Core Insights - Brightstar Lottery PLC reported strong financial results for Q3 2025, achieving a revenue of $629 million, a 7% increase from $587 million in Q3 2024, driven by a 7.9% growth in same-store sales across all regions [4][5][34] - The company completed the sale of its IGT Gaming business for $4 billion, which significantly improved its cash position and reduced net debt to $2.6 billion from $4.8 billion [2][9][10] - Brightstar introduced medium-term financial targets, projecting 2028 revenue of $2.75 billion and Adjusted EBITDA of $1.3 billion, reflecting a robust organic growth profile [2][16] Financial Performance - Q3 2025 revenue was $629 million, up 7% year-over-year, with same-store sales growth of 7.9% [3][4] - Income from continuing operations was $95 million, compared to a loss of $46 million in the prior year [5][39] - Adjusted EBITDA increased by 11% to $294 million, with an Adjusted EBITDA margin of 46.7% [3][4] Cash and Debt Management - The company ended Q3 2025 with $1.6 billion in cash and cash equivalents, and net debt leverage of 2.3x [2][9] - Total liquidity stood at $3.2 billion, providing ample resources for strategic initiatives and upcoming license fee payments [9] - Brightstar returned $978 million to shareholders year-to-date and announced a 10% increase in the Q4 2025 dividend to $0.22 per share [4][11] Market and Operational Highlights - Instant ticket and draw same-store sales grew by 3.9%, with notable increases in Italy (6.1%) and the U.S. (1.6%) [7][34] - The U.S. multi-state jackpot revenue surged by 74% due to a $1.8 billion Powerball jackpot [7] - The company is focused on enhancing its operational efficiency through the OPtiMa plan, which has contributed to cost reductions and improved profit margins [7][8]

Financial Data and Key Metrics Changes - In 2024, the company generated over $1 billion in consolidated cash from operations and approximately $660 million of free cash flow, with more than 80% of that free cash flow coming from lottery operations [7][31] - The revenue for the year was $2.5 billion, consistent with 2023, with EBITDA of $1.2 billion at a 47% margin [8][27] - The company reported Q4 revenue of $651 million, down from $681 million in the prior year, primarily due to lower U.S. multi-state jackpot sales [23][24] - Adjusted EBITDA for the full year was $1.17 billion, down from $1.21 billion in the prior year [27] Business Line Data and Key Metrics Changes - Instant ticket and draw game sales increased by 4% in Q4, with a 7% same-store sales growth in Italy [10][23] - U.S. multi-state jackpot sales declined by $29 million due to lower jackpot activity compared to the previous year [25] - iLottery sales rose by 28% in both Q4 and the full year, maintaining a double-digit growth pace [13][14] Market Data and Key Metrics Changes - The company achieved strong growth in Italy, driven by new game launches and special draws [11][12] - Improving trends in large jurisdictions, including California, Florida, Georgia, New York, and Texas, contributed to increased sales [12] - The company is the leading iLottery platform supplier globally, with significant growth in jurisdictions like Georgia and Kentucky [14][15] Company Strategy and Development Direction - The company concluded a strategic review resulting in the sale of its gaming and digital business for over $4 billion, allowing a singular focus on its lottery business [6][21] - Future investments will focus on new game content and technologies to fuel sales growth and strengthen industry leadership [20] - The company is identifying structural cost savings to enhance efficiency and financial profile [21][33] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the core recurring business, expecting revenue growth aligned with long-term expectations [36] - The company anticipates a challenging first half of 2025 due to lower U.S. multi-stage jackpot activity impacting service revenue [37][39] - The increase in Mega Millions ticket price to $5 is expected to positively impact sales in the latter half of 2025 [88][92] Other Important Information - The company plans to allocate at least $2 billion of the proceeds from the gaming and digital sale for debt reduction [31][45] - Annual CapEx is expected to be in the range of $400 million to $450 million for 2025 and 2026, with significant investments required for the Italy Lotto contract [34][35] Q&A Session Summary Question: Can you expand on the $25 million investment into new contract extensions and growth initiatives? - Management indicated that these costs are primarily temporary and necessary for securing new contracts and technology setups [50][54] Question: What are the expected uses of proceeds from the gaming and digital business sale? - Management confirmed a commitment to $2 billion for debt repayment, with further discussions on additional allocations to occur around the closing date [59][60] Question: Can you provide an update on the Italy lotto rebid process? - The RFP was issued in early January, with bids due by March 17, and the award is expected in Q2 [74][75] Question: How significant are carriers for driving draw-based sales? - Management noted that the impact of carriers varies by jurisdiction, with minimal effect on overall sales for IGT [78][82] Question: What is the expected impact of the Mega Millions price increase? - Management believes the price increase will lead to fewer tickets sold but at a higher price point, potentially increasing overall revenue [88][92] Question: Can you discuss the new printing press and its expected returns? - The new press is expected to improve both capacity and efficiency, leading to better margins and competitive positioning [100][101] Question: What is the status of the Texas lottery renewal process? - The bid has been submitted, and feedback is expected in the first half of 2025 [121] Question: What is the situation regarding LMA incentives for the first semester? - Management indicated a combination of shortfall and lower incentives compared to the previous year, with a conservative outlook for the first half of 2025 [122][124]