate beginning in April. Retail Solutions performance was driven by cash box growth in UK betting offices and market share expansion in Greece, supported by the rollout of Vantage cabinets. The company is leveraging an omnichannel strategy where successful online titles like 'Wolf It Up' are being ported to retail markets to drive cross-platform engagement. Management emphasizes that the business transformation is focused on increasing digital-led revenue while maintaining a net leverage target of under 2.5x by 2027. Management expects the sequential relationship between EBITDA and revenue to revert to historical patterns of operating leverage in the second half of 2026 as the UK tax rate stabilizes. The company reaffirmed its 2026 EBITDA target of $112 million to $118 million, with pro forma free cash flow conversion expected to exceed 25% for the full year. Growth in the fourth quarter is expected to be driven by seasonal holiday game releases and scheduled upfront custom game development payments. Expansion into the iLottery eInstants vertical is slated for 2027, leveraging existing content creation capabilities to enter new digital markets. A new content studio in Manchester is expected to increase production by one additional game per month to meet high operator demand for market-specific content. Reported free cash flow was impacted by a one-time $7 million non-recurring cash outflow related to contractual working capital adjustments from the pubs restructuring. The closure of approximately 200 lower-performing William Hill shops allowed for the successful redeployment of terminals to higher-yielding locations across the broader estate. Management acknowledged that while the Hybrid Dealer product is growing, it may not reach the scale originally anticipated, leading to a more focused niche strategy. Potential regulatory risks remain in the UK regarding proposed tax increases on B2 gaming machines, though management is hopeful for a measured industry-wide response. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management believes gains are sustainable due to a 'multi-channel effect' where retail machine presence drives online play, noting their UK share is double their North American share. They are 'doubling down' on the UK market with new content even as competitors may exit due to regulatory constraints. The company intends to use excess cash for both debt repayment and share repurchases, with the mix shifting based on stock price levels and interest saving opportunities. M&A is not off the table if opportunities are immediately accretive and offer significant synergies with the existing business. Management indicated that Interactive margins are already near 70%, suggesting that while scaling offers some upside, future gains will be measured in 'several points' rather than double-digit swings. Management expects some activity in the Chicago market in late 2026, though the bulk of the opportunity is likely to materialize in 2027 depending on major operator rollouts.

Interested in Inspired Entertainment, Inc.? Here are five stocks we like better. Q2 performance improved sequentially: Revenue reached $61 million and EBITDA was $27 million, up 6% and 14% from Q1, respectively, while the EBITDA margin expanded to 45%. Inspired also reduced net leverage to 3.0 times after repaying $23 million of debt and repurchasing more than 700,000 shares. U.K. gaming taxes pressured interactive margins: Interactive revenue grew 15% year over year and U.K. gross gaming revenue rose 40%, but the Remote Gaming Duty increase to 40% significantly raised the tax burden. Management expects sequential operating leverage to resume in the second half as the tax change is fully reflected. Guidance and growth initiatives remain intact: Inspired reaffirmed its 2026 EBITDA target of $112 million to $118 million and expects adjusted free-cash-flow conversion above 25%. Growth efforts include expanding North American and international markets, launching new content through its Manchester studio, and entering additional lottery and regulated gaming markets. Inspired Entertainment (NASDAQ:INSE) said second-quarter revenue totaled $61 million and EBITDA reached $27 million, with EBITDA slightly ahead of consensus expectations, as the company continued to shift toward a more digital-led and less capital-intensive business model. Executive Chairman A. Lorne Weil said comparisons with the prior-year quarter were affected by the sale of the Holiday Parks business and a restructuring of the company’s pub segment. Sequentially, however, second-quarter revenue increased 6% from the first quarter and EBITDA rose 14%, despite the April implementation of a higher U.K. Remote Gaming Duty. → SpaceX’s First Earnings Report Could Decide Whether Shorts or Bulls Have Control The company’s EBITDA margin expanded by 1,000 basis points year over year to 45%. Year to date, Inspired retired $23 million of debt, repurchased more than 700,000 shares and reduced net leverage to three times. Inspired reaffirmed its 2026 EBITDA target of $112 million to $118 million and its reported free-cash-flow conversion target of more than 20% of EBITDA. Weil said the company expects pro forma free cash flow to exceed 25% of EBITDA for the year after adjusting for a one-time cash outflow related to the pub restructuring. → 3 Drone Stocks That Should Soar After the Summer Slump The company recorded approximately $7 million of nonrecurring working-capital cash outflows in the first half tied to contractual adjustments associated with the pub business restructuring. Weil said that adjusting for the item would raise expected full-year free cash flow from $23 million to about $30 million. Looking further ahead, management’s plan through 2027 calls for EBITDA at the midpoint of $130 million, a 47% EBITDA margin, leverage below 2.5 times and free-cash-flow conversion between 25% and 30%. → The Bitcoin Comeback May