Earnings call transcript: Brightstar Lottery’s Q2 2025 results and stock movement

Brightstar Lottery PLC reported its Q2 2025 earnings, revealing a 3% year-over-year increase in revenue to $631 million, while adjusted EBITDA saw a decline of 5% to $274 million. The company’s stock price showed a modest increase of 1.32% in regular trading, closing at $16.73, although it fell by 1.37% in pre-market trading. According to InvestingPro analysis, the stock appears undervalued with a Fair Value calculation suggesting upside potential. Despite the revenue growth, Brightstar has reduced its full-year revenue guidance to $2.5 billion, reflecting caution amid macroeconomic uncertainties.

Key Takeaways

• Revenue increased by 3% year-over-year to $631 million.
• Adjusted EBITDA decreased by 5% to $274 million.
• Full-year revenue guidance was lowered to $2.5 billion.
• Stock price increased by 1.32% in regular trading but decreased by 1.37% in pre-market trading.
• Brightstar launched new products and expanded its iLottery platform.

Company Performance

Brightstar Lottery’s Q2 2025 performance was marked by a 3% increase in revenue, driven by global same-store sales growth of 2.6% in instant ticket and draw games. Despite this, adjusted EBITDA fell by 5%, highlighting cost pressures or investment in growth initiatives. The company continues to lead as the world’s largest lottery operator, facing competition from other major players in the gaming and lottery industry.

Financial Highlights

• Revenue: $631 million (↑3% YoY)
• Adjusted EBITDA: $274 million (↓5% YoY)
• Cash from Operations: $433 million
• Free Cash Flow: $259 million
• Global same-store sales growth: 2.6% in instant ticket and draw games

Outlook & Guidance

Brightstar Lottery has revised its full-year revenue guidance downward to $2.5 billion, reflecting a cautious outlook. The company reaffirmed its adjusted EBITDA outlook of $1.1 billion and expects higher revenue and EBITDA in the second half of 2025. InvestingPro data shows analyst consensus is moderately bullish, with price targets ranging from $12.52 to $28.00. The long-term EBITDA target is close to €1.2 billion, with projected mid-single-digit growth.

Executive Commentary

CEO Vince Sadusky emphasized the company’s strategic initiatives: "We believe Brightstar Lottery’s current valuation provides a compelling entry point." He also highlighted the resilience of the lottery business: "The lottery business is one that has historically been anti-cyclical." Furthermore, Sadusky expressed confidence in the company’s iLottery platform: "We have a clear right to win in iLottery."

Risks and Challenges

• Macroeconomic pressures could impact consumer spending on lottery products.
• Increased competition in the iLottery and gaming sectors.
• Potential challenges in achieving cost savings from the Optima 3.0 program.
• Currency fluctuations affecting international revenue.
• Regulatory changes in key markets like the U.S. and Italy.

Brightstar Lottery’s Q2 2025 results reflect a mixed performance, with revenue growth but reduced profitability. The company’s strategic initiatives and market position provide a strong foundation, although challenges remain in navigating economic uncertainties and competitive pressures. For deeper insights into Brightstar’s financial health and growth potential, InvestingPro subscribers can access comprehensive analysis, including 10 additional ProTips and a detailed Pro Research Report, part of the coverage available for 1,400+ US stocks.

Full transcript - Brightstar Lottery PLC (BRSL) Q2 2025:

Sarah, Conference Call Operator: Hello and welcome to the Brightstar Lottery second quarter 2025 earnings call. All lines have been placed on mute to prevent any background noise. After the speaker’s remarks, there will be a question and answer session. If you would like to ask a question during this time, please press star 1 on your telephone keypad. I would now like to turn the conference over to James Hurley, Senior Vice President of Investor Relations. You may begin.

Vince Sadusky, Chief Executive Officer, Brightstar Lottery: Thank you, Sarah. Thank you all for joining us on Brightstar Lottery’s second quarter.

Max Chiara, Chief Financial Officer, Brightstar Lottery: 2025 conference call hosted by Vince Sadusky, our Chief Executive Officer, and Max Chiara, our Chief Financial Officer.

Vince Sadusky, Chief Executive Officer, Brightstar Lottery: After some prepared remarks, Vince and Max will be available for your questions.

Max Chiara, Chief Financial Officer, Brightstar Lottery: During today’s call, we will be making some forward-looking statements within the meaning.

Vince Sadusky, Chief Executive Officer, Brightstar Lottery: Of the federal securities laws.

Max Chiara, Chief Financial Officer, Brightstar Lottery: Forward-looking statements are not guarantees.

Vince Sadusky, Chief Executive Officer, Brightstar Lottery: Our actual results may differ materially.

Max Chiara, Chief Financial Officer, Brightstar Lottery: Those expressed or implied in the forward-looking statements. The principal risks and uncertainties that could.

Vince Sadusky, Chief Executive Officer, Brightstar Lottery: Cause our results to differ materially from.

Max Chiara, Chief Financial Officer, Brightstar Lottery: Our current expectations are detailed in our latest earnings release and in our SEC filings. During this call, we will discuss certain.

Vince Sadusky, Chief Executive Officer, Brightstar Lottery: Non-GAAP financial measures.

Max Chiara, Chief Financial Officer, Brightstar Lottery: You’ll find additional disclosures regarding these non.

Vince Sadusky, Chief Executive Officer, Brightstar Lottery: GAAP measures, including reconciliations with comparable GAAP.

Max Chiara, Chief Financial Officer, Brightstar Lottery: Measures and in our press release, slides accompanying this webcast, and our filings with the SEC, each of which is posted on our investor relations website.

