Inspired Entertainment, Inc. ((INSE)) has held its Q2 earnings call. Read on for the main highlights of the call.
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Inspired Entertainment, Inc. recently held its earnings call, revealing a generally positive sentiment driven by strong performance in key areas. The Interactive and Gaming segments showed significant growth, particularly in EBITDA, and strategic partnerships were highlighted. Despite some challenges in the Virtual Sports segment and a slow start in the Brazilian market, the overall outlook remains optimistic.
Strong EBITDA Growth
The company reported an impressive EBITDA of $28.4 million, marking a 15% increase over Q2 2024. This growth was accompanied by an improvement in EBITDA margins from 33% to 35%. A major contributor to this success was the Interactive business, which saw its EBITDA grow by nearly 50% year-over-year.
Significant Interactive Segment Performance
The Interactive segment continued its robust performance, achieving its eighth consecutive quarter of more than 40% year-over-year adjusted EBITDA growth. The segment also experienced an adjusted EBITDA margin expansion of 200 basis points, reaching 67%.
Successful Refinancing and Debt Management
Inspired Entertainment successfully refinanced its credit facility and is in the process of arranging a swap to fixed-rate debt. This strategic move is expected to lower the current effective rate and provide protection against rising interest rates.
Gaming Business Expansion
The Gaming segment experienced a 35% year-over-year increase in EBITDA, bolstered by a strong partnership with William Hill. Additionally, the company secured a new contract to supply 100% of gaming machines for Jenningsbet, a leading UK bookmaker.
Challenges in Virtual Sports Segment
Despite sequential improvements, the Virtual Sports segment faced challenges, with EBITDA declining year-over-year. This indicates ongoing difficulties in achieving consistent growth within this segment.
Slow Start in Brazil
The company encountered a slow start in Brazil due to the transition from a non-regulated to a regulated market. This shift posed initial challenges but is expected to stabilize as the market matures.
Forward-Looking Guidance
Looking ahead, Inspired Entertainment aims to continue its robust performance and strategic initiatives. The company anticipates further enhancing liquidity with the expected sale of the Holiday Park and aims to improve its overall EBITDA margin to 40% by the end of the year. The Virtual Sports segment is showing signs of stabilization, and the company is focusing on strategic expansions in key markets like North America, Brazil, and the U.K.
In summary, Inspired Entertainment’s earnings call reflected a positive sentiment, with strong growth in the Interactive and Gaming segments. Despite some challenges, the company’s strategic initiatives and forward-looking guidance suggest continued momentum and potential for further success.