Brightstar trims FY26 revenue and EBITDA outlook, holds cash guidance

Brightstar Lottery PLC (NYSE: BRSL) cut its fiscal 2026 revenue outlook to $2.44–$2.46 billion on Nov. 10, down from $2.50–$2.55 billion previously, while holding its cash-from-operations guidance unchanged. The Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization, a proxy for operating profit) range came down to $1.14–$1.16 billion from $1.16–$1.19 billion. The company attributes the profit reduction mainly to updated currency assumptions: the new outlook assumes a euro-dollar rate of 1.15 for the full year, versus 1.17 before.

The revenue cut reflects three drivers: lower second-half same-store sales expectations, the timing of some Italy B2C expansion efforts, and currency.

Where the third quarter slipped

Third-quarter revenue fell 4% to $607 million from $629 million a year earlier, according to the earnings release filed as SEC Form 6-K, Exhibit 99.1. The largest single drag was amortization of upfront license fees, which reduces service revenue and rose to $99 million from $53 million. The company ties that rise to the new Italy Lotto license.

Same-store sales at constant currency fell 3.9% globally, against growth of 7.9% a year earlier. U.S. multi-state jackpot wagers dropped 30.6%. Product sales offset part of the decline, more than doubling to $60 million from $25 million.

Adjusted EBITDA slipped 2% to $289 million from $294 million, but its margin rose to 47.5% from 46.7% — the operating engine held up even as the top line shrank.

Reported earnings fell harder. Income from continuing operations was $45 million versus $95 million. Diluted EPS was $0.12 versus $0.29, and Adjusted EPS was $0.10 versus $0.36. The company ties that gap to non-cash service revenue amortization, with its share of that amortization net of tax rising from $23 million a year earlier.

What do the nine-month numbers show?

The cut is modest next to a profit line that is still growing. Nine-month Adjusted EBITDA reached $861 million, up 5% from $818 million in 2025. The company credits higher product sales, better margin mix, more other service revenue, and OPtiMa-driven cost efficiencies.

Nine-month revenue was weaker at $1.78 billion, down 4% from $1.84 billion. Higher service revenue amortization and the UK contract transition more than offset gains in product sales and other service revenue.

Nine-month income from continuing operations rose to $164 million from $43 million. The company attributes that to the non-cash effect of euro-dollar moves on its debt, a better effective tax rate, and a discrete tax item in the second quarter.

How did cash and debt move?

Net debt was $3.84 billion at Sept. 30, up from $2.72 billion at Dec. 31, 2025. The company says the rise reflects the final Italy Lotto payment made this year. Total liquidity stood at $1.9 billion: roughly $0.5 billion of unrestricted cash plus $1.3 billion of undrawn credit facilities.

Third-quarter operating cash flow was positive $73 million, against an outflow of $445 million a year earlier — that prior period included a $579 million Italian Lotto license payment. Free cash flow was negative $8 million versus negative $509 million. For the nine months, operating cash flow was an outflow of $1.10 billion, against an inflow of $29 million in 2025.

The full-year cash outlook is unchanged:

• Net cash used in operating activities: about $900 million, including the final Italy Lotto license payment
• Cash from operations excluding that payment: about $750 million
• Capital expenditures: about $450 million, tightened from $450–$475 million

In September, Brightstar issued 500 million euros of 4.875% senior secured notes due September 2032. It used the proceeds to repurchase $393 million of its 2.375% notes due April 2028, pay issuance costs, and repay $176 million drawn on revolving credit facilities.

The board declared a quarterly dividend of $0.23 per share, payable Dec. 8 to holders of record Nov. 24. Over $200 million has gone to dividends and share repurchases year-to-date through Nov. 9.

What does the outlook change mean for the fourth quarter?

The outlook now assumes a euro-dollar rate of 1.12 in the fourth quarter. Delivery on revenue, Adjusted EBITDA and cash would support the view that the cut was about timing and currency rather than deteriorating fundamentals. A miss on any of them would weaken that case.

The investment debate, as framed by research site OptimistFi, turns on whether lottery contracts stay sticky and cash conversion normalizes. A positive operating cash quarter and in-range liquidity help that view; a lowered outlook and higher net debt keep the question open. The next dated catalyst is the Dec. 8 dividend payment, with the real test arriving at the fourth-quarter and full-year report.