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    BRSL
    Earnings call· Jun 2026(Q2 FY26)

    Brightstar Lottery Q2 FY26 earnings call BRSL

    Aug 4, 2026 Source

    Executive summary

    Brightstar Q2 FY26 — Strong Profitability and Strategic Growth Investments

    Brightstar Lottery delivered better-than-expected Q2 profits, driven by global same-store sales growth and cost discipline, while investing in high-return initiatives. The company completed its final Italy Lotto license payment and returned significant capital to shareholders, maintaining a strong balance sheet. Management expects accelerated revenue and profit growth in the second half as strategic investments begin to contribute more meaningfully, with a focus on digital expansion and operational efficiency.

    Highlights

    5

    • Q2 profits better than expected, driving 4% adjusted EBITDA growth to $286 million.

    • Global same-store sales increased 1.5% in Q2, accelerating from Q1, driven by U.S. and Italy.

    • Strong cash generation in H1 FY26, funding $140 million returned to shareholders year-to-date.

    • Net debt leverage of 3.24x, better than expected and below target, with $1.7 billion total liquidity.

    • OPtiMa 3.3 program initiated, accelerating savings target from $80 million to $100 million by FY28.

    Concerns

    3

    • Second quarter revenue was flat year-to-year as reported, impacted by a $47 million service revenue amortization increase.

    • U.S. same-store sales growth in Q3 FY26 expected to be offset by lower multistate jackpot games due to a $1.8 billion Powerball jackpot in Q3 FY25.

    • Product sales were down $8 million compared to last year due to elevated hardware sales in multiple jurisdictions in the prior year.

    Guidance & targets

    17
    CategoryTargetConfidence
    Full year 2026 Revenue, Profit, and Cash Flow
    Reaffirmed
    high materiality
    High
    Q3 FY26 Same-Store Sales
    In line with prior year
    medium materiality
    Medium
    Italy H2 FY26 Same-Store Sales Growth
    Low single-digit growth rate
    medium materiality
    Medium
    U.S. Q3 FY26 Instant and Draw Games Growth
    Low single-digit growth
    medium materiality
    Medium
    Q3 FY26 Organic Revenue Growth (ex-U.K. transition)
    About 4% year-over-year
    medium materiality
    Medium
    Q3 FY26 Adjusted EBITDA
    In line with the first 2 quarters of the year, slightly down versus the previous year
    medium materiality
    Medium
    Full Year 2026 Effective Tax Rate
    Mid- to high 30% range
    medium materiality
    High
    Full Year 2026 Cash Taxes
    Around $150 million
    medium materiality
    High
    OPtiMa 3.3 Savings Realization
    $70 million by end of 2026
    medium materiality
    High
    OPtiMa 3.3 Savings Realization
    1/3 of remaining balance in 2027
    medium materiality
    High
    OPtiMa 3.3 Savings Realization
    2/3 of remaining balance in 2028
    medium materiality
    High
    Annual Free Cash Flow
    More than $400 million
    high materiality
    High
    Italy B2C Incremental Growth Uplift
    1% run rate
    medium materiality
    Medium
    Italy B2C Customer Additions
    Significantly increasing monthly active users
    high materiality
    High
    CapEx Run Rate
    Down to a normalized mid-cycle from current $400 million run rate
    high materiality
    High
    Cash from Operations
    Beyond $800 million for the next couple of years
    high materiality
    High
    Net Debt Leverage
    Slightly improve that leverage ratio down the road
    medium materiality
    Medium

    Segment performance

    4
    SegmentRevenueYoYQoQMargin
    Global
    Global same-store sales accelerated from Q1, driven by stronger U.S. sales. iLottery continues to be an area of substantial growth.
    Same-store sales growth: 1.5% (Q2)iLottery wagers growth: 22% (H1)
    		————
    U.S.
    Improvement in U.S. sales primarily from stronger multistate jackpot performance and better instant and draw game sales. Strong iLottery expansion in Kentucky and Georgia, excellent eInstants performance in Michigan and Virginia.
    Same-store sales growth: stronger (Q2)iLottery growth: 29% (H1)
    		————
    Italy
    Same-store sales fueled by instant tickets, including relaunch of multiplier games, summer bundle, and new EUR 30 game. iLottery growth led by eInstants, especially EUR 30 and multiplier games.
    Same-store sales growth: fueled by instant tickets (Q2)iLottery growth: 23% (H1)
    		————
    Sao Paulo (Brazil)
    Digital lottery operations went live just 6 months after executing a 15-year concession. Retail lottery operations planned for later this year. Substantial long-term growth opportunity.
    Digital lottery operations: live (Q2)
    		————

    Operational metrics

    28
    Revenue (ex-service revenue amortization increase)
    FlatYoY
    Q2 FY26

    Reported revenue was $584M.

