Q2 2026 Inspired Entertainment, Inc Earnings Call Transcript
Key Points
- 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.
Good afternoon, everyone, and welcome to the Inspired Entertainment second quarter 2026 conference call.
All participant lines have been placed on mute to prevent any background noise.
After the speaker's prepared remarks, we will open the call for a question-and-answer session. 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 investors section of the company's website at www.inceinc.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.
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