Vince Sadusky, Chief Executive Officer, Brightstar Lottery: I’ll turn the call over to Vince. Thank you, Jim, and good morning to all. We are excited to welcome you to our first earnings call. As Brightstar Lottery as a pure play business, we’ve got a clear mission of elevating lotteries and inspiring players to bring meaningful benefits to all stakeholders. Our name has changed, but our global industry leadership remains, and there are a few characteristics worth highlighting. We are the world’s largest lottery operator, running day-to-day operations in nine jurisdictions. We are also the primary technology provider to many of the world’s largest lotteries, and we are the number one provider of iLottery platforms globally. These leadership positions are built on a nearly 50-year history of innovation, reliability, and an incredibly strong team with deep expertise in customer relations.

This is the foundation from which we’ve been able to deliver steady growth and strong cash flows, and we firmly believe our future is even brighter. Several important milestones have been achieved over the last few months. We closed the gaming and digital sale for net cash proceeds of approximately $4 billion, which was better than expected. We secured the Italy Lotto license, our most important operator contract, through November 2034, and we’ve developed a compelling digital strategy to grow that business. A capital allocation plan is in place to drive future growth while increasing returns for shareholders. With respect to the second quarter, results were in line with our expectations. Same-store sales trends improved around the world with close to 3% growth in core instant ticket and draw games, and more than 30% increase in global iLottery wagers.

Across the board, players are responding to innovative new games, especially those at higher price points. Italy’s same-store sales performance was impressive, rising nearly 4%. Scratch and win wagers were up on a successful relaunch of the Milliadario franchise across multiple price points, and a new summer bundle of tickets for Lotto Multi bet payslips are driving Tenny Lotto growth, while the Numero option is driving higher Giocca Delato sales. Italy iLottery wagers increased over 20% in the quarter on the success of new Joco Pu games as well as digital replicas of the most popular physical retail games. Our increased focus on driving digital adoption in Italy is working nicely. Year to year wagers on our B2C sites are growing at about twice the overall market rate, and we have gained about 2.5 points of market share since launching the MyLotteries Play app earlier this year.

In the U.S., same-store sales for instant and draw games returned to growth, up close to 1% in the quarter. California and Florida instant ticket sales achieved strong increases fueled by new games at $40 and $50 price points, and trends in Michigan improved with the launch of a new $50 ticket. Our proprietary Cash Pop game, which is currently in 16 jurisdictions, drove draw game sales growth in Florida, Georgia, and North Carolina. U.S. high lottery wagers were up over 30% in the period, fueled by Georgia and Kentucky and the contribution from new einstant games we recently launched in Michigan. Multi-state jackpot activity remained low with the absence of any large jackpots in the period compared to the $1.3 billion jackpot in Q2 of last year.

Rest of world same-store sales were up more than 8%, driven by EuroMillions jackpot performance, which had four draws at the €250 million cap. In addition to double-digit high lottery and growth in Poland, and in Belgium product sales were up about 60%, and our new state-of-the-art printing presses is running 24/7, helping us to deliver on increased production volumes. In Texas, France, and Portugal, we’re seeing increased demand for our proprietary Gleam and null tickets. In a short time, null has developed a library of over 60 games available across 20 jurisdictions. We’ve had some noteworthy contract wins and extensions over the last few months. First and foremost is Italy Lotto, which we secured through November 2034. In Missouri, a Brightstar Lottery customer for over 30 years, we entered into a new eight-year contract to deploy our fully integrated OMNIA solution.

OMNIA seamlessly connects retail and digital lottery channels to maximize operational flexibility. It also offers lotteries new ways of engaging players. We also secured several multi-year instant ticket printing contract extensions that we expect will maintain the strong momentum and opportunity we have in that business. The company has consistently returned capital to shareholders over the last decade through quarterly cash distributions. However, most of our capital during that period was allocated to investing in the business and reducing leverage. Today, with leverage in our target range, we are allocating more capital to enhance shareholder returns. In conjunction with the closing of the gaming and digital sale, we announced that $1.1 billion net cash proceeds would be returned to shareholders. First, via special dividend of $3 per share that provides an immediate benefit.

Second, a $500 million share repurchase authorization that represents a significant portion of our current market cap and provides an opportunity for ongoing capital return and support for the stock. Today we announced plans to launch a $250 million accelerated share repurchase program with a counterparty bank under the new authorization. This represents the largest buyback activity in the company’s history. D’Agostini, our largest shareholder, will not be participating in the program, so the shares will come out of the public float. We also intend to maintain the current level of about $160 million in annual regular cash dividends even with a reduced share count. The return to a singular focus on lottery marks an exciting new era for the company. Brightstar Lottery enjoys global leadership in a growing industry.

Our business model is supported by mostly exclusive contractual and recurring revenue streams that deliver steady growth and have proved to be very resilient in the face of macroeconomic and geopolitical challenges. For context, our average customer relationship is about 30 years and the average revenue weighted contract life remaining for our portfolio is 7 years. This provides us with significant stability and visibility for our revenue, profit, and cash flow. We believe broader iLottery adoption, especially in the U.S. and Italy, will be a meaningful tailwind that enhances our future growth algorithm. We have a clear right to win in iLottery. Over the years, the Brightstar Lottery team and Board of Directors have consistently worked to unlock the intrinsic value of our assets.

That is especially evident in the work done over the last two years to refocus the business on lottery, significantly improve the balance sheet, and return capital to shareholders. We believe Brightstar Lottery’s current valuation provides a compelling entry point as we execute on our long-term objectives. We believe the future is Brightstar. Now I’ll turn the call over to Max.

