Inspired Entertainment's Q1 2025: Unpacking Contradictions on Tariffs, EBITDA Margins, and Virtual Sports Growth

Tariffs and their impact on business operations, holiday park business sale and EBITDA margin targets, virtual sports market and growth expectations, EBITDA margin targets, and digital EBITDA contribution are the key contradictions discussed in Inspired Entertainment's latest 2025Q1 earnings call.



Digital Business Growth:
- The company's Interactive business revenue increased by 49%, and EBITDA grew by 79% over Q1 2024, with margins expanding to 64%.
- The growth was driven by strong performance in North America, particularly in the United States, with a 90% increase in revenue, led by high-quality and quantity of content.

Virtual Sports Stabilization:
- The Virtual Sports segment stabilized after facing challenges due to regulatory changes in Brazil, with signs of stabilization seen since January.
- The turnaround is expected due to the launch of Brazil-specific soccer games and the initiation of licensed content deals with North American audiences.

Refinancing and Debt Management:
- Inspired Entertainment successfully negotiated a five-year sterling-denominated floating rate financing, expected to sign agreements in June.
- The refinancing will provide greater flexibility, lower interest costs, and facilitate deleveraging through the anticipated sale of its holiday park business.

Holiday Park Sale and Deleveraging:
- The company's holiday park business is expected to be sold to facilitate deleveraging.
- The sale will allow Inspired to focus on high-margin, low-capital businesses, such as digital businesses, and reduce annual CapEx to around $25 million.