Pollard Banknote Q1 2026 Earnings Report

Pollard Banknote EPS Results

• Actual EPS: C$0.13
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Pollard Banknote Revenue Results

• Actual Revenue: $141.64 million
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Pollard Banknote Announcement Details

• Quarter: Q1 2026
• Date: 5/13/2026
• Time: After Market Closes
• Conference Call Date: Thursday, May 14, 2026
• Conference Call Time: 8:30AM ET

Pollard Banknote (TSE:PBL) 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. In addition, its charitable gaming product line includes pull-tab tickets, bingo paper, pull-tab vending machines, and ancillary products. The company generates the majority of its revenue from the sale of Instant tickets.

Pollard Banknote Q1 2026 Earnings Call Transcript

Key Takeaways

• Negative Sentiment: Pollard said first-quarter results were hurt by temporary timing issues in instant tickets, including a shift of high-margin orders into Q2 and some production inefficiencies that compressed margins.
• Negative Sentiment: GAAP revenue fell to CAD 141.7 million from CAD 146.2 million a year ago, while adjusted EBITDA declined to CAD 21.2 million from CAD 30.6 million and net income dropped sharply to CAD 3.5 million.
• Positive Sentiment: Management expects a rebound in the next two quarters, saying confirmed order volumes for Q2 and Q3 are above Q1 and above last year once California volumes are included, with Q2 adjusted EBITDA expected to exceed the prior-year quarter.
• Positive Sentiment: The digital business is ramping, led by Belgium’s 12-year omni-channel lottery contract, with revenue recognition expected to build through 2026 as implementation moves from planning into execution. Kansas iLottery also continues to perform well and should see lower startup losses this year.
• Positive Sentiment: Charitable gaming was a bright spot, with Minnesota eTab sales rebounding strongly and contributing to record revenue, while demand for consumable charitable products remained solid heading into the rest of 2026.

Presentation

[Operator]

Morning, everyone. Welcome to the Pollard Banknote Limited first quarter 2026 results conference call. Listeners are reminded that certain matters discussed in today's conference call or answers that may be given to questions asked could constitute forward-looking statements that are subject to risks and uncertainties related to Pollard's future financial or business performance. Certain material factors or assumptions are applied in making forward-looking statements, actual results may differ materially from those expressed or implied in such statements. The Risk Factor that may affect the results are detailed in Pollard's annual information form and other periodic filings and registration statements, you can access these documents at SEDAR+ database found at sedarplus.ca. I'd like to remind everyone that this conference call is being recorded today, Thursday, May 14th, 2026.

[Operator]

Now I would like to introduce Mr. Doug Pollard, Co-Chief Executive Officer of Pollard Banknote Limited. Please go ahead, sir.

[Doug Pollard, Co-CEO at Pollard Banknote Limited]

Okay. Thank you very much, operator. Thank you everyone for joining us this morning. As the operator said, my name is Doug Pollard. With me on the call today is John Pollard, Co-Chief Executive Officer, and Rob Rose, Chief Financial Officer. We released our 2026 first quarter results yesterday. You can access our news release as well as our complete financial statements and MD&A on our website at pollardbanknote.com and on SEDAR+. Today, we'll start with a few prepared remarks from me, providing an overall business update. John will then follow up with a discussion of our first quarter results. Then we'll open it up for questions. Our first quarter was a challenging quarter. It was impacted by negative factors, particularly in our instant ticket product line. These challenges were temporary issues related to the timing of customer orders.

[Doug Pollard, Co-CEO at Pollard Banknote Limited]

Nothing has systemically changed with our instant ticket business. There have been no changes in our client portfolio and no changes in our pricing. The onboarding of California is going well. In parallel, our digital contracts are performing well, led by Kansas and Belgium, and our charitable gaming business outperformed our expectations, driven by a rebound in Minnesota eTab sales. Instant tickets remain a significant part of our business. They represent roughly half of our overall sales. A temporary mix change resulted in a significantly lower overall average selling price in Q1 compared to last year. In addition, the timing of orders from a couple of our larger customers shifted from late in the first quarter to the second quarter, which reduced our volumes. Timing of orders and the timing of revenue recognition can vary significantly quarter to quarter and even within the quarter itself.