Max Chiara, Chief Financial Officer, Brightstar Lottery: Thank you, Vince, and hello to everyone joining us today. Brightstar Lottery generated second quarter revenue of $631 million and adjusted EBITDA of $274 million, propelled by 2.6% global same-store sales growth in instant ticket and draw games and a double-digit increase in product sales revenue. As expected, the year-over-year headwind caused by a lack of large U.S. multi-state jackpots and the associated LMA benefit continued in the second quarter but was mostly offset by underlying revenue growth in the other part of the business. Year-over-year comparisons and profits are also impacted given the high profit flow-through of jackpot and LMA activity. Second quarter revenue of $631 million was up 3% from $613 million in the prior year and was stable at constant currency.

Improved trends in same-store sales across all geographies and higher product sales related to both terminal sales and instant ticket services drove a $25 million increase in revenue, nearly offsetting the $27 million impact from elevated levels of jackpot activity and associated LMA incentives in the prior year period. For the second quarter in a row, there were no billion-dollar level jackpots in the second quarter compared to a $1.3 billion Powerball jackpot in the prior year period. Elevated levels of jackpot and LMA incentive revenue are highly dependent on the timing of very large multi-state jackpots, which occur sporadically, causing period-to-period variability. We delivered adjusted EBITDA of $274 million in the second quarter, down 5% as reported and 9% at constant currency when compared to $290 million in the prior year.

If you exclude the impact of multi-state jackpot and related LMA incentives, which are outside of our control, adjusted EBITDA was in line with the prior year despite incremental investments we are making in growth areas of the business. This reflects some of the benefits we are realizing from the Optima 3.0 cost savings program and highlights the resilient nature of this business year to date. Cash generation continues to be strong, delivering cash from operations of $433 million and free cash flow of $259 million. Cash from operations in the first half was about $100 million better than expected, mostly from timing of working capital items, although some of the upside will be maintained for the year. As Vince mentioned, we allocated $2 billion of the gaming and digital sales proceeds to debt reduction, which was completed earlier this month.

This included the full redemption of the 4.125% senior secured U.S. dollar notes due April 2026 and the 3.5% senior secured euro notes due June 2026, and prepayments of €300 million term loan facilities due January 2027 and revolving credit facilities due July 2027. In addition, we drew the second €500 million tranche of the new €1 billion term loan which was predicated on us winning the Italy Lotto Award. Net debt increased $463 million from the end of the year to $5.2 billion, which is primarily driven by the impact of foreign currency translation. Net debt leverage pro forma for the $2 billion debt reduction completed in July was 3.0x in line with our target and includes about a third of a turn negative impact from currency translation for the first six months of the year.

Our current balance sheet includes significant liquidity of $2.9 billion, putting us in a solid position in advance of the upcoming payment for the Italy Lotto license fee. As a reminder, this fee is payable in three installments with €500 million already paid in July, €300 million due when the new license term commences towards the end of this year, and the balance of €1.43 billion due by April 30, 2026. Brightstar Lottery is responsible for 61.5% of the total, so €1.37 billion or approximately $1.6 billion at current rate, and our consortium partners will fund the balance. With the mandatory debt repayment behind us, our debt maturity profile is attractive with no meaningful maturities until 2027.

We continue to execute on Optima 3.0, our structural cost reduction program initially designed to proactively address the stranded cost associated with the sale of gaming and digital, and have recently expanded the target to $50 million in annualized savings by the end of 2026 with about 60% expected to be realized this year. We are proceeding expeditiously and now expect an acceleration on some structural cost roll off post completion of the sale. We are also working diligently to explore opportunities to further expand this program in the future with new initiatives focused on improving our operational efficiency. The bulk of the current program savings are focused on back office optimization and do not impact customer facing activities or jeopardize our growth initiatives in any way. In conjunction with this expansion, we incurred a $21 million pre-tax restructuring charge in the second quarter.

Increasing shareholder value is a key area of focus, and we have recently announced several ways in which we are delivering enhanced shareholder returns. First is a two-year, $500 million share repurchase authorization representing about 17% of the current market cap of the company. As part of that authorization, we are planning to launch a $250 million accelerated share repurchase program, the largest in company history. Next is the declaration of a $3 per share special cash dividend that is payable today for U.S. shareholders. We anticipate that this special dividend, along with a quarterly dividend paid in June of this year and any remaining quarterly dividends that might be paid during the remainder of this year, will be treated as return of capital for U.S. Federal income tax purposes.

I refer you to the Form 6-K filing filed with the SEC today and the Dividend History section of our Investor Relations website for further information. Finally, we intend to maintain approximately $160 million in annual regular cash dividends going forward, even with the reduced share count post execution of the buyback program, effectively increasing the per share dividend on an annualized basis. At the current share price, our regular dividend represents a compelling yield of around 6%. Now I would like to turn to the outlook for full year 2025. We are reaffirming our adjusted EBITDA outlook of $1.1 billion while improving our cash flow expectations. Due to a timing shift in product sales and one month of the increased amortization related to the Italy Lotto upfront license fee, we are adjusting full year revenue down $50 million to $2.5 billion.

As a reminder, upfront license fee amortization is treated as contra revenue, and the starting date of the new concession will be December 1, 2025. With respect to adjusted EBITDA, the benefit from a more favorable Eurodollar exchange rate assumption to align with more current levels in the back half of the year is offset by higher than expected negative impacts from the muted U.S. multi-state jackpot activity and LMA dynamics described during this call. We expect higher revenue and adjusted EBITDA in the second half of the year versus the first half, reflecting improved multi-state jackpot and LMA comparisons as well as incremental Optima 3.0 cost savings in 3Q25. Revenue and adjusted EBITDA are expected to be up mid-single digits from prior year levels on same-store sales growth and higher product sales. Our full year cash flow outlook has improved nicely.

