Brightstar Lottery Q4 2025 and FY2025 Earnings Call - Italy Lotto License Recasts Growth, €1.43B Final Installment Hits in Q2 2026

Operator: Ladies and gentlemen, thank you for joining us. Welcome to Brightstar Lottery’s Q4 2025 and full year 2025 earnings call. After today’s prepared remarks, we will host a question and an answer session. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, please press star again. I will now hand the conference over to James Hurley, Senior Vice President of Investor Relations. James, please go ahead.

James Hurley, Senior Vice President of Investor Relations, Brightstar Lottery: Thank you, and thank you all for joining us on Brightstar Lottery’s Q4 and full year 2025 conference call, which is hosted by Vincent Sadusky, our Chief Executive Officer, and Massimiliano Chiara, our Chief Financial Officer. After some prepared remarks, both Vince and Max will be available for your questions. During today’s call, we will be making some forward-looking statements within the meaning of the federal securities laws. Forward-looking statements are not guarantees, and our actual results may differ materially from those expressed or implied in the forward-looking statements. The principal risks and uncertainties that could cause our results to differ materially from our current expectations are detailed in our latest earnings release and in our SEC filings. During this call, we will discuss certain non-GAAP financial measures.

You’ll find additional disclosures regarding these non-GAAP measures, including reconciliations with comparable GAAP measures in our press release, slides accompanying this webcast, and our filings with the SEC, each of which is posted on our investor relations website. Our statements are as of today, February 24th. We have no obligation to update any forward-looking statements we make. Now, I’ll turn the call over to Vince.

Vincent Sadusky, Chief Executive Officer, Brightstar Lottery: 2025 was a transformational year for Brightstar Lottery. The divestiture of the IGT gaming business reshaped the company into a focused, pure-play lottery leader. We strengthened our balance sheet, improving leverage to the best levels ever, secured the critical Italy Lotto license, and introduced a multi-year capital allocation strategy that both increases returns to shareholders and provides investment capital to fund Brightstar Lottery’s growth initiatives in digital, core technology, geographic expansion, retail points of sales, and printing. We generated $2.5 billion in revenue, supported by the diversity of our global portfolio. Same-store sales grew nearly 4% for the quarter and 2% for the year, underscoring the consistency and resilience of our global lottery operations. At the same time, we invested heavily in our teams, our technology, and our processes, enhancing the organizational capabilities that will support the next decade of growth.

Our Optima program delivered cost reductions, enabling funds to be reallocated to growth initiatives. $1.1 billion of EBITDA in fiscal year 2025 represents a 45% margin, even as we are investing for the long term. We also produced nearly $750 million in cash from operations before funding the first two lottery license payments. We returned over $1 billion to shareholders through dividends and share repurchases and announced two consecutive dividend increases, including the new quarterly payout of $0.23, which is a 15% increase from the historical run rate. These actions reflect our confidence in the strength, durability, and long-term growth potential of our cash flows. 2026 will be another year of investment in several long-term growth initiatives.

In Italy, securing Lotto for the next nine years provides the opportunity to execute a major digital expansion across iLottery, iCasino, and sports betting, leveraging one of the largest retail networks in the world with over 50,000 points of sale. This is an opportunity to extend our reach, broaden our B2C capabilities, and bring new digital experiences to one of the world’s most established lottery markets. We are also investing in our U.S. retail footprint by adding new points of sale, deploying self-service solutions, and partnering with national retailers to expand lottery accessibility across the country. Internationally, one of the most exciting developments is in São Paulo. As the economic engine of Brazil and one of the largest global metropolitan regions, São Paulo represents a rare, large market, full-service, new lottery launch.

We are building this business from the ground up, combining our technology, operational excellence, and game innovation to create a modern, scalable lottery ecosystem across both retail and digital channels. These initiatives, combined with ongoing expansion in iLottery, content, new games, data-driven CRM tools, and advanced AI capabilities, position Brightstar Lottery to accelerate organic growth and extend our industry leadership. Brightstar Lottery today is the largest and most advanced lottery operator and technology provider globally across both retail and digital channels. Our core business is one of the most stable and predictable models in gaming or entertainment, and it has demonstrated remarkable consistency through all economic times. On top of this solid foundation, we are executing targeted growth initiatives in Italy, B2C digital, iLottery, U.S. retail expansion, and Brazil, São Paulo Greenfield opportunity, each of which enhances our long-term growth profile.

Despite our leadership position, strong margins, and highly resilient cash flows, Brightstar Lottery continues to trade at a significant valuation discount to publicly traded lottery peers and an even larger discount relative to adjacent sectors such as sports betting and iCasino, which operate with far lower EBITDA and far greater volatility. The current valuation discount versus peers presents a compelling opportunity for investors. With durable cash flows and multiple growth catalysts underway, we are well-positioned to realize the full value of our focused lottery platform. I’ll turn the call over to Max.

Massimiliano Chiara, Chief Financial Officer, Brightstar Lottery: Thank you, Vince. Hello to everyone joining us on the call today. Fourth quarter revenue of $668 million increased 3% from $651 million in the prior year, beating expectations on elevated US multi-state jackpot activity and strong iLottery performance. 3.5% same-store sales growth included increases across all geographies when normalized for a like number of Italy Lotto ball draws. This was more than offset by the transition of the U.K. technology contract. US multi-state jackpot revenue rose year-over-year, driven by the $1.8 billion Powerball and the $980 million Mega Millions jackpot that hit in the quarter. Other service revenue includes the impact of higher amortization related to the Italy Lotto upfront license fee.