[Doug Pollard, Co-CEO at Pollard Banknote Limited]

Particularly through the later part of the first quarter, a number of higher valued Q1 games were shifted into the second quarter. The delay of these games, combined with some related production inefficiencies, reduced sales in the quarter and negatively impacted our instant ticket margins. Looking forward, however, our confirmed order volumes for the second and third quarters have increased compared to Q1 2026 and from the comparable quarters last year by the amount of the additional volumes added under our new California primary supply contract. As well as our customer mix of games, including specialty work and game type, has returned to the historical levels seen in 2025, which will generate higher average selling prices than the first quarter. Now, based on the recovery of our instant tickets, we expect that our consolidated adjusted EBITDA for the second quarter of 2026 will exceed the comparable quarter of 2025.

[Doug Pollard, Co-CEO at Pollard Banknote Limited]

In our digital division, work ramped up on our new National Lottery omni-channel gaming platform contract during the first quarter. Recall, this is a 12-year, CAD 289 million contract. That number includes VAT. That was awarded last fall for us to provide their technology solution, including an omni-channel central gaming system, which will seamlessly sell lottery products across both retail and digital channels. It also includes a Player Account Management solution to securely manage the player information, their wallets, and their preferences, and of course, an integrated marketing engagement platform to deliver personalized data-driven experiences at every player touch point. During the first quarter, we added additional staff resources to our current complement to work on scoping and planning this large Belgium engagement.

[Doug Pollard, Co-CEO at Pollard Banknote Limited]

As our staff begin working directly on the contract deliverables, our resultant revenue recognition will increase through the second quarter and through 2026. Work in Q1 began to be rolled out in our Oklahoma loyalty solution, and it is proceeding well. While relatively small in terms of financial impact, this is an important opportunity to showcase our technology implementation ability. This contract joins our portfolio of five other current lotteries utilizing our lottery-specific loyalty program and also provides us with a platform for expanding our suite of other services to the Oklahoma Lottery. Our Kansas iLottery operation continues to operate well as we completed one year of successful operation in Q1. We continue to exceed all operational expectations and expect to reduce our startup losses going forward in 2026.

[Doug Pollard, Co-CEO at Pollard Banknote Limited]

Additional investments in expanding our iLottery infrastructure in support of future contracts will continue. Our Kansas iLottery contract was awarded under an existing loyalty solution contract 2 years ago, which had a pre-existing 10-year contract term with an end date of October 26 and no remaining extensions. Consistent with the lottery's procurement policies, the lottery is required to issue a new request for proposal for the operations of the iLottery and loyalty solution. This RFP was recently released with responses due in early summer of this year. We are confident we will be providing a very compelling proposition for the lottery. Interest in iLottery operations from lotteries remains high, including the current request for proposal underway for the Colorado Lottery. Our NeoPollard iLottery joint venture grew through strong instant and other game style sales compared to the first quarter of last year.

[Doug Pollard, Co-CEO at Pollard Banknote Limited]

This includes strong growth in eInstants and other game content, despite the absence of any large draw-based game jackpot runs this quarter. As anticipated, the Virginia Lottery has recently issued an RFP for their iLottery operation. NPi's current Virginia contract does not end, however, until October 30, 2028. Our Board of Directors announced today they have authorized the launch of a normal course issuer bid, or NCIB, to purchase up to approximately 976,000 of our common shares, representing approximately 10% of our outstanding common shares in our current public float. The NCIB is subject to the approval of the Toronto Stock Exchange. We're undertaking the NCIB because we believe that currently, and from time to time, the market price of our common shares may not reflect the underlying value of our company's business and prospects.

