Q3 2025 Brightstar Lottery PLC Earnings Call
Ladies and gentlemen, thank you for standing by. My name is Krista and I will be your conference operator. Today at this time, I would like to welcome you to the bright star Lottery. Third quarter 2025 earnings conference call Alliance have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session if you would like to ask a question at that time.
Please press star. Then the number 1 on your telephone keypad. And if you'd like to withdraw that question again, press star 1, thank you. I would now like to turn the conference over to James Hurley vice president of investor relations James. You may begin
Thank you, and thank you all for joining us on Bright Star Lottery, Q3 2025 earnings conference call, which is being hosted by Vincent, Dusky our chief executive officer and Max, Kiara our Chief Financial Officer after some prepared remarks, both Vincent 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 today's 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 phones with the SEC Each of which is posted on our investor relations website.
Our statements are as of today, November 4th. And we have no obligation to update, any forward-looking statements, we make and now I'll turn the call over to Vince.
Thank you, Jim and good morning to all.
We achieved many strategic milestones in the third quarter, this includes closing. The IGT gaming sale for 4 billion in cash. Executing on our shareholder, return plans and completing the refocusing of the company as a lottery. Pure Play business, a big congratulations to the bright star team for their dedication and resilience in getting us here.
Today's better than expected, Q3 revenue and profit results. Reflect a significant acceleration of global same store sales across all geographies.
Year-to-date revenue of $1.8 billion highlights the scale of our business, which is driven by the sustained growth of core, instant ticket, and drug game sales.
That's translated into solid profits and cash flow generation, which are attractive characteristics of our Lottery business.
You can appreciate this in the nearly 1 billion dollars, we've returned to shareholders through a combination of dividends and share repurchases. This year, including the dividend we announced today.
That $0.22 cash dividend per share is a 10% increase from our historical rate, and it's a clear demonstration of our commitment to enhancing shareholder returns.
Same store, sales Rose in impressive, 8% in the third quarter, including 4% growth for core instance and draw games.
In the U.S., same-store sales were up 8%.
1.8 billion Powerball. Jackpot in the period.
We also had a nearly 2% increase in instant and draw games, same store sales.
Thanks to the continued success of our high-priced instant tickets in California and Florida, and the instant growth in Georgia.
Italy, same store, sales were up solid, mid single digits with strength across both instant and Drug games.
The million relaunch and summer bundle performed. Well, as did the new 25 year old special edition VIP game,
10y lot is multi pay slip and Joo de los numero Oro. Option, continue to fuel, Italy, drug game growth.
Global. I lottery sales increased over 30% in the period in Italy. Digital only Joko Poe games are driving e instant growth while our new Tenny Lotto fast game is cribbing contributing to double digit era expansion.
Lottery momentum is equally strong in the U.S., where robust user growth in Georgia and Kentucky is complemented by the high-performing Elephant, King, and Cats jackpot games.
Viking Gold. Our first AI developed game went live in Rhode Island and Kentucky a few weeks ago. Marrying, proven game mechanics with AI generated animation.
There are several more AI developed games in the pipeline.
We introduced the new BrightStar brand of Partners in North America and Europe at the reefs recent aspel and European Lottery trade shows.
Bridgestreet star received significant interest from customers eager to see the latest in Lottery Innovation to engage players.
Bright Stars AI capabilities were a particular interest, including our new game, Plan Wizard, a tool that analyzes instant ticket inventory and the performance of past games to assist in forecasting and building optimized game launch plans.
For over 50 years, our Innovative products and services have helped our customers Excel. We believe the current roster will drive compelling incremental value over the next few years.
Now, I'll turn the call over to Max.
Convinced, and hello to everyone joining us on the call today.
Before I discuss the third quarter result, I want to note the early adoption of new accounting disclosures change the geography of certain expense items on the income statement. Overall results are not impacted and we have provided historical recap financials reflecting these changes at the back of today's Q3 earnings press release.
Now, on with the quarters result,
Better than expected third, quarter revenue and adjusted. BB down were primarily driven by strong same store sales across jurisdictions and game types.
Adjusted EPS improved significantly in the quarter, from a 2-cent loss in the prior year to earnings of $0.36 in the current year, and increased 20% on a year-to-date basis.
Driven by improvements in net interest, income taxes and GNA expenses, partially offset by higher gross profit in the prior year.
The Q3 and year to date EPS figures do not yet fully reflect the benefit of the 13.6% date under our accelerator share purchase activities.
