Pollard Banknote reports a transitional Q1 2026 with $141.7M revenue Under John Pollard and Doug Pollard
Pollard Banknote reported weaker Q1 2026 earnings, but expects a strong rebound as Belgium Lottery development ramps up and other key customer order schedules normalize alongside the new California contract volumes.
Revenue declined 3.1% year-on-year to $141.7m, while operating income fell 58.5% to $7.6m. Adjusted EBITDA dropped 29.7% to $21.5m,with gross profit percentage of sales contracting from 17.4% to 11.7%. Net income declined to $3.5m from $11.7m in the prior-year quarter.
The primary pressure came from Pollard’s instant ticket business, where the supplier recorded a significantly weaker product mix during the quarter. Management said fewer higher-value specialty products, including Scratch FX games, reduced average selling prices despite relatively stable ticket volumes.
Production inefficiencies also affected profitability, with spoilage and rework costs increasing during the quarter. Pollard said operational adjustments have already been implemented to address those issues going forward.
While Pollard’s new California primary supply contract contributed expected additional volume, weaker timing across several other major customer orders offset those gains in Q1. Management said confirmed order schedules for the second and third quarters are materially stronger and include a more traditional mix of higher-margin specialized products.
The company maintained that the weak quarter reflected timing and operational factors rather than structural deterioration in lottery demand.
Belgium Lottery Contract Creates Near-Term Earnings Drag
A major contributor to the quarter’s weaker profitability was the early-stage implementation of Pollard’s 12-year, $289m Belgium Lottery omnichannel contract.
The agreement began onboarding during Q1 and includes a broad range of digital lottery infrastructure services, including central gaming systems, eInstant management, player engagement technology, warehousing and distribution systems, and a new iLottery platform.
Pollard said the project is currently in its planning and scoping phase, which generated relatively limited recognized revenue under percentage-of-completion accounting rules despite increased staffing and development expenses.
Management indicated development activity and revenue recognition are expected to increase throughout the remainder of 2026 as implementation work accelerates.
The Belgium deal represents one of Pollard’s most strategically important contracts because it expands the company deeper into long-term digital lottery infrastructure rather than traditional print supply alone.
The quarter also reinforced the evolving nature of Pollard’s business model. While instant ticket manufacturing remains the company’s largest revenue contributor, earnings volatility is increasingly being shaped by the ramp profile of large-scale digital contracts and the timing of specialized print work.
Digital and Charitable Gaming Operations Provide Stability
Despite pressure in the core print division, Pollard’s digital and charitable gaming operations delivered more resilient performance during the quarter.
Pollard’s combined iLottery income before profit share and income taxes increased to $18.2 million in the first quarter of 2026 from $17.8 million in the first quarter of 2025, driven by strong organic growth.
The supplier noted that quarterly iLottery performance can fluctuate depending on large draw-based jackpot activity, but underlying organic growth across digital contracts remains strong.
Charitable gaming also produced improved results after regulatory disruption impacted Minnesota’s eTab market during 2025. Pollard said expanded game content, more frequent launches and increased site deployment helped revenue recover above both depressed 2025 levels and previous 2024 records.
The company also benefited from the contribution of Pacific Gaming, acquired in 2025, which strengthened its position in bingo electronics, handhelds and charitable gaming systems.
Pollard said demand for printed charitable products and related ancillary equipment remains strong across North America, while opportunities for new eTab jurisdictions continue to expand.
Share Buyback Signals Confidence in Long-Term Outlook
Alongside its earnings release, Pollard announced plans to launch a normal course issuer bid to repurchase up to approximately 976,000 common shares, subject to TSX approval.
Management said the buyback reflects its belief that the company’s current market valuation does not fully reflect the long-term value of its business and growth prospects.
Looking ahead, Pollard expects profitability to improve through the remainder of 2026 as higher-margin instant ticket work returns to production schedules, manufacturing efficiencies recover and Belgium contract development activity ramps further.
The company also expects continued momentum in charitable gaming and digital lottery operations to support earnings growth over the longer term.
Management said confirmed instant ticket order volumes for the next two quarters are already running above comparable 2025 levels, supported by California contract expansion and a return to a more normalized product mix featuring higher-value specialized games.
Source: Pollard Banknote Limited