[Doug Pollard, Co-CEO at Pollard Banknote Limited]

We believe that at such times, the purchase of common shares for cancellations would be in the best interest of the company shareholders, an appropriate use of its capital, and clearly illustrates our belief that our current strategy is the correct one. Charitable gaming and eTab generated strong results in the first quarter after eTab have been negatively impacted by Minnesota market regulatory changes in 2025 that reduced all supplier sales and margins, including ours. Updated game content, increased frequency of new game introductions, and expanded sites have all contributed to higher gross margin in Minnesota, exceeding levels achieved in 2024 under the old regulations. Demand for consumable charitable products such as pull-tabs, vending machines, and bingo supplies remain strong in the first quarter and is expected to continue through 2026.

[Doug Pollard, Co-CEO at Pollard Banknote Limited]

Despite the temporary challenges of the first quarter, our confidence in our future results remains very high based on the new contract implementations, our strong order level for instant tickets, and our growing results in our charitable group. Now I'll turn it over to John to discuss in detail the first quarter results.

[John Pollard, Co-CEO at Pollard Banknote Limited]

Thanks, Doug. During the three months ended March 31, 2026, Pollard achieved GAAP revenue of CAD 141.7 million, compared to CAD 146.2 million in the three months ended March 31, 2025. The factors impacting the CAD 4.5 million revenue decrease were a lower instant ticket average selling price in the first quarter of this year. That decreased revenue by CAD 11.7 million as compared to 2025, primarily due to the change in customer mix and the decrease in proprietary product sales. Partly offsetting this decrease in revenue was the increase in instant ticket sales volumes of CAD 4.4 million compared to last year.

[John Pollard, Co-CEO at Pollard Banknote Limited]

Higher sales of ancillary lottery products and services increased revenue in the first quarter of 2026 by CAD 3.4 million as compared to the first quarter of 2025. This growth was primarily due to increased digital sales, including Pollard's iLottery contracts with the Belgium and Kansas Lotteries and higher distribution-related sales compared to 2025. Partially offsetting those increases in ancillary lottery sales was the decrease in sales of licensed products. Turning to the charitable side of our business, higher charitable gaming volumes in our printed and consumables part of that division increased revenue by CAD 2.4 million in the first quarter of 2026 compared to the first quarter of 2025. This is predominantly as a result of the acquisition of Pacific Gaming in the second quarter of 2025.

[John Pollard, Co-CEO at Pollard Banknote Limited]

In addition, higher average selling price of charitable printed games further increased sales by CAD 0.4 million. Charitable e-gaming or eTabs further increased sales by CAD 1.8 million compared to 2025, with revenue generated in Minnesota reaching new records. New game content, increased frequency of new game launches, and a greater number of sites have driven revenue higher than the pre-regulatory change levels in 2024. During the three months ended March 31, 2026, Pollard generated approximately 74.5% compared to 68.3% last year of its revenue in US dollars. During the first quarter of 2026, the actual US dollar value compared to Canadian dollars weakened by 5.8%, resulting in an approximate decrease of CAD 6.5 million in revenue relative to the first quarter of 2025.

[John Pollard, Co-CEO at Pollard Banknote Limited]

Cost of sales was CAD 125.1 million in the first quarter of 2026 compared to CAD 120.8 million in the first quarter of 2025. The CAD 4.3 million in cost of sales was primarily the result of the higher cost associated with increased Pollard iLottery operations, including ramping up resources in preparation for the Belgium Lottery contract development efforts. Higher instant ticket production inefficiencies. Further increasing cost of sales in the first quarter of 2026 was the addition of Pacific Gaming. Now, these increases to cost of goods sold were partially offset by the impact of lower exchange rates on US dollar-denominated expenses.

