Brightstar (BRSL) Q2 FY26 earnings call: guidance and Q&A

Details on retailer incentives for digital conversion in Italy, key upcoming milestones, and whether the 1% incremental growth uplift is expected this year or next.

Vince detailed technology upgrades, new terminals, and the MyLotteries app's enhanced features. He mentioned recruiting 23,000 retailers and their strategic importance, but did not disclose specific deal terms. Max confirmed the expectation to reach a 1% run rate for incremental growth uplift from Italy B2C by year-end, emphasizing methodical marketing spend. Vince added that the primary goal for year-end is significantly increasing monthly active users.

“But our goal -- our primary driver and most important goal by the end of the year is customer additions. We want to and we have a goal of significantly increasing our monthly active users.”

asked by Jeff Stantial · answered by Vincent Sadusky

Views on the competitive landscape for systems and iLottery contracts in the U.S., incumbent win rates, and if RFPs are increasingly rewarding AI/tech innovation.

Vince acknowledged increased competition and M&A activity among competitors but stated Brightstar's focus on core lottery operations. He noted that in meaningful markets, operating history is often a base requirement. Brightstar typically rates highest technically in RFPs but sometimes loses on price. He highlighted investment in systems and infrastructure to maintain leadership and leverage AI capabilities for efficiency.

“In places where we don't win, it's almost always on price and almost never on the technology offering. And so we recognize this and with this singular focus on lottery, that's been a big part of the investment that Max has been talking about as we invest in our systems and infrastructure as well as our digital offering in Italy and improving our iLottery offering around the world.”

asked by Jeff Stantial · answered by Vincent Sadusky

What are the biggest drivers to bridge from current earnings/cash flow to the normalized $400M+ annual free cash flow target?

Max explained that starting from $750M cash from operations (excluding Lotto payment) for FY26, this is expected to grow beyond $800M for the next couple of years. Bringing CapEx down from the current $400M run rate to a normalized mid-cycle level would yield $600M-$650M FCF. After minority payments of $200M-$250M, this results in the $400M+ target. He noted this is a starting point, with further growth expected after the CapEx cycle ends in 2028, driven by EBITDA improvement and lower interest/taxes.

“When you take the CapEx and you bring the CapEx down to a normalized mid-cycle from the current $400 million run rate for the last 2 years and the next 2, you basically get to a number that starts with the $600 million, $650 million of free cash flow. When you consider the minority payment between $200 million and $250 million, you basically get to that $400 million.”

asked by Steven Pizzella · answered by Massimiliano Chiara

Given the final Lotto payment is behind, leverage is below target, and attractive valuation, how are share repurchases being considered?

Max stated there is $175 million remaining authorization. The company intends to continue nurturing shareholder returns, consistent with its balanced leverage target. He highlighted that the 3.25x leverage at June end was 0.25x below initial expectations, providing increased flexibility for both dividends and buybacks, while carefully managing spending for contract renewals in 2027 and 2028.

“We have remaining authorization of $175 million right now, including the last $10 million that we just completed a few days ago. We believe that we have to continue to nurture shareholder returns going forward in consistency with our balanced leverage target.”

asked by Steven Pizzella · answered by Massimiliano Chiara

Are customers getting more comfortable with higher Mega Millions price points, and is the committee working on initiatives to drive growth?

Vince noted that recent large jackpots proved players are getting more comfortable with the $5 price point. However, weekly sales are still behind historical run rates, suggesting not all players are fully on board. The consortium continues to consider changes to the model, with Brightstar providing research and insight.

“So it proved that at the $5 price point, perhaps customers -- consumers and players are getting more comfortable with the value proposition. But nonetheless, the weekly sales for Mega Millions is behind the historical run rate and so you don't think folks are fully on board or fully appreciate the changes.”

asked by Barry Jonas · answered by Vincent Sadusky

Has the company seen an impact from elevated gas prices on lottery sales at gas stations/C-stores, and could lower gas prices be a benefit in H2?

Vince stated it's difficult to tell the direct impact of gas prices, as many transactions are cash. Digital sales show no sign of slowing. He emphasized game innovation and availability as key drivers. He noted that lottery sales remain consistent even in tough times. The company is focused on increasing points of sale through new hardware and vending machines, and a new national retailer will add over 1,000 locations this year, with thousands more next year.

“I would say it's difficult to tell, to be honest. A lot of the transactions continue to be cash transactions. The transactions that we can trace are digital and the digital shows no sign of slowing especially in markets like North America where we've been providing and the states have been offering iLottery for years, the growth continues very, very strong.”

asked by Chad Beynon · answered by Vincent Sadusky

How are Sao Paulo operations performing, and has the minority contribution for the Lotto been completed, meaning cash payments start from H2?

Vince stated that the Sao Paulo iLottery launch is live with eInstants, ahead of schedule for technology. It's early days with limited marketing, but good growth is expected as retail comes online in 2027. Max clarified that the $1.7 billion Lotto payment was fully realized in Q2, impacting net debt. Brightstar is only responsible for 61.5% of the payment, with partners responsible for the balance. The cash impact was fully realized in Q2.

“Our iLottery launch is live with the eInstants in the market. It's early days. There's not a lot of marketing that's taken place because the retail build-out is still taking place and retail will be a big part of the marketing efforts. But we're ahead of schedule in terms of the technology included with -- that it takes to launch an iLottery product.”

asked by Domenico Ghilotti · answered by Vincent Sadusky