Q1 2026 Pollard Banknote Ltd Earnings Call

May 14, 2026

Operator 1: Good morning, everyone. Welcome to the Pollard Banknote Limited Q1 2026 results conference call. Listeners are reminded that certain matters discussed in today's conference call or answers that may be given to questions asked could constitute forward-looking statements that are subject to risks and uncertainties related to Pollard's future financial or business performance. Certain material factors or assumptions are applied in making forward-looking statements, and actual results may differ materially from those expressed or implied in such statements. The risk factor that may affect the results are detailed in Pollard's annual information form and other periodic filings and registration statements. You can access these documents at SEDAR Plus database found at sedarplus.ca. I'd like to remind everyone that this conference call is being recorded today, Thursday, 14 May 2026.

Operator: Good morning, everyone. Welcome to the Pollard Banknote Limited Q1 2026 results conference call. Listeners are reminded that certain matters discussed in today's conference call or answers that may be given to questions asked could constitute forward-looking statements that are subject to risks and uncertainties related to Pollard's future financial or business performance. Certain material factors or assumptions are applied in making forward-looking statements, and actual results may differ materially from those expressed or implied in such statements. The risk factor that may affect the results are detailed in Pollard's annual information form and other periodic filings and registration statements. You can access these documents at SEDAR Plus database found at sedarplus.ca. I'd like to remind everyone that this conference call is being recorded today, Thursday, 14 May 2026.

Speaker #2: Certain material factors or assumptions are applied in making forward-looking statements, and actual results may differ materially from those expressed or implied in such statements.

Speaker #2: The risk factor that may affect the results are detailed in Pollard's annual information form and other periodic filings and registration statements, and you can access this documents at setters+databasefound@setterplus.ca.

Speaker #2: And I likely remind everyone that this conference call is being recorded today. Thursday, May 14, 2026. And now I would like to introduce Mr. Doug Pollard, Co-Chief Executive Officer of Pollard Banknote Limited.

Operator 1: Now I would like to introduce Mr. Doug Pollard, Co-Chief Executive Officer of Pollard Banknote Limited. Please go ahead, sir.

Operator: Now I would like to introduce Mr. Doug Pollard, Co-Chief Executive Officer of Pollard Banknote Limited. Please go ahead, sir.

Speaker #2: Please go ahead, sir. Okay. Thank you very much, operator. And thank you, everyone, for joining us this morning, as the operator said. My name is Doug Pollard.

Doug Pollard: Okay. Thank you very much, operator. Thank you everyone for joining us this morning. As the operator said, my name is Doug Pollard. With me on the call today is John Pollard, Co-Chief Executive Officer, and Rob Rose, Chief Financial Officer. We released our 2026 Q1 results yesterday. You can access our news release as well as our complete financial statements and MD&A on our website at pollardbanknote.com and on SEDAR Plus. Today, we'll start with a few prepared remarks from me, providing an overall business update. John will then follow up with a discussion of our Q1 results, and then we'll open it up for questions. Our Q1 was a challenging quarter. It was impacted by negative factors, particularly in our instant ticket product line. These challenges were temporary issues related to the timing of customer orders.

Speaker #2: With me on the call today is John Pollard, Co-Chief Executive Officer, and Rob Rose, Chief Financial Officer. We released our first quarter 2026 results yesterday.

Speaker #2: You can access our news release as well as our complete financial statements and MD&A on our website at pollardbanknote.com and on Cedar Plus. Today we'll start with a few prepared remarks from me providing an overall business update and John will then follow up with the discussion of our first quarter results and then we'll open it up for questions.

Speaker #2: Our first quarter was a challenging quarter. It was impacted by negative factors, particularly in our instant ticket product line. These challenges were temporary issues.

Speaker #2: Related to the timing of customer orders, nothing has systemically changed with our instant ticket business. There have been no changes in our client portfolio and no changes in our pricing.

Doug Pollard: Nothing has systemically changed with our instant ticket business. There have been no changes in our client portfolio and no changes in our pricing. In addition, the onboarding of California is going well. In parallel, our digital contracts are performing well, led by Kansas and Belgium, and our charitable gaming business outperformed our expectations, driven by a rebound in Minnesota eTabs sales. Now, instant tickets remain a significant part of our business. They represent roughly half of our overall sales. A temporary mix change resulted in a significantly lower overall average selling price in Q1 compared to last year. In addition, the timing of orders from a couple of our larger customers shifted from late in Q1 to Q2, which reduced our volumes. Now, timing of orders and the timing of revenue recognition can vary significantly quarter to quarter and even within the quarter itself.

Speaker #2: In addition, the onboarding of the California is going well. In parallel, our digital contracts are performing well led by Kansas and Belgium, and our charitable gaming business outperformed our expectations driven by a rebound in Minnesota ETAB sales.

Speaker #2: Now, instant tickets remain a significant part of our business. They represent roughly half of our overall sales. A temporary mixed change resulted in a significantly lower overall average selling price in Q1 compared to last year.

Speaker #2: In addition, the timing of orders from a couple of our larger customers shifted from late in the first quarter to the second quarter, which reduced our volumes.

Speaker #2: Now, timing of orders and the timing of revenue recognition can vary significantly quarter to quarter and even within the quarter itself. Particularly through the later part of the first quarter, a number of higher valued Q1 games were shifted in the second quarter.

Doug Pollard: Particularly through the later part of Q1, a number of higher valued Q1 games were shifted into Q2. The delay of these games, combined with some related production inefficiencies, reduced sales in the quarter and negatively impacted our instant ticket margins. Looking forward, however, our confirmed order volumes for Q2 and Q3 have increased compared to Q1 2026 and from the comparable quarters last year by the amount of the additional volumes added under our new California primary supply contract. As well as our customer mix of games, including specialty work and game type, has returned to the historical levels seen in 2025, which will generate higher average selling prices than Q1.

Speaker #2: And the delay of these games combined with some related production inefficiencies reduced sales in the quarter and negatively impacted our instant ticket margins. Looking forward, however, our confirmed order volumes for the second and third quarters have increased compared to Q1 2026 and from the comparable quarters last year.

Speaker #2: By the amount of the additional volumes added under our new California primary supply contract. As well as our customer mix of games, including specialty work and game type, has returned to the historical levels seen in 2025, which will generate higher average selling prices than the first quarter.

Speaker #2: Now, based on the recovery of our instant tickets, we expect that our consolidated adjusted EBITDA for the second quarter of 2026 will exceed the comparable quarter of 2025.

Doug Pollard: Based on the recovery of our instant tickets, we expect that our consolidated adjusted EBITDA for Q2 2026 will exceed the comparable Q2 2025. In our digital division, work ramped up on our new Belgium National Lottery omnichannel gaming platform contract during Q1. Recall, this is a 12-year, CAD 289 million contract. That number includes VAT. That was awarded last fall for us to provide their technology solution, including an omnichannel central gaming system, which will seamlessly sell lottery products across both retail and digital channels. It also includes a Player Account Management solution to securely manage the player information, their wallets, and their preferences, and of course, an integrated marketing engagement platform to deliver personalized data-driven experiences at every player touch point.

