Good morning, everyone, and welcome to the Inspired Entertainment Fourth Quarter and Full Year 2025 Conference Call. [Operator Instructions] 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 fourth 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 the 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 expressed or implied in such statements. For a discussion of these risks and uncertainties, please refer to the company's filings with the Securities and Exchange Commission. 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. 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 participating in our year-end conference call. As it happens, Brooks and I are doing this call from a major lottery conference in Florida, where there is a lot of buzz about the things we have going on in the lottery space including the amazing cloud-based lottery platform we launched a few weeks ago that you may have read about in the recent press release. We won't have much more to say about lottery today in our prepared remarks, but we're happy to elaborate in the Q&A, and we certainly expect to be talking more about it in the coming quarters. That said, I'll begin the call today with a few introductory remarks concerning the fourth quarter and full year and then hand it over to Brooks to discuss the quarter in detail. Beginning with Slide 3, I think we can look at the quarter as an important milestone in the steady transformation that's been occurring in the company. As we've discussed previously, hopefully not ad nauseam, the transformation continues to be led by the Interactive business, which grew revenue and EBITDA by 53% and 60%, respectively, in the fourth quarter. In a moment, Brooks will discuss the nature of the tremendous resilience we have built into this business, together with the steps we're taking to ensure that at the same time, we continue to drive growth. These kinds of growth rates were mildly interesting a few years ago when we were growing off a base of a couple of million dollars, but on a base upwards of $50 million at present, it's a whole other story, obviously. In our last conference call, we talked about targeting to get our company-wide EBITDA margin into the mid-40s. Our margin for the full year 2025 was 37%. But in the fourth quarter, it reached 42%, a record for any single quarter in our company's history. As noted on the slide, we're comfortable with 2026 EBITDA guidance of $112 million to $118 million, with the midpoint of $115 million, representing low double-digit growth over 2025 if we exclude the divested holiday parks EBITDA. This would put our full year company-wide margin squarely into the mid-40s. And as I'll touch on at the end of the program, we're comfortable that this momentum for the company as a whole will continue through into 2027. While the Interactive business follows its growth trajectory, our equipment businesses are continuing to move in an asset-light direction. And these together are positively impacting free cash flow. As noted in the slide, we expect to be deleveraging through 2026, targeting to be at 2.5x to 3x net leverage by year-end. This will lead in turn to a step down in our interest rate and perhaps other financing options as well. And on that note, I'll turn things over to Brooks.

Okay. Thanks, Lorne. So, moving to Slide 4, we're gratified to see the results in the fourth quarter justify the key premise that we've been discussing over the course of the year is that the combination of the mix of our business becoming more and more digital and particularly with the strong growth in our Interactive segment and also the disposal of the lower-margin holiday parks business, both the combination of that would drive our EBITDA margins over 40% and our fourth quarter results strongly validate that thesis. Moving to Slide 5. So this slide visually depicts the progress we've made in our mix and its impact on our EBITDA margins, but it goes beyond that. We've made a conscious decision to focus on CapEx-light business. Combining this with our significantly reduced headcount discussed last quarter will prove to materially improve the cash flow of the business on a going-forward basis. We expect these trends to continue throughout 2026, and we're targeting EBITDA margins in the mid-40s with significant improvement in cash flow. Moving to Slide 6. It's important as well to note that our focus is not solely on improving the EBITDA margins and cash flow, but also in growing each of the segments of the business. More than 80% of our revenue is recurring. So along with growth, we need to continue to renew contracts with our key customers, and we are very proud of the long-term relationships we've had with customers like bet365 and Entain and the faith they put in us to continue to innovate our products and enhance player engagement. I've discussed on previous calls the importance I place on getting access to the North American market for our Virtuals business and having the product fully integrated in the sportsbook section of the site rather…

