Good morning and welcome to the Inspired Entertainment 3rd Quarter 2025 conference call. All participants' lines have been placed on mute to prevent any background noise. After the speaker's 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 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 a forward-looking statement within the meaning of United States securities laws. These statements are based on management's current expectations and beliefs and are subject to various risk, uncertainties, and other factors that may cause actual results to differ materially from those exposed or implied in such statements. For a discussion on these risks and uncertainties, please refer to the company's filing with Securities and Exchange Commissions. 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.

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 in last year, and a result that we're pleased with. In a departure from PRATS 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 and we feel that this kind of comprehensive discussion will help us put everything in proper perspective then at the conclusion we will discuss earnings balance sheet and cash flow projections for 26 and 27 to begin I'll hand it over to Brooks who will discuss in some

detail current results and operations okay thanks Lauren before I dive into the business update I want to briefly address the upcoming UK budget announcement on November 26th 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 managed through the 2019 triennial, which cut maximum stakes in betting shops from effectively 50 pounds to two pounds, 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 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 and speaks to our ability to adapt effectively. Once the UK 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, and we have a number of levers and opportunities at our disposal to navigate our way through this. Okay, moving to the SWAT, 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. 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 UK 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. 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. 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 refreshed 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 and 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. 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. 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 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, 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 to add states is in bandwidth. We don't have a crystal ball, of course, but we're confident that states will see the opportunity and feel it's a matter of when, not if. Now, moving over to Hybrid Dealer, we've 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're starting to see the network effect of rolling this product out across our customer base. We have a very good mix of both Tier 1 and Tier 2 customers and have seen success with both. Our William Hill branded roulette game in the UK 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. 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 dealers are 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 UK, Greece, and North America. In the UK, we're 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. 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 Game Pack 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. And I'll pass it over to Lorne.

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 so we're starting with trailing 12-month revenue adjusted EBITDA and EBITDA margin of 310 million 110 million and 35 percent respectively the digital retail mix is just under 50 50 and net leverage ratio of 3.2 times as we move through the rest of the material i try to explain why we're confident in projecting significant expansion in margins reductions and leverage and strong free cash flow slide 15 summarizes the underlying dynamics that have been underway for some time earlier brooks talked about the high margin relatively low capex and scalability of our digital business it's the swing in the mix of our business in that direction that's the primary driver of financial performance in parallel the divestiture of the holiday park business provides an immediate boost to margins and the operational re-engineering going on throughout the company allows us to make up for the divested holiday parks in a moment i'll quantify with some specificity of 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 and as the slide implies in our case the three are highly interdependent 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 half-x 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 reengineering 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. 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 percent to 45 percent free cash flow conversion to reach 30 percent of EBITDA and net leverage to decline to uh under two a few minutes ago brooks discussed the expectation of increased uk gaming taxes in the november uk budget it's for this reason that for now we've expressed absolute adjusted EBITDA guidance in terms of high single digit growth which 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 and i should mention that certain important upsides new new eye gaming states for example would be significant additional mitigating factors as they are 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 and with that we can open to Q&A operator we can have Q&A now please 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 1 on your telephone keypad to raise your hand and join the queue and if you would like to withdraw your question simply press the star one again if you are 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 and your first question comes from the line of Ryan Sigtal of Craig Hallam. Your line is now open.

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 points over the next two to three years. i guess that implies revenue is kind of flattish maybe even down um 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 yeah i think the well the principal reason for that is obviously um you know the holiday parks business going away um so that's you know that's the the single biggest driver of the of the revenue that you kind of modeled out.

But I wouldn't 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.

Helpful. Yeah, I think it's just a comparison of kind of the starting baseline there um virtual sports i think i heard uh expect year over year growth in q4 i guess what gives you that confidence in the acceleration because it was up you know 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 Yeah, a couple 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 wouldn't have seen full end packed up, and we'll get that in the fourth quarter. And 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. So a combination of kind of all of those things gives us confidence that, you know, that we're going to grow. I think the quarter number, EBITDA, is 7.2 from last year. so it's not an insignificant amount we need to grow but that's what our target is so I may quick follow up just on that any commentary or added detail on what those adjustments with your largest customer were and then I'll hop back in the queue thanks guys thanks no I think we'll probably keep that to our to between us and our customer if you don't mind fair enough thanks guys good luck thanks your next question comes from the line of

Barry Jonas of Truist Securities. Please go ahead.

