Skip to content
    INSE
    Earnings call· Jun 2026(Q2 FY26)

    Inspired Entertainment Q2 FY26 earnings call INSE

    Aug 5, 2026 Source

    Executive summary

    Inspired Entertainment Q2 FY26 — Digital Transformation and Strong H2 Outlook Despite UK Tax Impact

    Inspired Entertainment continued its transformation towards a digital-led, less capital-intensive model in Q2 FY26, achieving significant EBITDA margin expansion and debt reduction. Despite the substantial impact of the UK remote gaming duty, the company maintained strong underlying business growth, particularly in Interactive UK GGR and North American market share. Management anticipates stronger sequential momentum in the second half, driven by seasonal trends and product initiatives, with a focus on continued deleveraging and shareholder returns.

    Highlights

    5

    • EBITDA margin expanded by 1000 basis points year over year to 45% in Q2 FY26.

    • Net leverage reduced to 3.0x year-to-date FY26.

    • Retail Solutions delivered EBITDA margins exceeding 50% for the first time.

    • Interactive UK gross gaming revenue (GGR) grew 40% year over year in Q2 FY26 despite tax increase.

    • Interactive North America continued to gain market share.

    Concerns

    2

    • The UK remote gaming duty nearly doubled from 21% to 40% beginning April 1st, significantly impacting Interactive segment margins and year-over-year comparisons.

    • A one-time non-recurring cash outflow of approximately $7 million occurred in H1 FY26 due to pub restructuring, impacting reported free cash flow.

    Guidance & targets

    16
    CategoryTargetConfidence
    Full-year 2026 EBITDA
    $112M-$118M
    high materiality
    High
    Full-year 2026 Free Cash Flow conversion
    20% plus of EBITDA
    medium materiality
    High
    Full-year 2026 Pro forma Free Cash Flow conversion
    in excess of 25% versus the 20% shown on the slide
    medium materiality
    High
    Interactive H2 FY26 volume growth
    well ahead of first half
    medium materiality
    High
    Interactive H2 FY26 trajectory
    similar trajectory
    medium materiality
    High
    Interactive Q4 FY26 revenue increase
    over 17%
    medium materiality
    High
    Interactive Q4 FY26 adjusted EBITDA increase
    23%
    medium materiality
    High
    Retail Solutions Greek terminal delivery
    begin delivering
    low materiality
    Medium
    iLottery game delivery
    begin delivering games
    low materiality
    Medium
    New content studio game production
    one additional game per month
    low materiality
    Medium
    Virtual Sports Soccer 4.0 rollout
    continue to roll this product out to additional customers on a worldwide basis
    low materiality
    Medium
    Virtual Sports Mass Lottery launch
    Q3 launch anticipated
    low materiality
    High
    Full-year 2027 Midpoint EBITDA
    $130M
    high materiality
    High
    Full-year 2027 Midpoint EBITDA margins
    47%
    high materiality
    High
    Full-year 2027 Leverage
    under 2.5%
    high materiality
    High
    Full-year 2027 Free Cash Flow conversion
    between 25% and 30%
    high materiality
    High

    Segment performance

    3
    SegmentRevenueYoYQoQMargin
    Retail Solutions
    Strong performance driven by margin expansion strategy, following holiday parks sale and pub restructuring. William Hill shop closures improved remaining estate performance, and removed terminals were successfully redeployed. Greek market share expanded with new Vantage cabinets.
    Cash box growth: continued across UK retail businessesMarket-leading share: further expanded in GreeceTerminals installed: 125 for AGLC in AlbertaSubscription game packs sold: to >92% of Illinois terminal base
    		———>50%
    Interactive
    Performed well despite the UK remote gaming tax nearly doubling from 21% to 40%. Strong content and demand drove UK GGR growth. Expects sequential improvement in H2 due to seasonal trends.
    UK Gross Gaming Revenue growth: 40% YoYMarket share: continued gain in UKMarket share: continued gain in North America
    		—13%——
    Virtual Sports
    Delivered stable results with sequential revenue growth. Growth driven by BetMGM launches in New Jersey, Ontario, and Alberta, rollout of Soccer 4.0 with BetBuilder, and strong performance in Latin America. Expanding into the lottery space.
    Turnover increase (BetMGM): 50% from Q1 to Q2Turnover increase (Latin America): 55% from Q1 to Q2GGR increase (Latin America): 61% from Q1 to Q2Turnover increase (Soccer 4.0): 6% for key customers
    		——3%—

    Operational metrics

    13
    EBITDA margin
    45%1000 bps YoY expansion
    Q2 FY26

    Expanded due to Holly Park sale and pub restructuring.

    Net leverage
    3.0xreduced
    Q2 FY26

    Reduced year-to-date.

    Debt retired
    $23M
    YTD FY26

    Year-to-date debt reduction.

    Shares repurchased
    700,000+
    YTD FY26

    Over 700,000 shares repurchased year-to-date.

    UK Remote Gaming Duty
    40%nearly doubled from 21%
    effective April 1st

    Impacted Interactive segment margins.

    Working capital adjustment (pub restructuring)
    $7M
    H1 FY26

    One-time non-recurring cash outflow.

    Interactive revenue growth
    6%sequential
    Q2 FY26 vs Q1 FY26

    Sequential growth despite UK gaming duty.

    Interactive EBITDA growth
    14%sequential
    Q2 FY26 vs Q1 FY26

    Sequential growth despite UK gaming duty.

    Greek terminals to be refreshed
    32%
    ongoing

    32% of 9,000 terminals yet to be refreshed.

    New content studio game production
    one additional game per month
    ongoing

    Focus on market-specific content from Manchester studio.

    Hybrid Dealer turnover increase
    13%sequential
    Q1 to Q2 FY26

    Sequential growth.

