NASDAQ:BRAG Bragg Gaming Group Q3 2023 Earnings Report $4.11 -0.04 (-0.85%) Closing price 03:58 PM EasternExtended Trading$4.11 +0.00 (+0.12%) As of 04:42 PM Eastern Extended trading is trading that happens on electronic markets outside of regular trading hours. This is a fair market value extended hours price provided by Polygon.io. Learn more. Earnings HistoryForecast Bragg Gaming Group EPS ResultsActual EPS-$0.14Consensus EPS N/ABeat/MissN/AOne Year Ago EPSN/ABragg Gaming Group Revenue ResultsActual Revenue$24.57 millionExpected RevenueN/ABeat/MissN/AYoY Revenue GrowthN/ABragg Gaming Group Announcement DetailsQuarterQ3 2023Date11/9/2023TimeN/AConference Call DateThursday, November 9, 2023Conference Call Time8:30AM ETUpcoming EarningsBragg Gaming Group's Q1 2025 earnings is scheduled for Thursday, May 8, 2025, with a conference call scheduled at 8:30 AM ET. Check back for transcripts, audio, and key financial metrics as they become available.Conference Call ResourcesConference Call AudioConference Call TranscriptSlide DeckInterim ReportEarnings HistoryCompany ProfileSlide DeckFull Screen Slide DeckPowered by Bragg Gaming Group Q3 2023 Earnings Call TranscriptProvided by QuartrNovember 9, 2023 ShareLink copied to clipboard.There are 9 speakers on the call. Operator00:00:00You for standing by. I would like to welcome everyone to the Bragg Gaming Group Third Quarter 2023 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. Thank you. Operator00:00:27I would now like to turn the call over to Yaniv Spielberg, Chief Strategy Officer for Bragg Gaming Group. Yaniv, please go ahead. Speaker 100:00:37Thank you, operator. Morning, everyone, and thank you for joining our Q3 2023 earnings conference call. I'm Yenny Spilberg, Chief Strategy Officer for Bragg Gaming Group. I'll be hosting today's call alongside my colleagues, CEO, Mateusz Mazi, who will comment on our Q3 performance and Ronen Kanur, our CFO, We'll review and discuss our Q3 financial results. If you have not already done so, you can follow our earnings call presentation from our website at investors. Speaker 100:01:06Bragg. Group, that's investors with an s, dot bragg. Group, in the section called Latest Presentation. On this call, we'll review BRAGG's financial and operating results for the Q3 of 2023. And following our prepared remarks, we'll open the conference call to a question and answer period. Speaker 100:01:25I'll start the call with some brief cautionary remarks Regarding certain statements that may be made on this call, certain statements made on this conference call and our responses to various questions may constitute forward looking information for future oriented financial information within the meaning of applicable securities law. Statements about expected growth, prospective results, Strategic outlooks and financial and operational expectations, opportunities and projections rely on a number of assumptions concerning future events, Including market and economic conditions, business prospects or opportunities, future plans and strategies, technological developments and anticipated events, Trends and regulatory changes that may affect the corporations and its subsidiaries and their respective customers and industries. While we believe these assumptions to be reasonable, they are subject to a number of risks, uncertainties and other factors, many of which are outside the company's control which could cause the actual results, performance or achievements of the company to be materially different. There can be no assurances that these assumptions or estimates are accurate Any of these expectations will prove accurate. For a complete discussion of these factors, please refer to our recently filed press release and other publicly available disclosure. Speaker 100:02:39With that behind us, I'd like to turn the call to our CEO, Mateusz. Mateusz? Speaker 200:02:44Good morning, everyone. I'm Mateusz Mazi, Chairman and CEO of Bragg. And I'm going to run through our operational highlights from the quarter. Then I'll hand over to our CFO, Ronnen Kanur, who will Take you through the financials. Afterwards, I'll take a few of the points in little more detail wrapping up with our outlook and summary, and then Ronen and I We'll be happy to take your questions. Speaker 200:03:10Turning now to Slide 4, I want to run through some of the key points of 3rd quarter, The quarter in which I was appointed CEO. I have a long history at Bragg. I originally founded Oryx Gaming back in 2012, Running the company until I sold ORIX to Bragg in 2018. As a part of that process, I also became Bragg's largest shareholder. I continued as CEO of Borix until in 2021, I stepped back