Gross Profit Rises 13.5% to €11.9 Million
(USD $12.6 Million); Adjusted EBITDA Grows 70.5% to €3.8
Million (USD $4.0 Million)
Reiterates Full Year 2023 Guidance Ranges;
Midpoints Imply Year over Year Revenue Growth of 13% and AEBITDA
Growth of 32%
Bragg Gaming Group (NASDAQ: BRAG, TSX: BRAG) ("Bragg" or the
"Company"), a global B2B content-driven iGaming technology
provider, today reported financial results for the third quarter
ended September 30, 2023. The Company also reiterated its revenue
and Adjusted EBITDA growth targets for the 2023 full year
period.
Summary of 3Q23 Financial and
Operational Highlights
Euros (millions)(1)
3Q23
3Q22
Change
Revenue
€
22.6
€
20.9
8.0
%
Gross profit
€
11.9
€
10.4
13.5
%
Gross profit margin
52.5
%
50.0
%
250
bps
Adjusted EBITDA(2)
€
3.8
€
2.2
70.5
%
Adjusted EBITDA margin
16.9
%
10.7
%
620
bps
Wagering revenue
€
5.7
B
€
4.6
B
24.6
%
(1)
Bragg’s reporting currency is Euros. The
exchange rate provided is EUR €1.00 = USD $1.06. Due to fluctuating
currency exchange rates, this reference rate is provided for
convenience only.
(2)
Adjusted EBITDA is a non-IFRS measure. For
important information on the Company’s non-IFRS measures, see
“Non-IFRS Financial Measures” below.
Chief Executive Officer Commentary
“Bragg’s initiatives to position the business as a leading
content-driven iGaming B2B provider as well as our disciplined
expense management combined to drive growth in third quarter
revenue, gross profit and Adjusted EBITDA, as well as a quarterly
Adjusted EBITDA margin of 16.9%,” said Matevž Mazij, Chief
Executive Officer for Bragg. “Third quarter year over year revenue
rose 8% to €22.6 million (USD $24.0 million), gross profit
increased 13.5% to €11.9 million (USD $12.6 million) and Adjusted
EBITDA increased more than 70% to €3.8 million (USD $4.0 million).
These results reflect, in part, a revenue mix shift to
higher-margin products including in-house created proprietary
content, exclusive third-party content, and turn-key Player Account
Management (“PAM”) and managed services partnerships, alongside our
ongoing cost control actions.
“The global availability of our proprietary and exclusive
third-party content is accelerating, particularly with a growing
number of Tier 1 operators, and we expect our global market
penetration for these games to accelerate further in the fourth
quarter and throughout 2024. During the quarter we launched 12 new
proprietary and exclusive third-party games in the largest four
regulated online casino markets in the United States and we expect
to continue to release games at this cadence or higher over the
next 12 months. We are also expanding our presence in Europe where
we have introduced 15 proprietary and exclusive third-party games
during the third quarter, including with several new customers in
the region. We continue to have the leading PAM in the Netherlands
which is live with operators that we estimate account for
approximately 30% of the gross gaming revenue generated in the
market. As we continue to introduce more higher-margin proprietary
and exclusive third-party games to more new partners at a faster
pace, we expect to generate further top-line, gross profit and
Adjusted EBITDA growth as well as higher operating margins.”
Mr. Mazij concluded, “Our strategic initiatives have helped
position Bragg as a must-have content supplier for leading global
iGaming operators, further building our foundation from which we
can deliver consistent profitable growth. We are confident we have
the right strategies, balance sheet and infrastructure in place to
further our business momentum as we continue to successfully
execute on our strategies that are generating cash flow growth and
creating new value for our shareholders.”
Third Quarter 2023 and Recent Business Highlights
- Effective August 28, 2023, the Company introduced a new Chief
Executive Officer, Matevž Mazij
- New content and RGS technology went live in Michigan and
Connecticut with FanDuel
- Secured global distribution agreement with Tier 1 operator 888
Holdings, launching Bragg’s content across a number of popular
online casino brands including William Hill, 888, Mr. Green and SI
Sportsbook
- Secured content distribution agreement with Tier 1 operator
PokerStars (Flutter) in Europe for the following jurisdictions: UK,
Italy, Portugal, Spain, Denmark, and Sweden and in the U.S. for New
Jersey, Michigan and Pennsylvania
- New content went live in the UK with Unibet, a leading brand
from Kindred Group
- Launched content with Tier 1 operator bet365 in Ontario
- In October, the Company expanded its content distribution in
Italy through a new agreement with Lottomatica Group S.p.A, the
leading online operator in Europe’s second largest online casino
market
- In November, the Company extended its agreement with Entain Plc
to supply Entain’s Dutch iGaming operator, BetCity.nl, with its PAM
platform until 2025
- Since July 1, 2023 the Company has made five (5) monthly cash
payments to Lind Global Fund II LLP (“Lind”) in the aggregate
amount of USD $2.5 million, in lieu of conversion into common
shares, avoiding further dilution.
