Inspired Entertainment Q3 2025 Earnings Call Transcript

Quartr
Provided by Quartr
November 5, 2025

Key Takeaways

  • Positive Sentiment: Company reported strong results with Q3 adjusted EBITDA of $32.3M and trailing 12-month adjusted EBITDA of $110M, while the interactive segment posted >40% year‑over‑year adjusted EBITDA growth for its ninth consecutive quarter and recorded its largest revenue month in October.
  • Positive Sentiment: Closed the sale of the holiday parks business on November 7, which management says will drive higher margins, materially lower CapEx and ~40% headcount reduction; proceeds will be used to improve net leverage and the board reauthorized a $25M buyback.
  • Positive Sentiment: Management reiterated a multi‑year plan to expand adjusted EBITDA margin by 10 percentage points to 45% by 2027, increase digital mix to 60% (after corporate), convert 30% of EBITDA to free cash flow, and reduce net leverage to under 2x, driven by digital mix, the parks sale and operational reengineering.
  • Negative Sentiment: Near‑term guidance is cautious — expressed as high single‑digit absolute adjusted EBITDA growth — pending the U.K. budget on November 26 and potential gaming tax changes, which could negatively affect results until specifics are known.
  • Positive Sentiment: Key growth initiatives include an organic new interactive studio to increase game delivery, momentum for Hybrid Dealer (G2E award and strong William Hill results), and meaningful upside if additional U.S. iGaming states come online.
AI Generated. May Contain Errors.
Earnings Conference Call
Inspired Entertainment Q3 2025
00:00 / 00:00

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Operator

Good morning, and welcome to the Inspired Entertainment third quarter 2025 conference call. All participants' lines have been placed on mute to prevent any background noise. After the speakers' remarks, we will open the call for a question-and-answer session. Please note that today's event is being recorded. Before we begin, please refer to the company's forward-looking statements that appear in the third quarter 2025 earnings press release and in the accompanying slide presentation. Both of which are available in the investors' section of the company's website at www.inseinc.com. These also apply to today's conference call. Management will be making forward-looking statements within the meaning of United States securities laws. These statements are based on management's current expectations and beliefs and are subject to various risks, uncertainties, and other factors that may cause actual results to differ materially from those exposed or implied in such statements.

Operator

For a discussion on these risks and uncertainties, please refer to the company's filing with the Securities and Exchange Commission. The company assumes no obligation to update or review any forward-looking statements except as required by law. During today's call, the company will discuss both GAAP and non-GAAP financial measures. Reconciliations of these non-GAAP measures to the most directly comparable GAAP measures can be found in today's earnings release and slide presentation, which are both available on the website. As a reminder, the slide presentation will be advanced by the operator to accompany management's remarks. A PDF version of the slides will be available following the call in the investors' section of the company's website. With that, I would now like to turn the call over to Lorne Weil, the company's Executive Chairman. Mr. Weil, please go ahead.

Lorne Weil
Lorne Weil
Executive Chairman at Inspired Entertainment

Thank you, Operator. Good morning, everyone, and thank you for joining our third quarter conference call. As we reported earlier this morning, third quarter and trailing 12-month Adjusted EBITDA were $32.3 million and $110 million, respectively. Both well ahead of consensus last year, and a result that we're pleased with. In departure from press protocols, we have prepared a brief slide deck today summarized here in slide four, which will be presented by President and CEO Brooks Pierce and myself. There are a lot of moving parts right now: the sale of holiday parks, the restructuring of pubs, the continued phenomenal growth of interactive as examples that paint a very exciting picture. We feel that this kind of comprehensive discussion will help us put everything in proper perspective. At the conclusion, we will discuss earnings, balance sheet, and cash flow projections for 2026 and 2027.

Lorne Weil
Lorne Weil
Executive Chairman at Inspired Entertainment

To begin, I'll hand it over to Brooks, who will discuss in some detail current results and operations.