[John Pollard, Co-CEO at Pollard Banknote Limited]

Our gross profit was CAD 16.6 million, or only 11.7% of sales in the first quarter of 2026, compared to CAD 25.4 million or 17.4% of sales in the first quarter of 2025. The decrease of CAD 8.8 million in gross profit and the decrease in gross profit percentage were primarily the result of our decreased instant tickets sales margins, which were largely the result of, as we've talked about today, the lower average instant tickets selling prices due to that significant shift in customer mix and also related to some production inefficiencies in the quarter. Revenue related to the National Lottery contract is recognized based on a percentage of completion to date basis over the anticipated entire delivery time frame.

[John Pollard, Co-CEO at Pollard Banknote Limited]

In the first quarter of 2026, we developed the needed talent to advance the implementation of the development stage to ensure immediate deployment once planning and scoping with the customer is complete. Although this resulted in some costs being incurred without related revenue recognition, but it also ensured a successful start to the contract. Additionally, lower licensed product sales also contributed to the decrease in gross profit in the quarter. Factors that partially offset those decreases in gross profit and gross profit percentage factors were, as we discussed previously, the higher printed and eTab charitable sales positively impacted our gross profit. Also the acquisition of Pacific Gaming positively impacted gross profit. Administration expenses were CAD 19.2 million in the first quarter of 2026, compared to CAD 17.3 million in the first quarter of 2025.

[John Pollard, Co-CEO at Pollard Banknote Limited]

The increase of CAD 1.9 million from the first quarter of last year was largely as a result of the ERP implementation costs of CAD 1.3 million and also the addition of Pacific Gaming's administration costs. Selling expenses were CAD 6 million in the first quarter of 2026, similar to the CAD 6 million in the first quarter of 2025. Pollard's share of income from its iLottery joint venture increased to CAD 16.6 million in the first quarter of 2026 from CAD 16.2 million in the first quarter of 2025. This CAD 0.4 million increase was primarily due to the continued strong instant sales in North Carolina and Virginia and higher iGaming sales in Alberta. These increases were partially offset by the expiry of a customer contract at the end of the second quarter of 2025.

[John Pollard, Co-CEO at Pollard Banknote Limited]

Adjusted EBITDA decreased to CAD 21.2, 21.5 million in the first quarter of 2026, compared to CAD 30.6 million in the first quarter of 2025. The primary reasons for the CAD 9.1 million decrease in Adjusted EBITDA were the decrease in gross profit of CAD 7.6 million. That's net of amortization and depreciation. Which was primarily due to the lower instant ticket sales margins and increased digital development resource costs, partially offset by the improved charitable gaming margins. Further reducing Adjusted EBITDA was the increase in administrative expenses, net of the ERP implementation cost of CAD 0.2 million, and the increase in realized foreign exchange loss of CAD 0.5 million. Partially offsetting those decreases was the increase in our share of our NeoPollard joint venture iLottery business of CAD 0.4 million.

[John Pollard, Co-CEO at Pollard Banknote Limited]

Interest expense decreased to CAD 2.3 million in the first quarter of 2026 from CAD 2.8 million in the first quarter of 2025, primarily as a result of lower interest rates in the first quarter of 2026, as well as a reduction in average long-term debt outstanding as compared to the prior year. Amortization and depreciation totaled CAD 12.6 million during the first quarter of 2026, which increased from CAD 11.6 million in the first quarter of 2025. The increase of CAD 1 million was equally a result of increased depreciation of property, plant, and equipment and the increase in amortization of intangible assets.

[John Pollard, Co-CEO at Pollard Banknote Limited]

Income tax expense was CAD 1.3 million in the first quarter of 2026, an effective rate of 26.5%, which was lower than our domestic rate of 27.0%, due primarily to the effect of lower income tax rates in foreign jurisdictions and the effect of non-taxable items, partially offset by the impact of withholding and other taxes. Net income decreased to CAD 3.5 million in the first quarter of 2026, compared to CAD 11.7 million in the first quarter of 2025. The primary reasons for the CAD 8.2 million decrease were due to the decrease in gross profit of CAD 8.8 million, which were principally as a result of lower instant ticket sales margins, primarily due again to that lower average selling price.