Speaker #2: In our digital division, work ramped up on our new Belgium National Lottery omnichannel gaming platform contract during the first quarter. Recall, this is a 12-year, $289 million Canadian contract.

Speaker #2: Now, that number includes VAT. That was awarded last fall for us to provide their technology solution including an omnichannel central gaming system, which will seamlessly sell lottery products across both retail and digital channels.

Speaker #2: It also includes a player account management solution to securely manage the player information, their wallets, and their preferences. And of course, an integrated marketing engagement platform to deliver personalized data-driven experiences at every player touchpoint.

Speaker #2: Now, during the first quarter, we added additional staff resources to our current complement to work on scoping and planning this large Belgium engagement. As our staff begin working directly on the contract deliverables, our resultant revenue recognition will increase through the second quarter and through 2026.

Doug Pollard: During Q1, we added additional staff resources to our current complement to work on scoping and planning this large Belgium engagement. As our staff begin working directly on the contract deliverables, our resultant revenue recognition will increase through Q2 and through 2026. Work in Q1 began to be rolled out in our Oklahoma loyalty solution, and it is proceeding well. While relatively small in terms of financial impact, this is an important opportunity to showcase our technology implementation ability. This contract joins our portfolio of 5 other current lotteries utilizing our lottery-specific loyalty program and also provides us with a platform for expanding our suite of other services to the Oklahoma Lottery. Our Kansas iLottery operation continues to operate well as we completed 1 year of successful operation in Q1.

Speaker #2: Work in Q1 began to be rolled out in our Oklahoma loyalty solution and it is proceeding well. While relatively small in terms of financial impact, this is an important opportunity to showcase our technology implementation ability.

Speaker #2: This contract joins our portfolio of five other current lotteries utilizing our lottery-specific loyalty program and also provides us with a platform for expanding our suite of other services to the Oklahoma lottery.

Speaker #2: Our Kansas High Lottery operation continues to operate well as we completed one year of successful operation in Q1. We continue to exceed all operational expectations and expect to reduce our startup losses going forward in 2026.

Doug Pollard: We continue to exceed all operational expectations and expect to reduce our startup losses going forward in 2026. Additional investments in expanding our iLottery infrastructure in support of future contracts will continue. Our Kansas iLottery contract was awarded under an existing loyalty solution contract 2 years ago, which had a preexisting 10-year contract term with an end date of October 26 and no remaining extensions. Consistent with the lottery's procurement policies, the lottery is required to issue a new request for proposal for the operations of the iLottery and loyalty solution. This RFP was recently released with responses due in early summer of this year, and we are confident we will be providing a very compelling proposition for the lottery. Interest in iLottery operations from lotteries remains high, including the current request for proposal underway for the Colorado Lottery.

Speaker #2: Additional investments in expanding our eye lottery infrastructure in support of future contracts will continue. Our Kansas High Lottery contract was awarded under an existing loyalty solution contract two years ago.

Speaker #2: Which had a pre-existing 10-year contract term with an end date of October 26 and no remaining extensions. Consistent with the lottery's procurement policies, the lottery's required to issue a new request for proposal for the operations of the eye lottery and loyalty solution.

Speaker #2: This RFP was recently released with responses due in early summer of this year and we are confident we will be providing a very compelling proposition for the lottery.

Speaker #2: Interest in eye lottery operations from lotteries remains high, including the current request for proposal underway for the Colorado lottery. Our Neo Pollard ard eye lottery joint venture grew through strong e-instant and other game-style sales compared to the first quarter of last year.

Doug Pollard: Our NeoPollard iLottery joint venture grew through strong eInstant and other game style sales compared to Q1 of last year. This includes strong growth in eInstant and other game content, despite the absence of any large draw-based game jackpot runs this quarter. As anticipated, the Virginia Lottery has recently issued an RFP for their iLottery operation. NPI's current Virginia contract does not end, however, until October 30, 2028. Our board of directors also announced today they have authorized the launch of a normal course issuer bid, or NCIB, to purchase up to approximately 976,000 of our common shares, representing approximately 10% of our outstanding common shares in our current public float. The NCIB is subject to the approval of the Toronto Stock Exchange.

Speaker #2: This includes strong growth in e-instance and other game content despite the absence of any large draw-based game jackpot runs this quarter. Also, as anticipated, the Virginia lottery has recently issued an RFP for their eye lottery operation.

Speaker #2: NPI's current Virginia contract does not end, however, until October 30, 2028. Our board of directors also announced today they have authorized the launch of a normal course issuer bid, or NCIB.

Speaker #2: To purchase up to approximately $976,000 of our common shares representing approximately 10% of our outstanding common shares in our current public float. The NCIB is subject to the approval of the Toronto Stock Exchange.

Speaker #2: We're undertaking the NCIB because we believe that currently and from time to time the market price of our common shares may not reflect the underlying value of our company's business and prospects.

Doug Pollard: We're undertaking the NCIB because we believe that currently, and from time to time, the market price of our common shares may not reflect the underlying value of our company's business and prospects. We believe that at such times, the purchase of common shares for cancellations would be in the best interest of the company's shareholders, an appropriate use of its capital, and clearly illustrates our belief that our current strategy is the correct one. Charitable gaming and eTabs generated strong results in Q1 after eTabs have been negatively impacted by Minnesota market regulatory changes in 2025 that reduced all supplier sales and margins, including ours. Updated game content, increased frequency of new game introductions, and expanded sites have all contributed to higher gross margin in Minnesota, exceeding levels achieved in 2024 under the old regulations.

Speaker #2: We believe that at such times the purchase of common shares for cancellations would be in the best interests of the company shareholders and appropriate use of its capital and clearly illustrates our belief that our current strategy is the correct one.

Speaker #2: Charitable gaming and ETABs generated strong results in the first quarter after ETABs have been negatively impacted by Minnesota market regulatory changes in 2025 that reduced all supplier sales and margins, including ours.

Speaker #2: Updated game content increased frequency of new game introductions and expanded sites have all contributed to higher gross margin in Minnesota. Exceeding levels achieved in 2024 under the old regulations.

Speaker #2: And demand for consumable charitable products such as pull tabs, vending machines, and bingo supplies remains strong in the first quarter and is expected to continue through 2026.

Doug Pollard: Demand for consumable charitable products such as pull-tabs, vending machines, and bingo supplies remain strong in Q1 and is expected to continue through 2026. Despite the temporary challenges of Q1, our confidence in our future results remains very high based on the new contract implementations, our strong order level for instant tickets, and our growing results in our charitable group. Now I'll turn it over to John to discuss in detail the Q1 results.

Speaker #2: So despite the temporary challenges of the first quarter, our confidence in our future results remains very high. Based on the new contract implementations, our strong order level for instant tickets and our growing results in our charitable group.

Speaker #2: Now I'll turn it over to John to discuss in detail the first quarter results.