Already Be Underway—2 ETFs for Exposure Interactive revenue increased 15% year over year in the second quarter, while adjusted EBITDA rose about 13%. Management said the growth rates reflected the effect of the U.K. Remote Gaming Duty, which nearly doubled to 40% from 21% on April 1. Inspired’s U.K. gross gaming revenue increased 40% year over year during the quarter. However, Weil said the combination of higher gross gaming revenue and the higher duty rate increased the company’s absolute tax impact by roughly 2.5 times from the prior year, limiting margin expansion. “The underlying business is growing like crazy,” Weil said in response to an analyst question, describing the second quarter as a trough caused by the tax change. Since the higher tax was fully reflected in the second quarter, management expects the third and fourth quarters to show the business’s historical sequential operating leverage as revenue grows without another tax-rate increase. President and CEO Brooks Pierce said Inspired continued to gain U.K. market share and was expanding in North America, led by its Cash Bank game family. Pierce said the company’s U.K. interactive share has grown from roughly 3% to 4% several years ago to more than 11%, approaching 12%. Management also said it was monitoring potential additional U.K. gaming-tax proposals. Pierce said industry participants have become more aligned in opposition to major tax increases after the higher online gaming duty took effect, though he said future policy decisions remain difficult to predict. Retail Solutions delivered EBITDA margins before corporate allocation of more than 50% for the first time, supported by cash-box growth across U.K. licensed betting offices, MSAs, pubs, adult gaming centers and bingo locations. William Hill closed more than 200 shops during the quarter, primarily lower-performing locations. Pierce said the closures improved the performance of the remaining estate, while Inspired redeployed removed terminals across its broader network. In Greece, the company reported year-over-year cash-box growth and market-share gains. Allwyn placed an order for more than 2,000 replacement machines, with deliveries expected to begin in the fourth quarter. About 32% of Inspired’s 9,000 Greek terminals have yet to be refreshed, management said. Inspired installed 125 terminals for Alberta Gaming, Liquor and Cannabis during the quarter. It also sold subscription game packs to AGLC and to more than 92% of its Illinois terminal base, which Pierce said produced the market’s best performance to date. The company highlighted Wolf It Up! as a successful title that has translated from online gaming into retail markets in the U.K. and North America. Inspired is also building a content studio in Manchester. Its Bee Reel Games studio is expected to launch its first game by year-end and ultimately add one game per month, with an emphasis on market-specific content. Virtual sports revenue increased 3% sequentially. BetMGM’s integrated sportsbook offering in New Jersey and Ontario contributed to a 50% increase in turnover from the first quarter to the second quarter, while early July results continued to show growth, according to management. Inspired also launched with BetMGM and other operators, including Bet365, in Alberta’s newly regulated market. The company said its Soccer 4.0 product, including a bet-builder feature, generated a 6% turnover increase for certain customers during the World Cup period. In Latin America, its Altenar partnership produced a 55% increase in turnover and a 61% increase in gross gaming revenue from the first quarter to the second quarter. Management expects a third-quarter launch with the Massachusetts Lottery through its Aristocrat Interactive partnership, which would bring Inspired live in four lottery states. The company also said it is investing in iLottery capabilities and expects to begin delivering games into that category next year. On capital allocation, Weil said the company expects to use excess cash for debt repayment and share repurchases, with the balance varying by quarter. He added that acquisitions remain possible if opportunities offer significant synergies and immediate accretion. Inspired Entertainment, Inc (NASDAQ: INSE) is a business-to-business provider of digital gaming content and technology solutions for the global gaming industry. The company's offerings include server-based gaming modules, virtual sports simulations, digital interactive content and mobile sports betting platforms. Inspired designs proprietary games and software that integrate with lotteries, casino operators, retail betting shops and online platforms, emphasizing reliable performance, rapid deployment and engaging player experiences. At the core of Inspired's product suite is its Virtual Sports catalog, which simulates sporting events using advanced algorithms and randomized outcomes. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Inspired Entertainment Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

This article first appeared on GuruFocus. Revenue: $61 million in Q2 2026, roughly in line with expectations; up 6% sequentially from Q1 2026. Adjusted EBITDA: $27 million in Q2 2026, slightly ahead of consensus; up 14% sequentially from Q1 2026. EBITDA Margin: Expanded by 1,000 basis points year-over-year to 45%. Interactive Revenue Growth: Worldwide year-over-year growth of 15% in Q2 2026. Interactive Adjusted EBITDA Growth: Increased approximately 13% year-over-year in Q2 2026. UK Gross Gaming Revenue (GGR): Grew 40% year-over-year in Q2 2026. Debt Reduction: Retired $23 million in debt year-to-date. Share Repurchases: Repurchased over 700,000 shares year-to-date. Net Leverage: Reduced to 3x. 2026 EBITDA Target: Confirmed range of $112 million to $118 million. Free Cash Flow Conversion: Guided to 20%+ of EBITDA for 2026; expected to exceed 25% on a pro forma basis. Retail Solutions EBITDA Margin: Exceeded 50% before corporate allocation for the first time. Hybrid Dealer Turnover: Increased 13% from Q1 to Q2 2026. Hybrid Dealer GGR: Increased 25% from Q1 to Q2 2026. Virtual Sports Revenue: Increased 3% sequentially in Q2 2026. Latin America Partnership (Altenard): Turnover up 55% and GGR up 61% from Q1 to Q2 2026. 