[John Pollard, Co-CEO at Pollard Banknote Limited]

Also reducing gross profit in the quarter was the impact of increased digital development resource costs. Further reducing net income was the increase in administration expenses of CAD 1.9 million, again, primarily a result of our increased ERP implementation costs, the increase in net foreign exchange loss of CAD 0.8 million, and the increase in other expenses of CAD 0.4 million. Partially offsetting these decreases to net income were the decrease to the income tax expense of CAD 2.8 million, the decrease in interest expense of CAD 0.5 million, and the increase in our NPi share of income of CAD 0.4 million. Net income per share, basic and diluted, decreased to CAD 0.11 and CAD 0.11 per share respectively in the first quarter of 2026 from CAD 0.43 and CAD 0.43 per share, basic and diluted in the first quarter of 2025.

[John Pollard, Co-CEO at Pollard Banknote Limited]

To close, I would just like to underline again what Doug mentioned earlier in his remarks. While the first quarter financial results were very disappointing, these were due to temporary factors related to the quarter and nothing has changed with respect to our business plans and our plans for growth and continued expansion and improvements in profitability. We remain very confident in both our short and long-term future. As Doug stated earlier, we expect our consolidated adjusted EBITDA in the second quarter of 2026 will exceed the second quarter of 2025. That is the end of our prepared part of the discussion. Operator, we'd be happy to entertain any questions at this time.

[Operator]

Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. Should you have a question, please press star followed by the number one on your touch tone phone, and you will hear a prompt that your hand has been raised. If you wish to decline from the polling process, please press star followed by the number two. Your first question comes from the line of Robert Young of Canaccord Genuity. Please go ahead.

[Robert Young, Analyst at Canaccord Genuity]

Hi. Good morning. Maybe the first place to start would be around the spoilage and rework that you noted. You said in the release that it was driven by the nature of the work. I was curious if you expand on that. Given that it was a lower ASP quarter, I was wondering if the spoilage was part of the reason why ASP was low, because that was deferred to the current quarter.

[John Pollard, Co-CEO at Pollard Banknote Limited]

Hello, Rob. It's John Pollard answering that question. We did have some unusually large production inefficiencies and spoilage in the quarter. Those were related partly and to a significant extent to some new products and production processes that we had in the quarter that we did have some difficulty with. Those issues have been resolved and corrected and will not reoccur in the next quarter. There was some relationship there a little bit that some of those new products and processes were related to games that we were producing late in the quarter that, as we mentioned in our marks, had some high margins related to them and caused some of those games to get shifted to the next quarter.

[John Pollard, Co-CEO at Pollard Banknote Limited]

We have a lot of sort of variety in the size and margins of our various orders from our customer base. Usually those blend out pretty evenly through one quarter to another, but in this case, there was a big difference in Q1. There was a relationship to those inefficiencies that pushed some of those high margin games at the end of the quarter to next quarter.

[Robert Young, Analyst at Canaccord Genuity]

Okay. Can I take that and would it be correct to say that the margin pressure from lower ASP was partly or largely due to the spoilage, or was it more due to aggressive mix of orders?

[John Pollard, Co-CEO at Pollard Banknote Limited]

Well, I mean, obviously when you have excess spoilage, that will impact your margins in the quarter when it occurs. It didn't relate to the average selling price other than the change in timing of some of those orders. I'm not sure if that's fully answering the question, Rob.

[Robert Young, Analyst at Canaccord Genuity]

Yeah. I'm just trying to understand in the release, you gave good information on the impact of volume and ASP. I'm just trying to get a sense of the impact from the spoilage 'cause it would be a contributing factor to both of those. The second part would be, is it spilling into Q2? There's a manufacturing issue continuing in Q2, or is it resolved now?

[John Pollard, Co-CEO at Pollard Banknote Limited]

The impact from the spoilage was much smaller than the impact from the average selling price and the volumes. You can tell from the, I think as I just noted in my comments, I think we saw, if I'm remembering the numbers correctly, a CAD 11 million reduction in sales related to our average selling price. That's a really big number.