Speaker #3: Thanks, Doug. During the three months ended March 31, 2026, Pollard achieved GAP revenue of $141.7 million compared to $146.2 million in the three months ended March 31, 2025.

John Pollard: Thanks, Doug. During the three months ended 31 March 2026, Pollard achieved GAAP revenue of CAD 141.7 million, compared to CAD 146.2 million in the three months ended 31 March 2025. The factors impacting the CAD 4.5 million revenue decrease were a lower instant ticket average selling price in Q1 of this year. That decreased revenue by CAD 11.7 million as compared to 2025, primarily due to the change in customer mix and the decrease in proprietary product sales. Partly offsetting this decrease in revenue was the increase in instant ticket sales volumes of CAD 4.4 million compared to last year.

Speaker #3: The factors impact in the $4.5 million revenue decrease were a lower instant ticket average selling price in the first quarter of this year that decreased revenue by $11.7 million as compared to 2025, primarily due to the change in customer mix and the decrease in proprietary product sales.

Speaker #3: Partly offsetting this decrease in revenue was the increase in instant ticket sales volumes of $4.4 million compared to last year. Higher sales of ancillary lottery products and services increased revenue in the first quarter of '26 by $3.4 million as compared to the first quarter of 2025.

John Pollard: Higher sales of ancillary lottery products and services increased revenue in Q1 2026 by CAD 3.4 million as compared to Q1 2025. This growth was primarily due to increased digital sales, including Pollard's iLottery contracts with the Belgium and Kansas Lottery and higher distribution-related sales compared to 2025. Partially offsetting those increases in ancillary lottery sales was the decrease in the sales of licensed products. Turning to the charitable side of our business, higher charitable gaming volumes in our printed and consumables part of that division increased revenue by CAD 2.4 million in Q1 2026 compared to Q1 2025. This is predominantly as a result of the acquisition of Pacific Gaming in Q2 2025.

Speaker #3: This growth was primarily due to increased digital sales including Pollard's eye lottery contracts with the Belgium and Kansas lotteries. And higher distribution-related sales compared to 2025.

Speaker #3: Partially offsetting those increases in ancillary lottery sales was the decrease in the sales of licensed products. Turning to the charitable side of our business, higher charitable gaming volumes in our printed and consumables are part of that division increased revenue by $2.4 million in the first quarter of 2026 compared to the first quarter of 2025.

Speaker #3: This is predominantly as a result of the acquisition of Pacific Gaming in the second quarter of 2025. And in addition, higher average selling price of charitable printed games further increased sales by $0.4 million.

John Pollard: In addition, higher average selling price of charitable printed games further increased sales by CAD 0.4 million. Charitable e-gaming or eTabs further increased sales by CAD 1.8 million compared to 2025, with revenue generated in Minnesota reaching new records. New game content, increased frequency of new game launches, and a greater number of sites have driven revenue higher than the pre-regulatory change levels in 2024. During the three months ended 31 March 2026, Pollard generated approximately 74.5%, compared to 68.3% last year, of its revenue in US dollars. During Q1 2026, the actual US dollar value compared to Canadian dollars weakened by 5.8%, resulting in an approximate decrease of CAD 6.5 million in revenue relative to Q1 2025.

Speaker #3: Charitable e-gaming or ETABs further increased sales by $1.8 million compared to 2025 with revenue generated in Minnesota reaching new records. New game content increased frequency of new game launches and a greater number of sites have driven revenue higher than the pre-regulatory change levels in 2024.

Speaker #3: During the three months ended March 31, 2026, Pollard generated approximately $74.5% compared to $68.3% last year of its revenue in US dollars. During the first quarter of 2026, the actual US dollar value compared to Canadian dollars weakened by $5.8%, resulting in an approximate decrease of $6.5 million in revenue relative to the first quarter of 2025.

Speaker #3: Cost of sales was $125.1 million in the first quarter of 2026 compared to $120.8 million in the first quarter of 2025. The increase of $4.3 million in cost of sales was primarily the result of the higher cost associated with increased Pollard eye lottery operations including ramping up resources in preparation for the Belgium lottery contract development efforts.

John Pollard: Cost of sales was CAD 125.1 million in Q1 2026, compared to CAD 120.8 million in Q1 2025. The increase to CAD 4.3 million in cost of sales was primarily the result of the higher costs associated with increased Pollard iLottery operations, including ramping up resources in preparation for the Belgium Lottery contract development efforts and higher instant ticket production inefficiencies. Further increasing cost of sales in Q1 2026 was the addition of Pacific Gaming. These increases to cost of goods sold were partially offset by the impact of lower exchange rates on US dollar-denominated expenses.

Speaker #3: And higher instant ticket production inefficiencies. Further increasing cost of sales in the first quarter of 2026 was the addition of Pacific Gaming. Now, these increases to costs of goods sold were partially offset by the impact of lower exchange rates on US dollar denominated expenses.

Speaker #3: Our gross profit was $16.6 million or only $11.7% of sales in the first quarter of 2026 compared to $25.4 million or $17.4% of sales in the first quarter of 2025.

John Pollard: Our gross profit was CAD 16.6 million, or only 11.7% of sales in Q1 2026, compared to CAD 25.4 million or 17.4% of sales in Q1 2025. The decrease of CAD 8.8 million in gross profit and the decrease in gross profit percentage were primarily the result of our decreased instant tickets sales margins, which were largely the result of, as we've talked about today, the lower average instant tickets selling prices due to that significant shift in customer mix and also related to some production inefficiencies in the quarter. In addition, revenue related to the National Lottery contract is recognized based on a percentage of completion to date basis over the anticipated entire delivery timeframe.

Speaker #3: The decrease of $8.8 million in gross profit and the decrease in gross profit percentage were primarily the result of our decreased instant ticket sales margins, which were largely the result of, as we've talked about today, the lower average instant ticket selling prices due to that significant shift in customer mix, and also related to some production inefficiencies in the quarter.

Speaker #3: In addition, revenue related to the Belgium lottery contract is recognized based on a percentage of completion to date basis over the anticipated entire delivery timeframe.

Speaker #3: In the first quarter of 2026, we developed the needed talent to advance the implementation of the development stage to ensure immediate deployment once planning and scoping with the customers complete.

John Pollard: In Q1 2026, we developed the needed talent to advance the implementation of the development stage to ensure immediate deployment once planning and scoping with the customer is complete. Although this resulted in some costs being incurred without related revenue recognition, but it also ensured a successful start to the contract. Additionally, lower licensed product sales also contributed to the decrease in gross profit in the quarter. Factors that partially offset those decreases in gross profit and gross profit percentage factors were, as we discussed previously, the higher printed and eTab charitable sales positively impacted our gross profit. Also the acquisition of Pacific Gaming positively impacted gross profit. Administration expenses were CAD 19.2 million in Q1 2026, compared to CAD 17.3 million in Q1 2025.

Speaker #3: Although this resulted in some costs being incurred without related revenue recognition, but it also ensured a successful start to the contract. Additionally, lower licensed product sales also contributed to the decrease in gross profit in the quarter.