The actual number of shares outstanding at the end of the quarter has been reduced to approximately 190 million shares.
Per quarter revenue of 629 million grew 7% from prior year up 5% at constant currency.
Improved Trends in same store sales across all geographies drove in 19 million. Increasing instance, ticket and draw Revenue. Italy is 6% growth
Was a special impressive even when normalized for a like number of lots of drawers Rising 5.3%.
Us, multi-stage jackpot Revenue, increased 15 million primarily due to elevated activity associated with a 1.8 billion Power Ball, jackpot and other service Revenue, decreased 10 million primarily due to known wager, based revenue from European contracts in the prior year.
Please note that this is the first quarter of the UK transition, which I'll address in more detail shortly.
the quarter adjusted, ebita of 294 million rows 11%
Or 7% at cost and currency.
High flow through of wager, based Revenue, growth resulting from strong sales store sales and Jack productivity, and lower cost associated with expense. Recoveries were partially offset by The non-, Wager based service Revenue impact in Europe that I just mentioned and the impact of product sales makes and startup cost associated with the new printing, press
In addition, the transition of the UK contract, had a negative impact of around 6 million in the Turk water, and is expected to cause a headwind of about 14 million to revenue and ibida in Q4.
Flow from operations and free cash flow for the torque quarter. And yet today periods, reflect the impact of the first installment of the lotto license fee.
On a year-to-date basis. Cash flow from operations was a negative 6 million or a positive 573 million. When you adjust for the 579 million Italy, Lotto upfront, license fee and freakish flow was a negative to 45 million or a positive 334 million when you make that same adjustment,
2 billion of the IGT gaming sale proceeds were used to reduce debt improving net debt to 2.6 billion dollars at the end of the third quarter.
As Vince mentioned, we have deliver significant shareholder returns this year with around 980% and an additional 42 million to be paid in the fourth quarter, marking a 10% increase in the quarterly dividend to 22 cents per share.
Our financial profile is strong with total liquidity of 3.2 billion and net debt, leverage of 2.3x.
This puts us in a solid financial position in advance of the 2 remaining Italy, Lotto license fee installments.
As a reminder, the fees payable in 3, branches with 500 million euro already paid in July, 300 million euro due in the 4 quarter and the balance of 1.43 billion Euro due by April 2026.
Bright star is responsible for 61.5% of the total so 1.37 billion Euro or approximately 1.6 billion dollars at current rates and our Consortium Partners will fund the balance.
We are reaffirming our full year, 25 revenue and adjusted EB. The Outlook of approximately 2.5 billion and 1.1 billion respectively.
Cash from operations for continuing operations is now expected to be a negative 220 million or about 700 million. Positive, when excluding the Italy Lotto license fee.
A, an improvement of about $55 million from our prior expectations, primarily due to the timing of working capital and a cumulative improvement of about $150 million from the original outlook for the year, reflecting a laser-focused approach to the known EBITDA items affecting cash generation.
Capex is being revised lower to around 340 million due to timing shift.
Overall, this represents about 110 million improvements.
In the outlook for capex versus what we expected at the beginning of the year.
Now, I will turn the call back over to Vince as we present an update on the business.
Great. Thanks Max. Well, now, that the sale of gaming is complete and bright stars of pure play lottery company, we thought it would be helpful to provide an overview of business attributes, as well as some future Financial targets to assist current and prospective investors in. Evaluating our company, the name BrightStar may be new however, the company's leadership in the lottery business draws on nearly 50 years of experience,
During this time, we've developed and deployed some of the leading products and services in the industry.
As the premier Pure Play Global lottery company. Our mission is to elevate Lottery and Inspire players for decades. Our innovative solutions have helped customers to Excel and distinguish their Lottery from other forms of discretionary. Consumer spending. Today, we're shaping the future of the global Lottery business in partnership with our customers.
The return to a singular focus on lottery. Marks an exciting new chapter bright star enjoys Global Leadership in a growing industry and the singular Focus improves, our ability to continue to innovate and execute
Our business has been consistent. As we have serviced our Lottery customers. Well, and as a result, have had an average customer relationship of about 30 years.
One of our unique competitive advantages is that we are the only system provider who is also a significant operator of lottery in both the U.S. and Europe. This gives our team great insight as a customer of our own products and services.
The world Lottery industry has experienced steady growth for decades and accelerated growth. During the co years to this day, lottery sales remain at those elevated levels which is remarkable considering the significant expansion of online consumer gambling options,
Also, unlike other forms of gambling lottery Play has been very resilient during economic downturns.
