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Inspired Entertainment, Inc. (INSE)
NASDAQ:INSE
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Inspired Entertainment
(NASDAQ:INSE)
Rating:68Neutral
Price Target:
$9.00
▲(12.92%Upside)
Positive Factors
Earnings Beat
Inspired Entertainment reported 3Q24 EBITDA of $30M, beating consensus expectations by 3%.
Interactive Division Growth
Interactive division increased EBITDA by 47% and beat consensus by 13%.
Strategic Partnerships
The hybrid dealer product continued to make progress with a strategic partnership with FanDuel, one of the largest gaming operators in the United States.
Negative Factors
Gaming Segment Decline
Gaming 2Q revenues and EBITDA declined by 13% and 12% year-over-year.
Valuation Concerns
Shares of INSE are currently trading sub-5x EV/EBITDA, below peers, recent supplier M&A transactions, and its historic levels.
Virtual Sports Challenges
Virtual Sports continues to face headwinds resulting in EBITDA being 16% below consensus.
Inspired Entertainment (INSE) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$216.64M
Dividend YieldN/A
Average Volume (3M)116.21K
Price to Earnings (P/E)3.2
Beta (1Y)1.20
Revenue Growth-7.53%
EPS Growth2035.55%
CountryUS
Employees1,420
SectorConsumer Cyclical
Sector Strength70
IndustryGambling, Resorts & Casinos
Share Statistics
EPS (TTM)0.00
Shares Outstanding26,912,200
10 Day Avg. Volume109,909
30 Day Avg. Volume116,214
Financial Highlights & Ratios
PEG Ratio<0.01
Price to Book (P/B)-67.39
Price to Sales (P/S)0.00
P/FCF Ratio17.34
Enterprise Value/Market Cap2.45
Enterprise Value/Revenue0.43
Enterprise Value/Gross Profit2.88
Enterprise Value/Ebitda1.72
Forecast
1Y Price Target
$12.50Price Target Upside56.84% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering4
Inspired Entertainment Business Overview & Revenue Model
Company DescriptionInspired Entertainment, Inc. (INSE) is a leading company in the global gaming industry, specializing in the development and supply of virtual sports, mobile gaming, and server-based gaming systems. The company operates across a diverse range of sectors, including land-based and online gaming platforms. Its core products and services include virtual sports offerings, digital gaming content, and electronic gaming machines which are provided to various operators, from small businesses to large multinational corporations.
How the Company Makes MoneyInspired Entertainment generates revenue through several key streams. The company earns money by supplying its virtual sports and gaming content to both land-based and online operators, who pay licensing and service fees to access these products. Additionally, Inspired Entertainment sells and leases electronic gaming machines to retail gaming venues, deriving income from both direct sales and ongoing maintenance agreements. The company also benefits from revenue-sharing arrangements with its clients, where a portion of the gaming revenue generated through their products is shared with Inspired. Significant partnerships with major gaming operators and continued expansion into new markets further contribute to the company's financial performance.
Inspired Entertainment Earnings Call Summary
Earnings Call Date:May 08, 2025
(Q1-2025)
| % Change Since: 6.69%|
Next Earnings Date:Aug 07, 2025
Earnings Call Sentiment Positive
The earnings call presented a mixed outlook, with strong growth in the Interactive and U.S. markets and successful refinancing efforts. However, challenges in Brazil, holiday timing issues, and a decline in Virtual Sports highlighted areas of concern. Overall, the positive growth in digital segments and refinancing outweigh the negatives.Q1-2025 Updates
Positive Updates
Strong Growth in Interactive Segment
The Interactive business showed significant growth with revenue increasing 49% and adjusted EBITDA increasing 79% over Q1 2024. Margins expanded from 54% to 64% in 2025.
Successful Debt Refinancing
The company successfully negotiated the refinancing of its existing bonds with a new 5-year sterling-denominated floating rate financing, providing greater flexibility and expected rate reductions.
Expansion in North America
The U.S. business grew by 90% against a market growth of about 20%, highlighting strong content and account management quality.
New Product Launches in Virtual Sports
Key initiatives in Virtual Sports, including licensed content launches in North America, a new Brazil-specific soccer game, and expansion in Greece and Turkey, are expected to drive growth.
Promising Hybrid Dealer Product
The Hybrid Dealer product, including branded wheel games and new derivatives, is scaling rapidly with major operators like BetMGM and Caesars.
Negative Updates
Regulatory Challenges in Brazil
The company faced disturbances due to new regulations and taxes in Brazil, impacting the Virtual Sports business.
Impact of U.K. Easter Holiday Shift
The Leisure business was negatively affected by the shift of the U.K. Easter holiday from Q1 to Q2, impacting performance.
Virtual Sports Segment Decline
Despite recovery efforts, the Virtual Sports segment experienced a year-over-year quarterly decline in EBITDA.
Macro Challenges in the U.K. Retail Sector
The U.K. retail market is experiencing challenges, with softness reported in customers other than William Hill.
