Inspired Cuts 2026 Outlook After Brazil Online Gaming Shutdown

Inspired Entertainment reported its third-quarter 2026 results on 2026年11月5日, and lowered its full-year Adjusted EBITDA target to $109 million–$112 million from $112 million–$118 million, primarily because of the suspension of regulated online betting and gaming in Brazil. The revision landed alongside a higher Adjusted EBITDA margin but sharply lower reported revenue.

For the three months ended 2026年9月30日, revenue fell 29% to $61.4 million from $86.2 million. Net operating income nevertheless rose 6% to $10.3 million from $9.7 million, while net loss narrowed to $0.1 million from $1.9 million. Adjusted EBITDA declined 13% to $28.2 million from $32.3 million, but its margin increased to 46% from 37%.

Inspired described the margin as a quarterly record excluding periods that benefited from a UK VAT rebate, and said Adjusted EBITDA grew 4% sequentially. Lower adjusted earnings alongside a higher margin show the two forces running through the quarter: portfolio changes reduced the revenue base, while the remaining business converted a larger share of revenue into Adjusted EBITDA.

Portfolio Changes Complicate the Revenue Comparison

The reported comparison includes the effect of the 2025年11月 divestiture of the UK Holiday Parks business and certain associated leisure assets, together with a structural restructuring of the Pubs business. Both contributed in the prior-year period, so the divested or reshaped operations help explain why the reported revenue decline does not, by itself, describe the performance of the continuing portfolio.

Inspired calculated that like-for-like revenue increased approximately 4% after excluding those portfolio changes. A further company adjustment for the UK Remote Gaming Duty increase from 21% to 40%, beginning 2026年4月, produced revenue growth of approximately 9%, with Adjusted EBITDA growing at roughly twice that pace on the same adjusted basis.

Retail Solutions revenue dropped 39% to $37.4 million from $61.8 million, with segment Adjusted EBITDA falling to $19.6 million from $22.6 million. Virtual Sports revenue declined 9% to $8.5 million from $9.3 million, while its segment Adjusted EBITDA decreased to $5.7 million from $6.6 million.

Interactive moved in the opposite direction on revenue, rising 3% to $15.5 million from $15.1 million, although segment Adjusted EBITDA slipped to $10.2 million from $10.7 million. Chief executive Brooks Pierce attributed the revenue increase to UK volume growth offsetting the higher gaming tax and said the US business outpaced the US iGaming market.

Brazil and UK Duties Reshape the Outlook

The affected Brazilian business represented approximately 5% of total revenue. Pierce said near-term opportunities to offset its lost contribution were limited, with Inspired evaluating options as the regulatory situation evolves. That lost contribution also reached the cash-flow outlook: management expects full-year free cash flow conversion to finish slightly below its 20% target because Brazil will not contribute fourth-quarter earnings, despite year-to-date conversion of approximately 22%.

Inspired defines free cash flow as cash flow from operating activities less cash flow from investing activities less finance-lease repayments. The reduced conversion forecast therefore connects the guidance revision to expected cash generation as well as adjusted earnings.

Separately, the UK Budget confirmed that Machine Games Duty will increase from 20% to 25% in 2027年4月. Pierce called the rise “disappointing but manageable” and said Inspired would pursue measures to limit its effect. The later start provides a defined date for planning, while the existing Remote Gaming Duty increase is already reflected in the current-year comparisons.

Digital Deployments Carry the Growth Pipeline

During the third quarter, Inspired went live on day one in Alberta’s newly regulated gaming market with both Interactive and Virtual Sports. Customers included FanDuel, DraftKings, BetMGM, Rush Street Interactive, Caesars Entertainment and bet365.

Fourth-quarter developments included the launch of Virtual Sports on the Massachusetts Lottery’s Aristocrat Interactive-powered iLottery platform and an expanded partnership bringing Virtual Sports to FanDuel’s online customers. Inspired also signed a contract to supply BetMGM with a bespoke Price Is Right licensed hybrid-dealer game, with delivery expected in the fourth quarter.

Executive chairman Lorne Weil said the opportunity pipeline across customers, markets, distribution channels, product formats and partnerships should more than offset current regulatory impacts. His 2027 capital priorities include investments with attractive returns and sustainable cash generation, alongside expected continued debt reduction and share repurchases.

The central question is whether those digital launches and the wider pipeline can replace Brazil’s contribution while Inspired absorbs the current UK Remote Gaming Duty and prepares for the higher machine duty. The margin improvement shows better conversion of revenue into Adjusted EBITDA, while the reduced earnings and cash-flow targets show that regulatory losses are still reaching the outlook before the pipeline becomes reported growth.