The new lotto license commenced in early December and adds about EUR 41 million a quarter in additional amortization, which is treated as contra revenue under US GAAP. Favorable foreign currency rates also helped drive the year-over-year increase in revenue. Full year 2025 revenue of $2.51 billion was in line with the prior year and included the benefits of increased demand for instant ticket and draw games and favorable foreign currency rates, which mitigated some meaningful headwinds, including $51 million from higher LMA incentive revenue in the prior year and current year impacts of $18 million from the U.K. technology contract transition and $25 million from the incremental Italy Lotto license fee amortization. We delivered adjusted EBITDA of $304 million in the fourth quarter, a 5% increase compared to $290 million in the prior year.

Favorable foreign currency rates drove the year-over-year increase in profit. Operationally, the high flow-through of elevated US multi-state jackpot activity was more than offset by the U.K. transition. OPtiMa cost savings, which are split relatively equally between service gross margin and other operating expenses, were partially offset by project expenses related to contract bids, as well as enhancements of cloud-based solutions and point-of-sales optimization. For the full year, adjusted EBITDA was $1.12 billion, compared to $1.17 billion in the prior year period, as growth in wager-based revenue was more than offset by higher LMA incentives in the prior year, the U.K. transition, and the timing of terminal and software service deliveries in our product sales vertical. We also incurred higher start-up costs associated with the new printing press.

OPtiMa cost savings are tracking nicely to our target of around $50 million by the end of 2026 versus a 2024 baseline. These savings are not readily apparent on the face of the financial statements as they are somewhat offset by the investments in the business that I just described, which we are incurring to drive growth in pursuit of our 2028 financial targets. Sustained cash generation funded key investments and significant shareholder returns in 2025. On a full year basis, both cash from operations and free cash flow included $926 million related to the first two installments of the Italy Lotto upfront license fee, which were paid in July and December of 2025.

While the full amount of the license fee is reported in cash from operations, Brightstar is only responsible for its 61.5% share, or $569 million of the amount paid in full year 2025. Cash from operations, as reported, was a negative $193 million or a positive $733 million before the upfront license fee, exceeding the recently revised guidance. Free cash flow was negative $509 million or a positive $417 million when you make the same adjustment. As a reminder, the lotto license renewal occurs every nine years, these figures do not include the benefit of the pro rata contributions from our minority partners.

The final installment of the upfront license fee is EUR 1.43 billion or approximately $1.68 billion and is expected to be paid in the second quarter of 2026. Brightstar proportionate share of the final payment is EUR 880 million or approximately $1 billion. As Vince mentioned, Brightstar delivered significant shareholder returns over $1 billion in 2025, including $770 million in cash dividends, comprised of a $3 per share special dividend and regular quarterly dividends totaling $0.82 per share, and $271 million in the form of share repurchases through a $250 million accelerated share repurchase program and a 10b5-1 plan.

To date, in 2026, we repurchased an additional 2.1 million shares for a total cost of $13 million via the 10b5-1. We have utilized to date 60% of the $500 million share repurchase authorization that was approved in Q2 2025, repurchasing 18.6 million shares, representing a 9% reduction in shares outstanding. $200 million remains under this authorization. In addition, today we announced a $0.23 per share regular quarterly cash dividend to be paid in March. This represents a $0.01 increase from the prior quarter, when the dividend was raised by $0.02. In aggregate, these increases reflect a quarterly cash dividend that is 15% higher than the historical run rate. This reflects our confidence in future cash flows and reinforces our commitment to increasing shareholder returns.

Net debt improved significantly to $2.7 billion at the end of 2025, compared to $4.8 billion at the end of 2024, mainly due to the allocation of $2 billion for debt reduction from the IGT gaming sale proceeds. Net debt leverage was also reduced to 2.4x, compared to 4.1x at the end of the prior year, providing room to absorb the lotto upfront license fee and still maintain leverage at a manageable level. We expect net debt leverage to peak at around 3.5x, following the final installment of the license payment in the second quarter, then begin to decline thereafter. Our target leverage ratio mid-cycle is at or below 3x.

Our financial condition is strong, with no significant near-term maturities, due in part to the successful issuance of $750 million, 5.75% senior secured notes due in 2033. The proceeds of which were used to retire $750 million, 6.25% bonds due in 2027, and we have over $3 billion in liquidity, which is more than enough to fund our portion of the remaining lotto license fee. I would like to introduce our outlook for 2026. We expect to generate revenue of $2.5 billion-$2.55 billion, which includes about $175 million in incremental lotto license fee amortization as a contra revenue item.

This target represents a more than 5% organic growth rate on a year-over-year basis, led by expansion of our core business in Italy B2C digital efforts, and is in line with the three-year CAGR we expect to generate from 2025 to 2028. Adjusted EBITDA is forecasted between $1.16 billion and $1.19 billion, as organic growth and OPtiMa savings more than offset an additional $50 million of investment we are making in growth initiatives such as Italy B2C and iLottery expansion, R&D investments in technology, product and services, and project costs associated with the extensive contract renewal cycle recently completed and in progress. Our outlook assumes a euro-dollar exchange rate of 1.15 throughout the year.