from operations and joined Bragg's Board of Directors. Speaker 200:03:42As a Director, I have strongly supported our U. S. Acquisitions, Wild Street Gaming and Spin Games, and was involved in developing our U. S. Expansion strategy. Speaker 200:03:53I was subsequently appointed Chair of the Board earlier this year and then CEO at the end of August of this year. By appointing me as CEO, the Board was seeking to align streamline the interest of Bragg's shareholders with company operations and to unlock shareholder value, which is something I aim to do. So I'm delighted to be back and reporting on another quarter in which we continue to make good progress on our goals. After Ronen has presented the financials, I'm going to talk a little about our extended agreement with BetCity, which will see us continue supplying our PAM content And content aggregation to BetCity into 2025. And I'm also going to reiterate and expand a little on the key pillars of Bragg's strategy of how we aim to take the business to the next level and to become a premier content and technology supplier to the growing global iGaming Industry. Speaker 200:04:52Our content roadmap is going very strong. We are on track to launch 68 exclusive game titles globally this year, Putting our output among the top tier of online casino game developers on the market, almost half of these titles are from Our 3 Bragg Studios brands generating higher gross profit for the business and we intend to continue at this pace. During the Q3, we were pleased to see 2 of our Powered by Bragg titles enter the top 25 new slot rankings published by Eilis and Kriedcik. The success of Devil's Lock by Blueberry and Ultra Rush Golden Steve from Incredible Technologies is a testament to our strategy in the U. S. Speaker 200:05:37We're partnering with successful and familiar land based slot brands and bringing them online exclusively available in the market via Bragg. Our U. S. Rollout of our newest content and technology continues with recent launches with local market leaders BetMGM in New Jersey And with FanDuel in Michigan and Connecticut, and we're pleased to be able to leverage our slot production capabilities In other markets, we continue to roll out our content with new customers. In Italy, we have launched with top 2 operators in the market, Lotto, Optica and In Ontario, we went live with Bet365 and in the UK, we launched games with Unibet, which is one of the Kindred's With that, I'm now going to hand over to Ronnen to present our Q3 financials. Speaker 200:06:58Ronen? Thank you, Mateusz, and good morning, everyone. I'll begin my comments on Slide 6. As Matteo indicated earlier, the Q3 of 2023 was another positive step in our digital journey. We continue to execute against our mission and strategic plan, and we can see that in our financial and operational results. Speaker 200:07:21In the Q3, total revenue were up by 8% year over year to €22,600,000 continuing our growth momentum since the Q4 of 2021. The growth was mainly derived organically to our existing customer base launched in financial year 'twenty one and 'twenty two, In particular, the PAM and 10 kit solution customers in the Netherlands, together with content offering and a solid revenue performance from the Wall Street Gaming Studio customers. 3rd quarter, however, showed a slight sequential drop of 8.5% as a result of Bad City revised extended commercial terms. From an operational KPI perspective, total wagering generated by games and content offered by the group during the quarter was up by 24.6 percent from the same period in the previous year to €5,700,000,000 versus €4,600,000,000 in the same period last year. As you can see from the wagering chart on the right hand side, Bragg saw ongoing positive momentum from the Q4 of 2021, which demonstrates our ability to transform and diversify our operations. Speaker 200:08:31Gross profit from the quarter increased by 13.5 percent to €11,900,000 With gross profit margin slightly increased to 52.5% from 50% in the same period last year. The gross profit is primarily the result of increased revenue performance in all content products, while recording slightly lower PAM and managed services revenue, which also, as a result of Bat City, renegotiated extended commercial terms. Adjusted EBITDA for the quarter was up by 70.5 percent to €3,800,000 with adjusted EBITDA margin reaching 16.9%, an improvement of 6 20 basis points from the same period in the previous year. The change in margins mainly as a result of scale in revenue, while maintaining control investment in salaries and subcontractors and other operational costs as part of the company's strategy to expand software