    Revenue Growth (net of U.K. transition)
    2YoY
    Q2 FY26

    Important metric for future focus.

    Wager-based Revenue Growth
    In linevs prior year
    Q2 FY26

    Offset by U.K. transition impact.

    Other Service Revenue Growth
    5YoY
    Q2 FY26

    Includes growth from Italy B2C expansion efforts.

    Product Sales Change
    -8vs prior year
    Q2 FY26

    Compared to elevated hardware sales last year; expected to contribute more meaningfully in H2.

    Adjusted EBITDA
    286Up 4% YoY
    Q2 FY26

    Better than expected, driven by global same-store sales, OPtiMa savings, and expense recoveries.

    Reported EBITDA Margin
    49
    Q2 FY26

    Nearly 49%.

    EBITDA Margin (ex-upfront license fee amortization)
    42In line with Q1
    Q2 FY26

    Better than anticipated.

    Effective Tax Rate
    Mid- to high 30svs 55% in prior year
    FY26

    Heading closer to normalized mid- to low 30s.

    Cash Taxes
    150vs $220M in prior year
    FY26
    Capital Expenditures
    232
    H1 FY26

    Q2 CapEx was $121M.

    Capital Returned to Shareholders
    140
    YTD FY26

    Includes a $10M tranche of buyback activity just concluded.

    Adjusted EPS (excluding service revenue amortization)
    0.71
    H1 FY26

    Pro forma payout ratio of 65% compared to $0.46/share dividends paid.

    Service Revenue Amortization Impact on FY Adjusted EPS
    0.94
    FY26

    Noncash impact, more than covers current annual dividend run rate.

    Net Debt Leverage
    3.24Slightly better than expectations
    As of Q2 FY26

    Below targeted level, achieved after final Lotto license payment.

    Total Liquidity
    1.7
    As of Q2 FY26

    Provides flexibility for capital allocation strategy.

    OPtiMa Savings Target
    100Upgraded from $80M
    FY24-FY28

    Accelerated multiyear program (OPtiMa 3.3) focused on management structure and real estate optimization.

    Italy Retailers Recruited for Digital Activation
    23000
    To date

    Player engagement efforts begin this month and go into September.

    New U.S. Retail Locations
    Over 1000
    FY26

    From a new national retailer across 6-8 states this year, thousands more next year.

    Instant Ticket Units Produced Growth
    Double-digit
    H1 FY26

    Supported by new press and innovative GLEAM and Infinity games.

    Cash Flow Yield
    20
    Current

    Based on expected cash generation.

    Dividend Yield
    9
    LTM

    Very attractive.

    Adjusted EPS (ex-service revenue amortization) Valuation Multiple
    7
    2025 actuals

    Brightstar trading at this multiple.

    Italy iLottery Market Share
    Up
    Over a year ago

    Despite not having an aggressive launch campaign yet.

    Italy Retail Point-of-Sale Terminals Upgraded
    Over 33000
    Recently completed

    New terminals have faster processing capabilities, improving sales velocity and supporting future game innovation.

    Sao Paulo Concession Duration
    15
    Starting Q4 FY25

    Digital lottery operations launched 6 months after execution.

    Sao Paulo Population
    46
    Current

    Approximately 1/3 of Brazil's GDP, largest and most prosperous state.

    Mega Millions Weekly Sales
    Behind historical run rate
    Current

    Despite recent large jackpots, suggesting players not fully on board with $5 price point.

    Industry KPIs

    3
    MetricValueDetails
    Comparable sales comps1.5%
    Global system wide sales22%
    Net unit growth development pipelineOver 33000terminals

    Product announcements

    4
    ProductTypeDetails
    MyLotteries Play Applaunch
    Italy Retail Point-of-Sale Terminalsupdate
    Sao Paulo Digital Lottery Operationslaunch
    New Instant Ticket Pressmilestone

    Deals & partnerships

    6
    Oregon State LotteryMultiyear contract extensionMultiyear

    Extension of FM contract.

    Washington State LotteryMultiyear contract extensionMultiyear

    Extension of FM contract.

    MauritiusMultiyear FM contract extensionMultiyear

    Building on decades-long relationship.

    SlovakiaMultiyear FM contract extensionMultiyear

    Building on decades-long relationship.

    Sao Paulo15-year concession for digital lottery operations15 years

    Digital lottery operations went live 6 months after execution. Retail operations planned for later this year.