Cash from operations inclusive of the first two tranches of the Lotto upfront fee totaling €800 million is now expected to be a lower use of cash of about €275 million. This is €75 million better than our prior expectation, based on various improvements across the board in interest, income taxes, and other working capital items. CapEx has revised lower by €75 million to around €375 million, reflecting timing shifts related to recent contract extensions. Overall, this translates to about a €150 million improvement in the outlook for free cash flows. To round out the outlook conversation following recent contract renewal developments, we currently expect annual CapEx of about €375 million from full year 2025 through full year 2028, with a reduction to €200 to €225 million for several years thereafter once we complete our current CapEx cycle.

Related to the renewals and extensions of most of our largest SM and operator contracts, I would like to remind you that our full year 2025 adjusted EBITDA outlook of €1.1 billion includes several items that specifically reduce profit in 2025, such as the severity of the jackpot and LMA headwind for a total amount north of €70 million and specific investments in the business which are considered temporary in nature for a total amount expected for the full year of about €25 million. This, coupled with the benefits expected to be realized from Optima 3.0, gives us confidence that we can return to adjusted EBITDA levels closer to €1.2 billion in the future.

Likewise, cash from operations averaged around €780 million over the last three years, and we believe we should be able to return to that level going forward if we exclude the Italy Lotto upfront license fee once we exit from this one-off period. One thing to note, given the streamlined two-play lottery business expected going forward, we have initiated an extensive review of our financial disclosures to align to our post-gaming industry group with Q3 earnings. We expect to provide a status update and any changes to our GAAP, non-GAAP KPIs, and other disclosures to achieve this enhanced alignment and to early adopt some recent new disclosure requirements published by the SEC.

Brightstar Lottery is well positioned for the future as a pure play lottery business supported by our global leadership position, a growing resilient business with strong profit and cash flow profiles, a continued focus on structural cost reduction, and a balanced capital allocation strategy that includes enhanced shareholder returns. That concludes our prepared remarks. Operator, would you please open the line for questions?

Sarah, Conference Call Operator: Thank you. If you would like to ask a question, please press Star one on your telephone keypad. If you would like to withdraw your question, simply press Star one again. Please ensure that your phone is not on mute when called upon. Thank you. Your first question comes from Jeff Santill with Stifel. Your line is open.

Vince Sadusky, Chief Executive Officer, Brightstar Lottery: Hey, good morning, Vince. Max, thanks for taking our questions and congratulations again on closing the gaming and digital transaction. Maybe just starting off here on capital allocation and the buyback authorization. Max or Vince, can you just walk us through the intuition on looking to the accelerated share repurchase program structure versus more open market type purchases, and then maybe how you decided on the $250 million amount for the accelerated share repurchase program, and then for that remaining $250 million, should we expect the spend to be more opportunistic, more programmatic? Just to be clear, do we know yet or do you know yet if the De Agostini will be opting out of this half of the $500 million as well? Thanks.

Max Chiara, Chief Financial Officer, Brightstar Lottery: Yes, Jeff, good question. First of all, the total authorization that we have obtained by the Board of Directors in connection with the proceed of $500 million is a large program with regard to our capitalization and represents about 17% of the market cap of the company today. We think that sizing the program with a first tranche of 50% of its value is definitely an important decision and an important step towards showing the full commitment of the company to execute that plan. We think the benefit of the accelerated share repurchase program is obviously the immediacy of the ability to reduce the share count once the program is launched and also the fact that it represents a constant support of purchase of shares during a relative period of time that would help the company navigate through this interim period.

We believe that this program, this instrument, represents a better tool for our particular situation to help deliver the shareholder returns that we have committed for in terms of the next phase. We would like to see how this first phase gets completed. Obviously, the decision of De Agostini of not tendering shares into this first tranche makes the case for the entire program insisting on the float, which is an important feature of this program as well. It is not appropriate for us to speculate on the De Agostini intentions with the development of future tranches of the total program. We have not decided yet, speaking about that, what are the most appropriate instruments going forward. We would like to be able to launch this program, see the program in execution, see the outcome, and then decide what to do next once we get to that point.

Vince Sadusky, Chief Executive Officer, Brightstar Lottery: Thank you for. Sorry, I’ll just add to that and thanks for the compliment. A long two year process to get that strategic realignment done and raise the proceeds and now have the great opportunity to be able to have been competitive for Lotto and then also have the excess proceeds available to think about how to drive value for the company. I would just say from a big picture perspective, we all believe firmly, the management team, our Board of Directors, that the company’s intrinsic value is significantly greater than where it’s currently trading at. I mean, a lot of companies say that, but when you look at free cash flow per share, when you look at all the different metrics and valuations that we’ve looked at, we’ve decided that’s apparent. We’re excited to invest back in buying back our shares.

As you saw from the press release and heard on our comments, d’Agostini, our largest shareholder, will not participate in the buyback. Triangulating to what is the right amount and what is the right structure, the amount of $250 million is significant relative to the public float, and it will take some time to execute that. As Max said, we will then evaluate based upon the impact of that where we stand and what the next step might be. I think that this is significant from the perspective that the company historically has chosen to return capital to shareholders through dividends. We’re going to maintain that dividend policy. In fact, our intention is to maintain the dividends at the current level despite the reduced share count.

We think that this ASR as a vehicle is efficient, gives us the opportunity to buy shares back at a good value, and I think equally as important, it shows real commitment. This is the largest program the company’s ever done and it’s not really engaged in buybacks. It did a bit of that a few years back, but not consistently. I think this just really demonstrates the commitment entering into the contract and our strong view around about value opportunity for existing shareholders. That’s great, thank you both for all that color.

Maybe turning over to guidance, Matt, can you just talk about or maybe remind us what’s embedded in the back half guidance in terms of same-store sales, maybe focusing on Italy and then non-jackpots for North America, and then if you can, can you compare that to exit rate growth rates coming out of Q2 and if it is materially different, sort of like what are the puts and takes, the levers to drive towards that back half guidance. Thanks.