Cash from operations is expected to be -$900 million or +$750 million when you adjust for approximately the $1.68 billion related to the final Lotto license fee. CapEx is expected to be in the range of $450 million-$475 million. About three quarters of this investment is related to contractual obligations associated with wins and extensions we have already secured. The balance is primarily related to upcoming bids not yet secured. We recently communicated 2028 financial targets with revenue of approximately $275 billion and adjusted EBITDA of around $1.3 billion. 2025 actual results, the 2026 outlook, and 2028 targets are laid out here to highlight we are on plan to achieving those goals.

You can infer, we believe the business can generate an average of $800 million in cash from operations in the 2027, 2028 period annually, excluding upfront license payment. A reminder, following the 2025-2028 peak CapEx cycle, we expect CapEx to moderate to about $200 million-$225 million annually, yielding over $400 million in annual free cash flow before upfront license fees and after minority distributions. This would represent a mid-teens free cash flow yield at the current share price. We’d like to open the call for your questions.

Operator: Thank you. We will now begin the question-and-answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, please press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. First question comes from the line of Jeff Stanchal with Stifel. Jeff, your line is open. Please go ahead.

Jeff Stanchal, Analyst, Stifel: Good morning, Vince, Max, thanks for taking our questions and congrats on a strong quarter and guide here. Maybe starting off on the quarter. Italy, same-store sales, up 0.5% if you normalize for the timing of draws. It’s a little bit below sort of the recent trend, and historically, it’s been about a low single-digit growth algorithm. Can you just maybe dig in a little bit further on what’s driving that? If we think as we think about 2026, sort of, you know, how you view that KPI shaping up based on the content launch and the online strategy that you laid out.

Massimiliano Chiara, Chief Financial Officer, Brightstar Lottery: Yeah, yeah, sure thing. When we reviewed 2025 and the fourth quarter, you know, we’d say we exited 2025 with really good momentum. That was. The great thing about being international and having strong operations around the world is, you know, certain quarters, you’ve got really good launches of products in certain markets in North America or Italy, other quarters, you don’t. Having that geographical and product diversity, we think is really.

Vincent Sadusky, Chief Executive Officer, Brightstar Lottery: ... you know, is really, really effective. As you know, Italy’s driven a lot of the growth for us, and it turned in the back half of the year where North America was a significant contributor. I guess a couple of observations when we look at the performance for the year, and we think about our plans for 2026. When we look at the first half of the year versus the second half, there was a clear acceleration throughout the year in core sales.

The first half of the year, as we know, was, you know, was challenged as a result of the impact of really low jackpot activity and then the calculation around the LMA at the back half of the fiscal year, just the way the math worked out, unfortunately. In the second half of the year, though, we saw a meaningful acceleration. We had strong same-store sales growth, and that, you know, came largely in North America. We had better multi-state jackpot performance, which was more in line with the historical averages, and again, you know, continued double-digit iLottery gains in both the U.S. and in Italy. Our LMA jurisdictions showed, you know, a clear recovery as well.

We had mentioned on previous conference calls that we had put some initiatives in place that we, you know, we were hopeful would have an impact. You know, New Jersey was up, I think, in the 6% range or so for the back half of the year, which was driven by a long-standing effort by our government relations team to work with the lottery commission in the state to increase the payouts, as well as an incremental drawing. In Indiana, we had some good game launches, and we also talked in previous quarters about the installation of more automated vending machines to create more frictionless point of sales in the market.

That seems to be having an impact, as Indiana was up, I think, close to 7% in the second half of the year. I’d say, you know, those things all, I think, bode really well going into 2026. On the Italy front, as you pointed out, you know, the fourth quarter same-store sales, normalized, was just a little bit, you know, had very low growth. We had good iLottery growth. We didn’t have the product launches that we wanted. We are going to have those. We have a pretty robust plan going into 2026.

The rest of the world, you know, contributes less, certainly, but the fourth quarter same-store sales and rest of world were up about 5%, driven by Poland and Belgium. Overall, I’d say, you know, despite a more challenging start to the year, we did have a strong second half of the year, and, you know, it just comes from different places, depending on the timing of product launches, et cetera. When we look ahead to 2026, you know, we’ve been up around 1% or so in same-store sales versus the prior year, and that has been very similar to the way we exited 2025, in that it’s been led by the US and the rest of the world. Italy’s flattish.

Again, we have some new product launches coming up, and as well as we expect, certainly in the back half of the year, more significant contribution from the Italy B2C digital launch that we discussed, as well as we’re increasing our network expansion and working with our customers on their development plans. We think all those things have the capability to deliver growth, especially as the year progresses.

Jeff Stanchal, Analyst, Stifel: That’s great. Thanks for all that, Carlo and Vince. Then maybe just one on. There was a note in the release. Max, you’re stepping away from the board, sounds like to focus a little bit more on some strategic opportunities and M&A. Focusing more on the M&A side of that equation, what’s, I guess, what sort of assets do you see as strategically additive to the business? What’s the market like currently for assets being shopped around, and how much of a priority here should we think about M&A being, call it relative to that, executing on that multiyear outlook that you laid out for us last quarter?

