Brightstar Lottery (BRSL) Q3 2024 earnings summary

Executive summary

• Revenue for the first nine months reached $1.9 billion, with Q3 2024 revenue at $587 million, driven by growth in Italy and improved U.S. instant and draw game trends.

• Adjusted EBITDA for the period was $880 million (47.3% margin), with Q3 at $264 million (44.9% margin), reflecting strong profitability.

• The company is transitioning to a pure-play lottery business, following the announced sale of its gaming and digital business to Apollo, expected to close by Q3 2025.

• Organizational optimization initiatives (Optima 3.0) are underway, targeting $40 million in annualized cost savings by end of 2026, with a $38 million restructuring charge recognized in Q3.

• Year-to-date cash from operations reached $724 million, with over 85% from continuing operations.

Financial highlights

• Year-to-date revenue grew from $1.849 billion to $1.861 billion year-over-year; Q3 revenue declined 2% year-over-year to $587 million.

• Operating income for the period was $507 million, down from $555 million, mainly due to a $38 million pre-tax restructuring charge; Q3 operating income was $110 million (18.7% margin), down 33% year-over-year.

• Adjusted EBITDA declined slightly to $880 million from $898 million, with a resilient 47% margin; Q3 adjusted EBITDA was $264 million (44.9% margin), down 6% year-over-year.

• Adjusted EPS from continuing operations increased 11% year-over-year to $0.46 per diluted share.

• Free cash flow from continuing operations was $385 million year-to-date, with $144 million in Q3.

Outlook and guidance

• Q4 2024 revenue expected at $640–$690 million, with adjusted EBITDA of $280–$300 million.

• Full-year 2024 revenue projected at $2.5–$2.55 billion and adjusted EBITDA at $1.16–$1.18 billion.

• Low single-digit same-store sales growth anticipated for instant ticket and draw games, with continued momentum in Italy and recovery in the U.S. and Canada.

• Mega Millions ticket price increase to $5 in April 2025 expected to be a positive catalyst.