BRSL — Brightstar Lottery

Brightstar Lottery Q3 2025 Earnings Call Summary

1. Key Financial Results and Metrics:

• Revenue: Q3 revenue reached $629 million, a 7% increase year-over-year (5% at constant currency).
• Adjusted EBITDA: $294 million, up 11% year-over-year (7% at constant currency).
• Adjusted EPS: Improved from a loss of $0.02 to earnings of $0.36, with a 20% year-to-date increase.
• Same-Store Sales: Global same-store sales rose 8%, with U.S. same-store sales also up 8%. Multi-state jackpot sales surged 70% due to a $1.8 billion Powerball jackpot.
• Shareholder Returns: Nearly $1 billion returned to shareholders in 2025, including a 10% increase in the quarterly dividend to $0.22 per share.

2. Strategic Updates and Business Highlights:

• Completed the $4 billion sale of IGT Gaming, refocusing Brightstar as a pure-play lottery business.
• Strong performance in core instant ticket and draw game sales, with notable growth in iLottery sales (over 30% increase).
• Launched AI-developed games, including Viking Gold, enhancing product offerings.
• Introduced the Brightstar brand at trade shows, generating significant interest in innovative lottery solutions.
• Continued expansion in international markets, particularly in Italy and the U.S., with a focus on iLottery growth.

3. Forward Guidance and Outlook:

• Reaffirmed full-year 2025 revenue and adjusted EBITDA outlook of approximately $2.5 billion and $1.1 billion, respectively.
• Anticipated organic growth rate to accelerate to over 5% CAGR through 2028, driven by core business growth, iLottery expansion, and operational efficiencies.
• Expected revenue to reach approximately $2.75 billion by 2028, with adjusted EBITDA growing to $1.3 billion.
• Projected cash generation of $7.1 billion from 2025 to 2028, with $1.7 billion allocated for shareholder returns.

4. Bad News, Challenges, or Points of Concern:

• Transition of the U.K. contract is expected to negatively impact revenue and EBITDA by about $14 million in Q4.
• Increased revenue amortization from the new Italy Lotto license fee will weigh on reported revenue.
• Cash flow from operations is projected to be negative due to upfront license fees, although adjusted figures show positive cash flow.
• Potential challenges in maintaining growth rates in the face of competitive pressures and economic uncertainties.

5. Notable Q&A Insights:

• Management expressed confidence in the growth assumptions underpinning their targets, particularly in iLottery and B2C initiatives in Italy.
• The company is focusing on operational efficiencies and cost savings, with $80 million expected by 2028.
• Future opportunities in international markets, such as Brazil, are seen as promising but will take time to realize cash flow benefits.
• Management remains cautious about 2026 guidance, emphasizing the importance of jackpot performance and ongoing operational improvements.

Overall, Brightstar Lottery demonstrated strong financial performance in Q3 2025, with significant strategic milestones achieved, though challenges remain in transitioning contracts and managing competitive pressures. The outlook remains positive with a focus on growth and shareholder returns.