Speaker #3: Factors that partially offset those decreases in gross profit and gross profit percentage factors were as we've discussed previously, the higher printed and ETAB charitable sales positively impacted our gross profit.

Speaker #3: And also the acquisition of Pacific Gaming, positively impacted gross profit. Administration expenses were $19.2 million in the first quarter of 2026 compared to $17.3 million in the first quarter of 2025.

Speaker #3: The increase of $1.9 million from the first quarter of last year was largely as a result of the ERP implementation costs of $1.3 million and also the addition of Pacific Gaming's administration costs.

John Pollard: The increase of CAD 1.9 million from Q1 of last year was largely as a result of the ERP implementation costs of CAD 1.3 million and also the addition of Pacific Gaming's administration costs. Selling expenses were CAD 6 million in Q1 2026, similar to the CAD 6 million in Q1 2025. Pollard's share of income from its iLottery joint venture increased to CAD 16.6 million in Q1 2026 from CAD 16.2 million in Q1 2025. This CAD 0.4 million increase was primarily due to the continued strong instant sales in North Carolina and Virginia and higher iGaming sales in Alberta. These increases were partially offset by the expiry of a customer contract at the end of Q2 2025.

Speaker #3: Selling expenses were $6 million in the first quarter of '26, similar to the $6 million in the first quarter of 2025. Pollard's share of income from its eye lottery joint venture increased to $16.6 million in the first quarter of '26 from $16.2 million in the first quarter of '25.

Speaker #3: This $0.4 million increase was primarily due to the continued strong instant sales in North Carolina and Virginia and higher eye gaming sales in Alberta.

Speaker #3: These increases were partially offset by the expiry of a customer contract at the end of the second quarter of 2025. Adjusted EBITDA decreased $21.25 million in the first quarter of 2026 compared to $30.6 million in the first quarter of 2025.

John Pollard: Adjusted EBITDA decreased to CAD 21.5 million in Q1 2026, compared to CAD 30.6 million in Q1 2025. The primary reasons for the CAD 9.1 million decrease in adjusted EBITDA were the decrease in gross profit of CAD 7.6 million. That's net of amortization and depreciation, which was primarily due to the lower instant ticket sales margins and increased digital development resource costs, partially offset by the improved charitable gaming margins. Further reducing adjusted EBITDA was the increase in administrative expenses, net of the ERP implementation cost of CAD 0.2 million and the increase in realized foreign exchange loss of CAD 0.5 million. Partially offsetting those decreases was the increase in our share of our new Pollard joint venture iLottery business of CAD 0.4 million.

Speaker #3: The primary reasons for the $9.1 million decrease in adjusted EBITDA were the decrease in gross profit of $7.6 million—that's net of amortization and depreciation—which was primarily due to the lower instant ticket sales margins and increased digital development resource costs partially offset by the approved charitable gaming margins.

Speaker #3: Further reducing adjusted EBITDA was the increase in administrative expenses net of ERP implementation costs of $0.2 million and the increase in realized foreign exchange loss of $0.5 million and then partially offsetting those decreases was the increase in our share of our new Pollard joint venture eye lottery business of $0.4 million.

Speaker #3: Interest expense decreased to $2.3 million in the first quarter of 2026 from $2.8 million in the first quarter of '25 primarily as a result of lower interest rates in the first quarter of '26 as well as a reduction in average long-term debt outstanding as compared to the prior year.

John Pollard: Interest expense decreased to CAD 2.3 million in Q1 2026 from CAD 2.8 million in Q1 2025, primarily as a result of lower interest rates in Q1 2026, as well as a reduction in average long-term debt outstanding as compared to the prior year. Amortization of depreciation totaled CAD 12.6 million during Q1 2026, which increased from CAD 11.6 million in Q1 2025. The increase of CAD 1 million was equally a result of increased depreciation of property, plant, and equipment and the increase in amortization of intangible assets.

Speaker #3: Amortization of depreciation totaled $12.6 million during the first quarter of 2026, which increased from $11.6 million in the first quarter of 2025. The increase of $1 million was equally a result of increased depreciation of property, plant, and equipment and the increase in amortization of intangible assets.

Speaker #3: Income tax expense was $1.3 million in the first quarter of 2026 and effective rate of 26.5%, which was lower than our domestic rate of 27.0% due primarily to the effect of lower income tax rates in forest jurisdictions and the effect of non-taxable items partially offset by the impact of withholding another taxes.

John Pollard: Income tax expense was CAD 1.3 million in Q1 2026, an effective rate of 26.5%, which was lower than our domestic rate of 27.0%, due primarily to the effect of lower income tax rates in foreign jurisdictions and the effect of non-taxable items, partially offset by the impact of withholding and other taxes. Net income decreased to CAD 3.5 million in Q1 2026, compared to CAD 11.7 million in Q1 2025. The primary reasons for the CAD 8.2 million decrease were due to the decrease in gross profit of CAD 8.8 million, which were principally as a result of lower instant ticket sales margins, primarily due again to that lower average selling price.

Speaker #3: Net income decreased to $3.5 million in the first quarter of '26 compared to $11.7 million in the first quarter of 2025. The primary reasons for the $8.2 million decrease were due to the decrease in gross profit of $8.8 million, which were principally as a result of lower instant ticket sales margins primarily due again to that lower average selling price also reducing gross profit in the quarter was the impact of increased digital development resource costs further reducing net income was the increase in administration expenses of $1.9 million again primarily a result of our increased ERP implementation costs the increase in net foreign exchange loss of $0.8 million and the increase in other expenses of $0.4 million.

John Pollard: Also reducing gross profit in the quarter was the impact of increased digital development resource costs. Further reducing net income was the increase in administration expenses, CAD 1.9 million, again, primarily a result of our increased ERP implementation costs. The increase in net foreign exchange loss of CAD 0.8 million and the increase in other expenses of CAD 0.4 million. Partially offsetting these decreases to net income were the decrease to the income tax expense of CAD 2.8 million, the decrease in interest expense of CAD 0.5 million, and the increase in our NPI share of income of CAD 0.4 million. Net income per share, basic and diluted, decreased to CAD 0.11 and CAD 0.11 per share, respectively, in Q1 2026 from CAD 0.43 and CAD 0.43 per share, basic and diluted in Q1 2025.

Speaker #3: Partially offsetting these decreases to net income were the decrease to the income tax expense of $2.8 million the decrease in interest expense of $0.5 million and the increase in our NPI share of income of $0.4 million.

Speaker #3: Net income per share basic and diluted decreased to $0.11 and $0.11 per share respectively in the first quarter of 2026 from $0.43 and $0.43 per share basic and diluted in the first quarter of 2025.

Speaker #3: To close, I would just like to underline again what Doug mentioned earlier in his remarks. While the first quarter financial results were very disappointing, these were due to temporary factors related to the quarter, and nothing has changed with respect to our business plans and our plans for growth and continued expansion and improvements in profitability.