Thanks, Brooks. That was a terrific deep dive. Before I move into a discussion of guidance, let's take a minute to recap where we ended 2025 on Slide 13. Our EBITDA was $111 million, a little ahead of consensus in both revenue and EBITDA, 11% up over 2024 with an EBITDA margin of 37% of revenue. Our digital business accounted for 51% of EBITDA and leverage was 3.3. Turning now to Slide 14. We see 2026 and 2027 evolving as shown. As mentioned earlier, we're projecting 2026 EBITDA at the midpoint to be low double digits ahead of 2025, excluding the divested holiday parks EBITDA. And from midpoint to midpoint, this growth rate should continue comfortably through 2027. At the same time, we're projecting that our digital business will grow from 51% of EBITDA to more than 60% EBITDA margins will expand to 45% plus and the leverage to be 2.5x approaching 2x. Finally, with reference to Slide 15, I'd like to announce at this time a change in the way we will be reporting going forward, which we think simplifies our story and much more accurately reflects the operating characteristics of the businesses. As we have explained before, our leisure segment until very recently comprised two very different businesses, a server-based machine business focused on pubs, motorway service, bingo halls, et cetera, whose business model is very similar in nature to what we've been calling gaming. And the recently divested holiday parks business that was predominantly an amusement machine business with a very different business model. Now that we have divested holiday parks, we'll be combining gaming and the remaining leisure businesses into one reporting entity to be called Retail Solutions. We think this will reflect our current management structure and make the company more easily understood as well as generate some interesting operating synergies. Now looking at Slide 16. Finally, let's touch on our investment thesis, which is very simple and which is being pretty well validated at this time. The swing in the business mix to higher growth, higher margin, less capital intensity is having the intended result. Revenue is overwhelmingly recurring in nature and growing. EBITDA margins in the 40s and moving higher, capital expenditure showing meaningful decline despite growing revenue and EBITDA and steady declines in leverage and interest expense. And at this point, operator, we're happy to turn the program over to Q&A.

[Operator Instructions] Your first question comes from the line of Chad Beynon of Macquarie.

Thanks for all the additional commentary in the deck and the guidance, guys. Just wanted to start with U.K. I know last quarter, you talked about how well you navigated the triennial review a couple of years ago. It doesn't appear that any of your partners have really made any changes ahead of the upcoming tax change. But just wondering how that's factored into your guidance, maybe your discussions with them and if you expect any mitigation either by you guys or your partners when that's rolled out?

Chad, yes, I think we are seeing that. I mean if you go down the laundry list of customers in the U.K., many of them are going to adjust their to reflect the increase in taxes. And I think they're also going to adjust their bonusing structures and how they bonus players because of that. I think, frankly, with the conversations we've had with them and the target that we've said in terms of what we think the impact of taxes, we feel better about that now than we did even before just because now the operators are certainly going forward and implementing their plans. So we'll know here in a few weeks once it goes in April. And I suspect there'll be some impact in the beginning like there always is, but we expect to be able to mitigate that. And we're comfortable with the impact as we've talked about in the last quarter.

Great. And then in terms of the capital allocation strategy across the entire digital sector globally, we've just seen some valuations come down, I think, mainly because of the threat of prediction markets, and it might give you guys an interesting opportunity to either repurchase stock or execute on that bolt-on acquisition that we had talked about in the past on conference calls. I wanted to get your update on that, Lorne and Brooks, how you kind of see the market at these valuations.

Sure. I mean it's -- Chad, it's is actually a complicated and multifaceted question. Let me comment for a second first on the root of your question, which is about the prediction market. I mean we know right now, the overwhelming majority of prediction market handle is on sports. I think for Kalshi, it's gets upwards of 90%. There's a lot of talk about people betting on the fall of the regime in Iran and when some famous Hollywood actors is going to get pregnant. But the fact is it's almost entirely about sports. And what you're seeing in terms of valuations is whether it makes sense or not, it's pretty much focused on people whose business is primarily in the sports business. So we're not only completely insulated from that, but there's actually an interesting case to be made that it will accelerate the growth in iGaming and in iGaming states because of the impact on state revenues of the swing in the sports betting handle from the sports betting operators to the prediction markets. We'll have to see how that plays out. But it would be an interesting irony that we would actually benefit from the prediction markets. In terms of the second part of the question, which is the impact on valuation, yes, for sure. I mean, at our current valuations, even though as I said a number of times before, for a variety of reasons, strategically, we're probably more focused on deleveraging than we are on share repurchase. But at a certain point in valuations, it's too ridiculous to not do everything we can to take advantage of that opportunity. And since we have a pretty good buyback plan in place, and we have significant headroom in our credit agreements to buy back stock. I think it's safe to say that we'll be putting stock valuation in proper perspective in our asset allocation, at least for the present time, Chad.

