After posting a $58 million (€50 million) net loss in Q2, Brightstar Lottery has revealed details of an expanded cost reduction programme to “right-size” the business following the sale of the existing IGT Gaming & Digital.
For the three months to 30 June, revenue at Brightstar reached $631 million, an increase of 3% from last year. It was the first quarter during which lottery was reported as a standalone business after the recent split.
In July, private equity company Apollo completed its $6.3 billion acquisition of IGT’s Gaming & Digital business and Everi Holdings. The two businesses are now being combined and will jointly operate under the IGT brand.
With this, the legacy IGT lottery business is now operating as a completely separate entity. Ahead of the split, the segment was renamed Brightstar, reflecting its “source of inspiration and innovation” for players worldwide.
While Brightstar and the existing Gaming & Digital business operated alongside each other in Q2, and indeed H1, results have been reported as standalone to reflect the now-completed split. The published results compared Q2 this year to the lottery business’ performance in the same period in 2024.
“With a singular focus on lottery and unmatched industry expertise, we are well positioned to create value for all stakeholders with our mission to elevate lotteries and inspire players around the world,” Brightstar CEO Vince Sadusky said.
How did Q2 go for Brightstar?
Taking a closer look at Q2, service activity accounted for $588 million of all revenue, level with last year. However, product sales revenue climbed 59% to $42 million, leading to the rise in group revenue for the quarter.
The US and Canada drew the most revenue at $293 million, although this was lower 4% year-on-year. Italy revenue increased 10% to $259 million, while revenue in the rest of the world was also up 9% to $79 million.
Incidentally, Brightstar was handed a boost in the middle of Q2 by securing an extension to its agreement to run the Italian lottery. The business saw off competition from other parties such as Novomatic, Allwyn and Flutter to win the tender, which runs through November 2034.
Counting costs: Brightstar eyes further savings
While the rise in revenue was good news for Brightstar, the provider still has work to do in terms of costs.
Total operating expenses were 13% higher for Q2 at $492 million, with costs up across both services and product sales. In addition, an increased foreign exchange loss resulted in non-operating costs jumping 187%.
However, part of the latter increase was down to the OPtiMa 3.0 cost-reduction programme, which is focused on optimising general and administrative and operating activities following transformational actions in recent years. Brightstar said this has now been expanded to $50 million to “right-size” the business following the Gaming & Digital sale.
Chief Financial Officer Max Chiara added: “We are investing in key initiatives to drive sustainable, long-term growth, while also delivering structural cost reductions to right-size the business.”
In the red for Q2
Ultimately, higher costs offset revenue growth in Q2 and led to a pre-tax loss of $10 million, compared to last year’s $127 million profit.
Brightstar noted $50 million worth of income tax costs, but it was able to draw $40 million in profit from discontinued operations. As such, net loss stood at $20 million, in contrast to an $85 million profit in Q2 of 2024.
However, when discounting $36 million in net profit from discontinued operations and $2 million from non-controlling interest, bottom line loss was higher. Total net loss attributable to Brightstar in Q2 was $58 million, compared to last year’s $42 million net profit.
In addition, adjusted EBITDA declined 5% year-on-year to $274 million.
Revenue drops during H1
As for the six-month period to 30 June, revenue hit $1.21 billion, down 4.7%. Brightstar put this down to higher US multi-state jackpot activity but noted a 1.2% uptick in global instant ticket and draw same-store sales.
Both operating and non-operating costs were higher in the first half, although the operator was able to remain in the black before tax. For the period, pre-tax profit was $46 million, which was 85% lower than last year but a plus nonetheless.
Tax payments totalled $97 million and discontinued operations profit $92 million, resulting in a net profit of $40 million, compared to $213 million in 2024. However, when taking off $67 million in net discontinued operations profit and $4 million from non-controlling assets, bottom-line net loss attributable to Brightstar was $31 million, in contrast to last year’s $123 million profit.
As for adjusted EBITDA, this amounted to $524 million, down 15% from the previous year.
Company says it aims to “right-size” following IGT sale.