development, product and senior management functions. Operating loss increased by €500,000 to €2,100,000 mainly as a result of a one off termination of an employment contract and a loss from deferred consideration. Speaker 200:09:41We are pleased with the current trading and we are reiterating our 2023 revenue guidance range of €95,000,000 to €97,000,000 and adjusted EBITDA range of €15,500,000 to €16,500,000 As you can see on Slide 7, the gross profit margin continued to show a growing momentum since the Q4 of 2021 Due to the change in Bragg product mix, we continue to execute against our mission and strategic plan, and we are scaling up our business in line with both our revenue growth And the continued movement in product mix, as indicated on the right hand side of the slide. Gross profit increased by 13.5 percent to €11,900,000 with margin increasing from previous year by 250 basis points to 52.5%. The Q3 revenue growth year over year was driven mainly by the Dutch PAM and 10 gs customers' outperformance together with the improvement of our content offering. In the Q3, content revenue segment offering, which including aggregated third party, exclusive third party and proprietary content, Increased to €17,900,000 and represented 79.4 percent of total revenue as opposed to 69.9% on previous year, highlighting Bragg's execution of the content strategy. Proprietary content development is positively progressing both in the U. Speaker 200:11:06S. And EU markets By increasing both distribution and games performance, and as Ed Mateusz indicated, we have recently marked another key milestone with our recent launch of our newest Tech Stack In New Jersey with BetMGM. As indicated in the previous quarters, we are targeting gross profit margin improvements to exceed 60% But full year 2025, mainly by increasing the proportion of revenue which comes from proprietary content, TAM and 10Q solutions. Moving to Slide 8, adjusted EBITDA amounted to €3,800,000 against an operating loss of €2,100,000 The GAAP was driven by the following non cash and exceptional items: depreciation and amortization, the increase in intangible is part of the Spin Games acquisition in June 2022, increased level of investment in software development and a change in the useful life of customer relationship. Shared Best Payment, the charge for awards granted to senior management during the period composed of DSUs, RECs and options. Speaker 200:12:10During the period, one off charge of €500,000 was incurred relating to discounted contractor relationship of an employee. Exceptional costs, mainly associated with the discounted contractor relationship of employee in the total value of 600,000 And gain on remeasurement of deferred consideration is mainly associated with the acquisition of Spin Games in June 2022 On the total outstanding deferred liability, that was adjusted to reflect the change in our current fair value. Moving to Slide 9. As you can see on the slide, we ended the Q3 with cash balance of $7,900,000 compared to €11,300,000 of December 31, 2022, with outstanding liability of US5.5 million dollars of convertible security. During the Q3 and post quarter end, the company made cash repayment of US2.5 million dollars leaving an outstanding balance of US4.5 million dollars As of today's date, we expect to continue exercising our rights to pay down the existing convertible security, subject to ongoing management assessments. Speaker 200:13:17Our net working capital at the end of September 2023 is €6,300,000 which is excluding deferred consideration and convertible debt. This compares to €6,600,000 at the beginning of the year. From a cash flow perspective, for the 9 months ended September 30, 2023, A total of €6,200,000 generated from operating activities with underlying performance reaching €10,200,000 offset by negative movement in working capital and income tax of €4,000,000 A total of €6,600,000 invested in intangible assets, mainly related to the capitalization of software development costs in the period and the total of €2,600,000 used in finance activity, which predominantly related to the repayment of loans in relation to the convertible security in the total of €2,300,000 Looking forward, management are projecting a positive free cash flow from operations, while there is no CapEx or technology debt required in the business. In addition, management is confident that there are no current financing or debt requirements needs for the business. With that, will hand over back to Mateusz to continue our business and operational activities. Speaker 200:14:27Thank you, Ronen. As a recently appointed CEO and with this as my first time leading our earnings