Vincent Sadusky, Chief Executive Officer, Brightstar Lottery: First of all, I’d like to kind of give a little bit of a rationale behind the decision on stepping not seeking re-election to the board after a six-year tenure. This has been taken in conjunction with the conclusion of the Brightstar strategic portfolio transformation that has again just been completed with the sale of the IGT gaming business, also as part of a deliberate governance evolution to strengthen the separation between management leadership and non-executive oversight at board level. In this respect, I will continue to operate in close partnership with our executive chairman, Marco Sala, and with Vince on my CFO duties, as well as you said, on the additional responsibilities attributed to me in the areas of strategy and M&A.

Speaking specifically on M&A, I’d like to remind everyone that we have a very compelling plan with a significant step up in our growth rate to 5% organic. That plan obviously was drafted during the transition period on the gaming sale and entails significant strategic initiatives primarily to develop that and favor that growth through various individual engine initiatives. Fundamentally, our plan is commensurate with a significant initiative portfolio of organic growth. Definitely, we continue to remain opportunistic on M&A.

Massimiliano Chiara, Chief Financial Officer, Brightstar Lottery: ... particularly, if, opportunities were to arise in the market, in areas where we have, opportunity to enhance our growth, faster and accelerate our plan.

Vincent Sadusky, Chief Executive Officer, Brightstar Lottery: Yeah, I’ll just add to that. You know, and I would just add to that. You know, when you think about the unique space that Brightstar Lottery operates in, and where it has, you know, significant right to win and significant strengths, it’s in the area of digital, in the area of iLottery. This B2C expansion in Italy, our willingness to, you know, potentially partner with other joint venture partners internationally, as we’ve done in Italy and São Paulo, and, you know, we’re currently looking in other parts of the world.

When you think about, you know, where we would potentially look to enhance what we believe is a strong opportunity for let’s call it organic growth, but it’s really, I think, product and geographical expansion that’s built into our plan, which requires a significant amount of investment, and we expect a, you know, and a superior ROI, it would be in those, in those particular areas. That’s great. Thank you both for all the color. If I could just squeeze in one more here on capital allocation, you know, Vince or Max, whoever wants to take this? How opportunistic do you plan to be this year with that remaining $200 million or so left on the repurchase authorization?

Just it seems to be, at least to us, that the market is pricing in a degree of cyclicality here that’s pretty dislocated from the historical fundamentals that we’ve witnessed for lottery. Just curious how you’re, you know, you’re approaching this pullback in the stock relative to the capacity level of the authorization. Thanks.

Massimiliano Chiara, Chief Financial Officer, Brightstar Lottery: As I said during my prepared remarks, we have significantly accelerated shareholder returns during this six-month period. We have achieved so far about 60% of our authorization on the buyback, but we have also increased the ordinary dividends, and we paid the special dividend in July. This represent more than 30% capital returns over the 2025. Again, the current yield, just on the ordinary dividends, is getting towards the 7% at this point with this with the stock price of the last few days. Having said that, we continue to be disciplined in our evaluation of the opportunities going forward to continue to kind of devolve and return cash to shareholders, both in dividends and buyback.

We also obviously want to be mindful of the fact that we have significant commitments with respect to Lotto and other contracts that we need to take care of during the next few quarters. Thank you.

Vincent Sadusky, Chief Executive Officer, Brightstar Lottery: You know, I would just throw out. Yeah, I would just tie on to the. Sorry, to the buyback question, my sales pitch that I included in my, in my script. You know, it’s just, it’s pretty incredible that there’s such a meaningful disconnect between our intrinsic value and where our stock trades today. I know a lot of CEOs say that, but again, I mean, by every investor metric, whether it’s EBITDA, multiples, free cash flow yield, DCF, or our valuation below both direct lottery peers and comparable businesses, whether it’s in gaming, travel, leisure, infrastructure-like businesses.

We increased our dividend. Now that’s, you know, at the current trading levels, more than 6% yield, which is far above levels typically associated with companies that have our level of stability and multiyear contract visibility, and the resiliency of the business. You know, we have engaged in, you know, actively in share buybacks. You know, to Max’s point, you know, we continue to think through the allocation on a go-forward basis. You know, we and our board certainly take a long-term view towards value creation for this business. That’s great. Thank you both. I’ll pass it on.

James Hurley, Senior Vice President of Investor Relations, Brightstar Lottery: Operator, the next question, please.

Operator: Apologies for that. Your next question comes from the line of Barry Jonas of Truist. Barry, your line is open. Please go ahead.

Barry Jonas, Analyst, Truist: Hey, guys. Good morning. Wanted to start with Brazil. Can you maybe talk a little bit more about the opportunity and how we should be thinking about both near-term and longer-term implications? Thanks.

Vincent Sadusky, Chief Executive Officer, Brightstar Lottery: The Brazil opportunity is significant. We had to invest a significant amount upfront in order to obtain the license. It was a deal that, as I mentioned, is pretty rare. You know, as you know, there’s not a lot of meaningful Greenfield opportunities left around the world. You know, Brazil’s been a challenging place politically. It certainly had its ups and downs. We were confident that it met our risk profile after spending a lot of time doing the analysis and the work to understand the stability and the potential competitive threats in that market. São Paulo is the crown jewel of Brazil economically. People can afford to buy lottery tickets. It’s got a terrific amount of activity.