Thank you. Lauren, 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.

Sure. Well, I think to begin from a financial point of view, we're only interested in deals where there are significant touch points 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, you know, pay crazy prices that we can't mitigate by having a lot of operational synergy. So that's sort of, that's the overarching concern. In terms of kinds of companies, we're interested, we would be interested either in, you know, when people nowadays call tuck-in acquisitions that strengthens 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 uh in our in our equipment business um 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 uh there's plenty of opportunity to to as i said to do tuck in acquisitions um and that's kind of what we're doing barry got it and then uh i noticed there was a release about your uh 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 uh to enter hopefully thanks yeah so we've uh we've started with uh draft kings and rush street i think the

two first customers in West Virginia you know for 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 streets made that into a pretty amazing market and same thing in West Virginia so a number of our operator customers you know we're we're pressing us to get the content and all their markets so you know clearly so West Virginia's 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, you know, new states. I think the only state we're not in now is Rhode Island, which is kind of a unique environment. So certainly if any states were to be added, you know, that's a huge bonus for us. In terms of the international markets, you know, I think we have almost 500 customers now. We're pretty much in every market you can think about. I would say that probably the biggest market that we're not participating in in a meaningful way that we hope to is probably South Africa. But Brazil is, you know, growing and some of the other Latin American markets are growing. So we kind of have no lack of geographical opportunities for us.

Congrats on the quarter and appreciate the new targets.

Thanks, Barry. your next question comes from the line of a jordan pender citizens your line is now open hey everyone good morning maybe just follow up on the mna comments you know first on you mentioned you're going to open a new interactive studio um are you buying this or is this an organic initiative and then maybe more broadly kind of the related to the mna part of this um you know 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.

Sure. Maybe I'll answer the first part and a little bit of the second part, and then Lauren can expand. So the studio is going to be, 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. And 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 you know probably the single biggest issue for us is you know there's lots of markets where some of these studios get revenue that we won't go into and that's probably the single biggest gating factor as to why we haven't done an acquisition in that space before but we continue to to look at it and and as the content pipeline gets bigger and bigger there's more and more of these companies that are popping up. So, you know, we're constantly looking at that. And maybe Lauren.

Yeah, no, I don't have anything to add to that. I think that's right. Perfect.

And just following up, on the share buyback, you know, it's been a couple of years since you've bought back stock. Can you just maybe remind us your philosophy? You know, is this going to be kind of a programmatic buyback opportunistic, just anything to help us there?

Yeah, I mean, I think uh well just to address the the point about not having done a buyback for the last couple of years you know that largely was occasioned by the accounting issue that we uh fortunately are now has completely behind us but while it was going on uh we weren't able to buy back stock so now we're in a situation where that's all behind this. We're generating plenty of cash. Our cash position itself is strong, and so we're obviously in a position to do it, and we think right now our stock is at a level where, regardless of what anybody's philosophy is about the the the subject of uh share buybacks in the context of uh of capital allocation uh it's it's our view is it's obviously very attractive i i don't think it's going to be programmatic though i think it's still going to be opportunistic because we're constantly balancing uh the the the goal to bring our leverage ratio down to the level that we talked about in these projections and i think uh i think that's uh priority um and you know we don't know whether and when a meaningful m a opportunity will come across uh or will come along and then we need to act on that so uh i don't think we want to be programmatic about share buybacks because again we're balancing all of these factors but um we're certainly going to be more aggressive than we've been in the last couple years that's for sure thank you very much thanks jordan and your next

question comes from the line of Chad Pannon of Macquarie. Please go ahead.

Hi. 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. So maybe first question, Are you adding new partners in your biggest market, like the United Kingdom, or are you just gaining market share? And then the second part of that, do you think that, you know, certain partners are better cushioned against, you know, some regulatory changes? I know we'll hear more about that. But, yeah, I guess just wanted to ask about, you know, tier one, two, three partners versus just overall share in that market.

