Company: BRSL
Filing Date: 2025-02-25
Form Type: 20-F
Source: 0001619762-25-000007
Chunk: 27

Company: Brightstar Lottery PLC
Filing Date: 2025-02-25
Form: 20-F
Item: Item 5
Chunk 27
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12 million of additional payroll and benefit costs as a result of increased headcount and inflationary conditions, as well as a $9 million aggregate increase in variable costs and project costs supporting contract renewal and extension activity. The increase in cost of product sales for the year ended December 31, 2024 is primarily due to product mix with lower margin instant ticket product sales compared to higher margin software license sales in the prior corresponding period.

Gross Margins

                            For the year ended December 31,                 Change           
  ($ in millions)                                      2024       2023           $           
 ─────────────────────────────────────────────────────────────────────────────────────────────
  Gross margin                                                                               
  Service                                                        1,151        (16)           
  % of service revenue                                   48         49        (80)      bps  
  Product                                                32         59        (27)           
  % of product sales                                     22         35      (1300)      bps  

Service gross margin as a percentage of service revenue decreased 80 basis points. Gross margin as a percentage of service revenue decreased slightly to 48% from 49%, primarily due to the increase in cost of services discussed above.

Cost of product sales as a percentage of product sales decreased by approximately 1300 basis points and product gross margin as a percentage of product sales decreased by the same, principally as a result of product mix.

Operating Expenses

                                                                                                                                                                                                            For the year ended December 31,                Change  
  ($ in millions)                                                                                                                                                                                                                      2024      2023      $       
 ───────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────
  Selling, general and administrative                                                                                                                                                                                                   393       407      (14)    
  Selling, general and administrative expenses decreased primarily due to reduced costs for legal consultants and the tentative legal settlement related to the Texas Fun 5 instant ticket game inc...                                                             

                                                                                                                                                               For the year ended December 31,                Change           
  ($ in millions)                                                                                                                                                                         2024      2023      $           %    
 ───────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────
  Research and development                                                                                                                                                                  45        37      7           +20  
  Research and development expenses increased, mainly due to higher outside services for investments in developing system