The population really enjoys gaming and wagering. This is, I think, an area that the government is very focused on and has done the right way and has spent a lot of time in crafting the RFP and the potential bidder and bidder support. They already have, you know, the funds allocated for several hospitals in the area, so they’ve got a direct utilization of funds, and I think the public, you know, sees the direct benefit. In order to de-risk both the financial commitment, as well as the significant amount of operating startup capital, as well as intellectual property knowledge, we partnered up with Scientific Games on this, on this venture.

Between the two of us, this is going to be an incredible effort, an incredible entrepreneurial effort to start this lottery from scratch. The point of sales have got to be built out, the implementation and installation of all of the machines across the state. It has an iLottery component. Both of us will be printing tickets and contributing tickets to the venture for scratch tickets and game development. It’s a very long-term contract as well. We’re excited about it. It will, you know, as usual, we’ve got plenty of experience with this. As usual, it will take some time to generate meaningful cash flow, but we do think this can generate meaningful cash flow.

Because it’s a 50/50 joint venture, you know, we’re excited about the cash flow potential, you know, this will be an entity that we won’t consolidate.

Barry Jonas, Analyst, Truist: Got it. That’s helpful. Just wanted to follow up on the M&A angle. You know, there’s currently been increasing deals across the global lottery space. You’ve addressed your M&A strategy, but how should we be thinking about implications from all the competitive M&A that’s been out there for Brightstar Lottery, whether that’s in a competitive operating or a bidding environment? I would just note that one competitor is acquiring a company in the US doing prediction markets, so curious to get your thoughts on that deal. Thanks.

Vincent Sadusky, Chief Executive Officer, Brightstar Lottery: Yeah, that would be, you know, all in acquiring PrizePicks. I think, you know, each company in the lottery space, there’s not that many of us, have their own strategic imperative and strategic direction. Of course, everybody thinks it’s the right one. We think ours is right, given our, you know, many years of experience being a leader in the digital gaming space with our PlayDigital segment, as well as being a leader in the, in the land-based gaming area with IGT. We decided over many, many years that those businesses did not have significant synergies and were not comparable, didn’t help us win any more lottery contracts, and were not leverageable into incremental consumer sales.

We obviously reached a very different strategic conclusion from some of our competitors that have been more active in the M&A market and actually have been acquiring companies that are involved in the iGaming space, the iCasino space, the prediction markets, and we believe that’s a completely different business. You know, they have their own strategic goals. Maybe, you know, that’s a way to enhance growth, even though it’s not a good strategic fit. You also have the issue of geography, meaning, you know, many of these acquisitions that they have made, or competitors have made, and the acquisition targets that are currently available, don’t overlap very well with our geographies. We just don’t believe that there is...

a smart thing to do is to go out and pay a very high multiple for a business that potentially could grow, you know, with the potential of higher growth, than lottery, but is not a good strategic fit. Again, as I mentioned earlier, if you see us interested in anything, it would be in the area of, you know, enhancing our iLottery, game development, enhancing our platform. We are now in the B2C business, specifically in Italy. You know, that is interesting to us, if there is a good overlap with a strong provider of games and consumers in Italy.

You know, we believe very strongly that the greatest value creation comes organically, and, you know, the fact is, you know, we’ve built out an outstanding team in Italy to develop and deploy our iCasino and sports betting. We actually just on a limited basis started sports betting this week. We’ve had iCasino for a couple of months. We believe in the leverageable opportunity from the Lotto license in Italy, that we can grow and build that business. We’ve been in that business before. We’ve been hard at work for many, many years on building out the best iLottery platform. Our games are now top performers in the world, in our game development studio for iLottery. It, it’s a...

I guess, along with an answer to, we’re not interested in overpaying for things just to potentially enhance our growth that are not a good strategic fit. It would have to be a very strong strategic fit for us.

Barry Jonas, Analyst, Truist: Thank you.

Operator: As a reminder to everyone who’s dialed in, if you would like to ask a question, please press star one to raise your hand. To withdraw your question, please press star one again. Please limit yourself to one question and one follow-up. Our next question is from Domenico Gilotti of Equita. Domenico, your line is open. Please go ahead.

Domenico Gilotti, Analyst, Equita: Good morning. A few question, first of all, on the Italian market. I’m interested in your first thoughts on your iGaming launch, as you were commenting just a second ago. In general, I’m also interested in having your thoughts on the potential launch of the tender for instant tickets in Italy in 2027. We read about this. I want to understand your idea on that. The last, if you could be interested, in case of the tender for retail concessions also on this kind of opportunity in Italy.

Then, more broadly, some color on the 5% organic growth that you are targeted for 2026, if you can give us a feeling on the contribution from the 2 key geographies?

Vincent Sadusky, Chief Executive Officer, Brightstar Lottery: I’ll get started, then I’ll hand it over to Max to help with the building blocks of growth. On the Italy digital opportunity, we’re primarily administering the B2C experience through our MyLotteries app. We’ve made really good progress with very little marketing. We’ve been putting together our marketing channels and opportunities. The great opportunity, of course, is the folks that we touch, I think, roughly 1 million consumers a month, or we have over 1 million interactions a month in Italy with people checking their lottery tickets, winnings, et cetera. You know, we’ve not begun a significant marketing effort so far through that channel and with our retailers, but clearly that’s the opportunity. That all gets launched early this year.