Yeah. Yeah, thanks, Chad. Yeah, I mean, it's kind of exactly what you would want. It's pretty broad based. It's across, you know, our three biggest markets, North America, UK, and Greece. But some of the other smaller markets are growing as well. And principally, it's us gaining share. You know, 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 build games that resonate with the North American players, and that's turning out. And, you know, so all the big guys, whether it's DraftKings, FanDuel, BetMGM, Rush Street, are all doing better and better. But it really goes all the way through, you know, Tier 2, Tier 3, lower markets. So it's pretty broad-based across the business. And like I said, you know, the October numbers were great. You get the advantage of having Halloween. I mentioned that last week was the single biggest week we've ever had. We had the, you know, the confluence of payday in the U.K., Halloween, and the resetting of limits all happened, you know, in one week. So that, you know, kind of led to pretty phenomenal results. But we obviously, as we go into the fourth quarter, you know, December is historically, you know, one of the biggest, if not the biggest months with all the Christmas games. And November, you know, is also a very good month. So the fourth quarter is shaping up nicely.

Thank you. And then 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. um no we don't we don't 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 and 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 um the content um you know 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. So 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.

Thanks, Brooks. Appreciate it, and appreciate the slide, Jack. Okay, Chad, thanks.

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

Yeah, thanks for taking my question, and great to see the parks business approaching a sale here and a 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 like 50% growth this year. Do you expect that that pace is likely to continue next year? And what are the key kind of drivers that you see that's going to be driving and active, whether that's like Brazil or expanding your partnerships with some players in the U.S. and things that are in the pipeline for that business?

Yeah, we sort of addressed it a little bit earlier, but I'm happy to go back through it. But, yeah, I mean, look, nine quarters in a row of more than 40% EBITDA growth is, you know, eventually the math gets a little bit more challenging. But as I mentioned, you know, the October numbers were great. We expect a fourth quarter to continue, you know, to build on that momentum. The biggest issue for us, which, again, I talked about a little bit, is, you know, what our customers are saying is your games are great, your game mechanics are great. We just want more of them. And, 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, you know, sustain the growth levels. There's, you know, there's so much content out there now that you really do have to have the combination of the quality and the quantity. But our game design teams have come up with some really interesting mechanics we mentioned in the presentation. about this persistence game that we're doing called PlayerLink that's driving increased play. So we've got lots of levers that we're pulling, and we hope this streak continues.

Thanks. And then last question for me, virtual sports, obviously, you know, a smaller piece of the business today, but good to see how that business has stabilized over the last couple 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? And are there a couple larger opportunities that you're kind of optimistic about when we look beyond just the fourth quarter, but for next year, really?

Yeah, I mean, so not to put any undue pressure on BetMGM, but they're likely to be the first big operator in North America. So they've gone live with us in Ontario, and they're seeing phenomenal results over the last few months, and 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, and I'm hoping that that will be a catalyst for a number of other operators to see that virtual sports resonates and works in every other market around the world we've been in, and we think it will in North America. So, you know, unfortunately for us, we haven't been able to, frankly, because the operators have lots of priorities that they're working on for their, you know, iGaming and their sports business and virtuals just kind of has slid down their priority list a little bit. But I still believe that it will resonate. I still believe we have, you know, licensed content with the NFL, NBA and NHL that will resonate with the North American player base. And once, you know, like I said, it's doing phenomenally well in Ontario, I think once we get one of the big guys, hopefully bet MGM 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's not a challenge for us. It's really just a resource issue for the other guys.

Thanks for the context. Appreciate it.

No problem. and there are no questions i will now turn the conference back over to mr wheel for the closing remarks uh thank you operator and uh thanks everyone for um joining the call today i know uh this is sport radars just started five minutes ago so we probably lost a few of our listeners but But just to reiterate where we are, we're feeling very bullion about the business right The rest of this year looks solid. And we're pretty confident that as we move through 26 and 27, 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.

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