Brooks Pierce
Brooks Pierce
President and CEO at Inspired Entertainment

Okay, thanks, Lorne. Before I dive into the business update, I want to briefly address the upcoming U.K. budget announcement on November 26 and the discussion around potential tax changes in the gaming industry. There's been a lot of coverage and discussion on all sides of the issue and its impact on the industry, but frankly, this isn't new. We've managed through the 2019 triennial, which cut maximum stakes in betting shops from effectively GBP 50 to GBP 2. A major change that we successfully navigated through product innovation and operational discipline. Today, performance in that business is well above pre-triennial levels. Potential shop closures have been in the headlines as well, and our experience tells us that this is also manageable. Typically, lower-performing shops are most at risk, and much of that play finds its way to nearby shops, effectively lowering our servicing costs.

Brooks Pierce
Brooks Pierce
President and CEO at Inspired Entertainment

The potential increase in remote gaming duty would be another facet we've experienced dealing with. We've managed similar changes in other markets, and our performance in the interactive segment speaks to our ability to adapt effectively. Once the U.K. budget's announced, we'll share more specifics, but in the meantime, we're planning proactively and are confident in our ability to manage changes effectively just as we have in the past. We have a number of levers and opportunities at our disposal to navigate our way through this. Okay, moving to the next slide. We're pleased with the performance of the business in the third quarter and are carrying that momentum into the fourth quarter. We're confident we'll exceed Q4 2024 performance and current guidance, assuming current FX rates don't change materially.

Brooks Pierce
Brooks Pierce
President and CEO at Inspired Entertainment

The interactive and gaming segments were particularly strong, with interactive achieving more than 40% year-over-year Adjusted EBITDA growth for the ninth consecutive quarter. October is now complete and is the single largest revenue month for this segment in our history, and last week was the biggest week we've ever had. This was all highlighted by the success of some of our seasonal games, but frankly, we're seeing strong performance throughout the portfolio and market share gains across our key geographies in both the U.K. and North America. We're also pleased to see a second consecutive quarter of stabilization in the virtual sports segment, and are confident that it will grow year-over-year in the fourth quarter.

Brooks Pierce
Brooks Pierce
President and CEO at Inspired Entertainment

The close of the sale of the holiday parks business on November 7th is a milestone in our shift to higher Adjusted EBITDA margins, lower CapEx, and close to 40% lower headcount going forward. Taking the proceeds from the holiday park sale to improve our net leverage puts us in a stronger financial position as we move through the fourth quarter and into 2026. In addition, we announced today that our board has reauthorized a $25 million share buyback plan as part of our plans going forward. The next slide demonstrates the success of our strategy in making North America a bigger part of our business, in large part due to the growth we're seeing in this market from our interactive business, but we're also gaining momentum in our North American VLT business that I'll cover in more detail later in the presentation.

Brooks Pierce
Brooks Pierce
President and CEO at Inspired Entertainment

The success of the Vantage cabinet in the William Hill estate is coming through in our results and was highlighted recently by Evoke in their trading update. We're also starting to see the impact on performance of the refresh terminals in the Greek estate. Although the year-over-year performance in the virtual segment continues to be impacted by the taxation that started in January in Brazil, our comps in the fourth quarter in 2026 will be easier, and we've also introduced a number of initiatives and increased our customer counts in Brazil and Turkey, and we're starting to see some of that improvement come through the numbers. As you can see on slide eight, we've been generating solid year-over-year Adjusted EBITDA growth every quarter, and the trailing 12-month Adjusted EBITDA is now at $110 million.