Max Chiara, Chief Financial Officer, Brightstar Lottery: I’ll kick off on this. Vince, again, so again going through the four major items. LMA jackpot, Italy and U.S. The LMA starts a new fiscal year with our Q3. There is not a progressed history that would influence any deviation from the norm being the norm. Kind of an expectation of no incentive, no shortfall. We don’t expect Q3 to be a surprise at this point. Obviously with Q4 we have to see what happens during Q3 in terms of jackpot performance. For now we expect a muted second half of the year in terms of LMA. When you compare H1 to H2, we should hopefully get a benefit out of it. Jackpot again, the jackpot has been extremely impacted in the last nine months. Since the $1.3 billion early April of 2024, there has only been $1 billion Mega Millions jackpot at the end of December.

Obviously we have suffered for the entire period. We expect some sort of return to normalization in the second half, but we don’t see an excitement around the casual play yet. Still modest improvement in the jackpot, although definitely better than in the last nine months. In terms of Italy, Italy has experienced the best quarter over the last six quarters in Q2 and even Q1 was phenomenal when you normalize it for the selling days and everything else. Italy is expected to continue well in Q3 and Q4, but probably at a slightly more modest growth than what we have experienced in Q1 normalized for this adjustment. Last but not least, in the U.S. retail market we see a steady state improvement step by step. We see months in, month out, more states, more jurisdictions turning the corner, moving into a positive trend.

We have seen California, Florida doing very well in Q2 and we expect more of those to improve also in the back half of the year. Finally, iLottery, we expect iLottery to continue this phenomenal trend. Really for us, the turning page has been the full introduction of the cloud, the transition to cloud, which has allowed us to scale up the operations quickly and follow the market when the market goes up, like we have seen in Kentucky for example in this last three months. Vince, anything to add?

Vince Sadusky, Chief Executive Officer, Brightstar Lottery: Yeah, I would just add to that. I think Max summed up the revenue drivers and the profitability drivers well and the expectation for the back half of the year. I would say when we look at pacings for the first three weeks of the year, worldwide sales are up about 2% or so. It was great in the second quarter to see a return to growth. The takeaway for me really is it’s just great to have multiple revenue streams. We’re geographically diverse and becoming more and more product diverse in that we’re having more significant revenue streams coming in from iLottery and for printing as well. I think it’s just great to have this diversity.

The way I look at it is if it had not been for another quarter of bad luck with North America multi-state jackpots, the top line growth would have been very good for the quarter. That’s our view. We definitely see the core trends have improved in the second quarter and continue that trend through the third quarter. Hopefully we get a little bit of luck on multi-state jackpots in the U.S. and just to put things in perspective, I think it was about a year and a half, about six quarters or so where there was a billion dollar jackpot or a build towards a billion dollar jackpot. We haven’t seen that in Powerball since 2Q24. I think Mega Millions has only seen one. We really think the move to the $5 Mega Millions can have a significant impact on the build.

Unfortunately, Mega Millions has been hit multiple times and has not enjoyed a good run since the $5 price change. Over time we have the expectation that those jackpots will build and we have a chance to see, I think, a good positive impact from that change as well.

Max Chiara, Chief Financial Officer, Brightstar Lottery: That’s great. Thank you both.

Sarah, Conference Call Operator: The next question comes from Barry Jonas with Truist. Your line is open.

Vince Sadusky, Chief Executive Officer, Brightstar Lottery: Hey guys. Good morning. Maybe as a follow up, you know, you’ve given some helpful color on current trends, but last quarter you did highlight a high degree of macro uncertainty. Have you seen any improvements since? I’ll start. Go ahead, go ahead Max.

Max Chiara, Chief Financial Officer, Brightstar Lottery: The macro uncertainty that we mentioned a quarter ago was really more of a warning in terms of really not knowing the direction of discretionary consumption going forward in light of the uncertainty created during the spring for tariffs, events, and other situations. I think we continue to see a cautiousness around particularly lower courts, but we have not seen the deterioration that could have been possible. The market is holding up pretty well for us. The deciding factor is the ability to provide incremental innovation with new games, new game features, and new ways to access games that stimulate demand with existing players and new players. The company has the ability to offset potential weakness in the market by fostering incremental innovation.

We remain cautious, but we are optimistic that the second part of the year will look better and will show a better trend than the first part of the year.

Vince Sadusky, Chief Executive Officer, Brightstar Lottery: Great. I would agree with Max, I would say really, that comment was, as Max said, just based upon everything that was going on with tariffs and the very potential negative scenario in the States and in Europe in particular, where our business is primarily driven of what might happen now that we’re not of course wrapped up, but much more settled on the tariff front and the negative economic fallout seems to be negligible and hopefully that continues. It doesn’t seem like that’s certainly not nearly as significant a concern as we had in the second quarter. Again, just to step back and keep in perspective, the lottery business is one that has historically been anti cyclical and in some cases when the economy’s been tough, folks play lotteries more often.

I think it really is up to us and the team to continue to bring great products to the marketplace. I would definitely say that that comment is significantly reduced where we sit today than where we sat 90 days ago. That’s extremely helpful. Just for my follow up, recognizing your average contract life, I think it’s about seven years wanting just to follow up there, as you think about the next round of contract bids, whether that’s a renewal or maybe a competitive bid character as the competitive environment and maybe walk through the balance between incumbency technology and then pricing to really be successful.

Max Chiara, Chief Financial Officer, Brightstar Lottery: Thank you.

