Key Points
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Brazil’s online gaming shutdown was the main reason Q3 EBITDA missed consensus, prompting Inspired to lower the bottom end of its full-year guidance to $109 million. If the shutdown persists, management expects the company’s growth trajectory to be delayed by about a year.
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Q3 EBITDA margin climbed to 46%, up 900 basis points year over year, as Inspired restructured lower-margin operations and expanded digital. Interactive EBITDA grew 20% before the U.K. tax impact, with U.S. gross gaming revenue up more than 30% year over year.
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U.K. gaming duty increases are expected to affect results, including an estimated $2 million to $3 million annual impact from the machine duty rise beginning in April 2027; management expects to mitigate it over time.
Inspired Entertainment (NASDAQ:INSE) said regulatory changes in Brazil and the United Kingdom are weighing on its outlook, even as growth in its digital business helped lift third-quarter margins.
Executive Chairman Lorne Weil said the shutdown of online gaming in Brazil was the primary reason the company’s quarterly EBITDA came in below consensus. Inspired lowered the bottom end of its full-year guidance to $109 million because of the shutdown.
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The company reported a third-quarter EBITDA margin of 46%, up 900 basis points from a year earlier. Weil said the margin rose from 35% in the second quarter of 2025 as Inspired divested and restructured lower-margin businesses and expanded its higher-margin digital operations.
Year-to-date free cash flow was $17.6 million, or about 22% of EBITDA. Weil said the company would lower its previous 2026 free cash flow conversion target of 20% slightly because of Brazil’s impact.
Brazil shutdown shifts growth targets
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Management’s projections assume Brazil remains shut, an outcome that Weil said would push the company’s growth trajectory back by about a year. He expects 2027 results to rise only modestly from 2026 under that assumption, as Inspired first replaces the lost Brazil business.
CEO Brooks Pierce said the shutdown primarily affects virtual sports, while the company’s iGaming business in Brazil was relatively small. Inspired has ways to reduce costs if the ban remains in place, he said.
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Pierce said the situation remains fluid and that a possible reopening for sports betting, while online casino gaming remains banned, could potentially benefit virtual sports. He expects a decision by the first quarter, though he characterized that timing as his own view.