John Pollard: To close, I would just like to underline again what Doug mentioned earlier in his remarks. While the Q1 financial results were very disappointing, these were due to temporary factors related to the quarter and nothing has changed with respect to our business plans and our plans for growth and continued expansion and improvements in profitability. We remain very confident in both our short- and long-term future. As Doug stated earlier, we expect our consolidated adjusted EBITDA in Q2 2026 will exceed Q2 2025. That is the end of our prepared part of the discussion. Operator, we'd be happy to entertain any questions at this time.

Speaker #3: We remain very confident in both our short and long-term future and as Doug stated earlier, we expect our consolidated adjusted EBITDA in the second quarter of 2026 will exceed the second quarter of 2025.

Speaker #3: That is the end of our prepared part of the discussion. Operator, we'd be happy to entertain any questions at this time.

Speaker #1: Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. Should you have a question, please press star followed by the number one on your touch-tone phone.

Operator 2: Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. Your first question comes from the line of Robert Young of Canaccord Genuity. Please go ahead.

Operator: Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. Your first question comes from the line of Robert Young of Canaccord Genuity. Please go ahead.

Speaker #1: And you will hear a prompt that your hand has been raised. And if you wish to decline from the polling process, please press start followed by the number two.

Speaker #1: And your first question comes from the line of Robert Young of Khanaka Community. Please go ahead.

Speaker #2: Hi. Good morning. Maybe the first place to start would be around the spoilage and rework you noted. You said in the release that it was driven by the nature of the work.

Robert Young: Hi. Good morning. Maybe the first place to start would be around the spoilage and reworked, you noted, you said in the release that it was driven by the nature of the work. I was curious if you could expand on that. Given that it was a lower ASP quarter, I was wondering if the spoilage was part of the reason why ASP was low, because that was deferred to the current quarter.

Robert Young [Managing Director and Head of Research: Hi. Good morning. Maybe the first place to start would be around the spoilage and reworked, you noted, you said in the release that it was driven by the nature of the work. I was curious if you could expand on that. Given that it was a lower ASP quarter, I was wondering if the spoilage was part of the reason why ASP was low, because that was deferred to the current quarter.

Speaker #2: I was curious if you could expand on that. And then given that it was a lower ASP quarter, I was wondering if the spoilage was part of the reason why ASP was low.

Speaker #2: Because that was deferred. To the current quarter.

John Pollard: Hello, Rob. It's John Pollard, answering that question. We did have some unusually large production inefficiencies and spoilage in the quarter. Those were related partly and to a significant extent to some new products and production processes that we had in the quarter that we did have some difficulty with. Those issues have been resolved and corrected and will not reoccur in the next quarter. There was some relationship there a little bit that some of those new products and processes were related to games that we were producing late in the quarter that, as we mentioned in our marks, had some high margins related to them and caused some of those games to get shifted to the next quarter.

Speaker #3: Hello, Rob. It's John Pollard answering that question. We did have some unusually large production inefficiencies and spoilage in the quarter. Those were related partly and to a significant extent to some new products and production processes that we had in the quarter that we did have some difficulty with.

Speaker #3: Those issues have been resolved and corrected. And will not reoccur in the next quarter. And there was some relationship there a little bit that some of those new products and processes were related to games that we were producing late in the quarter that as we mentioned in our remarks had some high margins related to them.

Speaker #3: And caused some of those games to get shifted to the next quarter. We do we have a lot of sort of variety in the size and margins of our various orders from our customer base.

John Pollard: We have a lot of sort of variety in the size and margins of our various orders from our customer base. Usually those blend out pretty evenly through one quarter to another, but in this case, there was a big difference in Q1. There was a relationship to those inefficiencies that pushed some of those high-margin games at the end of the quarter to next quarter.

Speaker #3: Usually, those blend out pretty evenly through one quarter to another. But in this case, there was a big difference in Q1. And so there was a relationship to those inefficiencies that pushed some of those high-margin games at the end of the quarter to next quarter.

Speaker #2: Okay. And so can I take that and would it be correct to say that the margin pressure from lower ASP was partly or largely due to the spoilage?

Robert Young: Okay. Can I take that and would it be correct to say that the margin pressure from lower ASP was partly or largely due to the spoilage? Was it?

Robert Young [Managing Director and Head of Research: Okay. Can I take that and would it be correct to say that the margin pressure from lower ASP was partly or largely due to the spoilage? Was it?

Speaker #2: Or was it more due to resonance of orders?

John Pollard: I mean-

Robert Young: Due to mixed orders?

Robert Young [Managing Director and Head of Research: Due to mixed orders?

Speaker #3: Well, I mean, obviously, when you have excess spoilage, that will impact your margins. In the quarter when it occurs. But it didn't it wasn't didn't relate to the average selling price other than the change in timing of some of those orders.

John Pollard: Well, I mean, obviously, when you have excess spoilage, that will will impact your margins in the quarter when it occurs. It didn't relate to the average selling price other than the change in timing of some of those orders. I'm not sure if that's fully answering the question, Rob.

Speaker #3: So I'm not sure if that's fully answering the question, Rob.

Speaker #2: Yeah, I'm just trying to understand—in the release, you gave good information on the impact of volume and ASP. I'm just trying to get a sense of the impact from the spoilage.

Robert Young: I'm just trying to understand. In the release, you gave good information on the impact of volume and ASP. I'm just trying to get a sense of the impact from the spoilage, because it would be a contributing factor to both of those. The second part would be, is it spilling into Q2? Is the manufacturing issue continuing in Q2, or is it resolved now?

Robert Young [Managing Director and Head of Research: I'm just trying to understand. In the release, you gave good information on the impact of volume and ASP. I'm just trying to get a sense of the impact from the spoilage, because it would be a contributing factor to both of those. The second part would be, is it spilling into Q2? Is the manufacturing issue continuing in Q2, or is it resolved now?

Speaker #2: Because it would be a contributing factor to both of those. And then the second part would be is it spilling into Q2? Does the manufacturing issue continue in Q2?

Speaker #2: Or is it resolved now?

John Pollard: The impact from the spoilage was much smaller than the impact from the average selling price and the volumes. You can tell from the I think as I just noted in my comments, I think we saw, if I am remembering the numbers correctly, a CAD 11 million reduction in sales related to our average selling price. That's a really big number.

Speaker #3: The impact from the spoilage was much, much smaller than the impact from the average selling price. And the volumes and you can tell from the I think as I just noted in my comments, I think we saw if I'm remembering the numbers correctly an $11 million reduction in sales related to our average selling price.

Speaker #3: That's a really big number. And related to that mix problem. And so the spoilage issues were much, much smaller than that. Still, not immaterial.

Robert Young: Okay

Robert Young [Managing Director and Head of Research: Okay

John Pollard: You know, related to that mix problem. The spoilage issues were much, much smaller than that. Still, you know, not immaterial, but they did also affect the timing of those high-margin games.

Speaker #3: But they did also affect the timing of those high-margin games.

