Gaming company Inspired (NASDAQ: INSE) reported Q3 CY2025 results topping the market’s revenue expectations, with sales up 10.5% year on year to $86.2 million. Its non-GAAP profit of $0.28 per share was 41% above analysts’ consensus estimates.

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“Inspired delivered a strong quarter driven by strategic execution, digital expansion, and product innovation,” said Brooks Pierce, President and CEO of Inspired.

Company Overview

Specializing in digital casino gaming, Inspired (NASDAQ: INSE) is a provider of gaming hardware, virtual sports platforms, and server-based gaming systems.

Revenue Growth

A company’s long-term performance is an indicator of its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Unfortunately, Inspired’s 9.8% annualized revenue growth over the last five years was tepid. This fell short of our benchmark for the consumer discretionary sector and is a tough starting point for our analysis.

We at StockStory place the most emphasis on long-term growth, but within consumer discretionary, a stretched historical view may miss a company riding a successful new product or trend. Inspired’s performance shows it grew in the past but relinquished its gains over the last two years, as its revenue fell by 1.3% annually.

We can dig further into the company’s revenue dynamics by analyzing its three most important segments: Gaming, Leisure, and Virtual Sports, which are 31.4%, 10.8%, and 40.3% of revenue. Over the last two years, Inspired’s Gaming (land-based casino games) and Leisure (gaming terminals and amusement machines) revenues averaged year-on-year declines of 7.4% and 4.1% while its Virtual Sports revenue (digital gaming and sports betting) averaged 8.7% growth.

This quarter, Inspired reported year-on-year revenue growth of 10.5%, and its $86.2 million of revenue exceeded Wall Street’s estimates by 3.9%.

Looking ahead, sell-side analysts expect revenue to decline by 11.6% over the next 12 months, a deceleration versus the last two years. This projection is underwhelming and indicates its products and services will see some demand headwinds.

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Operating Margin

Operating margin is an important measure of profitability as it shows the portion of revenue left after accounting for all core expenses – everything from the cost of goods sold to advertising and wages. It’s also useful for comparing profitability across companies with different levels of debt and tax rates because it excludes interest and taxes.

Inspired’s operating margin has been trending up over the last 12 months and averaged 9.7% over the last two years. The company’s higher efficiency is a breath of fresh air, but its suboptimal cost structure means it still sports mediocre profitability for a consumer discretionary business.

This quarter, Inspired generated an operating margin profit margin of 11.3%, down 4 percentage points year on year. This contraction shows it was less efficient because its expenses grew faster than its revenue.

Earnings Per Share

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Inspired’s full-year EPS flipped from negative to positive over the last five years. This is encouraging and shows it’s at a critical moment in its life.

In Q3, Inspired reported adjusted EPS of $0.28, up from $0.21 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects Inspired’s full-year EPS of $0.38 to shrink by 11.8%.

Key Takeaways from Inspired’s Q3 Results

It was good to see Inspired beat analysts’ EPS expectations this quarter. We were also glad its Virtual Sports revenue outperformed Wall Street’s estimates. On the other hand, its Leisure revenue missed. Zooming out, we think this was a good print with some key areas of upside. The stock remained flat at $7.59 immediately after reporting.

So should you invest in Inspired right now? We think that the latest quarter is only one piece of the longer-term business quality puzzle. Quality, when combined with valuation, can help determine if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free for active Edge members.