Inspired Cuts EBITDA Guidance Over Brazil as UK Tax Slows Interactive Growth

The supplier posted a record 46% margin in the third quarter, but Brazil's shutdown of its regulated market hits a business worth about 5% of revenue, and Interactive growth has slowed to 3% with the 40% remote gaming duty in force.

• Inspired Entertainment lowered its 2026 adjusted EBITDA guidance to $109 million to $112 million, from $112 million to $118 million, mainly because of Brazil's shutdown of regulated online betting and gaming
• Reported third-quarter revenue fell 29% to $61.4 million after the sale of its UK holiday parks and a restructuring of its pubs business, while like-for-like revenue rose about 4%, according to the company
• Adjusted EBITDA fell 13% to $28.2 million, but the margin reached a record 46%, against 37% a year earlier, and the net loss narrowed to $0.1 million
• Interactive revenue grew 3% in the quarter, against 17% for the first nine months, with UK volume growth offsetting the remote gaming duty rise to 40% in April, according to the company
• The company called the rise in machine games duty from 20% to 25% from April 2027 "disappointing but manageable"

Inspired Trades a Smaller Top Line for a Wider Margin

Inspired Entertainment, the NASDAQ-listed supplier of gaming terminals, virtual sports and online games with most of its revenue in the UK, reported third-quarter results on 5 November for the period to 30 September. Revenue fell to $61.4 million from $86.2 million, a decline the company attributes largely to the UK Holiday Parks business, sold on 7 November 2025, and the restructuring of its Pubs business.

Like-for-like revenue rose about 4%, or about 9% before the tax increase, according to the release. Net operating income rose to $10.3 million from $9.7 million, and the net loss narrowed to $0.1 million from $1.9 million. Adjusted EBITDA fell 13% to $28.2 million but rose 4% against the second quarter, and adjusted net income fell to $2.8 million from $8.2 million.

Retail Solutions, the land-based segment that replaced the Gaming and Leisure segments in the first quarter, had revenue of $37.4 million, down 39%, with adjusted EBITDA down 13% to $19.6 million. The company describes "another strong performance in the UK and Greece". Its quarterly 10-Q shows UK revenue down to $37.5 million from $63.1 million and Greek revenue up to $6.8 million from $6.2 million. Virtual Sports revenue fell 9% to $8.5 million, with adjusted EBITDA down 14% to $5.7 million; the release gives no reason for the decline.

Interactive revenue rose 3% to $15.5 million on UK volume growth and a US business that, the company says, "outpaced the U.S. iGaming market". Interactive adjusted EBITDA fell 5% to $10.2 million.

Brazil Removes About 5% of Revenue

The release says Brazil's "unexpected shutdown of regulated online betting and gaming affects a business representing approximately 5% of our total revenue". The guidance cut reflects the loss of Brazil's earnings contribution in the fourth quarter, and management sees limited near-term options to offset it while it evaluates alternatives. The release does not say which segment carries the Brazilian business. Brazil's federal licences expired on 25 October under Provisional Measure 1.394.

Free cash flow conversion is expected slightly below the 20% target. Long-term debt was $322.9 million at 30 September, against $345.2 million at the end of 2025, after $24.4 million of repayments this year alongside $5.2 million of buybacks.

President and Chief Executive Brooks Pierce said the UK Budget had removed a major uncertainty and gave the company and its customers a clearer basis for planning. Executive Chairman Lorne Weil said Inspired would be disciplined in how it allocates capital heading into 2027.

The Record Margin Comes From What Inspired Sold

The 46% margin owes more to disposals than to growth. Shedding the holiday parks and restructuring pubs removed lower-margin revenue: nine-month adjusted EBITDA of $78.9 million is flat on last year's $79.1 million while revenue fell 21%. The new guidance implies fourth-quarter adjusted EBITDA of $30.1 million to $33.1 million, above the third quarter's $28.2 million, so even without Brazil the company is forecasting its strongest quarter of the year.

Interactive Is Absorbing the Tax, Not Outgrowing It

Interactive's nine-month revenue of $47.9 million is up 17%. In the third quarter, the second full quarter at the 40% duty for its UK operator customers, it grew just 3%, and segment EBITDA fell. The release's own word is "offset", and that is what the figures show. Suppliers whose fees track operator revenue feel the duty through their customers, as Flutter's UK restructuring shows on the operator side.

Brazil Is a Small Hit With No Obvious Remedy

At about 5% of revenue, Brazil costs Inspired more in proportion than Kambi's low single-digit share, and the company admits it has few short-term ways to replace it. Unlike the UK duty rises, Brazil's shutdown has no known end date: the provisional measure awaits Congress and the Supreme Federal Court has yet to rule.

Inspired has the margin it wanted from its disposals. What it lacks now is the growth to show that margin can hold once Brazil and the UK duty rises are fully in the numbers.