    National Retailer (unnamed)Agreement to add lottery games to locations

    Retailer excited about increasing foot traffic and incremental revenue.

    Risks & headwinds

    6
    U.K. transition impact on wager-based revenueQ2 FY26 (last full quarter of comparison), ~1 month impact in Q3 FY26.

    Offset global same-store sales growth and favorable mix in U.S. in Q2.

    Mitigation: Focus on 2% growth net of U.K. transition.

    Product sales lumpinessQ2 FY26

    Down $8 million in Q2 FY26 compared to prior year.

    Mitigation: Expected much more meaningful contribution in H2 FY26, with 2 percentage point incremental impact on growth in Q3.

    Impact of strong multistate jackpots in prior yearQ3 FY26

    Q3 FY26 U.S. low single-digit growth in instant/draw games to be offset by lower multistate jackpot games due to $1.8 billion Powerball jackpot in Q3 FY25.

    Mitigation: Overall core business helped by product sales and Italy B2C ramp-up.

    Investment in growth initiatives impacting Q3 EBITDAQ3 FY26

    Q3 FY26 adjusted EBITDA expected slightly down YoY.

    Mitigation: Continued investment to secure future and generate strong returns.

    Mega Millions weekly sales behind historical run rateCurrent

    Behind historical run rate

    Mitigation: Consortium continues to evaluate model changes; company provides research and insight.

    Competition on price in lottery RFPsOngoing

    Typically lose on price, not technology, in markets not won (e.g., Ohio, New Mexico).

    Mitigation: Singular focus on lottery, investment in systems and infrastructure, digital offering, and iLottery.

    What to watch in Q3 FY26

    5

    Italy B2C Monthly Active Users

    By end of year
    CurrentEarly days, recruitment ongoing
    TargetSignificantly increased

    Why it matters

    Primary driver for future digital revenue growth in Italy, indicating success of B2C expansion.

    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.

    Q&A highlights

    7

    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

    2 min read6 chapters

    Detailed Narrative

    01

    Italy B2C Expansion and Digital Strategy

    Brightstar has significantly enhanced its MyLotteries play app in Italy, launching a full range of digital gaming options including eInstants, eDraw, iCasino, and sports betting. The company completed an upgrade of 33,000 retail point-of-sale terminals to improve sales velocity and support future game innovation, with plans to leverage the retail network for digital adoption. Approximately 23,000 retailers have been recruited to drive digital account activation, with player engagement efforts starting in Q3.

    02

    Sao Paulo Greenfield Opportunity

    The company successfully launched digital lottery operations in Sao Paulo, Brazil, just six months after securing a 15-year concession. Sao Paulo, with 46 million residents, represents a substantial long-term growth opportunity, establishing a foundation for an entirely new lottery operation. Retail lottery operations are planned for later this year, with significant growth expected as retail comes online in 2027.

    03

    Operational Efficiency and Cost Optimization (OPtiMa 3.3)

    Brightstar initiated the third phase of its multi-year OPtiMa program, accelerating its savings target from $80 million to $100 million against a 2024 baseline. This phase focuses on management structure changes, including reducing executive layers and consolidating functions, as well as optimizing the global real estate footprint by embracing hybrid work arrangements. $70 million of the savings are expected by the end of 2026, with the remainder in 2027 and 2028.

    04

    Shareholder Returns and Capital Allocation

    The company returned $140 million to shareholders year-to-date, comprising $85 million in cash dividends and $55 million in share repurchases. With the final Italy Lotto license payment completed, net debt leverage stands at 3.24x, better than expected. Brightstar maintains $1.7 billion in total liquidity and has a remaining share repurchase authorization of $175 million, signaling continued commitment to shareholder returns.

    05

    Investment in Systems and Technology

    Brightstar is making significant investments in its system area to maintain its leadership position in lottery operations, focusing on accelerating investment in systems and infrastructure. This includes improving digital offerings in Italy and iLottery globally, and positioning the company to compete effectively in a dynamic environment, particularly with the integration of AI capabilities for efficiency and player experience optimization.

    06

    U.S. and Global Lottery Performance

    Global same-store sales increased 1.5% in Q2, an acceleration from Q1, driven by stronger U.S. sales (multistate jackpots, instant/draw games) and Italy (instant tickets, multiplier games, new EUR 30 game). iLottery wagers were up 22% in H1, with 23% growth in Italy and 29% in the U.S. The company secured multiyear contract extensions with Oregon and Washington state lotteries, and FM contract extensions in Mauritius and Slovakia.

    AI-generated summary of the company’s earnings call. Not investment advice.