Vince Sadusky, Chief Executive Officer, Brightstar Lottery: Yeah, sure. You know, when we look at all the activities, an incredible, probably an unprecedented amount of activity in renewal just all happening to come together really over the last year or year and a half, and by and large those have kind of gone the way that we expected. I think what’s really reassuring for our company and our solutions is in markets like, let’s say, Missouri, where there was an expanded contract renewal encompassing pretty much everything in lottery over the next several years, and their desire to have us implement OMNIA, which really covers everything from retail to iLottery to connected play to player management, data insights, et cetera. That significant technical win that the company achieved to Lotto, which, you know, there was obviously a very competitive process in price but also with a capital capable competitor in CISO Flutter to win that technology score.

We look at markets like Ohio and New Mexico that came available, and Brightstar did not win those opportunities based on value and were very disciplined on price, but we did win on technology. I think the technology investments that we continue to make, and again, a lot of this business is credibility, and iLottery, which is a huge, huge focus, will continue to be for lotteries. We continue to power, by our calculations, more lotteries platform-wise than any other operator in the world. We think these things are critical, and that’s the core business, and we’ve got to continue to win and innovate and be the best in that regard. The pricing for these contracts is, each individual one is in my view completely unique in terms of the dynamics and competitiveness and the competitive desires and all of those things.

We have to continue to win technically, we have to be the best, and also certainly compete in all the other attributes of these RFPs. I would say things are settling down now. There’s not that many that are up in the cycle as we work through this recent, very, very active period. Perfect.

Max Chiara, Chief Financial Officer, Brightstar Lottery: Thank you so much.

Sarah, Conference Call Operator: The next question comes from Chad Banan with Macquarie. Your line is open.

Vince Sadusky, Chief Executive Officer, Brightstar Lottery: Good morning. Thanks for taking my question, Vince. Max, I wanted to start with the double digit increase in instant ticket printing for the quarter. This has obviously been a focus to win more primary or secondary opportunities, but I was wondering if you could just kind of dive into again, kind of, Vince, on the back of your recent comment, with upcoming renewals or opportunities, if there’s anything on the instant ticket printing side and then maybe if you could just talk about how the efficiencies maybe helped in the quarter for margins broadly and how that could help going forward with Optima. Thank you. Yeah, sure. I’ll start off with an overview and then let Max talk more specifically to Optima and the efficiencies that we’ve been working on for our new size standalone lottery entity.

As you know, instant ticket has been an area that we think is considerable opportunity and it’s been an area of focus for us for the last couple of years. We’ve been the market leader in central systems, but certainly not in printing. One of the things we did was invested significantly in hardware and software and also we’ve expanded our print library and our logistical capabilities and we’ve learned from the markets where we perform those operations. We’ve come up with, as I mentioned, null instant, which is a great technology. We’ve rolled out a bunch of those games in a market that we control in a very mature market in Italy with very good success. We’ve also come up with innovation with this Gleam technology that’s got these holographic looks on tickets. The goal is to constantly offer something beyond a commodity product.

You have to obviously have the capabilities, but then I think through a deep library of content as well as some interesting production methodology, offer something else. The new press that we put in is now operational and just by virtue of it being one of the most recent ones to be installed is state of the art. As our learning curve progresses, not only is the capacity there, but our ability to continue to drive efficiencies over time is there, I think in 2025. Max can check this, I think our production is up somewhere around 20% or so. We think that trend will continue as we’ve won some new business, some significant printing contracts over the last year or so with Portugal, a new contract with FDJ Spain, et cetera. I think that is an area that is something that can contribute especially as the volume increases. Right.

Like any manufacturing facility, the greater the volume running, two shifts a day, 12 hours a day, eight to 12 hours a day, is really key to driving profitability as well as certainly best practices minimizing waste and maximizing the distribution opportunity. Those contracts have a tendency to come up more frequently than the FM contracts. It’s not nearly as difficult to change or add a printer, a printing company as it is to change FM or Central System. We believe that is one of the reasons for the investment and why we think the opportunity is greater. Also, we’ve seen a trend over the last decade or so where more and more lotteries are okay with and have gone to multiple print vendors. Unlike Central System, it’s not an all or nothing RFP and value proposition. Max, I’ll let you talk about the OMNIA. Yes.

Max Chiara, Chief Financial Officer, Brightstar Lottery: Just to confirm what Vince just said, in 2024 we produced $8.5 billion of standard unit in the instant ticket facility in Lakeland, Florida. We are running 25% above that right now. We have expanded the capacity by 50%, adding in a full new press. We invested about $30 million in the last two years to do that. We have created the conditions to expand capacity beyond the current portfolio and we are obviously going after the new contract as the bid environment permits. Switching to the question related to the margin progression in the second half of the year, EBITDA margin has clocked around 43% in the first half. We believe we are meant to go up in the second half, maybe a point, maybe two. That is primarily going to be driven by the efficiency generated by Optima.

From a pure marginality standpoint, we have some puts and takes in the top line and in the gross profit, but the bottom line is that we should be able to drive those savings home and hence improve our marginality in the second half of the year. Speaking about that, we are looking very closely at the new SEC recently deliberated principles ASU 2024-03, which is called Income Statement Expense Disaggregation Disclosures 2027 as date of inception but with the possibility for an early adoption.

Since we are in the transition to this new company pure play lottery setup, we think that there is an opportunity for us to take advantage of this new requirement to kind of adopt early, adopt potentially some of the features or all of the features of this new disclosures requirements and improve the transparency on our reporting and our KPIs as well as improve the ability for investors and the sell side to really compare side by side with our industry group in a more linear fashion. We think that this is an opportunity that we want to look hard into and we’ll come back with our Q3 earnings with more clear fact. Thank you.