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

If I compare your targets that you gave a couple of months ago to what you have in the deck today, the '27 targets, even adjusting for the U.K. taxes appears to be better than what you had put out previously. You guys have -- you kind of went through the prepared remarks and talked to the digital business and the positive momentum you're seeing there. Can you just kind of help us unpack what you're seeing, if I'm reading this correctly, that your expectations are maybe lifted from what you were seeing before?

Yes. I mean I think -- I guess to answer your question is, and I'm not sure exactly what the reference is to '27. I know Lorne just mentioned it in the remarks. But not seeing anything that would tell us that the momentum is not going to continue. As I mentioned in my remarks, because I just happened to get the numbers this morning, the last week we had was the best week we've ever had. So we're seeing the momentum continue in the -- certainly in the Interactive business. And we have a number of drivers in the Virtual Sports business staying in the digital space that we think are just about to come upon us. Obviously, the North American launch. Certainly, we've got some opportunities in Brazil that we are pretty excited about. The World Conference coming up here in the next couple of months. So we don't see anything on the horizon that tells us anything other than this momentum is going to continue.

Okay. Yes. And that was in reference to your EBITDA targets in '27, but that answered that. And then just on the follow-up in the press release, you kind of talked about your iGaming market share in the U.S. improving quarter-on-quarter and the results that led to. Can you just kind of talk to what you're seeing there from a customer perspective and I guess, also a spend perspective from those customers?

Yes. I mean I think we're having -- it's kind of an interesting dynamic going on with, let's call it, the big three customers, DraftKings, FanDuel and BetMGM. We talked a little bit about the game mechanics and some titles that we have using this thing that we call cash bank. So it's kind of morphed into each one of the big three have kind of taken under their wings an individual brand. DraftKings is really strong with Wolf it Up!. FanDuel is really strong with this new Kong game. And so what's happening is the big three are continuing to grow for us from a share perspective, and we're getting better placement, et cetera, et cetera. But we're also doing extremely well with companies like Rush Street and Fanatics and so on and so forth. So it really is -- it's kind of across the whole board, but I'd say probably the biggest driver in terms of the share gain is our game with the top three operators.

Your next question comes from the line of Ryan Sigdahl of Craig-Hallum.

I want to stay on the U.K., you mentioned kind of from a tax increase on the digital side and strategy is changing. Curious if you've heard anything from a retail standpoint, if any of your key customers are planning to shift promotions, marketing, et cetera, back to the retail side, just given the balance between online and retail?

Yes. I mean I think they look at it holistically as we've talked about before, kind of a whole ecosystem. But I think it's pretty clear that from a margin standpoint that they would be benefiting with some of this business moving to retail from online. But certainly, the sense that we get from the operator customers is that they're trying to mitigate the online tax thing as much as possible. But obviously, the more business that flows through the retail channel is certainly better for them from a margin perspective. It's interesting. One of the things we've talked about is the -- some of the shop closures with William Hill. And one of the questions people ask, well, what do you do with those machines that are going to be coming out of the shops? And Ryan, as you know, we've talked a lot about the shop closures are generally on the long end of the tail. So they're the least performing shops. But ironically, a number of these shops are being secured by other independent operators that are also customers of ours. So we've had the ability to be able to take the machines that would be coming out of the William Hill shops and either somebody else, another operator will buy the shop themselves or they're expanding on their own, and we'll move the machines into that part of the business. So, I think, obviously, nobody likes to hear anything about shop closures. But I think ironically, at the end of the day, we might actually be better served with the reconfiguration across the portfolio of LBO companies in the U.K. with some of the lower-performing shops going to other operators.

Then Virtual Sports. Last quarter, you expected growth year-over-year from a revenue standpoint in Q4 that didn't happen. I'm just curious what changed versus your expectations, but you did see very nice margin expansion. So I guess, is that sustainable? What happened on the top line? What happened on EBITDA? And should we expect kind of that higher level of EBITDA margin to be sustainable going forward? And then maybe last point on Virtual Sports, just the Bet Builder product. I know it's very, very early, I know you have launched it, but curious if you can quantify any kind of uplift what you've seen there and then how you plan to if you do accelerate that pipeline ahead of the World Cup?

