- INSE
-11.17%
This article first appeared on GuruFocus.
Release Date: November 05, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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EBITDA margin expanded 900 basis points year-over-year to 46% in Q3 2026, despite UK tax increases.
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Like-for-like EBITDA grew 12% over nine months (15% annualized) after adjusting for divestitures and tax impacts.
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Interactive segment EBITDA grew 20% before UK tax impact, with US GGR up over 30% and Italy up over 50% year-to-date.
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Free cash flow year-to-date was $17.6 million, and leverage declined to 2.8x, well below the 5x covenant.
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New growth opportunities include FanDuel virtual sports launch, Illinois VLT expansion, and entry into US Class 3 market.
Negative Points
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Full-year 2026 guidance low end reduced to $109 million due to Brazil shutdown.
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UK machine gaming duty increases from 20% to 25% in April 2027, expected to cost $2-3 million annually.
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Brazil online gaming shutdown impacts virtual sports business, with $1 million monthly EBITDA impact and growth pushed out a year.
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2027 growth expected to be only modest as company must first offset Brazil shutdown before generating growth.
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Free cash flow conversion target for 2026 lowered slightly due to Brazil impact.
Q & A Highlights
Q: With leverage now below three times and more certainty on some of the unknowns, how does that adjust your thinking on capital allocation, share repurchases, or M&A? A: Executive Chairman Lorne Weil said the company is always weighing share repurchase, debt repayment, and acquisitions, and is looking at a couple of acquisition opportunities carefully. However, given where the shares are tradingbarely four times EBITDA versus roughly seven times for gaming industry suppliers on averagethe overwhelming emphasis for the immediate and intermediate future will be on share repurchase. He said Inspired will be “buying it as aggressively as we ever have” and will see where that gets them through the fourth quarter.
Q: How much of the UK machine gaming duty increase can you reasonably offset, and what are the main levers? A: CEO Brooks Pierce estimated the impact at $2 million to $3 million starting in April 2027, noting it will not be a full-year hit next year. He said the company has a history of mitigating UK tax rate changes over time through game development and other measures, and views this as a short-term headwind beginning in 2027 that it expects to offset over the course of time.