Significant positive is the long-term contract nature of our business, both as an exclusive system provider and as an operator providing greater visibility into future Revenue profit and cash flows than many other Industries.
The traditional Lottery business has been our leading position in the high growth. High Lottery operations.
We expect broader our Lottery adoption, especially in the US. And Italy will continue and meaningfully enhance sales growth.
We believe our Global Leadership position provides us a clear right to win in our Lottery.
The bright star team and board of consistently worked to unlock the intrinsic value of our assets, disposing of non-core businesses, strengthening the balance sheet and increasing Capital returns to shareholders.
We believe our current valuation provides a compelling entry point as we execute on strategies to create shareholder value.
The scope of bright star's capabilities and Geographic reach is unmatched. We are uniquely able to either operate Lottery on a b2c basis or provide technology and other services on a B2B basis. We work with about 90 customers around the world with leading market, share in the US and Italy, our 2 main markets,
Our service contracts are mainly exclusive and long-term in nature with an average length of over 10 years.
Incumbency has tremendous value. Evidenced by a nearly 100% FM and operator contract renewal rate in the US and Italy over the last 15 years.
We generated $2.5 billion in revenue. Last year, about 80% of that was recurring in nature, which translates into $1.2 billion in EBITDA and about $700 million in cash from operations.
Bright Stars investment appeal and unique competitive position. Rest from 4 pillars, first is the unparalleled depth of Industry experience across our leadership team. Second is the large growing Global Lottery industry characterized by exclusive long-term contracts, requiring specialized expertise
Third is our Market leadership and recurring Revenue base and forth. Our technology product leadership bolstered by a 50-year history of proven Innovation and our unique position in the value chain.
We built a focus strategy to evolve the business and create compelling incremental, value.
Over the next several years it focuses on defending and growing core contracts pursuing targeted expansion and leading in I Lottery especially in the US and Italy, our main markets where bright star is well positioned to win with established leadership.
We are also focused on driving efficiencies through our Optima cost Savings Program digitization and broader AI adoption. These initiatives are expected to drive up to 1.7 billion in capital return. The shareholders in the 25-28 period.
The lottery industry has delivered steady mid single digit growth over the last 20 years and has demonstrated remarkable resilience during periods of macroeconomic and geopolitical uncertainty.
Industry sales have climbed, even as new gaming Alternatives have become available.
We expect that mid single digit growth profile to be maintained over the next several years fueled by broader I Lottery adoption.
This support generates strong, predictable revenue and cash flows for us through our percentage of service contracts.
As I mentioned earlier, incumbency is a powerful asset. We've retained nearly 100% of our facilities management and operator, contract Revenue in the US and Italy over the last 15 years and over 70% of current FM and operator. Contract revenue is secured or extendable Beyond 2028.
This provides great visibility and predictability into our revenue and cash flows over the next several years.
3 key levers will drive incremental growth for our Core Business. The first is Cher expansion, there's over 12 billion in Lottery industry sales currently owned by competitors that is up for rebid by 2028 much of which is outside the US
We've recently dedicated more management resources to pursuing these opportunities.
Brazil, for example, is a compelling Market opportunity where we've already established an initial foothold in Ministry, I
The second lever is product Innovation and portfolio optimization.
Lottery is a supply-driven business and compelling. New games are a powerful call to action.
Optimizing the pricing and payouts of a lottery game portfolio is an effective way to deliver. The most engaging player experience is across a broad range of tastes and preferences. This strategy worked well for us in Italy, over the last several years.
Channel and touch. Point expansion is the third lever.
Making lottery games more accessible to players as an effective way to drive sales growth.
The recruitment of new retailers with large store networks and the deployment of self-service vending machines are great examples of a proven way to do this.
New technologies that facilitate higher sales velocity like Lottery link and our cloud-based Tech Solutions are other examples of products designed to increase sales.
The lottery link is now live in New Jersey, and we've begun to deploy self-service vending machines in high-traffic locations throughout Italy.
Registar is well, positioned to expand market, share across platforms and content.
We're already the global leader in iot platforms and have built a library of over 300 games used by nearly 20 customers.
In the US, our Lottery penetration is under 10% with only 14 Lottery live and none of the top 5 participating.
Mature markets reach over 40%, showing strong player interest.
Our us, I lottery sales have grown well above the market rate over the last few years, and we've been awarded 2 of The Last 4 platforms.
We expect over 20% annual growth for the next several years.
This is supported by winning new jurisdictions, including leveraging our strong track record of performance with our FM customers, as we have successfully done in Tennessee and Missouri.
