Brightstar Makes a Profit of $33m as Italy Lotto Settlement Paves Way for Company

Key Points

• Revenue fell 7% to $584m in Q2 2026, but adjusted EBITDA rose 4% to $286m as same-store sales growth and cost discipline offset non-cash headwinds.
• The €1.43bn final Italy Lotto licence payment, completed in April 2026, was the single largest drag on reported revenue and operating cash flow.
• CEO Vince Sadusky confirmed the company’s “heaviest investment period” is now largely behind it, with Italy B2C and iLottery growth targeted to drive a stronger second half.

Brightstar Posts $33m Profit as Italy Lotto Payment Clears the Decks

Sales were down 7%. The net profit changed from a deficit of $58m to a profit of $33m. In the case of Brightstar Lottery Q2 2026 was a quarter when the bottom line and reality diverged completely, and company management devoted much time during the earnings call trying to explain the significance of the difference.

The revenue of $584m for Q2, reported on 4 August, was lower than $631m in the second quarter of the previous year. However, there were two purely mechanical factors responsible for most of this fall: an increase in amortisation of non-cash license fees nearly twice because of the Italian Lotto agreement, and a British service switch that lowered reported service revenues without changing lottery sales.

CEO Vince Sadusky said the results were “better-than-expected,” driven by “global same-store sales expansion and disciplined operational management, even as we invest in long-term growth initiatives.”

What Actually Moved Revenue Lower?

The Italy Lotto concession dominated Brightstar’s numbers in ways that distort a straightforward read of the results. Upfront licence fee amortisation, a non-cash accounting charge that runs through service revenue, rose from $53m to $100m year-on-year. That single line item accounts for more than the entire reported revenue decline. Strip it out, and the rest of the business held up.

Instant ticket and draw wager-based revenue was broadly flat at $517m. US multi-state jackpot wager-based revenue rose 14% to $17m, benefiting from a weak prior-year comparison when jackpot activity had been low. Other revenue within the services segment climbed 5%. Total service revenue fell 6% to $550m, but only because of the amortisation charge; product sales fell 20% to $34m, reflecting lower hardware deliveries after an elevated prior year.

Management expects product sales to recover in the second half, and crucially, Q2 2026 was the final full quarter carrying the peak of the Italy Lotto amortisation headwind. Sadusky confirmed that the company’s “heaviest investment period” is now largely behind it.

The Italy Lotto Payment Is Now Settled

The strategic context behind these numbers is Brightstar completing its final Italy Lotto licence payment of €1.43bn ($1.67bn) in April 2026. That payment, made to Italy’s ADM regulatory authority as part of the renewed concession running to November 2034, dragged operating cash flow sharply negative for the quarter. Free cash flow also reflected the outflow. But it is done.

With the payment settled, the amortisation charge that has been running through reported service revenue does not disappear but ceases to accelerate. CFO Max Chiara said the company is lifting its OPtiMa cost savings target to $100m by 2028, adding that strong cash generation in the first half “supports our balanced approach to capital allocation, which included returning $140 million to shareholders in the year-to-date period.”

Brightstar maintained total liquidity of $1.7bn at the quarter’s close, comprising $0.6bn in unrestricted cash and $1.2bn in undrawn credit facilities. Net debt rose to $3.8bn from $2.7bn at year-end 2025, almost entirely a product of the Italy payment rather than deteriorating operations.

Adjusted EBITDA Grows, Profit Turns Positive

Away from the reported revenue line, the financial picture was considerably stronger. Adjusted EBITDA rose 4% to $286m, with the adjusted EBITDA margin widening from 43.5% to 48.9%. Operating costs were held broadly level year-on-year, and a $4m foreign exchange gain replaced last year’s $99m loss, a swing that directly improved the pre-tax line.

Pre-tax profit stood at $63m compared to a loss of $10m in Q2 2025. Following income tax of $7m, income from continuing operations stood at $56m compared to the loss of $60m in the prior year. Deducting $23m relating to non-controlling interest, net profit after taxes related to Brightstar amounted to $33m.

For the six months, the figures were just as impressive. Adjusted EBITDA increased by 9.4% to reach $573m, while pre-tax profit jumped 237% to stand at $155m, compared to a net loss from continuing operations of $52m in H1 2025.

Italy B2C and iLottery as the Next Growth Levers

Brightstar’s Q2 operational activity in Italy gave management its most direct evidence that the B2C digital strategy is moving. During the quarter, the company launched an enhanced My Lotteries Play app, upgraded more than 33,000 retail terminals and recruited around 23,000 new retailers to support digital account activation. Sadusky said his primary goal by year-end is “customer additions,” arguing that significantly increasing monthly active users would have “an exponential effect… on digital revenue growth in Italy.”

Global iLottery wagers continued growing at a double-digit pace across Q2. Global same-store sales for instant ticket and draw games grew 1.1% at constant currency, with the rest-of-world segment growing at 5.2%. The US same-store revenue performance was 4.7%, buoyed by the jackpot rebound.

OPtiMa 3.3 Adds Another Layer of Cost Discipline

In addition to the financial performance, the company also announced the introduction of OPtiMa 3.3, which is the third stage in the long-term restructure plan of Brightstar. This particular stage will aim to reduce executives and senior leaders, eliminate overlap between departments, and optimise real estate around the world. Costs associated with the restructure will amount to $15m-$20m, and $8m was accrued in the quarter. This process should lead to savings of $20m on an annual basis.

A quarterly dividend of $0.23 was approved by the Board and will be paid out on 1 September 2026.

Historical Context: A Business Still Finding Its Shape

Brightstar’s current financial profile reflects a company less than a year into life as a standalone lottery operator. In Q1 2026, Brightstar posted $587m in revenue, adjusted EBITDA climbed 15%, and Sadusky flagged iCasino and sports betting as longer-term adjacencies to the core lottery platform. Q2’s Italy B2C execution is the most concrete expression of that strategy so far.

The full-year 2026 outlook is not changed at all: revenues to be in a range from $2.50bn to $2.55bn, with organic growth exceeding 5%, and adjusted EBITDA is expected to stand at $1.16bn-$1.19bn. Approximately $175m in additional amortisation of Italy Lotto will remain a burden on the company’s revenues, but OPTIMa cost savings should fully compensate for growth expenditures of $50m.

On 4 August, the shares of BRSL increased by 10.4% in reaction to the company’s better-than-expected profits and steady guidance despite a weaker-than-expected revenue result.

Expert Analysis

The Q2 report is essentially Brightstar showing it can protect margins through the most capital-intensive phase of its post-separation history. The Italy payment is settled. The UK transition is nearing its end. The outstanding question is whether iLottery double-digit growth and the Italy B2C account additions can lift reported revenue alongside profits in H2. If the amortisation charge stabilises as management expects, even modest organic growth in the underlying lottery operations should push the reported headline in a more flattering direction. Investors now have the clearest signal yet that the drag is structural and temporary, not operational.