Vince Sadusky, Chief Executive Officer, Brightstar Lottery: Thanks, Max. Appreciate it. Thanks, Vince. Secondly, I just wanted to ask about the Greek state lottery opportunity. I know there’s a hundred plus page document out there that’s been translated from Greek to English, but just in terms of maybe the timing of this or, more importantly, historically, I guess the financial arrangement, if it’s a similar type of contract or economics where there would be an upfront fee similar to the way that Lotto is designed, or if you’re able to win or participate in that opportunity, if that’s more the traditional % of sales and no upfront fee from a CapEx standpoint, just any color on that would be helpful. Thank you. Yeah, I would just say on Greece it’s early days right now. The RFI was issued, so it’s a request for information.

As you know, the incumbent and ourselves, we did a lot of work on it and submitted, but it’ll run a process and they’ll make a determination as to what the RFP will ultimately look like. That contract, I think, expires in 2027, so it’ll be a process. First step for some of these lotteries is an RFI, gather information. Their commission will then utilize that information to make a determination as to what form of contract that they and what form of RFP that they want to put together. We’re in the game on that one, but it’s early days. Great.

Max Chiara, Chief Financial Officer, Brightstar Lottery: Thanks, Vince.

Vince Sadusky, Chief Executive Officer, Brightstar Lottery: Appreciate it.

Sarah, Conference Call Operator: The next question comes from David Katz of Jefferies. Your line is open.

Vince Sadusky, Chief Executive Officer, Brightstar Lottery: Morning, everybody. Thanks for taking my question. Congrats on all the activity. No small amount of work. When I look at the business today, and I think you pointed this out in your deck that by virtue of the repurchase, you’re getting a little bit of dividend growth. I do wonder if that becomes just a part of the thought process going forward and whether dividend growth via one way or the other is something that will become more a part of the story going forward. Yeah, I think, as we—thanks for the comment, David. Appreciate it. Really, when I think about trying to make Brightstar Lottery as attractive an investment vehicle as possible, to me, it’s pretty straightforward. The company’s done a lot of work to get its balance sheet in a great place.

We have, I think, a really solid, proven business that’s been really resilient through the explosion of digital gaming opportunities around the world and in particular in North America, through the innovation I think, and the joy that people get out of these lotteries. It’s our job to work with these lotteries and certainly the ones that we directly control to continue that innovation and interest for people. You get a little bit of love to the positive and negative with the big jackpots. That’s just part of the business. You have growth upside from the increasing digitization of the business that’s more mature in certain markets. When you think about Brightstar’s footprint, our most significant footprint, of course, is North America and Italy, where it’s not all that mature, and there’s, we believe, significant upside opportunity.

You have a nice growth aspect associated with a very consistent and solid countercyclical business. To do what we can do to enhance the profile for all of us collective shareholders, capital returns is certainly part of that value proposition that we’ve spent quite a bit of time thinking about. Initially the comment has been we intend to maintain the absolute value of our dividend each quarter despite the fact that shares are going down. Yes, you picked up on that. Great. The thinking on a go forward basis, we can’t comment on it, but we will constantly be evaluating what our yield is in order to remain competitive. That’s something that we think is an important part of our value proposition to investors. Just to follow that up quickly, please finish.

Max Chiara, Chief Financial Officer, Brightstar Lottery: Sorry, this is Matt speaking. I just wanted to substantiate one more item on what Vince just said. Obviously, having disposed of the more volatile of our businesses allows us to also come into our forecast process more comfortably vis a vis not only our profit but also our cash. That gives us confidence that we can kind of project and maintain going forward a posture vis a vis different usage of cash inclusive of the dividend. Again, it’s a technical step initially as a result of the accelerated share repurchase program execution, but again, going forward, obviously our ability to better project cash is a point of strength in terms of determining the dividend.

Vince Sadusky, Chief Executive Officer, Brightstar Lottery: Understood. My very quick follow up was really just going to be whether you’ll start thinking and talking about a dividend payout ratio at some point in the future.

Max Chiara, Chief Financial Officer, Brightstar Lottery: It’s a good question. There are companies that have stated payout ratios on earnings, adjusted earnings, cash flow, adjusted cash flow. This is definitely something that we may want to look at in the future in terms of our new equity story. Again, it’s important to keep in mind the specific technicalities of our industry and in particular of some of our contracts that require large amortization of upfront fee to be deducted from revenue and have a straight flow through to profit, which obviously have an impact to the bottom line. We have to assess the situation and see what is the best indicators to improve the predictability of cash allocation to shareholders.

Vince Sadusky, Chief Executive Officer, Brightstar Lottery: Okay, thank you very much.

Sarah, Conference Call Operator: The next question comes from Domenico Delore with Ecuada. Your line is open.

Max Chiara, Chief Financial Officer, Brightstar Lottery: Good morning. Three questions. First on the accelerated share repurchase program instrument because I’m less familiar, just to be sure. There is a specific time frame to execute the buyback. It’s something that we will know in advance. If you can just clarify on that. Second, on the MyLotteries Play app business evolution in Italy, you were providing some comments during the call. If you can add some color on your strategy and maybe some KPIs. Third, if you can remind us the sensitivity to the Eurodollar with a new perimeter in terms of sales, adjusted EBITDA and net financial position. I can take the.

Vince Sadusky, Chief Executive Officer, Brightstar Lottery: Yeah, go ahead, Max. If you want to take number one and three, I’ll take. Right.

Max Chiara, Chief Financial Officer, Brightstar Lottery: On the ASR timing, obviously it’s all predicated upon the volume trading, daily volume trading. I would say that in general our expectation is that the company will be in the market with this program up to the end of the year probably. That’s kind of roundabout where we expect the program to last. In terms of sensitivity on the euro dollar, obviously with the mandatory repayment we have taken out a big chunk of Euro debt at the holding company which is functional currency dollar. Hopefully we have turned the corner on that FX volatility and now the impact of $0.01 on net debt is down to $15 million. That’s the majority of the impact that you will see reflected in our financials going forward. Vince?