Game innovation and portfolio optimization offer additional potential, as we are on track to launch about 40 new e-Instinct games each year.
our CRM tools help customers Drive growth by delivering customized engaging player experiences using Rich player insights
The iot opportunity is equally compelling in Italy.
As the operator of the country's 2, largest lottery games. We are well, positioned to lead digital expansion.
Italy is 1 of the world's most attractive gaming markets with total Market wages. Growing at a 7% kagar, over the last decade including 20% digital growth.
Land-based wages have grown alongside digital expansion.
Today, I Lottery penetration in Italy is just 3%.
By comparison to other European markets, ranges from the mid-teens to over 50%.
Italy's digital acceptance is clear. I gaming and online sports betting, have reached 30 and 505% penetration respectively.
we aim to bring Italy's I Lottery, penetration in line, with European benchmarks by 2030
As we execute proven, I lottery strategy strategies in Italy. We've identified other avenues to increase digital adoption 1 is to activate digital Solutions in our 58,000 lotto and scratch and points of sale to enhance the overall player and Retail experience.
In the last year, lotto and scratch and win reached 9.5 million and 17.1 million players. Respectively, representing 40 to 75% of Italy's total gaming population.
We've already begun executing, this digital strategy with the my lottery Play launched earlier this year.
In just 9 months, we've gained 3 incremental points of market share with minimal marketing effort.
My lottery Play, also enables expansion into a casino digital sports, betting and bingo.
We recently went live with over 80. I casino games and a dozen Live, casino games tapping into the estimated 25% overlap between digital Lottery players and those who are also engaged with. I casino and digital sports betting activity,
This presents cross-selling opportunities that should drive increased average spending on our lottery and other games.
We believe we can create significant incremental value here without the need to become a market leader.
We'll earn additional distribution fee on all my lottery Play activity for lottery related, wagering, this is on top of the 6% on lotto and 3.9% on Scratch and win Wagers. We earn as a concession are for those games.
Needless to say, the new Lotto license, unlocks significant strategic and financial opportunities reinforcing our leadership in Italy's, evolving digital gaming landscape.
Now, I'll turn the call back to Max.
Thank You, Vince.
When we consider all the strategies that Vince just outlined, We Believe Bright Stars. Organic growth rate accelerates to more than a 5% kegger over the next 3 years.
In terms of its building blocks. We have first, we expect our Core land-based Business in the US and Italy to deliver a 3%. Kegger excluding the UK transition.
Second improved iot regulatory, momentum in the US combined with our longstanding Market leadership. There is expected to contribute another 1%. Kegger
Third, the new Italy b2c expansion initiatives. Led by a lottery growth are expected to deliver another 1% kegger and finally growing share in underpenetrated international markets and instant ticket printing offer additional momentum.
Because the accounting impact of the amortization of the upfront fee paid in connection with the new Lotto, license will weigh on our reporting Revenue. The net result is an expectation of more than a 3%. Kegger
In addition to the accelerated Topline, organic growth, trajectory we have identified certain operational efficiencies that are expected to deliver approximately 80 million in Gross, cost savings by 2028 versus the 2024 Baseline.
Expected by 2026 which are mostly focused on back. Office optimizations to rightsize the business following, the IGT gaming sale.
The additional 30 million Optima savings. We are announcing today Target primarily the cost infrastructure across our main operational areas. It also includes benefits from back-end, technology modernization increase Automation digitization and broader AI adoption across the organization.
We have established a structured program to accelerate AI adoption across core processes. Such as content, creation, software development, and corporate work streams
We expect AI driven initiatives to yield even more on our profitable growth and on future capex in 2028 and Beyond when this initiative will be fully operational.
As we have communicated previously, the 25 to 28 period represents a peak capex cycle for us.
This is related to the renewal and rebid of several of our largest contracts, including California, and Italy Lotto, which we have already secured and New York and Texas alongside Italy, scratch and win, which are on the horizon. There is also a sequence of smaller contracts, mostly already secured.
In particular, we expect average annual capex of about 400 million for the 25-. 28 period. The vast majority of this is traditional contractually required Investments for new Central systems, retail Terminals and communication infrastructure across our portfolio.
There are a few new areas of Strategic investment Incorporated therein, such as capex to expand the number of player touch points. This includes more spending on proven sales drivers such as sales service, vending machines and new technologies, such as I Lottery link as Vince clearly explained in our strategy session.
