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Inspired Entertainment (INSE) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Consumer Discretionary· Aug 5, 2026

Source: earnings call transcript

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

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

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%—

Product announcements

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

William Hill Shop 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.

Alwin Order for replacement machines more than 2,000 machines ongoing refresh

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

AGLC Terminal installation 125 terminals

Installed 125 terminals for AGLC in Alberta.

DraftKings Wolf It Up roulette game launch

Launched branded Wolf It Up roulette game with DraftKings.

Betfred Hybrid Dealer integration

Added Betfred as a key UK operator for Hybrid Dealer.

BetMGM Fully 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.

Playtech Broader distribution of virtual sports portfolio

Went live with Malta Lottery through Playtech.

Mass Lottery iLottery launch

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

Risks & headwinds

UK Remote Gaming Duty increase effective 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 outflow H1 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

Interactive sequential growth

Q3 FY26
Current Q2 FY26 revenue up 6% QoQ, EBITDA up 14% QoQ
Target Continued 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.

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Q&A highlights

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 read 6 chapters

Detailed narrative

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.

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.

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.

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.

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.

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.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.