Vince Sadusky, Chief Executive Officer, Brightstar Lottery: Yeah, and I would just say on the iLottery side in Italy, when we described and discussed our Lotto win, we also outlined our digital plan for Italy. The attributes real quick are, we’ve had greater than a 20% CAGR over the last five years in iLottery growth in Italy. The first half of 2025 that continued, I think we were up over 20% or so. Having said that, the iLottery penetration in Italy is low. It’s in the kind of the low to mid single digits. Our focus area has certainly been on the opportunity to grow that. One of the steps that we’ve done is the team developed an outstanding MyLotteries Play app which has gained a significant amount of market share already.

I think we gained over 2 points of market share just in the first half of 2025, both on the draw games side as well as on the einstant games side. This is a real focus of ours going forward and now that we’ve secured Lotto, so we’ve got both contracts for many years, we will deploy all the very good and smart operator retail digital business execution around driving that, whether it’s combined jackpots or the utilization of in-store promotions to help to drive the level of digital play. We believe that given our deep experience on both retail and iLottery and the proven fact that the most successful digital operators, whether it’s in iLottery or if it’s in igaming or sports betting, have a combination of retail and digital presence.

We’ll continue to build off of the MyLotteries app and our goal is later this year to come out with a product that includes igaming and sports betting and allows players, of which there are quite a few that engage in both lottery activities as well as igaming and sports betting, to give them the opportunity to do all of that from our app. The goal is to expand the player base and engage with players beyond the retail destination, coupled with having several opportunities available, really a one stop shop with our best in class iLottery games coupled with the opportunity to engage in bingo and igaming and sports betting.

Max Chiara, Chief Financial Officer, Brightstar Lottery: Thank you.

Sarah, Conference Call Operator: Your final question comes from Joe Stoff of Susquehanna. Your line is open.

Max Chiara, Chief Financial Officer, Brightstar Lottery: Good morning, Vince. Max, on you know both Texas and.

Vince Sadusky, Chief Executive Officer, Brightstar Lottery: New York, those contracts, certainly the process, the tender process seems to have been delayed somewhat. The expiration of those are in August of 2026. Do they give you an official notice that it would be extended by an explicit time? What is that?

Max Chiara, Chief Financial Officer, Brightstar Lottery: The second question is, you.

Vince Sadusky, Chief Executive Officer, Brightstar Lottery: Maybe the observations you have for.

Max Chiara, Chief Financial Officer, Brightstar Lottery: The new pricing on Mega Millions in April and what you saw in the.

Vince Sadusky, Chief Executive Officer, Brightstar Lottery: Second quarter and thus far in the third, is the volume demand there relative to what you expected?

Max Chiara, Chief Financial Officer, Brightstar Lottery: I guess the simple say.

Vince Sadusky, Chief Executive Officer, Brightstar Lottery: Observation is that it kind of launched probably not in the most ideal timing.

Max Chiara, Chief Financial Officer, Brightstar Lottery: Of April when the market was getting.

Vince Sadusky, Chief Executive Officer, Brightstar Lottery: Smoked and just wondering if more customers.

Max Chiara, Chief Financial Officer, Brightstar Lottery: Gravitated to the $2 Powerball at the expense of Mega.

Vince Sadusky, Chief Executive Officer, Brightstar Lottery: Yeah, so a couple of. It’s a really good question. We’ve been looking over data for the $5 Mega Millions launch and what we’ve gleaned is the absolute sales levels at comparable jackpot levels. The $5 game compared to the $2 game, looking at any given week with similar jackpot levels, is higher under the five dollar ticket price. The way the math works is the number of ticket sales is down for sure, but of course the average ticket purchase and number of tickets purchased, that absolute transaction dollar value is up. We certainly hope and expect that it will be up much more than it’s currently been up. As you point out, I think it was a tough moment in time. More importantly than that, as we said earlier, we feel like the correlation between macro and lottery ticket sales is certainly not perfectly correlated.

In fact, lottery ticket sales oftentimes do well in a tough macro. It’s more the jackpot experience. Players need to, I think, play, have enough experience with the $5 price point to recognize that there’s value associated with that through a higher starting point for the jackpots, but more importantly a faster build of the jackpots week to week. Unfortunately, we just had some really bad luck that Mega Millions has been hit over and over again since the increase to $5. We’ve not been able to demonstrate that experience to consumers. It’s going to take some time. Hopefully we have a good run or two and we really get people to enjoy the incremental benefit and understand what we think is a better payout structure. With regard to Texas and New York, you pointed out, right, Joe, New York expires in August of 2026.

We don’t have anything specific contract wise. However, we do expect that an RFP will come out at some point and because the date is now a year away for the expiration, that will include some form of extension because we do not believe it would be possible to implement a new system in this tight time frame. Finally, Texas was disappointing. We felt as if we had the best proposal, et cetera. All the noise surrounding the couriers really kind of threw that off. The consolidation of the lottery government agency and all those things took place. The lottery’s been extended out through 2029 and International Game Technology has been granted an extension for another few years until, I think, 2028. We anticipate sometime between now and then they’ll start anew on an RFP process.

As you can imagine, there’s a lot of moving parts there in combining government agencies. I’m not sure that’s going to happen anytime soon.

Sarah, Conference Call Operator: This concludes the question and answer session. I’ll turn the call to CEO Vince Sadusky for closing remarks.

Vince Sadusky, Chief Executive Officer, Brightstar Lottery: Yeah, as always, thank you for your interest. We look forward to updating you as time progresses. Thanks, and have a great day.

Sarah, Conference Call Operator: This concludes today’s conference call. Thank you for joining. You may now disconnect.

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