Another is Investments to evolve our core technology stack to leverage new capabilities like Ai and Cloud infrastructure.
We're also investing in infrastructure needed to support New Italy. B2c opportunities activated by the new Lotto license.
We continue to expect annual capex to moderate to about 200, to 225 million posted this pickup cycle.
It is important to appreciate that our capex investment reinforced by unique competitive advantages and directly support. Our accelerated organic growth Outlook,
They also build foundations to deliver long-term efficiencies beyond the current Optima program.
The durability and predictability of our cash flows as a standalone Lottery business. Enable us to establish some key pillars for Capital, allocation
The company has consistently return Capital to shareholders over the last decade through quarterly cash. Dividends however, most of our Capital During the period was allocated to investing in the business and reducing leverage. Now, we leverage more comfortably around our target range of 3 times. We intend to allocate more Capital to invest for growth and enhance shareholder returns.
In conjunction with the sale of the gaming business. We recently announced several ways in which we are delivering increaser. All the returns first is a 2 year, 500 million, share purchase authorization, representing meetings percent of the current market cap. As part of that authorization we executed a 250 million accelerator share purchase agreement. The largest in company history, we also declare a 3 dollar per share, special cash dividend, that was paid in July.
We intend to maintain approximately 160 million in annual regular cash, dividends going forward. Even with the reduced share count post-execution of the buyback program, effectively, increasing the per share dividend on an annualized basis. You see that in today's announcement of a 10% increase in the Q4 dividend.
At the current share price of regular dividends represent a compelling yield of around 5% were committed to maintaining an attractive yield even as we Face increased Capital intensity to maintain the Contra portfolio over the next few years.
In the 25-, 28 period. We expect an aggregate 7.1 billion of cash generation to be allocated in the following manner about 3.2 billion for Investments required. To maintain the existing Contra portfolio and pursue targeted New Growth initiatives represented by the organic capex and our portion of the lot from fee.
About 1.7 billion for shareholder returns both dividends, and share purchases.
The ex uh the accelerator purchase and quarterly dividend plus the special dividend that was uh was paid already in 2025.
3 years.
About 2.2 billion split between payments to minority Partners debt reduction and other cache uses.
I'd like to note this multi-year, allocation does not include any upfront fee for Scratch and win in 28 as the structure of the RFP is not known at this time.
Also, as a reminder, our net debt at the Inception of the 25 to 28 period was 4.8 billion. Since then, we have been able to drive our debt, exposure down to today's historical law of 2.6 billion, allowing us going forward to absorb, the lot of from fee without significantly impacting. Our son leverage, where we expect it to go above our long-term 3x, Target for a temporary period, until the recurring cash generation of our business, will allow us to realign it towards the long-term Target over the next few years before engaging in discretion, when did
Moving now to the midterm targets, we are introducing 2028 revenue and profit targets to give you a sense of where we expect the accelerated growth Outlook. We have outlined to take us in the medium term
By 2028 we expect Revenue to reach approximately 2.75 billion.
As a more than 5% organic CAGR, Nets to over 3% on a reported basis, as a result of the increased service revenue amortization associated with the new Lotto concession, adjust the DBI. It is expected to grow at a more than 6% CAGR to $1.3 billion over the same period, as top-line expansion is accentuated by Optima cost savings and other efficiency initiatives.
Cash conversion before after from license fee is expected to improve to about 70%.
Once we are passed, the keep capex, the peak capex investment cycle, we believe the business will generate over 400 million in annual, free cash flow before upfront license fees. But after minority distributions this implies a low to mid teens free cash flow yield at the current share price. We expect freakish flow to further increase at 10 Pace. As many of the initiatives we had talked about today mature in 2030 and Beyond
We believe this is a compelling value for grow a growing durable business with low standing leadership positions.
With that sad. Now I'd like to open the call for questions.
Thank you pad to raise your hand and join the queue. And if you'd like to withdraw that question, again, press star 1. Your first question comes from the line of Jeff stanzel with stifel. Please go ahead.
Hey, great, good morning everyone. Thanks for taking our questions, maybe starting off here on, on the new Financial targeting targets and and sort of strategy, that that you laid out, Vince, if you take each of the of the buckets,
Uh that are laid out on on slide 23, so core growth, I Lottery, Italy, and all other could you maybe just unpack a little bit further for us? Some of the assumptions that are on underpinning, those growth rates, you know, meaning for for high Lottery. How much is sort of same store sales growth? How much of a benefit is is is new States launching for for Italy. You know how much is is assumed for you know retail market share High Lottery penetration you know like casinos Sports capture that side of things just anything to really help us better understand the algorithm from here. Would be great. Thanks.