Brooks Pierce
Brooks Pierce
President and CEO at Inspired Entertainment

This is certainly a positive, but the most important aspect of this slide is the impact we expect to see going forward with the sale of the holiday parks business and the move in our pubs business to a machine and content-led strategy. Both the interactive and virtual segments are operating at higher than 60% EBITDA margins after corporate allocations, and we expect the operating leverage of both of these segments to strengthen further as revenue increases. The combination of margin expansion, the sale of the holiday parks business, and the change in the pubs business model will significantly reduce our capital intensity and have a very positive impact on cash flow. The next couple of slides highlight not only the strong performance of the interactive segment, but frankly, the significant opportunity we see ahead as additional iGaming states potentially come online.

Brooks Pierce
Brooks Pierce
President and CEO at Inspired Entertainment

The potential we believe could be transformational for our business. Our content's resonating broadly across all the key geographies, and we're positioning the business to scale across even more. Looking ahead to next year, we plan to increase game deliveries through added capacity and a new interactive studio. The most common feedback we get from customers is they want more of our great content, and we're excited to deliver on that challenge. As we've talked about in the past, we're very bullish on the opportunity for an increase in the number of iGaming states as it's clear that iGaming is a much larger opportunity than online sports betting, as you can see in the GGR from just three of the existing iGaming states. The delivery of additional states is very seamless and frankly should produce significant operating leverage as the only real cost at states is in bandwidth.

Brooks Pierce
Brooks Pierce
President and CEO at Inspired Entertainment

We do not have a crystal ball, of course, but we are confident that states will see the opportunity and feel it is a matter of when, not if. Now, moving over to Hybrid Dealer, we have been talking about Hybrid Dealer for some time, and we felt validated to have won the award at G2E for innovative product of the year. More importantly, we are starting to see the network effect of rolling this product out across our customer base. We have a very good mix of both tier one and tier two customers and have seen success with both. Our William Hill branded roulette game in the U.K. is producing amazing results, which we view as a proof point for other operators. The next phase of development will emphasize and highlight our proprietary player-favorite content, such as our Wolf It Up and Piggy Bank family of games.

Brooks Pierce
Brooks Pierce
President and CEO at Inspired Entertainment

We see this as the natural evolution of our product strategy, supported by an increasing pace of game delivery to meet the strong market demand. While Hybrid Dealer is not expected to be as large as the broader interactive market, we believe it will be a valuable complement to our portfolio, enhance our offering, add diversity to our content, and contribute meaningfully in 2026 and beyond. Moving over to gaming, our gaming business continues to perform well across our three key markets of the U.K., Greece, and North America. In the U.K., we are gaining share in the betting shop business with the addition of two key customers. In Greece, our new cabinets are strengthening our leading position, and with nearly half of our machines still to be upgraded, we see continued opportunity for growth.

Brooks Pierce
Brooks Pierce
President and CEO at Inspired Entertainment

In North America, performance in Illinois and key Canadian provinces is at its highest level since we introduced these products into mature markets, which frankly is never easy. Notably, 98% of our Illinois customers ordered our GamePak subscriptions this year, validating our philosophy that server-based gaming is a powerful tool for operators to keep their players engaged, and we see applicability for that in many more markets around the world. I will pass it over to Lorne.

Lorne Weil
Lorne Weil
Executive Chairman at Inspired Entertainment

Thanks, Brooks. A lot of interesting concepts and data to digest. I'll begin with slide 14. Giving a snapshot of where we are at the end of the third quarter. I apologize if some of this material is repetitious for those who have been following us for a while, but we'll help level set for anyone new to the story. We're starting with trailing 12-month revenue, Adjusted EBITDA, and EBITDA margin of $310 million, $110 million, and 35%, respectively. The digital retail mix is just under 50/50. Net leverage ratio of 3.2x. As we move through the rest of the material, I try to explain why we're confident in projecting significant expansion in margins, productions, and leverage, and strong free cash flow. Slide 15 summarizes the underlying dynamics that have been underway for some time.