call, I want to remind everyone of the great business that we've built and of the exciting future we have ahead of us. Bragg is an award winning supplier in a growing multibillion dollar iGaming market. We have over 450 employees in 7 offices across North America, Europe and in India. We are licensed We're certified to offer iGaming products in over 25 regulated jurisdictions globally, including the largest markets in the U. Speaker 200:15:04S. And Europe, New Jersey, Pennsylvania, Michigan, the UK and Italy. Our customers number Over 200 and include names such as BetMGM, DraftKings, FanDuel in the U. S. And Intain SuperBet and Flutter in Europe. Speaker 200:15:24In view of recent M and A activity in the iGaming space, I believe that at Bragg we have built something very unique in the market. There are very few companies in the space that are able to offer what we can, which includes our full product suite of content, content aggregation, sports book delivery, PAM, Promotional Tools and Managed Services. With this product suite, we're uniquely positioned to be able to deliver full turnkey iGaming solution in regulated markets and in a landscape where more and more markets are on the cusp of regulation. With that in mind, I want to take a few minutes to refine and reflect on Bragg's strategy, which I haven't fundamentally changed since coming in as CEO, but which we have refined and expanded and we now plan to accelerate. Firstly, our proprietary and Bragg Studios are our in house studios, which now include Wall Street Gaming, Spin Games and ORIX Gaming, As well as 2 new studios we launched last year, Atomic Slot Lab and Indigo Magic. Speaker 200:16:41Games from Bragg Studios, which are also built on our own technology and distributed through our own network, generate close to 100% gross profit margin for us. So these are an important part of how we will deliver the overall gross profit and adjusted EBITDA margin targets that we have set for ourselves That Ronen mentioned earlier. In a moment on the next slide, I'll show you how we are doing in terms of roadmap delivery for our BracStudio content. The rest of our exclusive casino games portfolio is made up of games from our Powered by Brack partners, such as Blueberry, Incredible Technologies, Gamamat, Kingshow Games and many others. These games differentiate our games portfolio and include big names from both the land based and online spaces, Games that are in demand and which are available online only to customers of Bragg. Speaker 200:17:33So we are leveraging our increasing portfolio And our production capabilities mean that we can offer locally adapted games titles in each of these markets. As you saw from the recent game we built for Caesars Digital, Lady Luck Casino Egyptian Magic, we are also in a position of strength We will also continue to grow our content distribution network in regulated markets. This means focusing on our relationship with Tier 1 and Tier We want to continue to grow in large regulated markets where Bragg Online Casino content is still underrepresented, And these markets offer plenty of scope for growth. We are clearly focused on content rollouts In the United States, but markets such as UK, Switzerland, Italy, Holland and Ontario are also important to our content delivery growth We are closely watching regulatory developments as many markets which currently have no legal framework for online casino Or those which currently have restrictive frameworks are reviewing their laws with a trend towards more jurisdictions opening up Regularly iGaming in the near future, as well as watching for the next states to adopt online casino in the United States, we're well positioned To enter or expand in Latin American markets and newly regulated European markets. Speaker 200:19:22As these new markets regulate, we will explore All opportunities, not just for our content, but also for our full product suite, including PAM and content aggregation, and I'll talk more about it In a moment. A key differentiated product that we developed is Fuze. This is our multi award Winning promotions platform that allows operators to run promotions such as free rounds, tournaments, missions and quests To gamify and reward players and these work across both casino, lottery and sports betting products. All Bragg content customers, whether for Bragg Studios, powered by Bragg, aggregated content or sports betting products that we deliver Already have access to Fuze and Fuze driven campaigns resulted in significantly more traffic, Better conversion rates, better retention rates and higher lifetime value, which is beneficial both to our customers And to us, and we are now