Yeah, yeah, sure thing. So, um, I think we tried to lay out in really simple form the components of of growth. So we think, you know, certainly the, the starting point is something that's, you know, kind of based in in recent history around the, the ability for the core retail to grow. And then you on top of that, uh, you know, I I Lottery and the Italy B2B expansion as well as, uh, printing, uh, and, uh, and product sales, um, account for, for the balance. Um, the assumptions around. I Lottery are primarily organic growth. Uh, you know, we've I think got a realistic assumption around. Uh, What, uh, incremental markets might, um, might, uh, evolved, uh, over the, the plan period. But I think, you know, the thing that's a, you know, really exciting, uh, from our perspective, Max, and I is the ability to look at, um,
From now, 3 years from now versus going out for for the, for the longer term. So on the I Lottery front,
We've already secured, uh, several platform deals and content deals that, you know, take take time to actually initiate and then grow. So the, I Lottery growth in North America is primarily built around, uh, the Assumption of the, the, the, uh, customers and the, uh, and and, and the, the pool of of iot opportunity that that, uh, is currently currently secured, uh, on the B2B b2c side. Um, you know, we've, you know, we've gotten a lot of questions around that, right, because that's probably the most speculative piece of the of, of the walk and the most difficult for investors and potential investors to get their arms around. So, you know, we wanted to talk, talk about that um, you know, a bit more today, uh, which we think is important because this is something that, um, we think is, you know, a very, very exciting opportunity.
Again, when you think about our position in the marketplace, you know, having these these 2 long-standing Lottery that have
I think the numbers, you know, somewhere around 90% of the, the, the lottery Market in Italy. And they have this um, you know, really incredible, uh, retail distribution Network. Um and seeing what's been done in other parts of the world uh, and the uniqueness of Italy with the limited, um, really. No advertising. Um, you know, we think the things that we're doing are are very, very exciting to take a market that, uh, where people really love, uh, gaming. They love to play, uh, and an un a well underpenetrated Market in the b2c space around, I Lottery. Um, you know, we think this, this Evolution now that we've secured Lotto, uh, just makes just makes great sense. We, you know, we haven't really disclosed what our percentage is are, uh, in terms of anticipated market share. But, you know, we believe they're, they're incredibly reasonable and to
You know, come up really 3 Char points really. Just since launching our app, consolidating our play Under 1 roof have better user ability and and are interactivity with, with our, uh, with our customers, with their, with their ultimate customers. Even prior to really, uh, a robust marketing, uh, effort, I think is really indicative of the the potential to to, you know, to to increase our share pretty significantly.
And as we said, our share of a casino game play and sports betting play is pretty reasonable. Um, you know we've said over and over again. There's there's established players in the market that have been at this a long time. We're not uh, looking uh, or anticipating uh share anywhere close to what what, what they have? Uh, but it really doesn't take all that much to I think significantly improve the the cash flow prospects of you know, of this particular business. So uh when you look out to 28, also you know there's there's a ramp period, I think we've been very um, you know, very sober in our uh, projected share increase over the years and you know the really exciting stuff comes Beyond 2028. So we think, you know what we what we built in in this walk to 2028 is is super reasonable and then when you get into kind of the the the all
Other um, you know, a lot of this is built off of the instant ticking ticket share gains. We've had over the last year or year and a half. Um, you know, there's there's been uh, I think really good work done by the by the team now that we've invested in our print facility and we've got this state-of-the-art facility to have the confidence to go out and increment share. Now, we still, you know, we
You still have some teething pains going on with the with the print operation. As we're perfecting this, this state-of-the-art very complex uh facility and Equipment but we're working through that. And, you know, our goal is to be really best-in-class at in printing in our Lakeland, facility to be able to distribute great product around the world, and we have a lot of the business lined up on the product sales side.
Generation of equipment of of Hardware that we believe uh, will make us more competitive in the in in the sales uh category and and uh we think that's, you know, that that's immediate we we're already out in the marketplace competing with what I believe is is Superior Hardware. Um uh products. Uh so I I I you know we feel we feel really solid about the the walk and and and and what they're what they're built on large largely on on existing business or business reason, I think reasonable share gains based upon the anticipation of of of execution.