Lorne Weil
Lorne Weil
Executive Chairman at Inspired Entertainment

Earlier, Brooks talked about the high margin, relatively low CapEx, and scalability of our digital business. It is the swing of the mix of our business in that direction that is a primary driver of financial performance. In parallel, the divestiture of the holiday park business provides an immediate boost to margins. The operational re-engineering going on throughout the company allows us to make up for the divested holiday parks EBITDA. In a moment, I will quantify with some specificity the exact impact of each of these three elements. Slide 16 summarizes the three things that, of course, everybody wants: revenue growth, expanding margins, and growing free cash flow. Although generally, in my experience, you only get to pick two. As the slide implies, in our case, the three are highly interdependent.

Lorne Weil
Lorne Weil
Executive Chairman at Inspired Entertainment

Our revenue growth is driven by the compounding of market share gains within growing markets, with content development and greater allocation of resources to marketing having recently been the principal underlying drivers. Revenue growth, revenue mix, and scalability together drive expanding margins, and the latter, combined with declining CapEx, drives free cash flow. If only it were that easy in execution. Slide 17 decomposes our projection of a 1,000 basis point increase in Adjusted EBITDA margin between now and 2027, with the increase being almost equally split between the increased digital mix, the sale of holiday parks, and the operational re-engineering that we have undergoing. Regarding the latter, we expect most of the benefits to begin to take effect in the first quarter of 2026. Which finally brings us to slide 18, where we bring this all together.

Lorne Weil
Lorne Weil
Executive Chairman at Inspired Entertainment

To summarize, we're projecting the digital mix after corporate allocation to reach 60% by 2027. Headcount to decline by nearly 40%. Adjusted EBITDA margin to grow by 10 percentage points from 35%-45%. Free cash flow conversion to reach 30% of EBITDA, and net leverage to decline to under 2x. A few minutes ago, Brooks discussed the expectation of increased U.K. gaming taxes in the November U.K. budget. It's for this reason that for now we've expressed absolute Adjusted EBITDA guidance in terms of high single-digit growth, which we will then translate to more specific guidance once the tax proposal is known. As Brooks mentioned earlier, we've been through this drill before, and we're comfortable we can do much to mitigate any impact.

Lorne Weil
Lorne Weil
Executive Chairman at Inspired Entertainment

I should mention that certain important upsides, new iGaming states, for example, would be significant additional mitigating factors as they do not factor at all into our analysis. Finally, this entire discussion is focused on organic growth and does not reflect any expectation of M&A impact, which we continue to look at very carefully. With that, we can open to Q&A. Operator, we can have Q&A now, please. Oh, boy.

Operator

Thank you for that. We will now open the Q&A session. If you have dialed in and would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press the star one again. If you're called upon to ask your question and listening via loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question. Again, please press star one to join the queue. Your first question comes from the line of Ryan Sigdahl of Craig-Hallum. Your line is now open.

Ryan Sigdahl
Ryan Sigdahl
Senior Research Analyst at Craig-Hallum

Hey, good morning, guys. Appreciate kind of the targets and laying out the path over the next several years and what this company looks like. Still kind of digesting that in real time, but very back of the envelope math, maybe staring at slide 18 here. If we assume EBITDA grows at a high single-digit CAGR, EBITDA margin extends by 10 percentage points over the next two to three years. I guess that implies revenue is kind of flattish, maybe even down. Yeah, I guess walk through what's going on there, and maybe part of that is the starting point of holiday parks included or not.

Brooks Pierce
Brooks Pierce
President and CEO at Inspired Entertainment

Yeah, I think the principal reason for that is obviously the holiday parks business going away. That is the single biggest driver of the revenue that you kind of modeled out. I would not say we obviously are confident that the rest of the business segments are going to continue to grow at varying degrees. Obviously, the interactive business continues to race ahead, but the gaming business and the virtuals business, both we expect to grow.

Ryan Sigdahl
Ryan Sigdahl
Senior Research Analyst at Craig-Hallum

Helpful. Yeah, I think it's just a comparison of kind of the starting baseline there. Virtual sports, I think I heard expect year-over-year growth in Q4. I guess what gives you that confidence in the acceleration? Because it was up a decimal point sequentially, and so it appears like it's stabilizing, but what gives you the confidence to see a re-accelerating growth, at least sequentially, which will get you back to year-over-year growth by Q4?