2027 Targets: Midpoint EBITDA of $130 million and EBITDA margin of 47%; leverage projected to decline to under 2.5x; free cash flow conversion between 25% and 30%. Warning! GuruFocus has detected 4 Warning Signs with INSE. Is INSE fairly valued? Test your thesis with our free DCF calculator. Release Date: August 05, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. EBITDA margin expanded by 1,000 basis points year-over-year to 45%, driven by the Holiday Park sale and pub restructuring. UK gross gaming revenue grew 40% year-over-year in Q2, demonstrating strong content demand and market share gains despite the tax increase. Interactive business continued to gain market share in the UK and North America, with UK share approaching 12%. Retail Solutions delivered EBITDA margins over 50% for the first time, supported by cash box growth and successful terminal redeployment. Virtual sports momentum is building with BetMGM fully integrated in New Jersey and Ontario, and turnover up 50% sequentially. Hybrid Dealer is gaining traction with turnover up 13% and GGR up 25% from Q1 to Q2, including new operator launches. The company reduced net leverage to 3x and retired $23 million in debt year-to-date, with plans to continue deleveraging and repurchasing shares. New content studio in Manchester is expected to produce one additional game per month, enhancing content pipeline. Strong second-half outlook with seasonal uplift and custom game development payments scheduled for Q4. Expansion in Latin America with turnover up 55% and GGR up 61% from Q1 to Q2, and new lottery partnerships. UK remote gaming duty nearly doubled from 21% to 40% in April, negatively impacting interactive revenue and EBITDA growth. Interactive revenue growth decelerated to 15% year-over-year in Q2, with EBITDA growth of only 13%, below historical operating leverage trends. The tax increase caused a 2.5 times year-over-year increase in absolute tax impact, depressing margins. One-time nonrecurring cash outflow of approximately $7 million in H1 2026 related to pub restructuring, impacting reported free cash flow. Free cash flow conversion for 2026 is guided at 20% plus, below the pro forma 25% due to the one-time outflow. Potential further UK tax increases on B2 gaming machines are a risk, though the company hopes for a measured approach. Hybrid Dealer may not become as large as originally anticipated, limiting its growth potential. Interactive margins are already near 70%, limiting potential for significant further expansion. The company faces uncertainty regarding the timing of the Chicago VLT market launch, which could be delayed to 2027. The UK tax anomaly will continue to distort year-over-year comparisons for the balance of 2026. Q: Can you provide more detail on the interactive segment's growth deceleration, specifically breaking down UK performance versus other regions to better understand the underlying performance ex-UK?A: Brooks Pierce (CEO) explained that UK GGR specifically was up 40% year-over-year, but the near-doubling of the UK remote gaming duty (from 21% to 40%) significantly impacted reported revenue and EBITDA. He noted the company believes it gained market share in the UK during Q2 based on conversations with major operator customers. Lorne Weil (Executive Chairman) added that revenue growth outside the UK was significantly higher than in the UK, emphasizing that the tax increase from 20% to 40% comes straight off the top line, making the positive UK revenue growth "a miracle" given most operators saw declining revenues. Q: Is the sequential step-down in interactive revenue the trough for the year, and how should we think about the sequential path into the seasonally strong fourth quarter?A: Brooks Pierce (CEO) confirmed that the interactive business historically grows sequentially each quarter, with Q3 better than Q2 and Q4 better than Q3, and sees nothing to change that view. Lorne Weil (Executive Chairman) emphasized that the Q2 sequential decline is "completely due to the tax" and that the underlying business is "growing like crazy." Since the increased tax is now fully in the Q2 calculation, Q3 and Q4 should reflect full GGR growth without additional tax offsets, making Q2 a definitive trough. Q: How sustainable are the impressive UK market share gains that helped offset the tax increase, and could they slow once you lap certain reallocations?A: Brooks Pierce (CEO) highlighted that the company has shown consistent growth in the UK, going from roughly 3-4% market share to over 11-12%, and is "pretty much doubling down" in the UK market while others may be exiting due to constraints. Lorne Weil (Executive Chairman) added that the UK is the one market where the company has a significant retail machine estate, and the multi-channel effect of players seeing games in betting shops and arcades drives online performance, creating a sustainable competitive advantage as new games are introduced across both channels. Q: How are you thinking about capital allocation priorities, particularly the mix between debt repayment and share repurchases, and is M&A off the table as you seek lower leverage?A: Lorne Weil (Executive Chairman) stated the company will allocate all excess cash to debt repayment and stock repurchases, with proportions shifting quarter to quarter based on specific objectives. He noted debt reduction provides a "double or triple whammy" through absolute interest cost reduction and declining spread as leverage hits deleveraging points. Regarding M&A, he said it's never off the table, but any opportunity must have significant synergies