Pollard Banknote (TSE:PBL) executives used the company’s fourth-quarter and full-year 2025 earnings call to outline what they described as a “transformational” year, driven by new digital lottery launches and major contract wins alongside continued investment in technology and charitable gaming.
Major 2025 developments: Kansas iLottery launch, Belgium technology win, and California instant ticket role
Co-CEO Doug Pollard highlighted the February 2025 go-live of Pollard’s first iLottery solution using its internal Catalyst platform with the Kansas Lottery, which he said represented the fastest rollout of a greenfield iLottery operation. Management said startup losses were expected as revenue ramps, but the company is moving toward profitability on the Kansas contract through 2026 and said performance has exceeded expectations.
Pollard also pointed to a December contract with the Oklahoma Lottery for a lottery-specific PlayOn loyalty solution, including a website, app, and CRM. Including extensions, management said the seven-year contract is valued at approximately $10 million, and implementation had already started by the end of 2025.
In its traditional instant ticket business, management noted that Pollard was awarded the primary supply role for instant tickets with the California Lottery, described as the largest seller of instant tickets in the U.S. The 12-year contract, including available extensions, was framed as recognition of Pollard’s long-term relationship with the customer.
Fourth-quarter revenue rose to CAD 150.8 million
Co-CEO John Pollard said fourth-quarter revenue was CAD 150.8 million, up from CAD 140.3 million in the prior-year quarter. He attributed the increase to several factors:
- Higher average instant ticket selling prices added CAD 1.4 million, partially offset by a 0.5 million decline in instant ticket volumes.
- Other lottery products and services rose CAD 2.8 million, driven largely by Kansas iLottery sales and increased licensed product sales.
- Charitable gaming volumes increased revenue by CAD 2.1 million, predominantly due to the acquisition of Pacific Gaming in the second quarter.
- Charitable eGaming (eTabs) revenue decreased by CAD 1.2 million, primarily due to Minnesota regulatory changes.
- Michigan iLottery sales increased revenue by CAD 1.3 million amid strong instant and draw-based game activity influenced by large Mega Millions and Powerball jackpots.
- Currency translation added to reported revenue, with a weaker Canadian dollar vs. the U.S. dollar contributing about CAD 2.7 million and vs. the euro contributing CAD 1.8 million.
Management also cited “combined sales” (GAAP revenue plus Pollard’s 50% share of its NeoPollard Interactive joint venture) of CAD 185 million, up 10% from CAD 168.2 million a year earlier.
Margins and expenses: startup iLottery costs and Minnesota eTabs pressured gross margin
Cost of sales increased to CAD 128.4 million from CAD 117.9 million, which management linked to higher charitable gaming volumes following the Pacific Gaming acquisition, higher instant ticket costs due to product mix, increased iLottery operating costs (including Kansas startup expenditures and amortization), and higher licensed product sales. Higher U.S.-dollar expenses also raised costs.
Gross profit was CAD 22.4 million in the quarter, flat year-over-year, while gross margin declined to 14.9% from 16.0%. Management attributed the margin pressure primarily to Kansas iLottery startup losses, higher amortization and depreciation (notably from Catalyst-related intangible assets), and lower Minnesota eTab sales due to regulatory changes. Offsetting factors included the Pacific Gaming acquisition and higher average instant ticket selling prices tied to proprietary sales and customer mix.
Administration expenses increased to CAD 20.2 million from CAD 16.1 million, driven by higher compensation, CAD 1.3 million of ERP implementation costs, higher software licensing, and added Pacific Gaming costs. Selling expenses increased to CAD 5.8 million from CAD 5.3 million, also tied to compensation and Pacific Gaming.
NeoPollard Interactive contribution increased; quarterly net income turned positive
Pollard’s share of income from the NeoPollard Interactive (NPI) joint venture rose to CAD 16.9 million from CAD 12.6 million. Management said the increase was primarily due to strong instant ticket sales in North Carolina and Virginia and higher draw-based game sales influenced by two significant jackpot runs, partially offset by the expiry of one customer contract at the end of the second quarter.
Adjusted EBITDA increased to CAD 27.7 million from CAD 25.2 million, led by higher NPI equity income and improved gross profit net of depreciation and amortization, partially offset by higher administrative and selling expenses.
Net income was CAD 4.6 million compared to a CAD 1.8 million net loss a year earlier. Basic and diluted EPS were both CAD 0.17 versus a prior-year basic loss of CAD 0.07 and diluted loss of CAD 0.06.
2026 outlook themes: improving gross margins, lower CapEx, and contract ramp timing
In Q&A, CFO Rob Rose said margin improvement in 2026 will depend partly on rollout timing, but he expects headwinds from Kansas startup losses and Minnesota eTabs to improve through the year. He said instant ticket repricing has put the business in a good position and suggested the company could move back toward historical margins “in that very low 20% range” over time, while noting the business mix has expanded beyond traditional instant ticket printing.
Rose and management also said first-quarter 2026 should be “significantly better than Q4” regarding the Kansas and Minnesota pressures, with faster ramp-up in Minnesota eTabs in recent months.
On capital spending, management reiterated that total 2026 CapEx (including intangibles) is expected to be lower than 2025’s more than CAD 58 million as prior investments in eTab kiosk inventory, press upgrades, and Catalyst development moderate. Doug Pollard said the California instant ticket award does not create immediate capacity constraints and does not require major CapEx, noting the company has capacity to absorb the increased share.
Doug Pollard also discussed the impact of large jackpots on iLottery, saying big jackpot runs can drive first-time depositors and raise the “base level” of players over time, with retention influenced by CRM and loyalty efforts. Separately, management said it has not seen business impacts from recent global events and remained cautiously optimistic about 2026.
About Pollard Banknote (TSE:PBL)
Pollard Banknote Ltd is principally engaged in the manufacturing, development, and sale of lottery and charitable gaming products throughout the world. Its operating segments are Lotteries and charitable gaming and eGaming systems. It provides instant tickets and lottery services including licensed products, distribution, SureTrack lottery management system, retail telephone selling, marketing, iLottery, digital products, Social InstantsTM, retail management services, and instant ticket vending machines.