- The total outstanding balance of the convertible debt as of
November 9, 2023 is USD $4.5 million
- Bragg expects to utilize cash flow from operations to make
similar monthly cash payments to further reduce the Lind debt
Third Quarter 2023 Financial Results and other Key Metrics
Highlights
- Revenue increased by 8.0% to €22.6 million (USD $24.0 million)
compared to €20.9 million (USD $22.2 million) in 3Q22
- Wagering revenue generated by customers increased 24.6% to €5.7
billion (USD $6.0 billion) compared to €4.6 to billion (USD $4.9
billion) in 3Q22
- Gross profit increased 13.5% to €11.9 million (USD $12.6
million) from €10.4 million (USD $11.0 million) in 3Q22,
representing a gross profit margin of 52.5%
- Adjusted EBITDA was €3.8 million (USD $4.0 million), an
increase of 70.5% compared to €2.2 million (USD $2.3 million) in
3Q22; Adjusted EBITDA margin was 16.9% compared to 10.7% in
3Q22
- For the nine-month period ended September 30, 2023, total cash
flow from operations was €6.2 million (USD $6.6 million) compared
to €7.7 million (USD $8.2 million) for the first nine months of
2022; the €1.5 million (USD $1.6 million) decrease reflects working
capital movement in the first nine months of 2023.
- Cash and cash equivalents as of September 30, 2023 was €7.9
million (USD $8.4 million) and net working capital, excluding
deferred consideration and convertible debt, was €6.3 million (USD
$6.7 million)
Reiterates Full Year 2023 Guidance
Reflecting the Company’s business momentum through the first
nine months of the year as well as ongoing initiatives to optimize
key customer partnerships for the long-term, Bragg reiterates its
2023 full year revenue guidance range of €95-97 million (USD
$100.7-102.8 million) and its full year Adjusted EBITDA range of
€15.5-16.5 million (USD $16.4-17.5 million).
Investor Conference Call
The Company will host a conference call today, November 9, 2023,
at 8:30 a.m. Eastern Time, to discuss its third quarter 2023
results. During the call, management will review a presentation
that will be made available to download at
https://investors.bragg.group/financials/quarterly-results/default.aspx.
To join the call, please use the below dial-in information:
Participant Toll-Free Dial-In Number (US/CANADA): (888)
210-4227 Participant Toll Dial-In Number (INTERNATIONAL):
(646) 960-0341 United Kingdom: Toll-Free: +44 800 358 0970
United Kingdom: Toll Dial-In: +44.20.3433.3846 Conference
ID: 2522980
A webcast of the call and presentation may also be viewed at:
https://investors.bragg.group/events-and-presentations/events/default.aspx
A replay of the call will be available until November 16, 2023
following the conclusion of the live call. In order to access the
replay, dial (647) 362-9199 or (800) 770-2030 (toll-free) and use
the passcode 2522980.
Cautionary Statement Regarding Forward-Looking
Information
This news release may contain forward-looking statements or
“forward-looking information” within the meaning of applicable
Canadian securities laws (“forward-looking statements”), including,
without limitation, statements with respect to the following: the
Company’s strategic growth initiatives and corporate vision and
strategy; financial guidance for 2023, expected performance of the
Company’s business; expansion into new markets; expected future
growth and expansion opportunities; expected benefits of
transactions; and expected future actions and decisions of
regulators and the timing and impact thereof. Forward-looking
statements are provided for the purpose of presenting information
about management’s current expectations and plans relating to the
future and allowing readers to get a better understanding of the
Company’s anticipated financial position, results of operations,
and operating environment. Often, but not always, forward-looking
statements can be identified by the use of words such as “plans”,
“expects” or “does not expect”, “is expected”, “budget”,
“scheduled”, “estimates”, “forecasts”, “intends”, “anticipates” or
“does not anticipate”, or “believes”, or describes a “goal”, or
variation of such words and phrases or state that certain actions,
events or results “may”, “could”, “would”, “might” or “will” be
taken, occur or be achieved.