and be immediately accretive to be considered. Q: With interactive EBITDA margins near all-time highs, where realistically can those margins go over the next couple of years?A: Brooks Pierce (CEO) indicated that with scaling opportunities, the company expects to increase interactive margins by "several points" from the current level of nearly 70%, but cautioned it won't be a dramatic 10-15% swing. The margin expansion will come from continued operating leverage as the business scales. Q: Regarding the 2,000 replacement terminals for Greece, are these on the standard revenue share terms, and does the $30-35 million CapEx guidance include this deliverable?A: Brooks Pierce (CEO) confirmed the terms are unchanged from the last batch, noting the Vantage slant cabinet will likely be a larger mix given its extraordinary performance and higher yield management. Eric (CFO) clarified that the CapEx guidance excludes customer-funded CapEx, which would include the Greece deliveries, meaning the Greek terminal refresh is not included in the company's cash CapEx guidance. Q: Is the Chicago VLT opportunity factored into Q4 expectations, and how are you thinking about that market's potential?A: Brooks Pierce (CEO) indicated he would be in Chicago the following week, signaling its importance. He noted the market is dominated by two large operators (J&J and NSL) with whom the company has strong relationships. While competitors have suggested Chicago could launch in Q4 2026 versus earlier expectations of Q1 2027, Pierce estimated the company will see "some this year, but probably more next year," maintaining confidence in Chicago as a very strong market. Q: Can you provide commentary on World Cup exposure for the virtual sports product, particularly regarding penetration with BetMGM and other operators?A: Brooks Pierce (CEO) noted this was the first World Cup with BetMGM as a fully integrated sportsbook solution, while Bet365 and Betano had prior exposure. The company saw a 6% uplift in turnover, attributed to a combination of World Cup interest and the new Soccer 4.0 product with Bet Builder functionality (similar to same-game parlays). He expressed excitement about seeing whether the momentum continues into American football season, particularly with BetMGM now fully integrated, and hopes other major US sports betting operators will follow. Q: Can you explain the free cash flow conversion guidance of 20% plus and what drives higher conversion in the back half of the year?A: Lorne Weil (Executive Chairman) explained that the first half included a one-time, non-recurring cash outflow of approximately $7 million related to contractual working capital adjustments from the pub restructuring. This outflow is fully reflected in reported free cash flow but won't recur in the second half. On a pro forma basis, the full-year free cash flow projection of $23 million becomes $30 million, representing over 25% of EBITDA, with conversion expected to improve further as the business mix shifts toward less capital-intensive operations and declining leverage generates interest savings. Q: There are reports of a UK think tank recommending increased taxes on B2 gaming machines. What are you hearing on the ground, and what are your thoughts on potential further tax increases?A: Brooks Pierce (CEO) noted that following the online gaming tax increase, different industry factions (horse racing, betting shops, AGCs) initially had divergent views, but now the industry recognizes the need to align against further increases. He acknowledged the potential job losses and high street decimation that could result from aggressive tax hikes, and expressed hope that any increase would be "measured" rather than matching what the think tank has suggested, though he admitted it's impossible to predict. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Second Quarter Revenue of $60.8 million increased 6% sequentially despite the higher UK remote gaming duty introduced April 1 Net Operating Income of $9.9 million, Net Income of $0.2 million and Adjusted Net Income of $1.5 million Adjusted EBITDA of $27.1 million, up 14% from prior quarter, generating a Company-record 45% Adjusted EBITDA Margin Retail Solutions delivered another strong quarter due to North American retail sales and continued strength in the UK Revenue and Adjusted EBITDA in the Interactive segment increased 15% and 13% year-over-year, respectively, reflecting continued market share gains despite the higher UK remote gaming duty Repaid $10.0 million of principal of senior secured notes and repurchased approximately $2.6 million of common stock Pipeline of product launches and geographic expansion expected to drive strong performance in second half of 2026 Reiterating FY2026 Adjusted EBITDA target range of $112 million to $118 million1 and updating the Free Cash Flow conversion outlook to 20%+ NEW YORK, Aug. 05, 2026 (GLOBE NEWSWIRE) -- Inspired Entertainment, Inc. (“Inspired” or the “Company”) (NASDAQ: INSE), a leading B2B provider of gaming content, technology, hardware and services, today reported financial results for the second quarter ended June 30, 2026. Reported results reflect the divestiture of our UK holiday parks business and the restructuring of our pubs business, both of which contributed to the prior-year period. “Our second quarter results provide clear evidence that our transformation is translating into expanding margins and continued earnings growth, while building a stronger, more cash-generative business with lower leverage,” said Brooks Pierce, President and CEO of Inspired Entertainment. “We delivered sequential quarterly growth in both Revenue (+6%) and Adjusted EBITDA (+14%) and achieved a Company-record 45% Adjusted EBITDA margin2. Portfolio optimization initiatives, including the divestiture of our UK holiday parks business and the restructuring of our pubs business, reduced Revenue by approximately 