Brooks Pierce
Brooks Pierce
President and CEO at Inspired Entertainment

Yeah, a couple of different things. We've made some adjustments with our biggest customer that we're starting to see the benefits coming through already. We've added additional customers in Brazil. I think we added six in the quarter, which you would not have seen full impact of, and we'll get that in the fourth quarter. We've also seen some nice growth out of some of the business that we're doing in Turkey, and we're adding another stream of content in the Turkish market. A combination of kind of all of those things gives us confidence that we're going to grow. I think the fourth-quarter number, EBITDA, is $7.2 million from last year. It is not an insignificant amount we need to grow, but that's what our target is.

Ryan Sigdahl
Ryan Sigdahl
Senior Research Analyst at Craig-Hallum

If I may, quick follow-up just on that, any commentary or added detail on what those adjustments with your largest customer were? I'll hop back in the queue. Thanks, guys.

Brooks Pierce
Brooks Pierce
President and CEO at Inspired Entertainment

Thanks. No, I think we'll probably keep that between us and our customer, if you don't mind.

Ryan Sigdahl
Ryan Sigdahl
Senior Research Analyst at Craig-Hallum

Fair enough. Thanks, guys. Good luck.

Brooks Pierce
Brooks Pierce
President and CEO at Inspired Entertainment

Thanks.

Operator

Your next question comes from the line of Barry Jonas of Truist Securities. Please go ahead.

Barry Jonas
Barry Jonas
Managing Director at Truist Securities

Thank you. Lorne, can you expand a little on your M&A commentary and the prepared remarks? Just curious what the pipeline looks like and the types of companies' deals you'd be most interested in. Thank you.

Lorne Weil
Lorne Weil
Executive Chairman at Inspired Entertainment

Sure. I think to begin. From a financial point of view, we're only interested in deals where there are significant touchpoints with the company and our operations now so that we can anticipate meaningful immediate synergies and a deal that makes significant financial sense. We're not going to do anything that's highly in a diversification mode or pay crazy prices that we can't mitigate by having a lot of operational synergies. That's sort of the overarching concern. In terms of kinds of companies we're interested, we would be interested either in what people nowadays call tuck-in acquisitions that strengthen one of our existing businesses. The most likely would be an interactive studio or an interactive business that had products that we don't have or was addressing markets that we don't address that we could easily fold in. The same thing would be possible in our equipment business.

Lorne Weil
Lorne Weil
Executive Chairman at Inspired Entertainment

I think it's unlikely that we would do something very big in an M&A sense right now because the business is running beautifully. There's plenty of opportunity to, as I said, to do tuck-in acquisitions. That's kind of what we're doing, Barry.

Barry Jonas
Barry Jonas
Managing Director at Truist Securities

Got it. I noticed there was a release about your Premium My Gaming entrance into West Virginia recently. Just curious if you could talk more about that and then any other notable jurisdictions you'll be soon to enter, hopefully. Thanks.

Brooks Pierce
Brooks Pierce
President and CEO at Inspired Entertainment

Yeah. So we've started with DraftKings and Rush Street, I think, the two first customers in West Virginia. For a while, we're kind of waiting to see how some of these markets develop. Delaware as well, which was originally pretty small, but Rush Street's made that into a pretty amazing market. Same thing in West Virginia. A number of our operator customers were pressing us to get the content in all their markets. Clearly, West Virginia is rolling out. We'll start seeing the impact of that here in the fourth quarter. I think the rest is what we talked a little bit about, is new states. I think the only state we're not in now is Rhode Island, which is kind of a unique environment. Certainly, if any states were to be added, that's a huge bonus for us. In terms of the.

