Brightstar Lottery Q2 2026 Earnings: EBITDA Rises Despite Revenue Decline

Brightstar Lottery (NYSE: BRSL) reported Q2 2026 revenue of $584 million, down 7% from $631 million a year earlier, while diluted EPS from continuing operations improved to $0.18 from a loss of $0.47. Global same-store sales growth and cost controls supported higher adjusted EBITDA, but the final Italy Lotto license payment produced a substantial quarterly cash outflow.

Core earnings data

Revenue declined as higher Italy Lotto service revenue amortization, the U.K. contract transition, and lower product sales offset growth in global same-store sales and Italy’s B2C digital business. Adjusted EBITDA increased 4%, supported by sales flow-through, OPtiMa cost efficiencies, and general and administrative expense recoveries.

The return to GAAP profitability also reflected lower restructuring charges, a foreign-exchange gain compared with a large prior-year loss, and a reduced income tax provision.

NM indicates that the year-over-year comparison is not meaningful because one period was negative.

Business and geographic performance

Service revenue declined 6% to $550 million. Instant ticket and draw wager-based revenue was nearly unchanged at $517 million, U.S. multi-state jackpot wager-based revenue increased 14% to $17 million, and other service revenue rose 5% to $116 million. These gains were outweighed by $100 million of upfront license fee amortization, compared with $53 million a year earlier. Product sales fell 20% to $34 million.

Global same-store sales increased 1.5% at constant currency, including growth of 1.1% in the U.S., 1.5% in Italy, and 5.2% in the rest of the world. Global same-store revenue, which also incorporates contract mix, rose 2.6%.

Geographically, U.S. and Canada revenue declined 2% to $286 million. Italy revenue fell 15% to $221 million, largely reflecting the increased license-related amortization, while rest-of-world revenue decreased 2% to $77 million.

License amortization lowered revenue while adjusted EBITDA increased

The increase in upfront license fee amortization was central to the divergence between Brightstar’s headline revenue and adjusted EBITDA. The charge rose by $47 million to $100 million—the same size as the company’s total year-over-year revenue decline—although the U.K. contract transition and lower product sales also affected the result.

Adjusted EBITDA adds back service revenue amortization, while reported revenue includes its negative effect. Consequently, part of the margin expansion reflects the metric’s treatment of this amortization rather than operating improvement alone. Adjusted EBIT, which does not receive the same add-back, declined 24% to $128 million from $168 million.

Adjusted EPS also fell 8% despite the higher EBITDA. Brightstar said the net-of-tax service revenue amortization burden included in adjusted EPS increased to $43 million, or $0.23 per share, from $23 million, or $0.11 per share, in Q2 2025.

Profitability, cash flow, and balance sheet

The swing to GAAP income was not solely driven by underlying operations. Restructuring expense declined to $6 million from $21 million, while a $4 million foreign-exchange gain replaced a $99 million loss. The income tax provision also fell to $7 million from $50 million.

Quarterly operating cash flow from continuing operations was negative $1.34 billion after Brightstar made the final €1.43 billion, or $1.67 billion, Italy Lotto license payment in April. Capital expenditures were $121 million, resulting in negative free cash flow of $1.46 billion.

Cash and cash equivalents declined to $558 million at June 30 from $1.45 billion at the end of 2025. Net debt increased to $3.79 billion from $2.72 billion over the same period, reflecting the license payment, and net debt leverage was 3.24 times. Brightstar reported total liquidity of $1.7 billion, including approximately $0.6 billion of unrestricted cash and $1.2 billion of undrawn borrowing capacity.

Full-year 2026 guidance

Brightstar reaffirmed its full-year revenue, adjusted EBITDA, operating cash flow, and capital spending outlook. The guidance assumes that organic growth and OPtiMa savings will offset the effects of license amortization and planned growth investments.

Management’s view

CEO Vince Sadusky attributed operating profit support to global same-store sales growth and disciplined management while highlighting progress in Italy’s B2C expansion and double-digit growth in global iLottery wagers. Management expects revenue, profit, and cash flow trends to improve now that the final Italy Lotto license payment has been completed.

Brightstar also increased its OPtiMa cost-savings target to $100 million by 2028. The new OPtiMa 3.3 phase is expected to generate approximately $20 million of annualized savings after completion, with anticipated restructuring costs of $15 million to $20 million. The program focuses on reducing management layers, consolidating functions, ending certain consulting arrangements, and optimizing real estate.

Risks investors should monitor

• License-related accounting pressure: Incremental Italy Lotto service revenue amortization is expected to reduce reported full-year revenue growth by approximately $175 million, making reported revenue less representative of underlying wager trends.
• Contract and product sales weakness: The U.K. service contract transition and a 20% decline in quarterly product sales offset otherwise positive same-store activity.
• Cash demands and leverage: The license payment increased net debt, while planned full-year capital expenditures of $450 million to $475 million will continue to require substantial funding.
• Execution of savings and investments: Full-year EBITDA guidance depends on revenue growth and OPtiMa efficiencies more than offsetting approximately $50 million of growth investments. The restructuring program must also deliver its targeted savings while controlling implementation costs.

Summary

Brightstar Lottery’s second quarter showed positive underlying lottery demand and cost discipline, but license-related amortization weighed on reported revenue and adjusted EBIT, while the final Italy Lotto payment drove deeply negative cash flow and higher net debt. The main issues to monitor are whether organic growth and OPtiMa savings offset contract-transition and investment costs as assumed in the reaffirmed guidance, and whether cash generation improves following completion of the license payment.