Inspired Entertainment, Inc. Reports Q4 and Full Year 2025 Results

Transition to Digital and Higher Margin Business Accelerates; Record Interactive Revenue and Strong 2026 Guidance

Key Highlights for Investors

• Record Interactive Revenue: Q4 2025 Interactive revenue reached \$17.8 million, up 53% year-over-year, with full year Interactive revenue up 49% to \$58.6 million. Interactive Adjusted EBITDA jumped 60% YoY to \$13.1 million in Q4.
• Digital Transformation: After the divestiture of the holiday parks business, digital segments now represent 52% of Adjusted EBITDA, driving a record company Adjusted EBITDA margin of 42% in Q4.
• Adjusted EBITDA and Profitability: Q4 Adjusted EBITDA was \$32.3 million (+5% YoY), with full year Adjusted EBITDA of \$111.4 million (+11% YoY). Adjusted EBITDA margin was 42% in Q4 and 37% for the full year.
• 2026 Guidance: Management expects Adjusted EBITDA to increase by at least 20% in Q1 2026 and full year 2026 Adjusted EBITDA to be in the range of \$112 million to \$118 million, even after accounting for UK online gaming tax changes effective April 2026.
• Capital Structure and Balance Sheet: The company repaid \$13.3 million (£10 million) of debt in Q1 2026 and closed the sale of its UK Holiday Parks business for £18.6 million in Q4 2025.
• Segment Results: Gaming and Virtual Sports segments showed mixed results, Leisure declined after divestiture, but Interactive’s rapid growth offset these changes. The company will streamline reporting from Q1 2026, merging Gaming and Leisure into a “Retail Solutions” segment.
• Shareholder Returns: The company has initiated share repurchases, enhancing capital returns to shareholders.
• Strategic Partnerships and Product Launches: Expanded partnerships with major operators (BetMGM, Borgata, bet365, Entain), launched new products (Virtual Soccer BetBuilder in Greece, cloud-native lottery platform in the Dominican Republic, expansion into South Africa).
• U.S. iGaming Market Share: The company’s U.S. iGaming GGR market share increased by 50 basis points quarter-over-quarter in Q4 2025.
• Cash Flow and Liquidity: Operating cash flow in 2025 was \$52.0 million, up from \$31.7 million in 2024. Cash on hand improved to \$42.0 million at year-end 2025 from \$29.3 million at the end of 2024.

Detailed Financial Results

Fourth Quarter 2025

• Total revenue: \$77.2 million (-7% YoY, mainly due to Leisure divestiture and FX impacts)
• Net operating income: \$11.2 million (-14% YoY)
• Net loss: \$(7.2) million (compared to net income of \$67.0 million in Q4 2024, which included a large deferred tax benefit)
• Adjusted net loss: \$(5.1) million (compared to adjusted net income of \$3.8 million in Q4 2024)
• Segment Adjusted EBITDA contributions (with pro-rated corporate allocation):
  • Gaming: \$15.0 million (46.4% of total)
  • Virtual Sports: \$6.1 million (18.9%)
  • Interactive: \$10.7 million (33.1%)
  • Leisure: \$0.5 million (1.6%)

Full Year 2025

• Total revenue: \$304.1 million (+2% YoY)
• Net operating income: \$30.5 million (-1% YoY)
• Net loss: \$(17.0) million (vs. net income of \$64.8 million in 2024)
• Adjusted net income: \$1.4 million (down from \$13.0 million in 2024)
• Adjusted EBITDA by segment (with pro-rated corporate allocation):
  • Gaming: \$43.1 million (38.7% of total)
  • Virtual Sports: \$22.9 million (20.5%)
  • Interactive: \$34.4 million (30.9%)
  • Leisure: \$11.0 million (9.9%)

Major Developments and Strategic Initiatives

• Divestiture of UK Holiday Parks: Sale completed for £18.6 million, focusing capital on digital and scalable growth engines. The company continues to provide transitional services and recurring content support to the buyer.
• Debt Repayment: Repaid £10 million in Q1 2026, reducing leverage and interest burden.
• Share Repurchases: Initiated opportunistic share buybacks, supporting shareholder value.
• Product Innovation: Successful launches include new Virtual Soccer BetBuilder in Greece, expansion to South Africa, and first cloud-native lottery platform in the Dominican Republic.
• U.S. Market Penetration: Virtual Sports launched with BetMGM and Borgata in New Jersey; U.S. iGaming market share gains are notable.
• Key Partnerships: Multi-year extensions secured with major operators bet365 and Entain.
• Content Expansion: New racing products in Turkey (Horse and Greyhound), and five games in Eilers & Fantini’s Top 50, including a top-10 new slot game.

Forward-Looking Guidance and Outlook

• Q1 2026 Adjusted EBITDA expected to grow at least 20% YoY.
• Full year 2026 Adjusted EBITDA guidance: \$112 million to \$118 million, representing double-digit growth, excluding the divested Leisure business.
• Guidance incorporates UK online gaming tax changes effective April 2026, which could impact market dynamics.
• Further reporting simplification to take effect in Q1 2026, with Gaming and Leisure merged into a single “Retail Solutions” segment for improved transparency.
• Management is committed to maintaining strategic focus on high-margin digital opportunities, prudent capital allocation, and enhanced shareholder returns.

Risks and Considerations for Shareholders

• Net loss and lower adjusted net income for 2025 were primarily due to higher interest and tax expenses and the impact of divestitures.
• UK online gaming tax changes (from April 2026) may pressure earnings but are included in forward guidance.
• Currency fluctuations (GBP/USD) impact reported results; guidance assumes stable FX rates.
• Ongoing capital allocation (debt repayment, share repurchases) is expected to provide greater financial flexibility and potential upside for shareholders.
• Management continues to monitor macroeconomic and regulatory risks, as outlined in the company’s SEC filings.

Conclusion: Investment Implications

Inspired Entertainment’s Q4 and full year 2025 results showcase a business in transformation, with a decisive shift toward digital, higher-margin segments. Record Interactive growth, robust EBITDA margins, strong cash flow, and a clear 2026 growth outlook—despite regulatory headwinds—provide grounds for investor optimism. The divestiture of lower-margin assets, strengthened balance sheet, and capital return initiatives (debt paydown, share buybacks) further enhance the company’s investment case.

Key potential share price catalysts include execution on digital growth, further U.S. market share gains, and realization of full-year 2026 guidance. Risks remain, notably from regulatory changes and FX movements, but management’s proactive approach to capital allocation and operating leverage should help mitigate these challenges.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Please refer to Inspired Entertainment’s official filings and consult with a qualified financial advisor before making investment decisions. Past performance is not indicative of future results. All forward-looking statements are subject to risks and uncertainties as outlined in the company’s SEC filings.

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