Speaker #2: Got it. And then also suggested in the release that there were confirmed orders. That suggests volumes will be flat in the remainder of the year before you add California in.

Robert Young: Got it. Also suggested in the release that there are confirmed orders that suggest volumes will be flat in the remainder of the year before you add California in. I am curious what confirmed orders means.

Robert Young [Managing Director and Head of Research: Got it. Also suggested in the release that there are confirmed orders that suggest volumes will be flat in the remainder of the year before you add California in. I am curious what confirmed orders means.

Speaker #2: And so I'm curious what confirmed orders means.

Speaker #3: We should make sure we get that clear. Because we were trying to send a very specific message in our comments in the quarter. But we talk about our order volumes for the second and third quarters.

John Pollard: We should make sure we get that clear 'cause we were trying to send a very specific message in our comments in the quarter. You know, and we talk about our order volumes for the Q2 and Q3. We'd love to talk longer, but the nature of the way our orders come in from our customers, we don't typically get firmed up orders until they increasingly get firm as we get closer to ship dates. Really, out about 4 or 5 months is about as long as we get a firm order book, because our turnaround time for orders doesn't need to be that long or longer. We don't start to get firmed up orders from our customers until that time.

Speaker #3: We'd love to talk longer. But the nature of the way our orders come in from our customers, we don't typically get firmed-up orders until they increasingly get firm as we get closer to ship dates.

Speaker #3: But really, out about four, five months is about as long as we get a firm order book. Because our turnaround time for orders doesn't need to be that long or longer.

Speaker #3: So we don't start to get firmed-up orders from our customers until that time. And so we can look for the right now at the second and third quarters and have a very firm idea of exactly what's on our order schedule for our production schedule for that for that time.

John Pollard: We can look right now at the Q2 and Q3 and have a very firm idea of exactly what's, you know, on our order schedule, our production schedule for that, you know, for that time. What we're saying is that our volumes that we see in that production schedule for all of our non-California customers are back to normal levels, essentially, comparable levels to what we saw last year, if we call that normal, the recent normal. In addition to those levels, we will expect to have the full complement also of our expanded California work on top of those orders.

Speaker #3: And what we are saying is that our volumes that we see in that production schedule for all of our non-California customers are back to normal levels, essentially, comparable levels to what we saw last year.

Speaker #3: If we call that normal, then the recent normal. And in addition to those levels, we will expect to have the full complement also of our expanded California work on top of those orders.

Speaker #3: In Q1, as we noted in our comments, our volumes were only up slightly—not as much as they would have been if we'd had the full complement of California, plus our normal level of orders from last year.

John Pollard: In Q1, as we noted in our comments, our volumes were only up slightly, not as much as they would have been if we'd had the full complement of California plus our normal level of orders from last year. That is what will change in Q2 and Q3. I hope that's clear.

Speaker #3: That is what will change in Q2 and Q3. I hope that's clear. I'm sorry.

Robert Young: Got it.

Robert Young [Managing Director and Head of Research: Got it.

John Pollard: I'm sorry.

Speaker #2: And then is it fair to say that California contract is lower ASP? It wasn't a factor in the ASP mix, was it?

Robert Young: Is it fair to say the California contract is lower ASP? It wasn't a factor in the ASP mix, was it?

Robert Young [Managing Director and Head of Research: Is it fair to say the California contract is lower ASP? It wasn't a factor in the ASP mix, was it?

John Pollard: No. Our California contract, as we noted in the notes, is actually going really well. The customer's very happy. It's onboarding great. It's going, actually better than planned. The California was nothing to do. In fact, it was a positive influence to our quarter. We're getting the volumes and the average selling price that we had anticipated from that contract. Our problems with average selling price was related to two or three only really, but two or three of our other largest customers. Obviously, those are the ones that are gonna influence it most, not surprisingly, where we just had some unusual timing of some of their orders getting pushed to later in the year.

Speaker #3: No. Our California contract, as we noted in the notes, is actually going really well. Customers are very happy. It's onboarding great. It's actually going better than planned.

Speaker #3: The California was nothing to do. In fact, it was a positive influence to our quarter. We're getting the volumes and the average selling price that we had anticipated from that contract, the our problems with average selling price was related to two or three only, really.

Speaker #3: But two or three of our other largest customers, obviously, those are the ones that are going to influence it most. Not surprisingly. Where we just had some unusual timing of some of their orders getting pushed to later in the year.

Speaker #2: Okay, I think that's it for me. I'll just close with saying, great working with you, Rob Rose. You're there. Wish you health—a very healthy retirement.

Robert Young: I think that's it for me. I'll just close with saying great working with you, Rob Rose. If you're there, wish you health, very healthy retirement and lots of Jets Stanley Cups, I'll try.

Robert Young [Managing Director and Head of Research: I think that's it for me. I'll just close with saying great working with you, Rob Rose. If you're there, wish you health, very healthy retirement and lots of Jets Stanley Cups, I'll try.

Speaker #2: And lots of jet Stanley cups. I'll pass that on.

Speaker #3: I'll hold you to that, Rob. Thank you. We're not getting rid of Rob for another quarter or two or three yet. So as we noted till the end of the year.

Doug Pollard: I'll hold you to that, Rob. Thank you.

Rob Rose: I'll hold you to that, Rob. Thank you.

Rob Rose: We're not getting rid of Rob for another quarter or two or three yet, so as we know it until the end of the year. We have plenty of time to keep thanking Rob for his efforts yet.

John Pollard: We're not getting rid of Rob for another quarter or two or three yet, so as we know it until the end of the year. We have plenty of time to keep thanking Rob for his efforts yet.

Speaker #3: So we have plenty of time to keep thanking Rob for his efforts yet.

Speaker #2: Thank you, Robert and Rob.

Doug Pollard: Thank you, Robert and Rob.

Speaker #1: Your next question comes from the line of Stephen Poland of Raymond James. Please go ahead.

Operator 2: Your next question comes from the line of Stephen Boland of Raymond James. Please go ahead.

Operator: Your next question comes from the line of Stephen Boland of Raymond James. Please go ahead.

Speaker #4: Good morning. Just a follow-up on the orders—are they comparable to last year? Is there some change from your customers or consumer buying? Is there more caution?

Stephen Boland: Morning. Just a follow-up on, you know, that the orders are comparable to last year. Is there some change from your customers or consumer buying that, you know, is there more caution? Is the economy impacting what you're hearing on the ground in terms of what all your jurisdictions are doing and maybe their constituents?

Speaker #4: Is the economy impacting what you're hearing on the ground in terms of what all your jurisdictions are doing? And maybe they're constituents?

Doug Pollard: Thank you, Stephen. It's Doug Pollard speaking. The short answer is no, we're not seeing any significant changes. The economy, you know, and the questions around that, you know, there's always a question about the connection of, for example, gas prices to instant ticket sales. We're not seeing anything dramatic there. For the last couple of years, we've seen retail sales have flattened a little bit. You know, for several years, there was close to double-digit growth in sales, that's flatter. Some lotteries are still seeing nice growth, some of the ones we're leading. We're not seeing anything, any significant sign that people are shifting. It's one of the parts that we really like about instant tickets, right?