[Robert Young, Analyst at Canaccord Genuity]

Okay

[John Pollard, Co-CEO at Pollard Banknote Limited]

you know, related to that mix problem. The spoilage issues were much, much smaller than that. Still, you know, not immaterial, but they did also affect the timing of those high margin games.

[Robert Young, Analyst at Canaccord Genuity]

Got it. You also suggested in the release that there are confirmed orders that suggest volumes will be flat in the remainder of the year before you add California in. I'm curious what confirmed orders means?

[John Pollard, Co-CEO at Pollard Banknote Limited]

We should make sure we get that clear because we were trying to send a very specific message in our comments in the quarter. You know, if we talk about our order volumes for the second and third quarters. We'd love to talk longer, but the nature of the way our orders come in from our customers, we don't typically get firmed up orders until They increasingly get firm as we get closer to ship dates. Really out about four or five months is about as long as we get a firm order book because our turnaround time for orders doesn't need to be that long or longer. We don't start to get firmed up orders from our customers until that time.

[John Pollard, Co-CEO at Pollard Banknote Limited]

We can look for the right now at the second and third quarters and have a very firm idea of exactly what's, you know, on our order schedule, our production schedule for that, you know, for that time. What we're saying is that our volumes that we see in that production schedule for all of our non-California customers are back to normal levels, essentially comparable levels to what we saw last year. If we call that normal, then the recent normal. In addition to those levels, we will expect to have the full complement also of our expanded California work on top of those orders.

[John Pollard, Co-CEO at Pollard Banknote Limited]

In Q1, as we noted in our comments, our volumes were only up slightly, not as much as they would have been if we'd had the full complement of California plus our normal level of orders from last year. That is what will change in Q2 and Q3. I hope that's clear. I'm sorry.

[Robert Young, Analyst at Canaccord Genuity]

Is it fair to say the California contract is lower ASP? It wasn't a factor in the ASP mix, was it?

[John Pollard, Co-CEO at Pollard Banknote Limited]

No. Our California contract, as we noted in the notes, is actually going really well. The customer is very happy. It's onboarding great. It's going actually better than planned. The California was nothing to do. In fact, it was a positive influence to our quarter. We're getting the volumes and the average selling price that we had anticipated from that contract. Our problems with average selling price was related to two or three only really, but two or three of our other largest customers. Obviously, those are the ones that are gonna influence it most, not surprisingly, where we just had some unusual timing of some of their orders getting pushed to later in the year.

[Robert Young, Analyst at Canaccord Genuity]

Okay. I think that's it for me. I'll just close with saying great working with you, Rob Rose. If you're there, wish you a very healthy retirement and lots of Jets Stanley Cups. I'll try.

[Doug Pollard, Co-CEO at Pollard Banknote Limited]

I'll hold you to that, Rob. Thank you.

[John Pollard, Co-CEO at Pollard Banknote Limited]

We're not getting rid of Rob for another quarter or two or three yet, so as we noted till the end of the year. We have plenty of time to keep thanking Rob for his efforts yet.

[Doug Pollard, Co-CEO at Pollard Banknote Limited]

Thank you, Robert and Rob.

[Operator]

Your next question comes from the line of Stephen Boland of Raymond James. Please go ahead.

[Stephen Boland, Analyst at Raymond James]

Morning. Just a follow-up on, you know, that the orders are comparable to last year. Is there some change from your customers or consumer buying that, you know? Is there more caution? Is the economy impacting what you're hearing on the ground in terms of what all your jurisdictions are doing and maybe their constituents?

