Inspired Entertainment, Inc.

Revenue was $61 million in Q2 2026 and EBITDA was $27 million; EBITDA was a little ahead of consensus. EBITDA margin reached 45%, up 1,000 basis points year over year. On the Interactive side, worldwide revenue grew 15% year over year and EBITDA grew 13% year over year, while UK gross gaming revenue grew 40% year over year despite the UK remote gaming tax nearly doubling from 21% to 40% on April 1. Management reaffirmed its 2026 EBITDA target range of $112 million to $118 million and guided to free cash flow conversion of 20%+ of EBITDA on the slide, but said pro forma conversion should be in excess of 25% and that pro forma free cash flow for the year would be about $30 million versus $23 million reported. The company also said it had retired $23 million of debt year to date, repurchased over 700,000 shares, and reduced net leverage to 3x.

Lorne Weil framed the quarter as consistent with expectations and emphasized that the business is becoming more digital-led and less capital intensive. His tone was confident about the second half and into 2027, pointing to sequential momentum, operating leverage returning after the UK tax change is lapped, and a path toward $130 million EBITDA and 47% margins at the midpoint of the longer-term plan. He also stressed that the tax impact distorted year-over-year comparisons in Q2 and that the underlying business remains strong.

The CFO commentary focused on cash generation, leverage, and capital deployment. Management said year-to-date debt retirement was $23 million, share repurchases exceeded 700,000 shares, and net leverage fell to 3x, with a longer-term goal of below 2.5x. A key financial detail was the approximately $7 million one-time first-half cash outflow tied to working capital adjustments from the pubs restructuring, which depressed reported free cash flow; excluding that, full-year free cash flow would be about $30 million, or over 25% of EBITDA. The company also reiterated that excess cash will continue to go toward debt repayment and share repurchases, while keeping M&A as a possibility if it is immediately accretive and synergetic.

Analysts focused heavily on Interactive growth slowing sequentially and the impact of the UK tax hike. Management said the Q2 step-down was primarily tax-driven, that UK revenue was still positive, and that they expect the third and fourth quarters to improve sequentially as the tax comparison normalizes; they also said the business gained share in the UK and North America. Questions also covered whether the UK may raise other gaming taxes, the sustainability of UK share gains, free cash flow conversion, capital allocation, and whether Chicago VLT timing would slip into 2027; management said it was hearing the industry wants a coordinated response to tax proposals, believes UK share gains are sustainable through content and multichannel retail, and expects some Chicago opportunity this year but probably more next year.