All forward-looking statements reflect the Company’s beliefs and
assumptions based on information available at the time the
statements were made. Actual results or events may differ from
those predicted in these forward-looking statements. All of the
Company’s forward-looking statements are qualified by the
assumptions that are stated or inherent in such forward-looking
statements, including the assumptions listed below. Although the
Company believes that these assumptions are reasonable, this list
is not exhaustive of factors that may affect any of the
forward-looking statements. The key assumptions that have been made
in connection with the forward-looking statements include the
following: the regulatory regime governing the business of the
Company; the operations of the Company; the products and services
of the Company; the Company’s customers; the growth of Company’s
business, the meeting minimum listing requirements of the stock
exchanges on which the Company's shares trade, which may not be
achieved or realized within the time frames stated or at all; the
integration of technology; and the anticipated size and/or revenue
associated with the gaming market globally.
Forward-looking statements involve known and unknown risks,
future events, conditions, uncertainties and other factors that may
cause actual results, performance or achievements to be materially
different from any future results, prediction, projection,
forecast, performance or achievements expressed or implied by the
forward-looking statements. Such factors include, among others, the
following: risks related to the Company’s business and financial
position; that the Company may not be able to accurately predict
its rate of growth and profitability; risks associated with general
economic conditions; adverse industry events; future legislative
and regulatory developments; the inability to access sufficient
capital from internal and external sources; the inability to access
sufficient capital on favorable terms; realization of growth
estimates, income tax and regulatory matters; the ability of the
Company to implement its business strategies; competition; economic
and financial conditions, including volatility in interest and
exchange rates, commodity and equity prices; changes in customer
demand; disruptions to our technology network including computer
systems and software; natural events such as severe weather, fires,
floods and earthquakes; and risks related to health pandemics and
the outbreak of communicable diseases. Although the Company has
attempted to identify important factors that could cause actual
actions, events or results to differ materially from those
described in forward-looking statements, there may be other factors
that cause actions, events or results not to be as anticipated,
estimated or intended. There can be no assurance that
forward-looking statements will prove to be accurate, as actual
results and future events could differ materially from those
anticipated in such statements. Accordingly, readers should not
place undue reliance on forward-looking statements.
The Company disclaims any intention or obligation to update or
revise any forward-looking statements whether as a result of new
information, future events, or otherwise, except in accordance with
applicable securities laws.
Non-IFRS Financial Measures
Statements in this news release make reference to “Adjusted
EBITDA”, which is a non-IFRS (as defined herein) financial measure
that the Company believes is appropriate to provide meaningful
comparison with, and to enhance an overall understanding of, the
Company’s past financial performance and prospects for the future.
The Company believes that “Adjusted EBITDA” will provide investors
with useful supplemental information about the financial
performance of its business, enable comparison of financial results
between periods where certain items may vary independent of
business performance, and allow for greater transparency with
respect to key metrics used by management in operating its business
and making decisions. “Adjusted EBITDA” is a financial measure that
does not have a standardized meaning under International Financial
Reporting Standards (“IFRS”). As there is no standardized method of
calculating “Adjusted EBITDA”, it may not be directly comparable
with similarly titled measures used by other companies. The Company
considers “Adjusted EBITDA” to be a relevant indicator for
measuring trends in performance and its ability to generate funds
to service its debt and to meet its future working capital and
capital expenditure requirements. “Adjusted EBITDA” is not a
generally accepted earnings measure and should not be considered in
isolation or as an alternative to net income (loss), cash flows or
other measures of performance prepared in accordance with IFRS.
Although management believes these financial measures are
important in evaluating the Company, they are not intended to be
considered in isolation or as a substitute for, or superior to,
financial information prepared and presented in accordance with
IFRS. Non-IFRS measures are not recognized measures under IFRS and
do not have standardized meanings prescribed by IFRS. These
measures may be different from non-IFRS financial measures used by
other companies, limiting their usefulness for comparison purposes.
These non-IFRS measures and metrics are used to provide investors
with supplemental measures of our operating performance and
liquidity and thus highlight trends in our business that may nor
otherwise be apparent when relying solely on IFRS measures.
About Bragg
Bragg Gaming Group (NASDAQ: BRAG, TSX: BRAG) is a content-driven
iGaming technology provider, serving online and land-based gaming
operators with its proprietary and exclusive content, and its
cutting-edge technology. Bragg Studios offer high-performing,
data-driven and passionately crafted casino gaming titles from
in-house brands Wild Streak Gaming, Spin Games, Atomic Slot Lab,
Indigo Magic and Oryx Gaming. Its proprietary content portfolio is
complemented by a range of exclusive titles from carefully selected
studio partners which are Powered By Bragg: games built on Bragg
remote games server (Bragg RGS) technology, distributed via the
Bragg Hub content delivery platform and available exclusively to
Bragg’s customers. Bragg’s modern and flexible omnichannel Player
Account Management (Bragg PAM) platform powers multiple leading
iCasino and sportsbook brands and is supported by expert in-house
managed operational and marketing services. All content delivered
via the Bragg Hub, whether exclusive or from Bragg’s large,
aggregated games portfolio, is managed from a single back-office
and is supported by powerful data analytics tools, as well as
Bragg’s Fuze™ player engagement toolset. Bragg is licensed or
otherwise certified, approved and operational in multiple regulated
iCasino markets globally, including in New Jersey, Pennsylvania,
Michigan, Ontario, the United Kingdom, the Netherlands, Germany,
Sweden, Spain, Malta and Colombia.