focused on working together with our customers to roll out with more Fuse driven promotions, And we're now also able to offer Fuze as a standalone promotion platform for both casino and sportsbook, and we have already integrated our first As we continue to develop Fuse with more in demand features coming soon, We're also excited to be developing this proprietary functionality to create differentiated and unique casino content categories We're the name of creating a niche for Bragg content in a crowded marketplace. Speaker 200:21:02We at Bragg are extremely proud Our full product suite, which includes our proprietary and exclusive content, aggregated content, sports book delivery, PAM, managed services, Fuze promotional tools and data and reporting products. We have over 200 customers, including Compelling new time and full turnkey propositions with the aim of expanding our platform business to new brands and new markets. And as always, we continue to invest in our product to refine, improve and to explore opportunities in new jurisdictions. Our strategy is focused on expanding recurring profitability through our culture of continuous improvement with an eye On opportunities for increased automation and lower cost to serve. This way, we will continue to expand our profit pools and gross profit and adjusted EBITDA Margins. Speaker 200:22:20So to conclude, Bragg's long term ambition is to maximize shareholder value Moving to Slide 13. We extended the agreement with Betten BV, where we have agreed to continue supplying our PAM, that's player account management platform and our content and content aggregation to its flagship brand in the Netherlands, BetCity, into 2025. We partnered with BetCity to launch The brand back in October 2021 when the newly regulated Dutch market opened, and we're proud of our part in helping BetCity become One of the leading online sports betting and casino brands in the Netherlands today, and we're extremely delighted to continue to build On the success with them, as a part of the extension deal, we will integrate several new third party content suppliers for the Dutch market, Further strengthening our localized content portfolio, but we will also continue to deliver content from our proprietary Brack Studios, From our Powered by Bragg partners and we will continue to be the exclusive content aggregator for BetCity via our product delivery technology for the duration of the agreement. Moving to Slide 14. On Slide 14, I want to give you an update on how we're doing as a developer and distributor of exclusive online casino games. Speaker 200:24:01We are on track to release 68 games titles globally for a full year of 2023, Putting our output up there with the biggest game studios on the market. Proprietary and Exclusive game production has been a renewed focus for us in the past 2 years. So I'm very proud of development We have built and of the quality of the games that we are releasing, as well as ramping up our online casino games production, We are maintaining a strategic balance with approximately half of the titles coming from our own BRAC studios, which generate High margins for us and half of it coming from our Powered by Bragg partners bringing diversity, richness and in demand studio brand store portfolio. As you can see, in the second half of twenty twenty three, our content releases significantly increased and we plan to continue at this So in summary, our 3rd quarter Revenue rose 8% year over year to €22,600,000 Gross profit was €11,900,000 And adjusted EBITDA was up 70.5 percent year over year to €3,800,000 We have extended our agreement with BetCity to continue as their exclusive PAM content and content aggregation partner into 2025. We have our strategic pillars in place that will underpin our growth going forward and which will drive shareholder value. Speaker 200:25:39And our exclusive content production roadmap is firing on all cylinders with 68 online casino titles on track to be launched in the full year of 2023, including 30 from our proprietary Bragg Studios. Current trading is in line with our expectations, so we reiterate our guidance to €16,500,000 in adjusted EBITDA. The midpoints of these ranges represent 13.3% revenue growth and 32% adjusted EBITDA growth compared to our 2022 performance. I want to thank you all very much for attending this presentation today. And now Ronen and I would be happy to take any questions you might have. Operator00:26:33Thank you. And we will pause just a moment to compile the Q and A roster. Okay. It looks like our first Caller is Gianluca Tucci with Haywood Securities. Gianluca, please go ahead. Speaker 300:26:58Hi, good morning guys and