This article first appeared on GuruFocus .
Release Date: November 13, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Pollard Banknote Ltd ( PBKOF ) secured a significant 12-year contract with the National Lottery of Belgium, valued at approximately $289 million Canadian.
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The company was named the primary contractor for the California State Lottery's instant ticket products, a contract valued at $375 million Canadian over 12 years.
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Pollard Banknote Ltd ( PBKOF ) achieved record quarterly sales of $156.3 million, with combined sales including joint ventures reaching $187.3 million.
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The demand for instant tickets remains strong, with higher selling price points contributing to increased revenue.
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The company's Neo Pollard Interactive joint venture saw an increase in income, driven by strong sales growth in North Carolina and Virginia.
Negative Points
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Gross profit decreased to $28.1 million, down from $31.4 million in the same quarter last year, primarily due to startup losses in Kansas and lower margins in Minnesota.
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Administration expenses increased to $19.2 million, largely due to ERP implementation costs and additional expenses from acquisitions.
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Net income decreased by $7.9 million compared to the previous year, impacted by lower gross profit and increased expenses.
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The Kansas iLottery operation is currently a financial drag, though expected to improve in the future.
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The company faces challenges in adapting to regulatory changes in Minnesota, affecting charitable gaming revenue.
Q & A Highlights
Q: Gross margins have been down in 2025 compared to 2024, despite contract repricing. What are the factors affecting this, and should we expect improvements in 2026? A: Rob Rose, CFO, explained that while repricing has been incorporated, new headwinds like the Kansas iLottery and e-tabs have impacted margins. However, underlying instant ticket margins have improved. As we move into 2026, particularly with the California volume, margins are expected to improve. Additionally, adjustments in Minnesota's regulatory environment are being addressed to regain margins.
Q: Regarding the ERP implementation, are the costs expected to normalize soon? A: Rob Rose noted that ERP implementations are lengthy processes. The current phase started at the end of June and will impact numbers through 2026, with a focus on completing it quickly. Costs will taper off as the system goes live towards the end of 2026 and into 2027.
Q: With the recent Mega Millions jackpot, are you seeing momentum similar to the Powerball run in September? A: Doug Pollard, co-CEO, mentioned that the Mega Millions jackpot hasn't generated the same level of "jackpot fever" as the Powerball did. Factors like media fatigue and changes in the Mega Millions matrix might be affecting player engagement. However, as the jackpot approaches a billion dollars, some increase in activity is anticipated.
Q: How does the California Lottery win affect Pollard's position in the industry, and do you have the capacity to handle this new volume? A: Doug Pollard stated that winning the California contract, a long-standing account with a single provider, has significantly raised Pollard's profile in the industry. John Pollard added that the company has the capacity to handle the new volumes, as they will replace lower-margin work previously turned away.
Q: Can you elaborate on the competitive landscape for iLottery platforms, especially with the Belgian win? A: Doug Pollard explained that while traditional competitors like BrightStar and Scientific Games offer both online and offline solutions, Pollard's agile technology provides flexibility that appeals to lotteries looking for innovative solutions. The Belgian Lottery's choice reflects a preference for responsive and adaptable technology.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