Find out more.
Financial tables follow
BRAGG GAMING GROUP
INC.
INTERIM UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF (LOSS) AND COMPREHENSIVE (LOSS)
INCOME
(In thousands, except per
share amounts)
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
Revenue
22,574
20,899
70,162
61,053
Cost of revenue
(10,718
)
(10,454
)
(32,260
)
(28,961
)
Gross Profit
11,856
10,445
37,902
32,092
Selling, general and administrative
expenses
(13,047
)
(12,034
)
(38,035
)
(33,539
)
Loss on remeasurement of derivative
liability
(82
)
(101
)
(261
)
(101
)
Gain on settlement of convertible debt
231
—
435
—
Gain on remeasurement of consideration
receivable
—
—
—
37
(Loss) gain on remeasurement of deferred
consideration
(1,095
)
52
(387
)
521
Operating (Loss)
(2,137
)
(1,638
)
(346
)
(990
)
Net interest expense and other financing
charges
(450
)
(246
)
(1,414
)
(524
)
(Loss) Before Income Taxes
(2,587
)
(1,884
)
(1,760
)
(1,514
)
Income taxes
(364
)
(114
)
(1,290
)
(1,114
)
Net (Loss)
(2,951
)
(1,998
)
(3,050
)
(2,628
)
Items to be reclassified to net loss:
Cumulative translation adjustment
(611
)
2,211
(1,754
)
(1,754
)
Net Comprehensive (Loss) Income
(3,562
)
213
(4,804
)
(4,382
)
Basic (Loss) Per Share
(0.13
)
(0.09
)
(0.14
)
(0.12
)
Diluted (Loss) Per Share
(0.13
)
(0.09
)
(0.14
)
(0.12
)
Millions
Millions
Millions
Millions
Weighted average number of shares -
basic
23.3
20.0
22.3
21.2
Weighted average number of shares -
diluted
23.3
20.0
22.3
21.2
BRAGG GAMING GROUP
INC.
INTERIM UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(in thousands)
As at
As at
September 30,
December 31,
2023
2022
Cash and cash equivalents
7,876
11,287
Trade and other receivables
17,826
16,628
Prepaid expenses and other assets
2,628
1,823
Total Current Assets
28,330
29,738
Property and equipment
663
660
Right-of-use assets
1,271
576
Intangible assets
39,413
41,705
Goodwill
31,662
31,662
Other assets
47
47
Total Assets
101,386
104,388
Trade payables and other liabilities
18,801
19,549
Deferred revenue
564
746
Income taxes payable
1,367
1,113
Lease obligations on right of use
assets
411
294
Deferred consideration
1,511
1,176
Derivative liability
869
1,320
Convertible debt
3,588
—
Loans payable
—
109
Total Current Liabilities
27,111
24,307
Deferred income tax liabilities
1,201
1,201
Lease obligations on right of use
assets
955
344
Convertible debt
—
6,648
Deferred consideration
1,378
2,121
Other non-current liabilities
233
233
Total Liabilities
30,878
34,854
Share capital
118,670
109,902
Broker warrants
38
38
Shares to be issued
3,491
6,982
Contributed surplus
21,246
20,745
Accumulated deficit
(75,277
)
(72,227
)
Accumulated other comprehensive income
2,340
4,094
Total Equity
70,508
69,534
Total Liabilities and Equity
101,386
104,388
BRAGG GAMING GROUP
INC.
UNAUDITED SELECTED FINANCIAL
GAAP AND NON-GAAP MEASURES
(in thousands)
Three Months Ended September
30,
Nine Months Ended September
30,
EUR 000
2023
2022
2023
2022
Revenue
22,574
20,899
70,162
61,053
Operating (Loss)
(2,137
)
(1,638
)
(346
)
(990
)
EBITDA
1,209
837
8,963
4,944
Adjusted EBITDA
3,814
2,237
12,450
8,412
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231109723492/en/
Yaniv Spielberg Chief Strategy Officer Bragg Gaming Group
info@bragg.games
Joseph Jaffoni, Richard Land, James Leahy JCIR 212-835-8500 or
bragg@jcir.com
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