Brightstar Lottery (NYSE:BRSL) reported third-quarter revenue of $607 million and adjusted EBITDA of $289 million, as growth in product sales and software services helped offset weaker comparisons for major U.S. lottery jackpots.
Excluding the non-cash impact of service revenue amortization associated with its new Italy Lotto license, revenue rose 4% at constant currency, Chief Financial Officer Max Chiara said. That compared with approximately 1% operational growth in the first half of 2026.
Chief Executive Officer Vince Sadusky said third-quarter revenue and profit were in line with the company’s expectations. Brightstar expects to maintain the third-quarter operational growth rate in the fourth quarter, supported by product sales and its Italian consumer initiatives.
Revised outlook reflects jackpot and currency pressures
Brightstar revised its full-year revenue outlook to $2.435 billion to $2.455 billion and its adjusted EBITDA outlook to $1.14 billion to $1.16 billion. Chiara cited second-half sales expectations, the timing of certain Italian business-to-consumer initiatives and a stronger U.S. dollar against the euro.
In Italy, management pointed to a summer heat wave and more recent transportation strikes. Chiara said a trucker strike delayed deliveries of tens of millions of dollars of instant tickets, although retailers offset most of the impact by drawing on existing inventory.
In the United States, Brightstar lowered its expectations for multi-state jackpot sales. Chiara said a recent Powerball jackpot win made it harder to approach the unusually large jackpot recorded near the end of 2025.
The company maintained its cash flow outlook, expecting approximately $900 million in net cash used in operating activities for 2026, including the final €1.67 billion Lotto license payment. Excluding that payment, it expects approximately $750 million in operating cash inflow. Brightstar now expects capital expenditures of $450 million for the year, reflecting a shift in spending into 2027.
Product sales offset weaker wagering comparisons
Third-quarter product sales more than doubled to $60 million, driven by retail hardware and software sales and instant ticket printing. Sadusky highlighted terminal sales in Portugal and the delivery of several hundred lottery vending machines in North Carolina.
Other service revenue rose 11%, helped by software services from new contracts and extensions, including Lotterywest in Western Australia, and by the growing contribution from Italy’s consumer initiatives. Chiara said the company’s non-wager-based service revenue is mostly recurring and includes software, maintenance and other services.
Wager-based revenue was affected by the comparison with strong U.S. multi-state jackpot sales a year earlier and the remaining impact of a U.K. contract transition. Sadusky said U.S. instant ticket sales were the second-highest for a third quarter in the past five years, behind the prior-year period. Instant ticket sales rose 4% in both New Jersey and Indiana, where Brightstar has greater involvement in lottery operations through management agreements.
Income from continuing operations fell to $45 million from $95 million a year earlier. Chiara attributed the decline in part to higher Italy Lotto license amortization, higher net interest expense and the U.K. transition, partly offset by a lower tax provision. Year-to-date adjusted EBITDA increased 5% to $861 million.
Italy expansion and contract proposal
Brightstar is pursuing three consumer-focused initiatives in Italy: digital gaming through its MyLotteries Play app, self-service Lotto terminals called Otto and a payments service branded Sani. The company plans to begin deploying Otto terminals early next year; Sani will allow customers to pay bills, recharge phones and purchase gift cards.
Sadusky said approximately half of players participating in Dual Play, a hybrid instant game, move to the MyLotteries app for its digital experience. He cautioned that newer digital businesses require substantial upfront investment and that profitability will take time to improve as they gain scale.
Management also discussed a proposed 15-month extension of the existing Italian Scratch & Win contract through December 2029. Sadusky said the draft budget law contemplates an upfront cost of €188 million, with Brightstar expecting its partners to contribute their proportional shares. The proposal must still go through Italy’s parliamentary process.
Capital returns and cost savings
Through November 9, Brightstar had returned more than $200 million to shareholders, including $127 million in dividends and $77 million in share repurchases. At the end of the third quarter, net debt was approximately $3.8 billion, with leverage of 3.3 times and total liquidity of approximately $1.9 billion.
Chiara said the company expects its OPtiMa cost-saving program to deliver a $10 million year-over-year improvement in 2027, with the final $20 million potentially completed in 2028. He added that fourth-quarter margins are expected to be lower than in recent quarters because product sales generally carry lower margins than service revenue.
Looking beyond 2026, Chiara reiterated the company’s three-year revenue growth target of 5% annually. Sadusky said Brightstar expects more of that growth to come from Italian consumer initiatives and iLottery, and potentially less from retail growth than previously anticipated.
About Brightstar Lottery (NYSE:BRSL)
Brightstar Lottery provides technology and services to government-sponsored and authorized lotteries. Its offerings include lottery systems and retail terminals, draw-based and instant games, digital lottery platforms, and operational and marketing support. The company serves lottery customers in North America and international markets, supporting sales through retail locations and online channels. Its systems and services help lotteries manage game operations, transactions, and player engagement.