Yes. I mean we're certainly racing to answer your second question first. We're racing to get everybody. We announced the contract extensions with Bet365 and Entain, both of which are very big customers of ours, and we've got long-term extensions with them. So we've secured our future, I think, in the Virtual Sports business. on a going-forward basis. And the Bet Builder product has shown modest growth in OPAP, and I don't think there should be an expectation that this is going to be anything more than a high single-digit increase. And to be perfectly honest, in the first quarter, we've seen a little bit of softening in the Brazil market in Virtual Sports, which we think is probably a little bit of the seasonality and a little bit of a lag pre-World Cup. Virtual Sports, we've got a lot of things going on in that space that we hope will be able to drive the top line revenue. But I think we are comfortable with the margin expansion that you saw in the fourth quarter. But obviously, a big part of that is can we get the revenue going in the way that we'd like to see it go. So kind of a little bit of a mixed bag so far that we've seen in the first part of the first quarter, but we'll obviously be reporting on that here coming up in the not-too-distant future.

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

I wanted to start with the Iran conflict. I think a lot of investors are wondering how we should be thinking about any potential impact to your business, specifically maybe talk about any historical sensitivity to higher oil and gas prices.

Well, over the course of the few years that we've been in this business and the many, many years that we've been in this industry and other companies, we've had a number of crazy gyrations in the energy market. And I don't think, at least in my personal experience, Barry, I've seen much of an impact of that on our business. I mean I suppose if the price of oil were to go up high enough, long enough that it impacted players' disposable incomes that might show itself up in our business. But I don't I haven't seen much evidence of that in the past. And at least right now, it's not something that we're focused on. There is sort of some issue, I suppose, in some businesses of supply chain disruption to -- associated with this, let's call it, situation since the President is not calling it a war. And but our supply chains are in terrific shape right now. We had this thing with the memory chip shortage, but we have fixed that. So I think right now, I'm cautiously optimistic that we're pretty well insulated from this. But it's a crazy volatile world and anything is possible.

Great. And then just, Lorne, you teased it in the opening remarks, so I'll bite. Can you maybe talk more about the STRATA lottery platform? I think you've been working on this for a while, right, since the Sportech acquisition. So I would love to get your thoughts on the market opportunity and maybe potential time lines given how lengthy RFP processes are usually.

So, yes, so we've spent probably 2.5 years developing this. We developed it completely from scratch with a complete clean sheet of paper. And we've done this. I think the first lottery system I personally was involved in developing was back in the '70s when I was working with a company who put in the very first digital lottery system in the world. And then we did it again very, very successfully at Scientific Games, and now we've just done it yet again. It seems like a life sense. So -- but we assembled probably the best team of developers in the lottery industry. The system is completely cloud-based. It was designed to be integrated retail and online. And it's running flawlessly in a very, very commercially successful lottery in North America with about 2,500 retailers. This system can be scaled to -- could go to 25 million retailers if we ever had to. So we've -- we've had very, very significant reaction to it in the market. I think probably our focus in terms of the market opportunity for it is going to be outside the United States, at least for the first few years. These are customers and markets, again, going back to our Scientific Games days that we're very familiar with. And the architecture of the system and the functionality of the system is, let's say, is geared to those kinds of markets. So I wouldn't right now want to try to predict when we'll begin to see -- I mean, we're getting significant revenues, a few million dollars a year from the system right now in the Dominican Republic. But as we begin to expand that throughout the Caribbean and Latin America and probably Europe, certainly, over the course of the next couple of years, we should start to see significant revenue. And again, that's something that's not factored at all into the guidance that we gave earlier.

Yes. And Barry, just to add maybe one more point. I think that's -- as Lorne said, our focus over the next couple of years is primarily outside the U.S., and that's generally a sales market as opposed to recurring revenue market. So we certainly have had a number of people that are interested when they've seen the results of what we've done in the D.R. So we're going to start building a pipeline, hopefully, of opportunities that we'll be able to talk about coming up. But it's not like bidding for a big U.S. state. That's a completely different kind of business.