congrats on another good quarter. I'm just wondering, if we can start off on the news from earlier this week. I think you did a good job of providing color, Mats. But the extension, like does it take you through 2025 or at the start of 2025? And I'm curious if you can speak to how the company expects the revenue, like mix Speaker 200:27:35So the exact details of the commercial terms remain obviously subject to the parties' eyes only as they are sensitive commercial terms. We By negotiating this deal, we focused on keeping the PAM and Aggregation deal and it's in place until September 2025. And we reduced managed services resources, which Antein already has in house. Moving forward, we are going to work very aggressively on decreasing the exposure to 1 of our Top clients and we are going to work very aggressively in the direction of growing our Content proprietary content portfolio of clients, the Tier 1s that we have signed recently and the increasing number of Aggregation and PAM clients where we believe that we have a very good opportunity to leverage that position and grow our Proprietary and powered by Bragg content revenue with them. Speaker 300:28:49Great color. Thanks, Matt. And so on your commercial efforts, with all the recent Tier 1s that have been signed over the last quarter or so, I'm just wondering how you're thinking about 2024 at this point from a growth perspective, combined with your cadence of games comment accelerating, It appears that 2024 could be even growthier than 2023 at this point. Just curious for your comment on that. Speaker 200:29:18Sure. So we now have agreements with most of the Tier 1 operators, but they don't represent top customers for Bragg. Our plan in 2024 2025 as well is to grow our wallet share with all of these existing content only operators, As well as existing PAM and aggregation operators as they present a great revenue growth opportunity for our proprietary empowered by Brac content. We are also looking to establish ourselves in markets that we're in, but we are underrepresented. And finally, Newly regulated markets in LatAm and Europe are a great opportunity for our PAM aggregation engagement and content products with these Tier 1 operators that we already And new operators that are coming out of these newly regulated landscapes. Speaker 300:30:14Okay. That's great. And my last question here, as it pertains to the American markets In the U. S. Particularly, are you doing anything differently or like is it pretty much the same kind of execution plans from a growth perspective in the U. Speaker 300:30:32S? Speaker 200:30:36Well, as discussed in the presentation, in 2023, we will eventually roll out 69 titles, Both in the U. S. And Europe and preliminary data suggest that the content performs well. Bragg is now live in The 4 largest USI gaming markets being Pennsylvania, New Jersey, Michigan and Connecticut with its proprietary content. And we continue to roll out with more operator brands in these states, further expanding its reach. Speaker 200:31:06To answer your question, we launched our content portfolio in Pennsylvania with Rush Street Interactive and have also launched content with FanDuel in Michigan And we expect this trend to continue into 2024 2025. I would like to also say that we're very excited about the U. S. And I want to remind everyone that our business is Successfully in Europe and that we're one of the largest content aggregators and leading PAM providers in Europe and we expect to leverage Our expertise coming into the U. S. Speaker 200:31:44And become a leading content provider in iGaming partners to Global operators and U. S. Only operators, obviously, such as Zendesk and Flutter, Pet 365s and others. Speaker 300:31:57Okay. Thank you for the color, Mats, and congrats again on the quarter. Keep up Speaker 200:32:01the good work. Thank you. Operator00:32:03Thanks, Gianluca. And our next question comes from the line of Jordan Bender with JMP Securities. Jordan, please go ahead. Speaker 400:32:12Great. Thanks for taking my question. You actually just mentioned Rush Street in your prior comments. They are the new operator starting here soon in the state of Delaware To run the online platforms, I was wondering what does that kind of mean and can you kind of frame the revenue Speaker 200:32:39Hi. So it's probably too early to discuss the revenue opportunities for 2025. We I believe that Rush Street is obviously a great operator that they have an extremely good team and extremely good product. And I believe that they're going to use all of that to significantly grow the GGR in the state of Delaware. And we plan to be Very high on their priority list of content providers for that state. Speaker 200:33:17Exactly what the revenues are going to be is probably too early to discuss. Speaker 400:33:22Understood. And then In terms of your player and wager growth, nice growth in the quarter, but from a wager per player perspective, you're seeing a little bit of a deceleration Year to date and especially here in the Q3, is that just a function of mix or is there something in the underlying consumer, just spending less? Thank you. Speaker 200:33:45Yes. So this is mainly connected to the seasonality. 