We recently hired a seasoned digital gaming executive, Victor Krikorian, to lead the business. You know, Victor’s got, you know, great experience. We’ve spent a lot of time together. You know, he’s been with Flutter and Fortuna Entertainment Group and understands the opportunity to attract consumers and what it takes to have a competitive offering. Today, early days, it’s possible you can play lotto, you can play scratch-and-win games, you can play iCasino and skill games on our app, even though it has not been optimized. You’ll see I think a product that is every bit as good as the established leaders in the market as the year progresses.

You know, having said that, in fiscal year 2025, our iLottery wagers in Italy were up over 20%, as a result of, I think, continued really good game delivery in the portfolio. Our active users have increased significantly and, you know, again, early days, but we’ve gained three incremental points of iLottery market share since we launched the My Lotteries app, this kind of first iteration of the app, back in early January with limited marketing.

Yeah, we’re pretty excited about the long-term prospect and the opportunity for us to gain a reasonable share of the iCasino and sports betting market, which could, you know, in our plan, result over the years in I think a meaningful contribution to our cash flow and profitability in Italy, and it naturally leverages our strength in operating the two largest lotteries in Italy. On the scratch-and-win front, you know, we anticipate the process for scratch-and-win will be similar to Lotto. You’ll have the law come out, then the RFP will be issued. Could happen the end of this year, and we’re closely monitoring it. We’ll see how things play out.

You know, obviously we’re, you know, we’re very excited about the opportunity to extend our relationship with the state.

Massimiliano Chiara, Chief Financial Officer, Brightstar Lottery: In terms of the building blocks of the 2026 growth rate, I would say that we have the expectation for a couple of points coming from the core same-store sales, both in the retail lottery business. Probably a 1% on top coming from iLottery. Also LMA, we expect LMA to be positive in the year, primarily in the first half. We have an initial contribution from the Italy B2C that is probably gonna be in the range of 1% as well. Keep in mind, we have to complete the full circle of the UK transition, which started in August. That is gonna be a headwind, obviously, on our top line.

Then we have a little bit of product sales increases backloaded into Q4 as we typically season out the product sales in the last quarter of the year. Again, all growth engines are expected to start cranking up on the 5%, a three-year CAGR, three-year, 5% CAGR that we have laid out with our 2028 plan, or rather in 2026.

Vincent Sadusky, Chief Executive Officer, Brightstar Lottery: The last comment, I know you’re focused on Italy, I would make, Domenico, is around the performance of Italy in 2025. Again, you know, so much of the quarter-to-quarter performance is based on the timing and the cadence of new game launches in each jurisdiction. If you step back and you look at the full year, 2025, same-store sales in Italy were up about 2%, and when you normalize it for the number of draws and selling days, the real organic growth that we view was 3%. You know, we feel very comfortable with the continued growth potential of the Italian market.

Domenico Gilotti, Analyst, Equita: Thank you. If I may follow up on, say, on the guidance that you gave on operating cash flow, just to, just to be sure. If I take out the Lotto payment, you are guiding for $750 million. If I look at your EBITDA guidance, if I’m not wrong, there is something like some more than $400 million cash leakage from, I presume, financial charge, cash taxes, or working capital. Can you give us a sense of what do you expect on these items?

Massimiliano Chiara, Chief Financial Officer, Brightstar Lottery: Correct. Yes. The $750 million is perfectly comparable to the $730 million that we achieved this year. Obviously, you have to take a little bit of after tax EBITDA improvement into consideration. When we talk about interest and taxes, interest, we have been able to optimize the interest expense with the $2 billion debt repayment, we don’t see a big increase coming yet in 2026, despite the fact that we will have to make the $1 billion payment in the second quarter. There’s gonna be a little bit of increase, but not significant. Instead, we expect cash taxes to come down significantly. That’s really our focus going forward, is on the cash taxes. We paid more than $200 million last year.

We expect to pay something in the range of $150 this year. There was some timing on Italy payments, about $20 million. Obviously, the incremental amortization upfront fee will depress a little bit earnings, that will be a kind of a positive for lower tax payments into 2026. We have a couple of other optimizations underway that will allow us to kind of optimize that cash tax payment in that $150 range.

Domenico Gilotti, Analyst, Equita: Okay. Thank you.

Operator: Your next question comes from Chad Beynon of Macquarie Capital. Chad, your line is open. Please go ahead.

Chad Beynon, Analyst, Macquarie Capital: Hi, thank you. Vince, Max, good morning. Thanks for taking my question. Two-parter on iLottery, focusing more on North America. I guess, firstly, what have you seen so far from a legislation standpoint, as, you know, states are looking to expand products or, you know, bring in tax revenues for their state? Are you seeing movement there? Secondly, on iLottery, thinking about it from an AI standpoint, I would assume maybe some of the content could become potentially cheaper just because it might be easier for some of these games to be created. Wondering if there could be margin improvements on iLottery as AI continues to be a bigger part of that development. Thank you.

Vincent Sadusky, Chief Executive Officer, Brightstar Lottery: I would say on the expansion, U.S. has been averaging, you know, one or two jurisdictions a year, right? This year, Massachusetts, part of the RFP that we won in Missouri, County, Missouri, which I think our estimates are somewhere around the middle of 2026. We’ll be implementing that iLottery system. You know, we’ve implemented iLottery on the draw side in Connecticut. We’ve implemented it in Tennessee. Recently, New Jersey is a state that will also go to iLottery draw, from what I recall, we’ll be executing that as well. As far as new jurisdictions, it’s difficult to tell.