And our last question comes from the line of Josh Nichols of B. Riley Securities.

Great to see a very strong quarter yet again for the Interactive business. I was just curious, when you look at the north of 50% growth that you're seeing here, what's your expectations in terms of sustainability when you kind of look at the pipeline for '26, '27 to maintain that type of pace of growth? I know the U.K. tax increase may have some impact on margin, but I'm just curious like where you think the trajectory for that type of growth rate is likely to level out over the next 12 months or so?

Yes. That one is hard to say. I think if you had asked me several years ago, if we would have more -- 10 quarters in a row of more than 40% EBITDA growth in this segment, would we have predicted that? I'd say no. Every time I look at the numbers, I keep wondering if we're going to start hitting a wall, and that doesn't seem to be the case, certainly through as of this morning. I think in the U.K., in particular, and you've probably seen it, I know Entain in their results talked about this a lot. is I think the stronger both operators and suppliers are going to tend to thrive in this environment. So I would -- we're more than 10% share in the U.K., and I fully expect even with the tax situation that we'll be increasing our share because there's going to be some providers that just don't have enough scale to be able to make it. So all I can say is we're not seeing any indications of slowing yet. But certainly, mathematically, it's not possible to sustain this forever. But we're seeing nothing that would lead us to believe that it's going to slow down anytime soon, both in North America and in the U.K. And don't forget, we're also adding -- we've talked about this. We're adding additional geographies -- we're going into South Africa, and we'll go into another couple of geographies. So our hope is that if there's any softening in the two biggest markets that we can fill that gap with new geographies to just continue to keep this going.

Just one other point on that, Josh. You mentioned the impact of the tax on margins. But just to be clear, the way the tax works, it actually -- it shouldn't have any effect on our margins because our revenue is a percent of our customers' GGR. So, certainly, the increase in the tax would have the effect of reducing our customers' GGR. But our margin on the revenue that we get from that customer shouldn't have any impact at all. Obviously, it will impact the revenue, but not the margin.

Yes. Thanks for clarifying on that front. I think just one more follow-up. I mean, a pretty big shift you go into a very asset-light model here. The headcount is already down pretty significantly, and we're expecting to see CapEx step down as well, too. I know it looks like there was some outsized CapEx, right, in 4Q. But is everything now on a more normalized asset-light digital focused basis going forward as we start with 1Q of '26? Or is there a little bit more work to be done to get to some of those targets that you kind of laid out for '26 and '27?

No, I think the targets are solid. The composition is going to be slightly different because one of the things that we're doing from a CapEx perspective, we've talked a lot about this morning about the Dominican Republic Lottery. So we replaced the system. And now we're in the process over the next couple of years of replacing the terminals down there because this is a long-term contract. So I think the total amount of CapEx is going to be as we've laid out for everyone. I think the composition will be slightly differently because there'll be some investment over the next two years in lottery terminals. And then going out to year three and four, we would hope to have a step down even further other than potential expansion opportunities. So I think the model, Eric or Aimee can jump in if they feel or if they have anything else. But I think what we've laid out for you guys from a CapEx perspective, we feel very good about.

Yes. The only thing I'll add to that, this is Eric, Josh, is when you look at our reporting, the CapEx will include sort of all our gross CapEx that -- in our presentation on Slide 14, we have a cash CapEx number, which we footnoted. It excludes any purchases of PP&E that are customer funded, effectively where we receive the cash upfront. So if you look at it through that perspective, 2025 was about $44 million as opposed to -- I think the number is like upwards of $55 million, $56 million just from our financial statements. So I just want to make sure you understood that caveat, and we can chat later offline, if not.

I think that's good right around $46 million number.

That concludes our Q&A session. I'll now turn the conference back over to Mr. Weil, Executive Chairman, for closing remarks.

Thanks, operator, and I don't really have much more to add to what we said already. As I said in my remarks earlier, I think the fourth quarter was a very important milestone in terms of the transformation or the evolution that we're going through. We feel pretty good that it will continue in that direction into the first quarter of 2026 and through 2026. So thank you for your support, and we'll look forward to speaking to you again in a few months. Thanks.

This concludes today's conference call. You may now disconnect.