30% year-over-year. Excluding the impact of these initiatives, we delivered like-for-like year-over-year revenue growth3, and more importantly, the quality of our earnings strengthened and contributed to our record margin performance. “We continue to see strong performance across the business. We have demonstrated resilience in the face of the UK remote gaming duty increase that took effect on April 1, with continued market share gains and strong operating outperformance in line with what we had originally anticipated. Our Retail Solutions business continues to perform well, with strong terminal performance in the UK and Greece and further opportunities to refresh our installed base in Greece next year. Virtual Sports has stabilized, and we launched the first of many customers from our SaaS agreement with Playtech, enabling Inspired’s Virtuals to be delivered across Playtech’s established global operator network. With a growing pipeline of new customers and geographies, a strong product roadmap and a new content studio coming online in the fourth quarter, we expect momentum to build through the second half of the year and into 2027. “Alongside higher margins and sequential Adjusted EBITDA growth, we remain focused on driving cash generation and reducing leverage. Year to date, we have repaid over $23 million of debt, including $10 million in the second quarter, and repurchased more than 700,000 shares. We have strong visibility into the remainder of the year, with multiple drivers supporting continued momentum. The combination of resilient underlying demand, strong execution, expanding margins, disciplined capital allocation and a steadily improving balance sheet gives us confidence in delivering our 2026 targets and positioning the Company for continued growth and value creation in 2027.” “Our long-term thesis remains intact and we continue to see the benefits of the strategic actions we have taken to build a higher-margin, more cash-generative business,” said Lorne Weil, Executive Chairman of Inspired Entertainment. “We are gaining share, expanding profitability and reducing leverage, while maintaining the financial flexibility to deploy capital toward the highest-return opportunities, including debt reduction and share repurchases. “We remain well positioned for the remainder of 2026 and maintain our full-year Adjusted EBITDA target, while updating our Free Cash Flow conversion outlook to 20% or above, reflecting increased visibility into our full-year performance. As we look toward 2027, we see a business with multiple avenues for sustainable growth, significant opportunities to improve operating performance and a clear path to further deleveraging. We believe the Company’s continued execution will create meaningful long-term value for shareholders.” Recent Highlights Repayment of $10.0 million (£7.5 million) of debt principal in the second quarter with $23.3 million (£17.5 million) repaid year to date. Repurchase of 319,995 shares of our common stock in the second quarter for $2.6 million, with 707,225 shares repurchased year to date for $5.2 million. Live on day one with both Interactive and Virtual Sports in the newly regulated Alberta gaming market, with customers including FanDuel, DraftKings, BetMGM, Rush Street Interactive, Caesars Entertainment, and bet365 (3Q 2026). Four-year contract extension with Paddy Power, with Inspired as the exclusive provider of gaming terminals and content (2Q 2026). Three-year contract extension with Mecca Bingo for providing service, maintenance and logistics services to gaming machines installed at ‘Mecca’ bingo halls and AGCs in the UK (2Q 2026). Malta Lottery launched with several Virtual Sports channels via Streamed to Venue solution, which is live in over 160 venues in Malta and Gozo. This is the first of many customers live from Inspired’s SaaS agreement with Playtech, enabling Inspired’s Virtuals content and cloud-native platform to be delivered across Playtech’s established global operator network (3Q 2026). Outlook Management remains confident in its strategic direction and ability to deliver profitable growth in 2026. The continued expansion of the higher-margin digital businesses and increasing operating leverage support improved earnings quality and stronger free cash flow generation, driving long-term shareholder value. Management reaffirms full year 2026 Adjusted EBITDA target range of $112 million to $118 million2. This incorporates the expected impact of the UK remote gaming duty changes that became effective April 1, 2026. Post-divestiture of the UK holiday parks business, we expect earnings to be less seasonal on a comparable basis, with Adjusted EBITDA expected to grow sequentially throughout the year. The Company is updating its 2026 Free Cash Flow conversion outlook to 20%+, compared with its prior expectation of 20% to 25%, reflecting increased visibility into full-year cash generation. Non-GAAP Financial Measures We use non-GAAP financial measures, including Adjusted EBITDA, to analyze our operating performance. We use these financial measures to manage our business on a day-to-day basis. We believe that these measures are also commonly used in our industry to measure performance. For these reasons, we believe that these non-GAAP financial measures provide expanded insight into our business, in addition to standard U.S. GAAP financial measures. There are no uniform rules for defining and using non-GAAP financial measures, and as a result the measures we use may not be comparable to measures used by other companies, even if they have similar labels. The presentation of non-GAAP financial information should not be considered in isolation from, as a substitute for, or superior to, financial information prepared and presented in accordance with U.S. GAAP. You should consider our non-GAAP financial measures in conjunction with our U.S. GAAP financial statements. We define our non-GAAP financial