Inspired Entertainment shares climb on record EBITDA margin
Interactive segment surges 53% as gaming technology company provides upbeat 2026 guidance despite revenue decline
Inspired Entertainment shares rose in pre-market trading on Tuesday after the gaming technology company reported record fourth-quarter profitability margins, overshadowing a revenue decline and earnings miss that disappointed analysts.
The New York-based business-to-business gaming supplier reported quarterly revenue of $77.2 million, down 7% from the prior year but slightly ahead of Wall Street estimates of $76.1 million. However, the company posted a net loss per share of 25 cents, missing analyst expectations for a 25-cent profit.
Despite the headline earnings miss, investors focused on the company's improving profitability metrics. Adjusted EBITDA reached $32.3 million for the quarter, representing a 42% margin—a record for the company and up 5% year-over-year. The strong performance came despite challenges across several business segments.
"We delivered another quarter of record Adjusted EBITDA margins of 42%, demonstrating our ability to generate strong profitability even in a transitional period," the company said in its earnings announcement.
The standout performer was Inspired's Interactive segment, which surged 53% year-over-year to $17.8 million in revenue, with Adjusted EBITDA jumping 60%. The company attributed the growth to expanding market share in the U.S. iGaming sector, where it gained 50 basis points in gross gaming revenue during the quarter.
Inspired's core Gaming segment generated $36.3 million in revenue, down 6% from the previous year, while Virtual Sports revenue fell 7% to $9.4 million. The Leisure segment plunged 39% to $13.7 million, primarily due to the divestiture of the company's UK Holiday Parks business in November.
For the full year 2025, Inspired reported revenue of $304.1 million, up 2% from 2024, with Adjusted EBITDA climbing 11% to $111.4 million. The Interactive segment drove much of that growth, with annual revenue increasing 49% and Adjusted EBITDA rising 59%.
Looking ahead, the company provided guidance that appears to have buoyed investor sentiment. Inspired expects first-quarter 2026 Adjusted EBITDA to increase by at least 20% year-over-year, with full-year 2026 Adjusted EBITDA projected between $112 million and $118 million. The guidance incorporates the expected impact of UK online gaming tax changes taking effect in April.
The company also announced a restructuring of its reporting segments beginning in the first quarter, merging Gaming and Leisure into a single "Retail Solutions" segment while keeping Virtual Sports and Interactive as separate units.
Prior to the earnings announcement, analysts maintained a "Moderate Buy" rating on the stock with an average target price of $14.00, according to MarketBeat data. The shares, which closed at $8.34 on Monday, were trading around $8.11 in pre-market action.
Inspired Entertainment, which supplies server-based gaming and virtual sports products to regulated lottery, betting and gaming operators worldwide, has been transitioning its business mix toward higher-margin digital offerings. The company's market capitalization stands at approximately $214 million.