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.
Q: Can you provide more color on the FanDuel virtual sports launchhow many states it covers and how early engagement compares with BetMGM's integrated sportsbook? A: Pierce said it is too early to gauge, as FanDuel went live only within the last week or two and is in proof mode to ensure the technology works. It will migrate to the sportsbook in the next week or two, and he expects four to six weeks for it to bed down before there is a read. He noted nice progress with BetMGM and expects FanDuel, which is substantially bigger in sports betting, to be a catalyst for growth; FanDuel is launching with five sports versus BetMGM's three.
Q: On guidance and Brazil, you called out a $3 million revenue impact after the ban took effect, with EBITDA flow-through a bit higher. What is behind the revisions, and which segment is affected? A: Pierce said the situation remains fluid and the company is taking the most conservative posture by assuming the ban is not lifted, though there are reasons to think it might be. The impact is predominantly in the virtual sports business, while the iGaming business in Brazil was relatively small. He said nothing has really changed from what was discussed on the prior call regarding the revenue and EBITDA flow-through.
Q: If the Brazil ban sticks, do you have cost-saving measures, and what uplift could a return of the marketperhaps sports betting onlyprovide? A: Pierce said the company has people on the ground in Brazil working on the situation and remains hopeful the market returns. If the ban stays, there are ways to mitigate some costs, which would reduce the roughly $1 million per month impact. He noted speculation that sports betting could be allowed while online casino remains banned, which could potentially help virtual sports. He expects a decision by year-end or certainly in the first quarter.
Q: How does the new Be Real studio fit into your market-share thesis, and are you being asked for more exclusive games? A: Pierce said the studio is planned to develop games for the North American market and for player segments where Inspired is under-indexed, in the US or elsewhere. Once fully up to speed, it should add roughly another game per month, increasing capacity nicely. The first game is out for GLI approval and the second is nearly done. On exclusives, he cited a strong relationship with Rush Street, which told the company in October it was their second-biggest supplier, and noted exclusives with DraftKings, FanDuel, BetMGM, Hard Rock, and Fanatics.
Q: As UK operators absorb the higher machine duty, how are revenue-share conversations going, and does the strong performance in Greece and with William Hill help? A: Pierce acknowledged nobody was happy the tax increased at all, but noted earlier discussion had suggested an increase of as much as 20%, while it actually rose only 5%. He said the increase is manageable from an operator perspective and for Inspired, and the company has plans to mitigate as much of it as possible.
Q: What drove the EBITDA margin expansion, and how sustainable is it? A: Executive Chairman Lorne Weil said EBITDA margin reached 46% in the third quarter, up 1,100 basis points from 35% in the second quarter of 2025. The improvement came from divesting and restructuring the lowest-margin businessesincluding the holiday park divestiture and pub business restructuring, which together cut the labor force by a thirdcombined with above-average growth in the highest-margin digital business.
Q: How is the interactive segment performing against the UK remote gaming duty doubling? A: Pierce said interactive segment EBITDA grew 20% before the impact of the UK tax increase. Results were mixed monthly, with August affected by the World Cup, but September bounced back and October was the best month ever on record, eclipsing any month in the first quarter before the tax increase. The US was the largest contributor to growth with GGR up over 30% year-over-year, and Italy was the fastest-growing market with growth exceeding 50% year-to-date.
Q: What is the outlook for the three-year 20252027 period given the Brazil shutdown? A: Weil said the slide assumes the Brazil shutdown stays in effect. Brazil has not been a growth market in recent years, so the shutdown is not expected to compromise the company's organic growth profile, but it shifts the growth curve one year to the right. He expects 2027 to be up only modestly from 2026, with 2028 looking like what 2027 had otherwise been projected to be. Free cash flow is still projected to increase alongside declining leverage, though the prior 20% free cash flow conversion target for 2026 will be lowered slightly due to Brazil.
Q: What is the status of debt and covenant headroom? A: Weil said senior secured net leverage was about 2.8 times at the end of the third quarter, well below the five-times covenant, giving over $46 million of covenant EBITDA headroom. The private credit facility maturing in June 2030 can be repaid without prepayment penalty any time from June 2027, and with leverage
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
