Inseinc's Resilient Growth Amid Regulatory Challenges

The third quarter conference call for Inseinc has shed light on the company's ability to maintain growth momentum despite regulatory hurdles in the U.K. and Brazil. Executive Chairman Lorne Weil highlighted that EBITDA margins continue to improve, reaching 46% in the third quarter of 2026, a significant increase from 35% in the second quarter of 2025.

Weil emphasized that the company has strengthened its platform in every dimension, with capital intensity and leverage declining as digital business growth increases. Despite this, trailing 12-month EBITDA at the end of the third quarter of 2026 was essentially flat compared to the same period in 2025. However, adjusting for recent regulatory changes, including a doubling of the Remote Gaming Duty in the U.K. and Brazil's brief shutdown, yields a like-for-like EBITDA growth of 12% over nine months or about 15% annualized.

In his prepared remarks, Weil underscored the importance of considering these factors when evaluating the company's performance. "As anyone who even casually follows us knows," he said, "the news has been pretty well saturated with stories concerning regulatory changes in the U.K. and Brazil." However, he noted that despite these challenges, Inseinc's platform has continued to strengthen.

CEO Brooks Pierce took over from Weil, providing a more detailed analysis of the company's performance. He highlighted key drivers such as interactive market share gains, new markets and customers for virtuals, and the resilience of their retail business. Notably, Pierce compared the third quarter of 2026 to the same period in 2025, showing a 900 basis point increase in EBITDA margin despite tax increases.

One area where Inseinc has shown significant improvement is its digital business, which has driven above-average growth and contributed to an overall increase in EBITDA margins. Over the last six quarters, EBITDA margins have increased by 1,100 basis points from 35% in the second quarter of 2025 to 46% in the third quarter of 2026.

Free cash flow conversion also saw a notable improvement, reaching about 22% of EBITDA year-to-date. However, due to Brazil's shutdown, Inseinc has revised its full-year guidance downwards to $109 million at the low end.