measures as follows: EBITDA is defined as net income (loss) excluding depreciation and amortization, interest expense, interest income and income tax expense. Adjusted EBITDA is defined as net income (loss) excluding depreciation and amortization, interest expense, interest income and income tax expense, and other additional exclusions and adjustments (see Adjusted EBITDA reconciliation table). Such additional excluded amounts include stock-based compensation U.S. GAAP charges where the associated liability is expected to be settled in stock, and changes in the value of earnout liabilities and income and expenditure in relation to legacy portions of the business (being those portions where trading no longer occurs) including closed defined benefit pension plans. Additional adjustments are made for items considered outside the normal course of business, including (1) restructuring costs, which include charges attributable to employee severance, management changes, restructuring, dual running costs, costs related to facility closures and integration costs, (2) merger and acquisition costs, (3) gains or losses not in the ordinary course of business and (4) the costs of the restatement of previously issued financial statements. We believe Adjusted EBITDA, when considered along with other performance measures, is a particularly useful performance measure, because it focuses on certain operating drivers of the business, including sales growth, operating costs, selling and administrative expense and other operating income and expense. We believe Adjusted EBITDA can provide a more complete understanding of our operating results and the trends to which we are subject, and an enhanced overall understanding of our financial performance and prospects for the future. Adjusted EBITDA is not intended to be a measure of liquidity or cash flows from operations or a measure comparable to net income or loss, because it does not take into account certain aspects of our operating performance (for example, it excludes non-recurring gains and losses which are not deemed to be a normal part of underlying business activities). Our use of Adjusted EBITDA may not be comparable to the use by other companies of similarly termed measures. Management compensates for these limitations by using Adjusted EBITDA as only one of several measures for evaluating our operating performance. In addition, capital expenditures, which affect depreciation and amortization, interest expense, and income tax benefit (expense), are evaluated separately by management. Adjusted Net Income is defined as net income (loss) excluding the effects of certain exclusions and adjustments. Such excluded amounts include income and expenditure in relation to legacy portions of the business (being those portions where trading no longer occurs) including closed defined benefit pension plans. Additional adjustments are made for items considered outside the normal course of business, including (1) restructuring costs, which include charges attributable to employee severance, management changes, restructuring, dual running costs, costs related to facility closures and integration costs, (2) merger and acquisition costs and (3) gains or losses not in the ordinary course of business. These items have been adjusted to reflect the tax impact from excluding them from net income (loss). Adjusted Net Income per diluted share is computed by dividing the Adjusted Net Income by the weighted-average number of common shares outstanding during the period, including the effects of any potentially dilutive securities, including RSUs, using the treasury stock method, and convertible debt or convertible preferred stock, using the if-converted method, unless the inclusion would be anti-dilutive. Functional Currency at Constant rate. Currency impacts shown have been calculated as the current-period average GBP:USD rate less the equivalent average rate in the prior year quarter, multiplied by the current period amount in our functional currency (GBP). The remaining difference, referred to as functional currency at constant rate, is calculated as the difference in our functional currency, multiplied by the prior year quarter average GBP: USD rate, as a proxy for functional currency at constant rate movement. Currency Movement represents the difference between the results in our reporting currency (USD) and the results on a functional currency at constant rate basis. Reconciliations from net income (loss), as shown in our Consolidated Statements of Operations and Comprehensive Loss, to Adjusted EBITDA are shown below. Conference Call and WebcastInspired management will host a conference call and simultaneous webcast at 4:30 p.m. ET / 9:30 p.m. in the UK on Wednesday, August 5, 2026 to discuss the financial results and general business trends. Preregistration: Analysts and investors who wish to participate in the live conference call must register in advance here. Once registration is completed, participants will be provided with a dial-in number containing a personalized conference code to access the call. Webcast: A live audio webcast of the call can be accessed by registering here or through http://www.investors.inseinc.com. Please follow the registration prompts. Replay: A replay of the webcast will be available on the Company's website at http://www.investors.inseinc.com, along with a copy of this press release and an investor slide presentation. About Inspired Entertainment, Inc.With a proven track record of innovation, Inspired is a leading provider of content, technology, hardware and services for licensed gaming, betting and lottery operators around the world. Inspired’s proprietary games resonate with players and deliver consistent performance for gaming operators across interactive, virtual sports, and retail gaming environments. Inspired’s content and gaming systems are designed to work together across digital and retail