[Doug Pollard, Co-CEO at Pollard Banknote Limited]

Thank you, Stephen. It's Doug Pollard speaking. The short answer is no. We're not seeing any significant changes. The economy, you know, and the questions around that. You know, there's always a question about the connection of, for example, gas prices to instant ticket sales, but we're not seeing anything dramatic there. For the last couple of years, we've seen retail sales have flattened a little bit. You know, for several years, there is close to double-digit growth in sales, but that's flatter. Some lotteries are still seeing nice growth, some of the ones we're leading. We're not seeing any significant sign that people are shifting. It's one of the parts that we really like about instant tickets, right?

[Doug Pollard, Co-CEO at Pollard Banknote Limited]

I think that those sales are gonna prove to be very resilient no matter what's happening in the economic cycle.

[Stephen Boland, Analyst at Raymond James]

Okay. The second question's on Belgium. Just in terms of, you know, the impact on margin. You've talked about, put some talent on board, you know, to get things moving. Maybe you could just give us a little bit of a what's been accomplished so far, you know, in terms of implementation. I know the planning is mentioned in the MD&A. You know, what's the next steps over the next couple quarters? Is that margin impact? I don't know if you can quantify it, but is that something that will be steady for the remainder of 2026?

[Doug Pollard, Co-CEO at Pollard Banknote Limited]

Well, let me just start by saying that I'll remind everybody this is an extraordinarily complex project, right? It is omni-channel, it is iLottery, it is retail. It is a lot. There is a lot of planning that goes into that process and scoping that and figuring out what that process is. That's broken down into several phases. We've been intently working at that stage over the last little while and planning it out. I think that planning work that we've done has been pretty intense, but it's been pretty well-received by the lottery. I'm very happy with the trajectory that we're on.

[Doug Pollard, Co-CEO at Pollard Banknote Limited]

As we go forward in the next few quarters, you shift from the planning of that to getting the, you know, the software developers and engineers and such to start building and doing the developing. The way the accounting is designed for this is, as we do the work on the project, we then recognize more of the revenue. In Q1, there wasn't as much work done as that planning stage was done. As we go forward into Q2 and further out into 2026, you'll see that slowly ramp up and the revenue recognition will go with that.

[Stephen Boland, Analyst at Raymond James]

I mean, can you just give us a timeline? Again, apologize. Like, is this 2026? You start to see more re-revenue recognition in 2027 as things kind of go through this, the cycle.

[Doug Pollard, Co-CEO at Pollard Banknote Limited]

Well, I would say you'll start to see more revenue recognition in Q2.

[Stephen Boland, Analyst at Raymond James]

Okay.

[Doug Pollard, Co-CEO at Pollard Banknote Limited]

It will build through 2026.

[Stephen Boland, Analyst at Raymond James]

Okay. All right. Just last one from me. I'm not sure if you can answer this. You know, the NCIB, I'm not sure how active it'll be. I'm just wondering, can the, you know, the Pollard family, is that tendering into that or are you comfortable with your holdings? I don't know if you can talk to that yet.

[Rob Rose, CFO at Pollard Banknote Limited]

It's Rob here Steven. No, this NCIB is gonna be supporting the market shares. The Pollards have no intention to be tendering into that at all.

[Stephen Boland, Analyst at Raymond James]

Okay. Thanks very much.

[Operator]

Your next question comes from the line of Jim Byrne of Acumen Capital. Please go ahead.

[Jim Byrne, Analyst at Acumen Capital]

Yeah, good morning, guys. Maybe just a couple, starting with Virginia, maybe just remind me, when bids are due, and is it safe to assume that you guys will be bidding independently of your NPi partner?

[Doug Pollard, Co-CEO at Pollard Banknote Limited]

You know, that RFP just came out. They've already pushed back the due date on it until later this summer. I don't have the precise date on when that bid is due. Well, I appreciate your question. You know, it's recent enough. We just got it. I would say at this point, we're still considering what our approach will be for that.

[Jim Byrne, Analyst at Acumen Capital]

Okay. There is discussions underway that you might submit something together. Is that, you know, as the incumbents there, is that a potential opportunity?

[Doug Pollard, Co-CEO at Pollard Banknote Limited]

I don't think I can comment on specific conversations. I would just say that we're considering what approach we're gonna take.