Speaker #2: Thank you, Stephen. It's Doug Pollard ard speaking. The short answer is no. We're not seeing any significant changes the economy and the questions around that.

Speaker #2: There's always a question about the connection of, for example, gas prices to instant ticket sales. But we're not seeing anything dramatic there for the last couple of years.

Speaker #2: We've seen retail sales have flattened a little bit. For several years, there was close to double-digit growth in sales, but that's flatter now. Some lotteries are still seeing nice growth.

Speaker #2: Some of the ones we're leading. But we're not seeing anything any significant sign that people are shifting and it's one of the parts that we really like about instant tickets, right?

Speaker #2: I think that those sales are going to prove to be very resilient no matter what's happening in the economic cycle.

Doug Pollard: I think that those sales are gonna prove to be very resilient no matter what's happening in the economic cycle.

Speaker #4: Okay. The second question's on Belgium. Just in terms of the impact on margin, you've talked about put some talent on board. To get things moving, maybe you could just give us a little bit of a what's been accomplished so far in terms of implementation.

Stephen Boland: Okay. The second question's on Belgium, just in terms of, you know, the impact on margin. You've talked about, you put some talent on board, you know, to get things moving. Maybe you could just give us a little bit of what's been accomplished so far, you know, in terms of implementation. I know the planning is mentioned in the MD&A. You know, what's the next steps over the next couple quarters? You know, is that margin impact, I don't know if you can quantify it, but is that something that will be steady for the remainder of 2026?

Speaker #4: I know planning is mentioned in the MD&A. What are the next steps over the next couple of quarters? And is there a margin impact? I don't know if you can quantify it.

Speaker #4: But is that something that will be steady for the remainder of 2026?

Speaker #2: Well, let me just start by saying that I'll remind everybody this is an extraordinarily complex project, right? It is omnichannel. It is iLottery. It is retail.

Doug Pollard: Well, let me just start by saying that I'll remind everybody this is an extraordinarily complex project, right? It is omnichannel, it is iLottery, it is retail. It is a lot. There is a lot of planning that goes into that process and scoping that and figuring out what that process is, and that's broken down into several phases. We've been intently working at that stage over the last little while and planning it out. I think that planning work that we've done has been pretty intense, but it's been pretty well-received by the lottery. I'm very happy with the trajectory that we're on.

Speaker #2: It is a lot, and so there is a lot of planning that goes into that process—scoping that and figuring out what that process is.

Speaker #2: And that's broken down into several phases. So we've been intently working at that stage over the last little while and planning it out. And I think that planning work that we've done has been pretty intense.

Speaker #2: But it's making it's been pretty well received by the lottery. And I'm very happy with the trajectory that we're on. As we go forward in the next few quarters, you shift from the planning of that to getting the software developers and engineers and such to start building and doing the developing.

Doug Pollard: As we go forward in the next few quarters, you shift from the planning of that to getting the, you know, the software developers and engineers and such to start building and doing the developing. The way the accounting is designed for this is, as we do the work on the project, we then recognize more of the revenue. In Q1, there wasn't as much work done as that planning stage was done. As we go forward into Q2 and further out in, into 2026, you'll see that slowly ramp up and the revenue recognition will go with that.

Speaker #2: And the way the accounting is designed for this is as we do the work on the project, we then recognize more of the revenue.

Speaker #2: And so in Q1, there wasn't as much work done, as that planning stage was done. But as we go forward into Q2 and further out into 2026, you'll see that slowly ramp up.

Speaker #2: And the revenue recognition will go with that.

Speaker #4: And so we should see—I mean, can you just give us a timeline again? Apologize. Is this 2026? And then you start to see more revenue recognition in 2027 as things kind of go through the cycle?

Stephen Boland: We should see, I mean, can you just give us a timeline again? Apologize. Like, is this 2026 and then you start to see more re-revenue recognition in 2027 as things kind of go through this cycle?

Speaker #2: Well, I would say you'll start to see more revenue recognition in Q2. And it will build through

Doug Pollard: Well, I would say you'll start to see more revenue recognition in Q2.

Stephen Boland: Okay.

Doug Pollard: It will build through 2026.

Speaker #4: Okay, all right. And just last one for me: I'm not sure if you can answer this, but the NCIB—I’m not sure how active it’ll be.

Stephen Boland: Okay. All right. Just last one from me. I'm not sure if you can answer this, you know, the NCIB, I'm not sure how active it'll be. I'm just wondering from the, you know, the Pollard family, is that tendering into that or you're comfortable with your holdings? I don't know if you can talk to that yet.

Speaker #4: But I'm just wondering, can the Pollard family is that tendering into that? Or you're comfortable with your holdings? I don't know if you can talk to that yet.

Doug Pollard: It's Stephen Boland. No, this NCIB is gonna be supporting the market shares. The Pollards have no intention to be tendering into that at all.

Rob Rose: It's Stephen Boland. No, this NCIB is gonna be supporting the market shares. The Pollards have no intention to be tendering into that at all.

Speaker #3: It's Rob here with Stephen. So no, this NCIB is going to be supporting the market. Shares and the Pollards have no intention to be tendering into that at all.

Speaker #4: Okay. Thanks very much.

Stephen Boland: Okay. Thank you very much.

Speaker #1: And your next question comes from the line of Jim Bryan of Acumen Capital. Please go ahead.

Operator 2: Your next question comes from the line of Jim Byrne of Acumen Capital. Please go ahead.

Operator: Your next question comes from the line of Jim Byrne of Acumen Capital. Please go ahead.

Speaker #2: Yeah. Good morning, guys. Maybe just a couple starting with Virginia. Maybe just remind me when bids are due. And is it safe to assume that you guys will be bidding independently of your NPI partner?

Jim Byrne: Good morning, guys. Maybe just a couple, starting with Virginia. Maybe just remind me when bids are due, and is it safe to assume that you guys will be bidding independently of your NPI partner?

Doug Pollard: You know, that RFP just came out, and they've already pushed back the due date on it, until later this summer. I don't have the precise date on when that bid is due. Well, I appreciate your question. You know, it's recent enough. We just got it, and I would say at this point, we're still considering what our approach will be for that.

Speaker #3: You know what? That RFP just came out. And they've already pushed back the due date on it until later this summer. So I don't have the precise date on when that bid is due.

Speaker #3: And, well, I appreciate your question. It's reasoned enough. We just got it. And I would say, at this point, we're still considering what our approach will be for that.

Speaker #2: Okay. So there is kind of discussions underway that you might submit something together? Is that as the incumbents there? Is that a potential opportunity?

Jim Byrne: Okay. There is kind of discussions underway that you might submit something together. Is that, you know, as the incumbents there, is that a potential opportunity?

Doug Pollard: I don't think I can comment on specific conversations. I would just say that we're considering what approach we're gonna take.