channels, enabling scalable deployment and a consistent player experience. Through this integrated content-led approach, Inspired helps operators strengthen their offerings, drive engagement, and deliver compelling player experiences. Additional information can be found at www.inseinc.com. Forward-Looking StatementsThis press release contains “forward-looking statements” within the meaning of the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995, including, but not limited to, statements regarding our ability to bring certain of our products to customers in the various markets in which we operate and execute on our strategic plan, statements regarding expectations with respect to potential new customers and statements regarding our anticipated financial performance. Forward-looking statements may be identified by the use of words such as “anticipate,” “believe,” “continue,” “expect,” “estimate,” “plan,” “will,” “would” and “project” and other similar expressions that indicate future events or trends or are not statements of historical matters. These statements are based on Inspired management’s current expectations and beliefs, as well as a number of assumptions concerning future events. Forward-looking statements are subject to known and unknown risks, uncertainties, assumptions and other important factors, many of which are outside of Inspired’s control and all of which could cause actual results to differ materially from the results discussed in the forward-looking statements. Accordingly, forward-looking statements should not be relied upon as representing Inspired’s views as of any subsequent date. We cannot guarantee that the results anticipated by management, as set forth herein, will be realized or, even if realized, will have the expected effects on our results of operations or financial performance. Such results may be affected by, among other things, the “Risk Factors” section of Inspired’s annual report on Form 10-K for the fiscal year ended December 31, 2025, and subsequent quarterly reports on Form 10-Q, which are available, free of charge, on the U.S. Securities and Exchange Commission’s website at www.sec.gov. Inspired does not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date they were made, whether as a result of new information, future events or otherwise, except as required by law. Contact:For [email protected] For Press and [email protected] __________________________1 2026 target is consistent with the assumptions to be discussed in the Company’s August 5, 2026 conference call and presentation and assumes that GBP:USD exchange rates will remain broadly in line with current levels.2 Quarterly record Adjusted EBITDA margin excluding any periods with UK VAT rebate.3 This revenue comparison excludes the revenue from the UK holiday parks business and certain associated leisure assets which were divested on November 7, 2025, and reflects adjustments to the Company’s pubs business to account for a structural change in the Company’s operating model, including the exclusion of current-period revenues affected by the change.

Over the past six months, Inspired’s stock price fell to $7.76. Shareholders have lost 15.6% of their capital, which is disappointing considering the S&P 500 has climbed by 8.5%. This might have investors contemplating their next move. Is there a buying opportunity in Inspired, or does it present a risk to your portfolio? Dive into our full research report to see our analyst team’s opinion, it’s free. Despite the more favorable entry price, we’re swiping left on Inspired for now. Here are three reasons you should be careful with INSE, plus one stock we’d rather own. A company’s long-term sales performance is one signal of its overall quality. Any business can have short-term success, but a top-tier one grows for years. Over the last five years, Inspired grew its sales at a 12.1% annual rate. Although this growth is acceptable on an absolute basis, it fell short of our standards for the consumer discretionary sector, which enjoys a number of secular tailwinds. Operating margin is an important measure of profitability as it shows the portion of revenue left after accounting for all core expenses — everything from the cost of goods sold to advertising and wages. It’s also useful for comparing profitability across companies with different levels of debt and tax rates because it excludes interest and taxes. Inspired’s operating margin has more or less stayed the same over the last 12 months , and we generally like to see margin increases due to economies of scale and cost efficiency over time. Free cash flow isn’t a prominently featured metric in company financials and earnings releases, but we think it’s telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king. Inspired has shown poor cash profitability relative to peers over the last two years, giving the company fewer opportunities to return capital to shareholders. Its free cash flow margin averaged 5.1%, below what we’d expect for a consumer discretionary business. Inspired falls short of our quality standards. After the recent drawdown, the stock trades at 27.2× forward P/E (or $7.76 per share). This valuation is reasonable, but the company’s shaky fundamentals present too much downside risk. There are more exciting stocks to buy at the moment. We’d recommend looking at one of our top software and edge computing picks. ALSO WORTH WATCHING: Top 5 Momentum Stocks. The best time to own a great stock is when the market is finally noticing it. These aren’t just high-quality businesses. Something is happening with them right now. Elite fundamentals meet near-term momentum — both boxes checked at the same time. Find out which stocks our AI platform is flagging this week. See this week’s Strong Momentum stocks — FREE. Get Our Strong Momentum Stocks for Free HERE. Stocks that have made our list include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today.