    Hybrid Dealer GGR increase
    25%sequential
    Q1 to Q2 FY26

    Sequential growth.

    Virtual Sports revenue growth
    3%sequential
    Q1 to Q2 FY26

    Sequential growth.

    Product announcements

    4
    ProductTypeDetails
    Wolf It Up roulette gamelaunch
    Bespoke BetMGM game (Price is Right license)launch
    Be Real Games (first game)launch
    Soccer 4.0 with BetBuilderupdate

    Deals & partnerships

    8
    William HillShop closures

    Closed just over 200 shops, largely lower performing locations, which improved the performance of the remaining William Hill estate. Removed terminals were successfully redeployed.

    AlwinOrder for replacement machinesmore than 2,000 machinesongoing refresh

    Order for more than 2,000 replacement machines for the Greek estate, with deliveries starting in Q4 FY26.

    AGLCTerminal installation125 terminals

    Installed 125 terminals for AGLC in Alberta.

    DraftKingsWolf It Up roulette game launch

    Launched branded Wolf It Up roulette game with DraftKings.

    BetfredHybrid Dealer integration

    Added Betfred as a key UK operator for Hybrid Dealer.

    BetMGMFully integrated sportsbook solution

    BetMGM now has a fully integrated sportsbook solution in New Jersey and Ontario for virtual sports. Also launched with BetMGM in Alberta.

    PlaytechBroader distribution of virtual sports portfolio

    Went live with Malta Lottery through Playtech.

    Mass LotteryiLottery launch

    Anticipated Q3 launch with Mass Lottery through partnership with Aristocrat Interactive, bringing the company to four live lottery states.

    Risks & headwinds

    3
    UK Remote Gaming Duty increaseeffective April 1st, 2026

    nearly doubled from 21% to 40%

    Mitigation: Strong underlying GGR growth (40% YoY) and market share gains helped offset some impact; sequential improvement expected in H2 as tax is fully in effect.

    One-time working capital outflowH1 FY26

    $7M

    Mitigation: Non-recurring, will not impact H2 free cash flow.

    Potential for further UK tax increases (B2 gaming machines)future

    unquantified

    Mitigation: Industry alignment against drastic increases; management hopes for measured changes.

    What to watch in Q3 FY26

    5

    Interactive sequential growth

    Q3 FY26
    CurrentQ2 FY26 revenue up 6% QoQ, EBITDA up 14% QoQ
    TargetContinued sequential growth, reverting to historical pattern of H2 outperformance

    Why it matters

    Verifies management's expectation that Q2 was a trough and that the Interactive segment will show stronger growth now that the UK tax impact is fully reflected.

    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.

    Q&A highlights

    7

    Asked for Interactive growth excluding the UK to better understand underlying performance given the tax impact, and about the sustainability of UK market share gains.

    Management stated they don't break out ex-UK growth but confirmed it was significantly higher than in the UK. They attributed UK share gains to strong content and the multi-channel effect of retail presence, expressing confidence in continued growth.

    “We know for sure that the revenue growth outside of the UK was significantly higher than it was in the UK, just because the increase in the tax...”

    asked by Ryan Sigdahl · answered by Unknown Speaker

    2 min read6 chapters

    Detailed Narrative

    01

    Strategic Transformation & Financial Performance

    Inspired Entertainment is actively transforming into a more digital-led, less capital-intensive business model. This strategy has resulted in a 1000 basis point year-over-year expansion in EBITDA margin to 45% in Q2 FY26, driven by the divestment of holiday parks and pub restructuring. The company also reduced net leverage to 3.0x and repurchased over 700,000 shares year-to-date, demonstrating progress towards its financial goals.

    02

    Impact of UK Remote Gaming Duty

    A significant headwind in Q2 FY26 was the near doubling of the UK Remote Gaming Duty from 21% to 40%, effective April 1st. Despite this, Interactive UK gross gaming revenue grew 40% year-over-year, underscoring strong underlying content performance. However, the tax largely negated this growth in reported revenue and EBITDA. Management expects sequential improvement in H2 as the full impact of the tax is now reflected in the base period.

    03

    Retail Solutions Strength

    The Retail Solutions segment delivered strong performance, achieving EBITDA margins exceeding 50% for the first time. This was driven by continued cash box growth across UK retail businesses, including licensed betting offices and pubs. Market share expanded in Greece, supported by new Vantage cabinets and best-in-class content. The successful redeployment of terminals from William Hill shop closures also contributed positively to performance.

    04

    Interactive Segment Momentum

    The Interactive business continued to perform well, gaining market share in both the UK and North America, with UK GGR up 40% year-over-year. The segment anticipates stronger momentum in the second half of the year, which is traditionally higher due to seasonal holiday game releases. Additionally, upfront custom game development payments scheduled for Q4 FY26 are expected to provide an incremental benefit. A new content studio in Manchester is set to produce one additional game per month.

    05

    Virtual Sports Growth & Expansion

    Virtual Sports delivered stable results with sequential revenue growth of 3% from Q1 to Q2 FY26. Key initiatives included the launch with BetMGM in New Jersey, Ontario, and Alberta, and the rollout of Soccer 4.0 with the BetBuilder feature to key customers, which saw a 6% increase in turnover. The company is also expanding into the lottery space, with a Q3 FY26 launch anticipated with the Mass Lottery.

    06

    Capital Allocation Strategy

    Management is committed to allocating all excess cash to debt reduction and share repurchases. The proportions between these two will likely shift from quarter to quarter based on specific goals and market conditions. While M&A is not off the table, any potential acquisition would need to offer significant synergies with existing business and be immediately accretive to be considered.

    AI-generated summary of the company’s earnings call. Not investment advice.