Speaker #3: I don't think I can comment on specific conversations. I would just say that we're considering what approach we're going to take.

Doug Pollard: I don't think I can comment on specific conversations. I would just say that we're considering what approach we're gonna take.

Speaker #2: Okay. Excellent. And thinking about the ETAB, I know I think Alaska was a potential opportunity. expansion?

Jim Byrne: Okay. That's it. Thinking about the eTab, I know, I think Alaska was a potential opportunity. Any updates on eTab expansion?

Speaker #3: Yeah. We're pretty remain pretty excited about Alaska. We've been working hard on that for months now to put ourselves in a great position to launch strongly.

John Pollard: The, we remain pretty excited about Alaska. We've been working hard on that for months now to put ourselves in a great position to launch strongly. The bill is going through the state legislature in Alaska that has a, kind of, a start kickoff date of 1 January of next year. Don't quote me exactly on this. There's, like, a week or two left in the legislative session. We're hopeful that it's gonna get approved during that session. We have to wait and see. It seems like it is. We've got lobbyists working there and various people. We've been working really hard for months to be ready for a big bang, fast roll out there and be very successful.

Speaker #3: The bill is going through the state legislature in Alaska. That has a kind of a start kickoff date of January 1 of next year.

Speaker #3: And don't quote me exactly on this. There's like a week or two left in the legislative session. And we're hopeful that it's going to get approved during that session.

Speaker #3: But we have to wait and see. It seems like it is. We've got lobbyists working there, and various people. We've been working really hard for months to be ready for a big bang, fast rollout there, and be very successful.

John Pollard: We've joined forces with the largest distributor in Alaska to be ready. We've had multiple visits out there and, you know, we are just seeing, just generally on eTabs, some real interest in that product line, not just through our charitable gaming side of our business. Even lotteries themselves are increasingly seeing the tablet-based eTab as a way to potentially expand lottery revenues in social establishments in some of their jurisdictions. And we've got several discussions ongoing with state and provincial lotteries about deploying tablet-based, we wouldn't call them eTabs, but a tablet-based lottery product. Yeah, Alaska, we should find out in the next 2 weeks whether that bill gets approved, and then it'll be off to the races.

Speaker #3: We've joined forces with the largest distributor in Alaska. To be ready. We've had multiple visits out there. And we are just seeing just generally on ETABs some real interest in that product line.

Speaker #3: Not just through the our charitable gaming side of our business. But even lotteries themselves are increasingly seeing the tablet-based ETAB as a way to potentially expand lottery revenues in social establishments in some of their jurisdictions.

Speaker #3: And we've got several discussions ongoing with state and provincial lotteries. About deploying tablet-based that we wouldn't call them ETABs. But a tablet-based lottery product.

Speaker #3: But yeah, Alaska, we should find out in the next two weeks whether that bill gets approved. And then it'll be off to the races.

Speaker #2: Okay. That's excellent. And then maybe just one more on Kansas and the iLottery RFP. I believe it was at North Carolina that quickly came to RFP kind of right after launch.

Jim Byrne: Okay, that's excellent. Maybe just one more on Kansas and the iLottery RFP. I believe it was at North Carolina that, you know, quickly came to RFP kind of right after launch of their iLottery. You know, kind of assuming that there wouldn't be a significant change here in such short order. Is that correct? Is that kind of what you're hoping/expecting for Kansas?

Speaker #2: Of their iLottery. Kind of assuming that there wouldn't be a significant change here. In such short order. Is that correct? Is that kind of what you're hoping/expecting for Kansas?

Speaker #3: Well, let me first say, I don't think they're thinking of North Carolina. I think you're thinking of Pennsylvania. And that may have been the case there, where they had a relatively short term.

John Pollard: Well, let me first say, I don't think you're thinking of North Carolina. I think you're thinking of Pennsylvania. That may have been the case there, where they had a relatively short term. Look, I don't think we can comment specifically on why Kansas or what they might be thinking. I would just say they had a contract term that ended, you know, at the time, they wanted to get up and running quickly, and they turned to us to do so, and we delivered for them. I think that was impressive, and we're delivering the financial results that the legislature looked for.

Speaker #3: Look, I don't think we can comment specifically on why Kansas or what they might be thinking. I would just say they had a contract term that ended.

Speaker #3: And at the time, they wanted to get up and running quickly. And they turned to us to do so. And we delivered for them.

Speaker #3: And I think that was impressive. And we're delivering the financial results that the legislature looked for. So all I can say is that as they go forward into an RFP now, that would be both expected because the contract term and I think the job that we've done has put ourselves in a very good position.

John Pollard: All I can say is that as they go forward into an RFP now, that would be both expected because the contract term, and I think the job that we've done has put ourselves in a very good position. Like all these bids, it'll be a competitive bid and we're not taking anything for granted, and we will put forward a very competitive proposal.

Speaker #3: But like all these bids, it'll be a competitive bid. And we'll but we're not taking anything for granted. And we will put forward a very competitive proposal.

Speaker #2: Okay. That's it for me, guys. Thanks.

Jim Byrne: Okay. That's it for me, guys. Thanks.

Speaker #1: Once again, if you wish to ask a question, please press star one to join the queue. And there are no further questions at this time.

Operator 2: Once again, if you wish to ask a question, please press star one to join the queue. There are no further questions at this time. I will now turn the call back over to Doug Pollard. Please continue.

Operator: Once again, if you wish to ask a question, please press star one to join the queue. There are no further questions at this time. I will now turn the call back over to Doug Pollard. Please continue.

Speaker #1: I will now turn the call back over to Todd Pollard. Please continue.

Speaker #3: Okay. Thank you, operator. To our shareholders, I want to acknowledge the disappointment of the first quarter results. Again, I want to reinforce that we believe these are temporary factors.

Doug Pollard: Okay. Thank you, operator. To our shareholders, I want to acknowledge the disappointment of the Q1 results. Again, I want to, however, reinforce that we believe these are temporary factors, and we remain highly confident in our outlook for the rest of 2026 and beyond. The game-changing milestones that we achieved during the latter part of 2025 have established a foundation for our growth and success in both the retail side of our business, including various printed products and the digital solution portion of our business, covering iLottery, eInstant, Loyalty, and eTabs. We are tremendously excited about the opportunities that lie before us, both in the short and the long term. I wanna thank you for joining us, and we look forward to updating you next quarter. Until then, have a great rest of your day.

Speaker #3: And we remain highly confident in our outlook for the rest of 2026 and beyond. The game-changing milestones that we achieved during the latter part of 2025 have established the foundation for our growth and success in both the retail side of our business.

Speaker #3: Including various printed products and the digital solution portion of our business. Covering iLottery, e-instance, loyalty, and ETABs. We are tremendously excited about the opportunities that lie before us.

Speaker #3: Both in the short and the long term. So I want to thank you for joining us. And we look forward to updating you next quarter.

Speaker #3: Until then, have a great rest of your day.

Operator 2: Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.

Doug Pollard: Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.