As the Q1 earnings season wraps, let’s dig into this quarter’s best and worst performers in the consumer discretionary - gaming solutions industry, including Inspired (NASDAQ:INSE) and its peers. The Consumer Discretionary sector, by definition, is made up of companies selling non-essential goods and services. When economic conditions deteriorate or tastes shift, consumers can easily cut back or eliminate these purchases. For long-term investors with five-year holding periods, this creates a structural challenge: the sector is inherently hit-driven, with low switching costs and fickle customers. As a result, only a handful of companies can reliably grow demand and compound earnings over long periods, which is why our bar is high and High Quality ratings are rare. Gaming solutions companies provide the technology infrastructure behind gambling—slot machines, table game systems, lottery terminals, sports-betting platforms, and back-end software for casinos and online operators. Tailwinds include the ongoing legalization of sports betting across U.S. states and international markets, growing adoption of digital and mobile wagering, and casino operators' demand for data-driven player engagement tools. However, headwinds include stringent and evolving regulatory requirements across jurisdictions, high upfront R&D costs to develop next-generation platforms, and customer concentration risk given the limited number of large casino operators. Increasing competition from in-house technology development by major operators also pressures demand. The 6 consumer discretionary - gaming solutions stocks we track reported a strong Q1. As a group, revenues beat analysts’ consensus estimates by 2.9%. In light of this news, share prices of the companies have held steady. On average, they are relatively unchanged since the latest earnings results. Specializing in digital casino gaming, Inspired (NASDAQ:INSE) is a provider of gaming hardware, virtual sports platforms, and server-based gaming systems. Inspired reported revenues of $57.2 million, down 5.3% year on year. This print fell short of analysts’ expectations by 5.8%, but it was still a strong quarter for the company with a beat of analysts’ EPS and adjusted operating income estimates. “Our first-quarter results reflect the execution of our strategy and the quality of our underlying business,” said Brooks Pierce, President and CEO of Inspired Entertainment. Inspired delivered the weakest performance against analyst estimates of the whole group. Interestingly, the stock is up 7.2% since reporting and currently trades at $7.72. Is now the time to buy Inspired? Access our full analysis of the earnings results here, it’s free. Specializing in online casino gaming and sports betting, Rush Street Interactive (NYSE:RSI) is an operator of digital gaming platforms. Rush Street Interactive reported revenues of $370.4 million, up 41.1% year on year, outperforming analysts’ expectations by 11.3%. The business had a stunning quarter with a solid beat of analysts’ adjusted operating income and revenue estimates. Rush Street Interactive delivered the biggest analyst estimate beat, fastest revenue growth, and highest full-year guidance raise among its peers. The market seems happy with the results as the stock is up 11.5% since reporting. It currently trades at $26.75. Is now the time to buy Rush Street Interactive? Access our full analysis of the earnings results here, it’s free. Founded by a team of former gaming industry executives, PlayStudios (NASDAQ:MYPS) offers free-to-play digital casino games. PlayStudios reported revenues of $58.41 million, down 6.9% year on year, exceeding analysts’ expectations by 9.4%. Still, it was a slower quarter as it posted a significant miss of analysts’ adjusted operating income estimates. PlayStudios delivered the slowest revenue growth in the group. As expected, the stock is down 8.8% since the results and currently trades at $0.47. Read our full analysis of PlayStudios’s results here. Getting its start in daily fantasy sports, DraftKings (NASDAQ:DKNG) is a digital sports entertainment and gaming company. DraftKings reported revenues of $1.65 billion, up 16.8% year on year. This result met analysts’ expectations. Zooming out, it was a satisfactory quarter as it also logged a solid beat of analysts’ adjusted operating income estimates but full-year revenue guidance missing analysts’ expectations. DraftKings had the weakest full-year guidance update among its peers. The company reported 4.2 million users, down 2.3% year on year. The stock is flat since reporting and currently trades at $25.09. Read our full, actionable report on DraftKings here, it’s free. Famous for hosting the Kentucky Derby, Churchill Downs (NASDAQ:CHDN) operates a horse racing, online wagering, and gaming entertainment business in the United States. Churchill Downs reported revenues of $663 million, up 3.2% year on year. This number was in line with analysts’ expectations. Aside from that, it was a satisfactory quarter as it also recorded a beat of analysts’ EPS estimates but a miss of analysts’ adjusted operating income estimates. The stock is down 4.2% since reporting and currently trades at $85.19. Read our full, actionable report on Churchill Downs here, it’s free. Late in 2025 into early 2026, there was hand-wringing around artificial intelligence. For software companies, the fear was that AI would erode pricing power and compress margins as new tools made it easier to replicate what once required expensive enterprise platforms. Crypto investors had their own version of the same anxiety: if AI agents could trade, allocate capital, and manage wallets autonomously, what exactly was the long-term value of today’s crypto infrastructure? These concerns triggered a noticeable rotation away from these sectors and into safer havens. But markets rarely dwell on one narrative for long. Spring 2026 came, and the focus shifted abruptly from technological disruption to geopolitical risk. The US’ conflict with Iran became the dominant driver of market psychology, and when geopolitics takes center stage, the script changes quickly. Investors stop debating growth rates and start worrying about oil supply, inflation, and global stability. Want to invest in winners with rock-solid fundamentals? Check out our Hidden Gem Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate. 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