Brooks Pierce
Brooks Pierce
President and CEO at Inspired Entertainment

International markets, I think we have almost 500 customers now. We're pretty much in every market you can think about. I would say probably the biggest market that we're not participating in in a meaningful way that we hope to is probably South Africa. Brazil is growing, and some of the other Latin American markets are growing. We kind of have no lack of geographical opportunities for us.

Barry Jonas
Barry Jonas
Managing Director at Truist Securities

Great. Congrats on the quarter, and appreciate the new targets. Thank you.

Brooks Pierce
Brooks Pierce
President and CEO at Inspired Entertainment

Thanks, Barry.

Operator

Your next question comes from the line of Jordan Bender Citizens. Your line is now open.

Jordan Bender
Jordan Bender
Senior Equity Research Analyst at Citizens

Hey, everyone. Good morning. Maybe to just follow up on the M&A comments. First, you mentioned you're going to open a new interactive studio. Are you buying this, or is this an organic initiative? Then maybe more broadly, kind of related to the M&A part of this. Have you seen multiples for studios come down at all? I know those have been quite elevated in years past. It seems like that's kind of a natural fit for the trajectory of your business at this point. Thank you.

Brooks Pierce
Brooks Pierce
President and CEO at Inspired Entertainment

Sure. Maybe I'll answer the first part and a little bit of the second part, and then Lorne can expand. The studio is going to be organic. We're building it ourselves. We've hired the guy to run the studio. He's got a non-compete, so he'll get started after the first of the year, and we'll build it out. It'll be a lot of the content that we're kind of known for, but we also will give him some runway to try some newer types of content that maybe will help broaden our portfolio. In terms of M&A, we've looked at lots and lots and lots of studios, and probably the single biggest issue for us is there's lots of markets where some of these studios get revenue that we won't go into.

Brooks Pierce
Brooks Pierce
President and CEO at Inspired Entertainment

That is probably the single biggest gating factor as to why we have not done an acquisition in that space before. We continue to look at it. As the content pipeline gets bigger and bigger, there are more and more of these companies that are popping up. We are constantly looking at that. Maybe Lorne.

Lorne Weil
Lorne Weil
Executive Chairman at Inspired Entertainment

Yeah. No, I do not have anything to add to that. I think that is right.

Jordan Bender
Jordan Bender
Senior Equity Research Analyst at Citizens

Perfect. Just following up, on the share buyback, it has been a couple of years since you have bought back stock. Can you just maybe remind us your philosophy? Is this going to be kind of a programmatic buyback, opportunistic, just anything to help us there?

Lorne Weil
Lorne Weil
Executive Chairman at Inspired Entertainment

Yeah. I mean, I think. Just to address the point about not having done a buyback for the last couple of years, that largely was occasioned by the accounting issue that we, fortunately, now has completely behind us. While it was going on, we were not able to buy back stock. Now we are in a situation where that is all behind us. We are generating plenty of cash. Our cash position itself is strong. We are obviously in a position to do it. We think right now our stock is at a level where, regardless of what anybody's philosophy is about the subject of share buybacks in the context of capital allocation, our view is it is obviously very attractive. I do not think it is going to be programmatic, though. I think it is still going to be opportunistic because we are constantly balancing the.

Lorne Weil
Lorne Weil
Executive Chairman at Inspired Entertainment

is to bring our leverage ratio down to the level that we talked about in these projections. I think that's a priority. We don't know whether and when a meaningful M&A opportunity will come across or will come along, and then we need to act on that. I don't think we want to be programmatic about share buybacks because, again, we're balancing all of these factors. We're certainly going to be more aggressive than we've been in the last couple of years, that's for sure.

Jordan Bender
Jordan Bender
Senior Equity Research Analyst at Citizens

Thank you very much.

Lorne Weil
Lorne Weil
Executive Chairman at Inspired Entertainment

Thanks, Jordan.

Operator

Your next question comes from the line of Chad Beynon of Macquarie. Please go ahead.