We did not see anything explicit in this legislative session across the U.S., but we anticipate perhaps Colorado will be a state that will look to bid out its iLottery. There’s not a lot on the horizon, but I think at this continued pace of one or two a year, that seems directionally where it’s going. For Bright Star in particular, you know, we’ve got a strong platform. We, I believe we’ve got more platforms deployed than any other iLottery company in the business.

Uh, so we continue to refine and, and strengthen our game recommendation engine, which is, um, you know, has, uh, a lot of nifty, uh, AI tools incorporated, uh, in, in that, and we continue to work to, to improve and, and enhance things like, uh, like, game recommendations are, you know, perfect. Uh, you know, I mean, we used to call it machine learning, but now, you know, AI, uh, driven opportunities. Um, and then certainly we’ve, you know, we’ve, we have talked in the past, uh, around game development. So, you know, we’ve been with the, uh, this current pace in North America of new jurisdictions, um, putting out RFPs at, at this rate of one to two a year, we focused a lot of attention on our, on our content, uh, engine.

We know that content from our PlayDigital iCasino experience is the area that builds credibility and reputation with our ultimate customers. We’ve had a lot of focus in that area, and we’ve had really good success. For some of the markets where we don’t operate the platform, we’ve had really good uptake of our games because our games perform. The team, I’d say, has done a really good job, especially in the last 1.5 years or so, of focusing on and delivering top-performing games that are desired in the iLottery markets by states where we don’t have the platform. We think that’s an exciting opportunity to continue to grow in addition to continuing to pursue the platform opportunities.

Then finally, yeah, we’ve also talked in the past about the AI opportunity in game development. You know, when you find mechanics that work, and oftentimes the mechanics are, you know, there’s a lot of work that goes into things like progressive games, in particular, that consumers really, really seem to enjoy. When you get a formula that works to be able to leverage that into, you know, reskinning and slightly different look and feel of games, allows you to, you know, increase the throughput and certainly bring down the cost. We’ve had some games that, you know, have performed so well. We’ve essentially translated them into other languages and, you know, changed the odds and tweaked with the math necessary for compliance in various jurisdictions.

It’s by and large, the same game. Our focus has been, you know, very, very heavy in the iLottery space on continuing to make advancements to arguably have the best platform, have the best games. Over time, you know, we have been able to free up resources to be able to continue to develop better games across the world. I think over time, we don’t see a real, you know, we’ve hit the maturity stage for iLottery, fortunately, continues to grow at, you know, a significant pace. You know, over time, as you start to see the numbers get bigger and the % growth slows down, I think we’ll have a more significant focus on, you know, taking out costs and reducing costs in the business.

You know, right now, when we talk about investment in growth opportunities, clearly, you know, iLottery is one of our top areas.

Massimiliano Chiara, Chief Financial Officer, Brightstar Lottery: Just to top up the conversation on the margin expansion, as Vince mentioned, there’s cost in investment in growth initiatives that we expect to entertain this year, obviously, are going to be a little bit of a drag overall. Again, the iLottery business, you have to look at the iLottery business as a staggering, growing business as we add new contracts on top of existing contracts. As those contracts get to maturity phase, then the margin obviously goes up because it’s at the end of the day, it’s a scaling of an existing infrastructure that can be really deployed and benefited from as you grow the business down the road.

As we are in this heavy growth mode, we will continue to add contracts, and so the margin will gradually improve, but the full margin deployment will happen over time.

Chad Beynon, Analyst, Macquarie Capital: Great. Thank you. Then lastly, just wanted to revisit the topic of the, you know, $5 Mega Millions increase, which I believe happened in April, so it’s, you know, eight or nine months ago. Good to see a bigger jackpot hit recently. I know that was something that, you know, we were all trying to figure out the evolution of play and customer adoption on that. Does it feel like 2026, you know, based on what you’re giving in your guidance and kind of what you’re seeing with activity, that 2026 could lead to more jackpots, or higher jackpots driven by this Mega Millions increase? Are we finally starting to see maybe a little bit more of a tipping point? Thank you.

Operator: Our final question comes to the line of Joe Staff of Susquehanna. Joe?

Vincent Sadusky, Chief Executive Officer, Brightstar Lottery: Sorry.

Operator: The line is open. Please go ahead.

Vincent Sadusky, Chief Executive Officer, Brightstar Lottery: Operator, we’re in the middle of answering a question from Chad.

Operator: Oh, apologize for that.

Vincent Sadusky, Chief Executive Officer, Brightstar Lottery: Yeah. Yeah, sorry about that. Just commenting first on Powerball. The year-end run-up of Powerball was really great. The final jackpot ended up having the highest sales of any drawing since the first 2+ billion-dollar jackpot all the way back in 2022. The sales for the jackpot were nearly 2 times the sales of the last jackpot this size since October 2023. We were very excited. It really confirmed our thesis when we look at the data over several decades, that when there’s multiple hits on the jackpot, you do indeed, from time to time, hit this jackpot fatigue syndrome.

