BRSL — Brightstar Lottery PLC

Brightstar Lottery Q2 2026 Earnings Call Summary

1. Key Financial Results and Metrics

• Revenue: $584 million, flat year-over-year when excluding a $47 million increase in service revenue amortization; 2% growth net of the U.K. transition.
• Adjusted EBITDA: Up 4% to $286 million, with a margin of nearly 49%.
• Income from Operations: $56 million, a turnaround from a loss of $60 million in Q2 2025.
• Adjusted EPS: $0.24, up 20% year-over-year; $0.71 when excluding service revenue amortization.
• Cash Flow: Year-to-date cash from operations was negative $1.17 billion due to a $1.7 billion Lotto license payment; adjusted for this payment, cash from operations was positive $501 million.
• Net Debt Leverage: 3.24x, slightly better than expectations.

2. Strategic Updates and Business Highlights

• Same-Store Sales Growth: Global same-store sales increased by 1.5%, driven by stronger U.S. sales, particularly in multistate jackpots and instant/draw games.
• iLottery Growth: Wagers increased by 22% in the first half of the year, with notable growth in Italy (23%) and the U.S. (29%).
• Retail Expansion: Enhanced MyLotteries app launched, and over 33,000 retail point-of-sale terminals upgraded in Italy.
• Emerging Markets: Successful launch of digital lottery operations in Sao Paulo, Brazil, with plans for retail operations later this year.
• Cost Optimization: Initiated OPtiMa 3.3 program targeting $100 million in savings, with $70 million expected by the end of 2026.

3. Forward Guidance and Outlook

• Second Half Expectations: Anticipate accelerated revenue and profit growth as strategic initiatives take effect. Q3 organic revenue growth expected to double to about 4% year-over-year.
• Full Year 2026 Guidance: Reaffirmed, with expectations for continued growth in revenue, profit, and cash flow despite potential headwinds from prior year jackpot comparisons.

4. Bad News, Challenges, or Points of Concern

• U.K. Transition Impact: The transition continues to affect revenue comparisons, with only a month of impact expected in Q3.
• Product Sales Decline: Product sales were down $8 million compared to last year, attributed to elevated hardware sales in the previous year.
• Competitive Pressures: Increased competition in iLottery and systems contracts, with incumbents facing challenges from new entrants and evolving technology requirements.
• Market Conditions: Concerns about consumer spending due to elevated gas prices, although lottery sales remain consistent.

5. Notable Q&A Insights

• Italy B2C Initiative: The recruitment of 23,000 retailers is aimed at driving online conversion, with a focus on increasing monthly active users.
• Competitive Environment: The company is focused on maintaining its leadership in lottery operations while competitors pursue M&A and diversification strategies.
• Future Cash Flow: Brightstar expects to generate over $400 million in annual free cash flow post-CapEx cycle, with a significant increase anticipated as the company moves into a harvesting phase.
• Retailer Engagement: New functionalities at retail locations are expected to enhance customer acquisition for digital offerings, including the ability to scan codes for digital registration.

Overall, Brightstar Lottery reported a solid Q2 performance with strategic initiatives in place to drive future growth, despite facing some competitive and market challenges.