Inspired Entertainment (INSE) Q1 2025 earnings summary

Executive summary

• Q1 2025 revenue was $60.4 million, down 3% year-over-year, with net loss narrowing to $0.1 million and Adjusted EBITDA rising 19% to $18.5 million, driven by strong Interactive and Gaming segment growth.

• Digital and interactive segments showed exceptional growth and scalability, with Interactive revenue up 49% and margin expanding to 64%.

• Cash flow from operations increased to $25.5 million, aided by working capital improvements and prior hardware sales collections.

• Successful refinancing of bonds with a five-year sterling-denominated floating-rate facility, and commitment for £287.8 million in new private credit facilities to refinance existing debt.

• Sale of the holiday park business is expected soon, with proceeds earmarked for debt reduction and deleveraging.

Financial highlights

• Adjusted EBITDA increased 19% to $18.4 million, with margin improving to 30% from 25% year-over-year.

• Interactive segment revenue grew 49% to $12.1 million, with Adjusted EBITDA up 75% and margin expanding from 54% to 64%.

• Gaming revenue fell 6% to $21.7 million, but Adjusted EBITDA rose 43% to $9.3 million.

• Virtual Sports revenue dropped 29-30% to $8.7 million, with EBITDA down 39%, mainly due to regulatory changes in Brazil.

• Cash on hand at quarter-end was $39.0 million, with $6.5 million undrawn revolver facility.

Outlook and guidance

• Expectation of continued acceleration in performance, driven by digital and retail strength, with focus on profitability and capital efficiency.

• Anticipated completion of the holiday park sale and pub business transition to improve margins and reduce capital intensity.

• Confident in achieving EBITDA margins over 40% following these initiatives, likely within the year.

• Free cash flow conversion expected to increase, with CapEx targeted at $25 million annually, mostly content-related.

• Management expects cash balances, operating cash flow, and borrowing capacity to cover net cash requirements through May 2026.