[Jim Byrne, Analyst at Acumen Capital]

Okay. That's it. Thinking about the eTab, I know I think Alaska was a potential opportunity. Any updates on eTab expansion?

[Doug Pollard, Co-CEO at Pollard Banknote Limited]

Yeah. We remain pretty excited about Alaska. We've been working hard on that for months now to put ourselves in a great position to launch strongly. The bill is going through the state legislature in Alaska that has a kind of a start kickoff date of January one of next year. I don't quote me exactly on this. There's like one or two weeks left in the legislative session, and we're hopeful that it's gonna get approved during that session, but we have to wait and see. It seems like it is. We've got lobbyists working there and various people. We've been working really hard for months to be ready for a big bang, fast rollout there and be very successful.

[Doug Pollard, Co-CEO at Pollard Banknote Limited]

We've joined forces with the largest distributor in Alaska to be ready. We've had multiple visits out there and, you know, we are just seeing, just generally on eTab, some real interest in that product line, not just through our charitable gaming side of our business, but even lotteries themselves are increasingly seeing the tablet-based eTab as a way to potentially expand lottery revenues in social establishments in some of their jurisdictions. And we've got several discussions ongoing with state and provincial lotteries about deploying tablet-based. We wouldn't call them eTab, but a tablet-based lottery product. Yeah, Alaska, we should find out in the next two weeks whether that bill gets approved, and then it'll be off to the races.

[Jim Byrne, Analyst at Acumen Capital]

Okay, that's excellent. Maybe just one more on Kansas and the iLottery RFP. I believe it was at North Carolina that, you know, quickly came to RFP kind of right after launch of their iLottery, you know, kind of assuming that there wouldn't be a significant change here in such short order. Is that correct? Is that kind of what you're hoping/expecting for Kansas?

[Doug Pollard, Co-CEO at Pollard Banknote Limited]

Well, let me first say, I don't think you're thinking of North Carolina. I think you're thinking of Pennsylvania. That may have been the case there where they had a relatively short-term. Look, I don't think we can comment specifically on why Kansas or what they might be thinking. I would just say they had a contract term that ended and, you know, at the time, they wanted to get up and running quickly, and they turned to us to do so, and we delivered for them. I think that was impressive and we're delivering the financial results that the legislature looked for.

[Doug Pollard, Co-CEO at Pollard Banknote Limited]

All I can say is that as they go forward into an RFP now, that would be both expected because the contract term, and I think the job that we've done has put ourselves in a very good position. Like all these bids, it'll be a competitive bid. We're not taking anything for granted, and we will put forward a very competitive proposal.

[Jim Byrne, Analyst at Acumen Capital]

Okay. That's it for me, guys. Thanks.

[Operator]

Once again, if you wish to ask a question, please press star one to join the queue. There are no further questions at this time. I will now turn the call back over to Doug Pollard. Please continue.

[Doug Pollard, Co-CEO at Pollard Banknote Limited]

Okay. Thank you, operator. To our shareholders, I want to acknowledge the disappointment of the first quarter results. Again, I want to, however, reinforce that we believe these are temporary factors, and we remain highly confident in our outlook for the rest of 2026 and beyond. The game-changing milestones that we achieved during the latter part of 2025 have established a foundation for our growth and success in both the retail side of our business, including various printed products, and the digital solution portion of our business, covering iLottery, eInstant, Loyalty, and eTabs. We are tremendously excited about the opportunities that lie before us, both in the short and the long-term. I want to thank you for joining us, and we look forward to updating you next quarter. Until then, have a great rest of your day.

[Operator]

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.

Participants

Executives

• Doug Pollard, Co-CEO
• John Pollard, Co-CEO
• Rob Rose, CFO

Analysts

• Jim Byrne, Analyst at Acumen Capital
• Robert Young, Analyst at Canaccord Genuity
• Stephen Boland, Analyst at Raymond James