Chad Beynon
Chad Beynon
Managing Director and Sell-side Equity Analyst at Macquarie

Good morning, Brooks and Pierce. Thanks for taking my question. I wanted to revisit, Brooks, your comment about interactive October being the largest in history and obviously looking at the financials for Q3, the $11 million of EBITDA. Maybe first question, are you adding new partners in your biggest market, like the United Kingdom? Are you just gaining market share? The second part of that, do you think that certain partners are better cushioned against some regulatory changes? I know we'll hear more about that, but yeah, I guess just wanted to ask about tier one, two, three partners versus just overall share in that market. Thank you.

Brooks Pierce
Brooks Pierce
President and CEO at Inspired Entertainment

Yeah. Yeah. Thanks, Chad. Yeah. I mean, it's kind of exactly what you would want. It's pretty broad-based. It's across our three biggest markets, North America, U.K., and Greece. Some of the other smaller markets are growing as well. Principally, it's us gaining share. I think we are ranked number four or number five in the most recent Eilers report in North America. I think we've made a pretty focused shift to having built games that resonate with the North American players, and that's turning out. All the big guys, whether it's DraftKings, FanDuel, BetMGM, Rush Street, are all doing better and better. It really goes all the way through tier two, tier three, lower markets. It's pretty broad-based across the business. Like I said, the October numbers were great. You get the advantage of having Halloween.

Brooks Pierce
Brooks Pierce
President and CEO at Inspired Entertainment

I mentioned that last week was the single biggest week we've ever had. We had the confluence of payday in the U.K., Halloween, and the resetting of limits all happened in one week. That kind of led to pretty phenomenal results. Obviously, as we go into the fourth quarter, December is historically one of the biggest, if not the biggest, months with all the Christmas games. November is also a very good month. The fourth quarter is shaping up nicely.

Chad Beynon
Chad Beynon
Managing Director and Sell-side Equity Analyst at Macquarie

Thank you. On the prediction markets, obviously, you guys have extremely minimal exposure to, I guess, North American sports betting. We have seen a lot of the publicly traded equities trade off as a result of some competition there. Can you just talk about prediction markets, if you believe that affects any of your business segments here? Thank you.

Brooks Pierce
Brooks Pierce
President and CEO at Inspired Entertainment

No. We certainly aren't seeing anything. Unfortunately, it's because we don't have the one that it might potentially impact would be virtuals in North America. As I've said on a number of the calls, we're frustrated by the pace at which we're getting virtual sports in North America. The content, the NBA content, the NFL content, is resonating with markets outside of North America, but we're still struggling to get more and more operators in North America launched. That's really the only part of the business that I would see impacted. We certainly aren't seeing any impact in the interactive space from prediction markets taking players away. I think they're fairly, even though the operators obviously try and cross-sell, I think they're fairly separate and distinct players.

Chad Beynon
Chad Beynon
Managing Director and Sell-side Equity Analyst at Macquarie

Thanks, Brooks. Appreciate it and appreciate the slide deck.

Brooks Pierce
Brooks Pierce
President and CEO at Inspired Entertainment

Okay, Chad. Thanks.

Operator

Your next question comes from the line of Joshua Nichols of B. Riley Securities. Please go ahead.

Joshua Nichols
Joshua Nichols
Senior Equity Research Analyst at B. Riley Securities

Yeah. Thanks for taking my question. Great to see the parks business approaching a sale here in the stock buyback. Sorry if it was already addressed. I joined the call a few minutes late, but I wanted to just talk about the interactive business, phenomenal growth that you've been seeing there overall. I think it's on pace for something like close to 50% growth this year. Do you expect that that pace is likely to continue next year? What are the key kind of drivers that you see that's going to be driving interactive, whether that's Brazil or expanding your partnerships with some players in the U.S. and things that are in the pipeline for that business?