When there’s not a lot of jackpots for a while, you know, the interest from the general public, once the jackpot gets up to a significant number, really, really picks up. That, that, to us, was really reassuring to confirm the sustained appeal of the game. You know, with regard to Mega Millions, specifically, the build has been slower than anticipated with the changes that have been made. As you pointed out, you know, the game just got changed less than a year ago, and the jackpot hit four times, which is way more than statistically expected, and so it’s difficult to make any inferences around the play level.

We did see a jackpot near $1 billion finally, and that jackpot did indeed grow slower than the $2 game, and we did not see a significant benefit from the occasional players that oftentimes come into the market and help to drive those jackpots once the jackpot becomes significant. We continue to monitor it, and you know, certainly the committee that administers and in charge of Mega Millions is, you know, is very focused on it and feel like, you know, we need some time. We need to see where this run goes. Hopefully, knock on wood, this one continues to build. I know the again, the committee with, you know, our...

you know, helping, where we can around research, et cetera, is taking a look at an assessment of the performance to make a determination as to whether or not, there are some recommended changes and tweaking to the jackpot, funding. I think we’ll, you know, we’ll see those things play out in 2026 as we have a, you know, a larger body of knowledge from which to draw upon.

Operator: Your final question now comes from the line of Joe Staff of Susquehanna. Joe, your line is open. Please go ahead.

Joe Staff, Analyst, Susquehanna: Thanks. Good morning, Vince. Good morning, Max. I wanted to come back to the Italian digital product offering. You know, at least we think it’s pretty significant sort of proof point for the stock. Just wondering, Vince, as you think about, say, the opportunity here, I assume, correct me if I’m wrong, that, you know, the biggest opportunities is to certainly convert what is a retail sales lottery into a digital, and therefore higher volume, and then to iCasino. I guess, number one is, are those the most important inputs as you thought about the return and what you paid, you know, for the lottery re-renewal? That’s the first question.

The second question is, you know, how do we think about, you know, when you’re really starting to gain traction in that digital channel, maybe on those components? Is that something in terms of KPIs or any information that you’ll be releasing going forward? Thank you.

Vincent Sadusky, Chief Executive Officer, Brightstar Lottery: Great. Thanks for the question. Yeah, Joe, I would agree with you. I do think a lot of the enhanced growth profile of the business and the valuation has to do with growth, and a significant growth lever or enhancer is the Italy digital opportunity. It will take some time to build up the unique consumers and both convert players who are primarily retail players. I think that is one of the greatest opportunities, is we’ve built an incredible relationship and a lot of touch points through those retail players, and a good number of those retail players have digital activity, but it’s fairly limited to things like checking tickets and scanning tickets from their phone.

We think we have the ability to help promote and support movement of those people into more of a digital environment, where they’re actually purchasing iLottery tickets, and to a lesser extent, you know, get them interested in playing iCasino games. The whole thought process around the iCasino games, and to a lesser extent, sports betting, was to provide a fulsome entertainment experience for consumers in Italy. They already love us for the lottery. They’ve built a relationship. I think our digital offering on iLottery, as witnessed by the share increase, is much improved and will continue to improve, and our goal is to provide a digital platform that’s best in class and frictionless, and a really, you know, nice, fun experience.

We’re not there yet. That development is taking place in 2026. You know, why give the consumer the, a reason to leave that app and have a second app to engage in iCasino games, and again, to a lesser extent, in sports betting? Why not provide, you know, all those games all together in one app? Yeah, your assessment’s right in terms of the iLottery is the driver, and then we feel like we can pick up a decent amount of iCasino play. Yeah, certainly, yeah, nowhere near the leaders in the marketplace who are long-established, that have multiple brands. We don’t have to in order to fulfill our long-range plan. The same thinking around sports betting.

Like, why not also offer that in one, in one place as well? We certainly won’t be the leading sports betting platform. you know, that’s a unique business. We don’t have desires to, but again, really to offer players the convenience once they’ve established their wallet. So if they choose to, they can do everything through the My Lotteries, app. I’ll hand it over to Max to talk about.

Massimiliano Chiara, Chief Financial Officer, Brightstar Lottery: KPIs

Vincent Sadusky, Chief Executive Officer, Brightstar Lottery: ... KPIs.

Massimiliano Chiara, Chief Financial Officer, Brightstar Lottery: Again, the KPI opportunity is interesting because obviously we have to time and create the sort of leading indications of the successes of this venture, and we think that the first step is in growing market share in the iLottery space. We have seen already in 2025, a very good development without significant investments on our end, with a 3 percentage point increase in market share. We have now turned on the eInstant as the second provider in the market.

Joe Staff, Analyst, Susquehanna: Thanks a lot.

Operator: There are no further questions at this time. I will now turn the call back to Vince Sadosky, CEO of Brightstar Lottery, for closing remarks.

Vincent Sadusky, Chief Executive Officer, Brightstar Lottery: Yeah, thanks for joining us today, everyone. Brightstar Lottery’s core business is one of the most stable and predictable models in gaming and entertainment, we think it’s demonstrated remarkable consistency through all these economic cycles. We’ve talked about our growth initiatives that we think will enhance our long-term growth profile. Again, I make the pitch for our valuation discount, no matter how you take a look at this, and really appreciate your interest in Brightstar Lottery. We’ll see you in the next couple of weeks, many of you, and continue to update you throughout the year. Thank you.

Operator: This concludes today’s call. Thank you for attending. You may now disconnect.