Inspired Entertainment Cuts EBITDA Forecast to $109–112 Million After Revenue of $61.4 Million
Key Facts
Inspired Entertainment reported on November 5 its results for the third quarter ended September 30, with revenue of $61.4 million, and cut its 2026 adjusted EBITDA forecast range to $109–112 million from $112–118 million. The company said the revision mainly reflects the suspension of regulated online gaming and betting in Brazil. The results showed operating net income of $10.3 million, compared with a net loss of $0.1 million, while adjusted net income was $2.8 million. In the same session, the company's shares, INSE, closed at $3.50. The annual forecast cut puts the impact of the Brazilian suspension at the forefront of factors affecting the company's performance during the quarter.
The chairman said on the earnings call that Brazil's online gaming sector was "at a standstill and in a wait-and-see mode," and that this was the main reason quarterly EBITDA came in slightly below analyst consensus. A Brazilian interim measure issued on September 25 had banned nationwide the operation, offering, brokering and advertising of fixed-odds betting, including sports betting and online gaming. The government set October 6 as the date to begin blocking websites and apps dedicated to this betting. The decision affects the company's digital and virtual sports businesses linked to the Brazilian market. In this context, the company said Virtual Sports revenue fell 9% to $8.5 million, attributing most of the decline to the impact of the market closure.
Interactive revenue was about $15.5 million, up 3% year over year, presenting a different trend from the decline in Virtual Sports. The company said total U.S. interactive gaming revenue grew more than 30% year over year in the third quarter, outpacing growth in the broader U.S. online gaming market. Performance in the two segments indicates that U.S. interactive activity continued to expand, while the suspension of activity in Brazil weighed on the virtual sports business. These segment gains did not prevent the company from cutting its annual EBITDA forecast, as the Brazilian shutdown's impact was, according to management, the main reason the quarterly result came in below analyst consensus. Comparisons between the segments' performance remain tied to differences in their markets and sources of growth during the period.
On a comparable-revenue basis, the company said it recorded an increase of about 4% despite higher gaming taxes in the UK, attributing this to continued growth and market-share gains. This increase came alongside reported quarterly revenue of $61.4 million, while the information presented here does not provide a numerical breakdown linking the impact of comparable growth to the components of reported revenue. Inspired also said free cash flow conversion was 22% from the start of the year through the end of the third quarter. This indicator gives a picture of earnings conversion into cash during the period, alongside a limited net loss and positive adjusted net income in the quarter. These operational and financial indicators present a more mixed picture than the revenue figure alone, with regulatory pressure in Brazil continuing.
The UK tax burden again stands out in the outlook; the Machine Games Duty rate is due to rise from 20% to 25% starting in April 2027. Management estimated the annual impact on the company at about $2–3 million starting that month. The change follows the company's statement that comparable revenue rose in the third quarter despite the existing UK tax increases, reflecting growth and market-share gains. Inspired had announced that management's call to discuss the quarterly results would be held on November 5 at 5 p.m. Eastern Time, or 10 p.m. in the UK. The tax increase remains one of the forthcoming dated developments identified by the company among factors affecting its business.