Brooks Pierce
Brooks Pierce
President and CEO at Inspired Entertainment

Yeah. We sort of addressed it a little bit earlier, but I'm happy to go back through it. Yeah. I mean, look, nine quarters in a row of more than 40% EBITDA growth is, eventually the math gets a little bit more challenging. As I mentioned, the October numbers were great. We expect the fourth quarter to continue to build on that momentum. The biggest issue for us, which again, I talked about a little bit, is what our customers are saying is your games are great, your game mechanics are great, we just want more of them. Hence, that's why we're investing in the studio to increase the capacity so that we can get more games out to the market, which I think will hopefully help us sustain the growth levels.

Brooks Pierce
Brooks Pierce
President and CEO at Inspired Entertainment

is so much content out there now that you really do have to have the combination of the quality and the quantity. Our game design teams have come up with some really interesting mechanics. We mentioned in the presentation about this persistence game that we are doing called PlayerLink that is driving increased play. We have lots of levers that we are pulling. We hope this streak continues.

Joshua Nichols
Joshua Nichols
Senior Equity Research Analyst at B. Riley Securities

Thanks. Last question for me, virtual sports, obviously a smaller piece of the business today, but good to see how that business has stabilized over the last couple of quarters. You talked about trying to get up and running with some more operators in the U.S. What needs to be done to really get that business back into growth for 2026? Are there a couple of larger opportunities that you are kind of optimistic about when we look beyond just the fourth quarter of next year, really?

Brooks Pierce
Brooks Pierce
President and CEO at Inspired Entertainment

Yeah. I mean, not to put any undue pressure on BetMGM, but they're likely to be the first big operator in North America. They've gone live with us in Ontario, and they're seeing phenomenal results over the last few months. It's got some regulatory and resource challenges that we're working through with them, but we expect, hopefully, to go live with them yet this quarter. I'm hoping that will be a catalyst for a number of other operators to see the virtual sports resonate and work in every other market around the world we've been in. We think it will in North America. Unfortunately for us, we haven't been able to. Frankly, because the operators have lots of priorities that they're working on for their iGaming and their sports business, and virtual just kind of has slid down.

Brooks Pierce
Brooks Pierce
President and CEO at Inspired Entertainment

Their priority list a little bit. I still believe that it will resonate. I still believe we have licensed content with the NFL, NBA, and NHL that will resonate with the North American player base. Once, like I said, it is doing phenomenally well in Ontario. I think once we get one of the big guys, hopefully BetMGM first, live in North America and they do well, I think that will hopefully be a catalyst for the other big operators to put some resources to this because it is not a challenge for us. It is really just a resource issue for the other guys.

Joshua Nichols
Joshua Nichols
Senior Equity Research Analyst at B. Riley Securities

Understood. Thanks for the context. Appreciate it.

Brooks Pierce
Brooks Pierce
President and CEO at Inspired Entertainment

No problem.

Operator

There are no questions. I will now turn the conference back over to Mr. Weil for the closing remarks.

Lorne Weil
Lorne Weil
Executive Chairman at Inspired Entertainment

Thank you, Operator. And thanks, everyone, for joining the call today. I know it's a Sportradar just started five minutes ago, so we probably lost a few of our listeners. But just to reiterate where we are, we're feeling very ebullient about the business right now. The rest of this year looks solid, and we're pretty confident that as we move through 2026 and 2027, we can achieve the kind of performance parameters we talked about in the presentation. So thanks again for your support, and we look forward to talking to you in a few months. Thanks.

Operator

Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.

Executives
Analysts
    • Chad Beynon
      Managing Director and Sell-side Equity Analyst at Macquarie
    • Jordan Bender
      Senior Equity Research Analyst at Citizens
    • Ryan Sigdahl
      Senior Research Analyst at Craig-Hallum
    • Barry Jonas
      Managing Director at Truist Securities
    • Joshua Nichols
      Senior Equity Research Analyst at B. Riley Securities
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