That's great, thanks for, for all that detail. And then for for our followup, maybe turning over to to return of of capital Max. I I apologize if I missed this, but it it seems like the the full 250 million ASR at this point is, is pretty much effectively deployed. I I didn't catch any commentary on on expectations for that second, 250 million tranche whether in terms of timing mechanism. Anything like that. Um, any any color there would be would be appreciated. Thanks, of course. Uh, yes, we need a little bit of patience on that, because the first branch is still in the market. Uh, we are executing it as we originally anticipated. Uh, the expectation is, uh, to complete, uh, the first Ranch by the end of the year.
There and, uh, at the latest early January. So, let's see when we get there and, uh, Beyond
What other options we have for uh the the prosecution of of the buyback program.
Right. And just to be clear, do you know how much is is still remaining on, on the 250 million? ASR
The program is proceeding a pace with the original expectation. So we we kind of are not, uh, walking off our estimate of be done by the end of the year.
Understood. That's awful. Thanks back. Thanks then.
Your next question comes from the line of Barry. Jonah with truist, please go ahead.
Hey, good morning everybody. Uh, Patrick Kio on for Barry. Thank you for taking our questions. Uh, first Mega Millions is on a nice jackpot run right now. Uh, we're curious.
To get your thoughts on what you're seeing. Since the price change went into effect and how or when you'll know if it's been successful for you, thank you.
Yeah. So since Mega Millions increase their their price to 5 dollars back in the spring back in April. Um you know unfortunately as you know we there there just has not been a good run up until now. And so you know it was very it's been very difficult to really evaluate the success of the of the price change. The the advantage of the price change is the built-in, uh, Megaplier. And the, um, math model was changed such that, uh, less of the, of the, of the the, uh, amount bed. The amount wagered goes to the actual jackpot and more towards, uh, these next tier prizes, which are significant million multi-millions. And so it, it was the theory that this would offer a differentiate differentiated game to, uh, Power Ball, which is really driven more significantly towards the towards the top, the top jackpot.
Um, yeah, I think it's it will take time for players to understand and appreciate that. It's it's been, it's been, uh, the the actual results have been. Uh, according to that design, there's been
Many many more payouts at the sub jackpot level and I think that, uh, is beginning to be understood by by players, um, but that, that will certainly take some time. Um, you know, as with any jackpot game, uh, you know, the higher the jackpot, the more, the play, the more, the play, the more, you know, frequent uh, players will also win these less than top top jackpots. And I think, um, the differentiation will be, uh, will be accelerated. So I I think Meg is up to about 800 million now and we're we're rooting for it, uh, to have a, a, a continued run. Um, this is the highest it's been since the since the, since the increase in the price and hopefully that continues
And could you frame? Next year's growth relative to the 2028 targets. You introduced this morning. Thank you.
Yeah. So we normally provide uh an update to 26 when we um report the end of the year number. So we would um
Uh, not be prepared to uh, speak talk in detail about it right now. Uh, we wanted to really focus more on uh kind of finishing the year and uh give the market a glimpse of our expectations uh to the midterm with the 2028 targets. So that
uh, help, uh, investors unpack all our, uh, strategies and, uh,
Um, the new Equity story of bright star.
But again, the good news is that in the short term, our Core Business have accelerated Italy is running above trend.
Uh, um, with the particular, uh, particularly nice Q3 performance. Uh, normalize for the calendar at plus 5%, the US is recovering, uh, the core business in the US is recovering significantly. And when everything is set and done, and you take the 9 months here today, the jackpot is down just above 10% year on year. So,
You don't need a lot to really bring uh, the performance back in line uh, versus more historical averages. So obviously the 1.8 billion, jackpot in September was an outlier. Uh, but if there is a decent run in the 4 quarter, we may end up uh, in in a decent territory and really that leads everything on uh on the performance of the LMA, which is really Bound by the fiscal Lottery year, which ends a mid of our calendar year in uh, in June July. So unfortunately, from from once in a while, it happens that we got hit by, uh, consecutive quarters of no jackpots and that is reflected in the LMA. But again, when you go back,
15. 20 years, history of this business.
Um, that is quickly recovered. And again, hopefully this is going to be the same between the second part of 25 and the first part of 26. Again, if the jackpot performance just continued to to go along the way as it has historically done.
And the other good news for 26 for now that we are obviously sharing with the market is that we continue to accelerate.
uh our Optima efforts, we have accelerated the, the execution of the first part we actually brought uh already home 30 million of savings through 2025
Uh so there is an incremental if you want 50 to be to be done between 26 and 28, to get to the total of 80 million that we just announced today.
other than that, I would defer, uh, to the conversation, uh, when we report the end of the year numbers,
Awesome. That's all great. Thank you, guys. Appreciate it.
