Brightstar Lottery (NYSE:BRSL) reported second-quarter results that management said featured better-than-expected profit, supported by global same-store sales growth, cost discipline and expense recoveries, while the company continued to fund digital, retail and international expansion initiatives.
Chief Executive Officer Vince Sadusky said global same-store sales increased 1.5% in the second quarter, accelerating slightly from the first quarter as U.S. performance improved. Stronger multi-state jackpot activity was the principal driver in the U.S., supplemented by gains in instant and draw games. Sadusky pointed to New Jersey and Indiana as markets where expanded retail distribution, vending machines and digital signage have contributed to growth.
Second-Quarter Financial Performance
Chief Financial Officer Max Chiara said reported second-quarter revenue was $584 million. Excluding a $47 million increase in service revenue amortization, revenue was flat year over year as reported and rose 2% excluding the impact of the U.K. transition. Wager-based revenue was flat at constant currency, as global same-store sales growth and favorable U.S. mix were offset by the U.K. transition.
Adjusted EBITDA increased 4% to $286 million, exceeding management’s expectations. The company reported an EBITDA margin of nearly 49%, or 42% when excluding upfront license-fee amortization. Chiara attributed the improvement to same-store sales gains, savings from the OPtiMa cost program and certain expense recoveries.
Income from operations was $56 million, compared with a $60 million operating loss in the prior-year quarter. Chiara said the year-over-year turnaround reflected adjusted EBITDA growth, lower restructuring costs, a non-cash foreign-exchange benefit related to euro-dollar exchange rates on parent-company debt, and a lower tax provision.
For the first half, adjusted earnings per share rose 20% year over year to $0.24. That figure included $0.47 per share of non-cash service revenue amortization. Excluding that amortization, first-half adjusted EPS was $0.71, compared with dividends per share paid of $0.46, according to the company.
Italy Digital and Retail Expansion
Italy remained a central focus of Brightstar’s growth strategy. Same-store sales growth in the country was driven by instant tickets, including multiplier games, a summer bundle and the continued performance of a new €30 game. Italy iLottery growth was 23% in the first half, led by eInstants.
Brightstar launched an enhanced MyLotteries PLAY app in April, offering eInstant, eDraw, iCasino and sports-betting options, alongside loyalty, bonusing and live-chat features. The company also completed upgrades to retail point-of-sale terminals at more than 33,000 locations across Italy. Sadusky said the new terminals are expected to improve transaction speed during peak periods and support new game launches.
The company has recruited approximately 23,000 retailers to assist with digital account activation, with retailer engagement beginning in August and continuing into September. Sadusky said Brightstar had initially tested the offering with roughly 100 close retail partners during the summer.
During the question-and-answer session, Chiara said the company expects its Italy business-to-consumer initiative to reach a 1% growth run rate between now and year-end, though he cautioned that the business is still in its ramp-up phase. Management said customer additions and monthly active users are key near-term priorities.
International Operations and iLottery Growth
Brightstar said total iLottery wagers rose 22% in the first half. U.S. iLottery growth was 29%, with expansion in Kentucky and Georgia and strong eInstant content performance in Michigan and Virginia. Sadusky said the company expects additional iLottery platforms to come online in 2027 in Missouri and through Lotterywest in Australia.
In São Paulo, Brazil, Brightstar has launched digital lottery operations six months after securing a 15-year concession. Retail lottery operations are planned for later this year. Sadusky said the company has completed the technology deployment and regulatory approvals for the digital launch, though the operation remains in its early stages and has not yet received substantial marketing support ahead of the retail rollout.
The company also cited increased instant-ticket printing capacity, which supported a double-digit increase in standard units produced during the first six months. Brightstar reported growth with customers in Texas, France and Poland, and said its GLEAM and Infinity games helped drive production volumes.
Cash Flow, Capital Allocation and Outlook
Brightstar made the final installment of its Italy Lotto license payment during the second quarter. The $1.7 billion payment resulted in year-to-date cash from operations of negative $1.17 billion, or positive $501 million after adjusting for the Lotto payment. Brightstar said it is responsible for 61.5% of the payment, with consortium partners responsible for the remainder.
Capital expenditures were $121 million in the second quarter and $232 million in the first half, with the Italy Lotto deployment representing nearly half of first-half investment. The company returned $140 million to shareholders year to date, including $85 million in cash dividends and $55 million in share repurchases.
Net debt leverage stood at 3.24 times at June 30, below management’s target level, while total liquidity was $1.7 billion. Chiara said the company has $175 million remaining under its share-repurchase authorization following a recently completed $10 million tranche.
Brightstar reaffirmed its full-year 2026 revenue, profit and cash flow outlook. For the third quarter, management expects same-store sales to be roughly in line with the prior year, with Italy sales flat because of calendarization effects and lower multi-state jackpot sales in the U.S. compared with the prior year’s $1.8 billion Powerball jackpot.
Chiara said the company expects approximately 4% organic revenue growth in the third quarter, compared with 2% growth excluding the U.K. transition in the second quarter. Adjusted EBITDA is expected to be roughly in line with the first two quarters, though slightly below the prior-year period as the company continues investing in growth initiatives.
Brightstar also increased its OPtiMa savings target to $100 million from $80 million against its 2024 baseline. The company expects $70 million of the savings to be realized by the end of 2026, with the remainder expected in 2027 and 2028.
About Brightstar Lottery (NYSE:BRSL)
International Game Technology PLC operates and provides gaming technology products and services in North America, Europe, the Middle East, Africa, Asia-Pacific, Latin America, and the Caribbean. It operates in three segments: Global Lottery, Global Gaming, and Digital & Betting. The company designs, sells, operates, and leases a suite of point-of-sale machines that reconciles lottery funds between the retailer and lottery authority; provides online lottery transaction processing systems; produces instant ticket games; and offers printing services, such as instant ticket marketing plans and graphic design, programming, packaging, shipping, and delivery services.