Company Guidance
During the Inspired Entertainment First Quarter 2025 Conference Call, the company reported a strong performance with a first-quarter adjusted EBITDA of approximately $18.5 million, reflecting a growth of nearly 20% compared to the previous year. The Interactive segment showed remarkable growth, with revenue increasing by 49% and adjusted EBITDA rising by 79% over Q1 2024, while margins expanded from 54% to 64%. The U.S. market grew by 90% against a 20% underlying market growth, underscoring the effectiveness of their content and account management. Additionally, the company successfully renegotiated its debt, replacing existing bonds with a five-year sterling-denominated floating rate financing, which is expected to provide greater flexibility for future operations. The company also plans to sell its holiday park business to further deleverage and reduce annual CapEx to around $25 million. Despite challenges in the Leisure business and disturbances in Brazil due to new regulations, the company expressed confidence in the stabilization and future growth of its Virtual Sports segment.Inspired Entertainment Financial Statement Overview
Summary
Inspired Entertainment shows strong revenue and profit growth, despite high leverage and negative equity. Improved cash flow is a positive, but past volatility suggests careful management is needed.Income Statement
Inspired Entertainment shows a strong recovery in net income and revenue growth over the years. The gross profit margin remains impressive, with a significant increase in net profit margin from prior years. However, the EBIT and EBITDA margins have shown some volatility, indicating room for improvement in operational efficiency.72
Positive
Balance Sheet
The company has a high debt-to-equity ratio due to negative stockholders' equity, indicating significant leverage risk. The equity ratio is also negative, highlighting potential financial instability. While asset growth is noted, the heavy reliance on debt poses a risk to financial health.45
Neutral
Cash Flow
Cash flow analysis reveals a positive trend in operating cash flow and recent improvements in free cash flow. The free cash flow to net income ratio is promising, yet the company's historical volatility in free cash flow suggests potential liquidity concerns.68
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 297.10M | 323.00M | 285.40M | 208.90M | 199.80M | Gross Profit |
| 204.80M | 155.40M | 213.40M | 158.20M | 155.30M | EBIT |
| 30.70M | 39.90M | 48.90M | 3.70M | 8.80M | EBITDA |
| 78.90M | 84.00M | 90.70M | 53.90M | 53.00M | Net Income Common Stockholders |
| 64.80M | 7.60M | 20.60M | -36.70M | -29.20M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 29.30M | 40.00M | 25.00M | 47.80M | 47.10M | Total Assets |
| 438.40M | 340.90M | 309.40M | 331.70M | 324.10M | Total Debt |
| 350.80M | 331.50M | 288.50M | 322.50M | 311.10M | Net Debt |
| 321.50M | 291.50M | 263.50M | 274.70M | 264.00M | Total Liabilities |
| 441.70M | 418.90M | 367.10M | 409.70M | 412.80M | Stockholders Equity |
| -3.30M | -78.00M | -57.70M | -78.00M | -88.70M |
| Cash Flow | Free Cash Flow | |||
| 2.90M | -2.30M | -5.00M | -19.20M | 23.00M | Operating Cash Flow |
| 31.70M | 45.50M | 34.80M | 6.20M | 52.90M | Investing Cash Flow |
| -40.10M | -48.40M | -40.40M | -37.90M | -29.90M | Financing Cash Flow |
| -1.60M | 16.20M | -11.10M | 31.20M | -8.20M |
Inspired Entertainment Technical Analysis
Neutral
7.97
Price Trends
7.81
Positive
8.80
Negative
9.05
Negative
Market Momentum
0.02
Negative
50.53
Neutral
60.02
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For INSE, the sentiment is Neutral. The current price of 7.97 is below the 20-day moving average (MA) of 8.04, above the 50-day MA of 7.81, and below the 200-day MA of 9.05, indicating a neutral trend. The MACD of 0.02 indicates Negative momentum. The RSI at 50.53 is Neutral, neither overbought nor oversold. The STOCH value of 60.02 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for INSE.
Inspired Entertainment Risk Analysis
Inspired Entertainment disclosed 50 risk factors in its most recent earnings report. Inspired Entertainment reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Inspired Entertainment Peers Comparison
Overall Rating
UnderperformOutperform
Sector (62)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
79 Outperform | $423.32M | 11.86 | 25.73% | ― | 24.67% | 91.06% | |
73 Outperform | $511.35M | 10.77 | 49.64% | ― | 6.60% | 778.46% | |
68 Neutral | $216.64M | 3.17 | -12.77% | ― | -7.53% | 2035.55% | |
62 Neutral | $6.94B | 11.29 | 2.95% | 3.87% | 2.70% | -24.49% | |
44 Neutral | $112.96M | ― | -79.70% | ― | 13.92% | -54.82% |
* Consumer Cyclical Sector Average
Performance Comparison
INSE
Inspired Entertainment
7.97
-1.18
-12.90%
FLL
Full House Resorts
3.09
-1.91
-38.20%
AGS
Playags
12.38
0.80
6.91%
GAMB
Gambling.com
11.53
3.94
51.91%
Inspired Entertainment Corporate Events
Executive/Board ChangesShareholder Meetings
Inspired Entertainment Elects Directors at Annual Meeting
Neutral
May 27, 2025
On May 27, 2025, Inspired Entertainment, Inc. held its 2025 Annual Meeting of Stockholders, where seven directors were elected to serve until the 2026 Annual Meeting. Additionally, the appointment of CBIZ CPAs P.C. as the independent auditor for the fiscal year ending December 31, 2025, was ratified.
The most recent analyst rating on (INSE) stock is a Buy with a $13.00 price target. To see the full list of analyst forecasts on Inspired Entertainment stock, see the INSE Stock Forecast page.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.