As a reminder, if you would like to ask a question, please press *1 on your telephone keypad. Your next question comes from the line of Chad Benon with Macquarie. Please go ahead.
Good morning. Thanks for taking my question. And, uh, Vincent next, thanks for all the, uh, medium-term, uh, commentary in in, in framing out the store that was helpful. Um, max, just revisiting a little bit, what you were kind of touching on there, but I want to focus on Q4 and the decision to, uh, reaffirm uh, the Outlook. Uh, so I know that you have tough comparables, uh, particularly in in Italy from year-over-year basis.
But it looks like maybe Q3 came in a little bit better than expected from the same store basis. You know, that's kind of continued here. Um, can you? Maybe I'll and, and then I did want to touch on was the UK amount that uh, that you noted, a 14 million. Is that was that in the original guidance um but just want to want to ask about anything else that might be coming in you know below expectations or was this just an opportunity to to maintain. Hopefully some conservatism. Um given you know the uncertainty in with the consumer. Thank you.
I said, uh, yes. So, uh, this is definitely an interesting juncture of the year because uh, with this um uh phenomenal, Q3 performance. Um, we have kind of a, a bit re-established, the pace that uh, that we lost in the first half because of that LMA, jackpot combin negative combination
Top Line, 1 is the UK. And the second is the increased Revenue amortization coming from the
The larger upfront fee that we uh uh, we are going to uh, deliver to um, ADM in Italy. Uh, December 1st is the first date of the under the new concession. So we will have to book a month on on the new, on the new rate.
so when you when you take those 2 items out which uh probably together makes about 30 million dollars you you you can expect a
Definitely a a pretty interesting performance on the top line, uh, even compared to last year.
Uh, we expect the the product sale business to be kind of more or less in line with last year for the fourth quarter, which was definitely a, a decent performance. And then, we continue to anticipate, uh, uh, GNA to come, uh, lower in Q4. So, overall, we think we have the ingredients, uh, to deliver a great quarter again, obviously. Uh, um, it didn't make sense to, to go into the nitty-gritty details of the number to, and, and change it by a few million dollars. So, we are reiterating the 1.1, uh, billion ebita, we may end up exactly at that number. We may end up a little bit better. So we'll see at the end of the day, but we are facing a couple of headwinds on the top line. We continue to see good progress in our Core Business and we continue
To deliver savings in our operational structure. Overall, we are optimistic that we can deliver a good quarter.
Great, thank you, appreciate that, Max. Um, and then Vince on your medium-term outlook, uh, when you outline the growth, I know 1 of the things that you talked about with Cher expansion outside of, uh, us and Italy which I believe is about 12%. According to the to the slide deck, um, can you just talk about when a lot of these opportunities, uh, could could come to, you know, could come to your table? Um, is there, you know, a rolling, Cadence of new, uh, bids that are coming up? Um, or is this more on the the printing side, any more commentary? I know you're not giving 26 guidance, but just trying to figure out when some of these opportunities will arise. Thank you.
Yeah, I would say on the, on the share gains for our Core Business. Those things are, um, will will take several years either to, uh, win or like, let's take the case of
San Paulo Brazil, for example. Um, you know, if we decide to move ahead on that award, um,
which we've partnered up with, uh, with Scientific Games on that. Um, you know, we begin to execute that in 2026, but you won't see really cash flow, you know, profitability, uh, until you'll be on 2026. It's just, you know, the nature of these things especially when you're effectively establishing a lot of Lottery um in in a in a new in a green field Market, which is an incredibly exciting opportunity. However you know it takes
Takes some time. So I would say, you know, the things that we talked about uh, for Market expansion, um, especially thinking about the near-term, 2026 are related to to print and product sales.
Great. Thank you. Nice results, guys.
And that concludes our question and answer session. I will now turn the conference back over to Vince suski for closing comments.
And thank you all for your attention. Uh, just to recap, you know, we believe that Brightstar enjoys global leadership in a growing industry, and we think our return to a singular focus on lottery really marks an exciting new chapter. Uh, it improves our ability to continue to innovate and execute, drive the acceleration in organic revenue growth, and increase shareholder returns that we expect over the next 3 years.
Oh and of course we believe our current valuation provides a compelling entry point for growing adorable business. With long-standing leadership position as we execute on strategies, to continue to create significant shareholder value. Thank you.
Ladies and gentlemen, this does conclude today's conference call. Thank you for your participation and you may now disconnect
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