3rd quarter is usually Slower than 1st and second quarter. Speaker 400:33:58I guess from a growth perspective, First half down roughly 5% and the 3rd quarter is down about 24%. Is that is there anything kind of in that? Speaker 200:34:13I wouldn't say there's anything in that any underlying Reason that we would be able to identify. Speaker 400:34:25Understood. Thank you very much. Speaker 100:34:28Thank you. Operator00:34:29Thanks, Jordan. And our next question comes from the line of Adir Kadvi with 8 Capital. Adir, please go ahead. Speaker 400:34:39Thanks guys. Thanks for taking my questions and Matt, congrats on Speaker 500:34:42the role, looking forward to working with you. I just wanted to talk about some of the European markets, specifically the U. K. And Italian markets. You've been in these markets for some time, some meaningful wins. Speaker 500:34:53How are you thinking about those 2 markets just given how large they are and how meaningful they could be for your revenues moving forward? Speaker 200:35:04Yes. So we were in we started with these markets Anywhere between 24 12 months ago. And we were using this time to integrate with clients. These are Obviously, very heavily regulated markets. We believe that they are a great opportunity for our Content only proposition and we believe that we were largely underrepresented In those markets and we feel that these markets represent a great growth opportunity For our content in 2024 and 2025. Speaker 500:35:48Okay, excellent. And then just The content in different European markets, you've obviously had success. How easily transferable are those markets from, say, the Netherlands into the UK and then into Germany. And just like how does that all work? And do you find that there's minimal heavy lifting or investment that needs to go into launching this content in different markets? Speaker 200:36:16We are integrated with most of the clients that are operating across these markets. So the heavy lifting has been done in the past. And what we need to do now is we need to use our data and build local Custom content that is going to fit the requirements of these markets and effectively Place the content, position the content and promote the content with these operators and use our engagement tools that will allow us to create certain unique and Specific categories within the content portfolio to be able to compete with existing content providers in these markets. I'm very positive about the progress that we have made over the last 12 months. And I believe that we have a great future ahead of us With the 2 proprietary studios and roadmaps that have been put in place with these 2 proprietary studios And powered by Bragg Studios that are developing content for these local markets in Europe. Speaker 500:37:26Excellent. Thanks guys. Congrats on Speaker 400:37:27the quarter. I'll pass the line. Speaker 200:37:29Thank you. Speaker 400:37:30Thanks, Operator00:37:37And our next question comes from the line of Daniel Rosendert. Daniel, please go ahead. Speaker 600:37:44Hi, Mats and Ronen. My first question comes around cost controls and automation. So we're seeing some of the benefits take place here in the quarter, but just wondering how much more leverage do you have in terms of implementing Speaker 200:38:07Ronen, you want to take this? Sure. Daniel, good morning, Speaker 700:38:12everyone. So we Implemented at the beginning of last year. We implemented at the beginning of this year, so we implemented quite Speaker 200:38:18a lot of cost controls. Speaker 700:38:21Some of the areas that Only focus on our growth and what we actually need to grow and to diversify in different markets, different products and of course, The new content we're producing. Of course, there's a lot of room for optimization. It's from every single department. But I would have to say from Speaker 200:38:41a business perspective today, majority of the work is automated, majority of Speaker 700:38:45the process is automated. We Becoming more efficient in the way we're operating, the way we're actually building games. We are investing in our technology. We actually have at this stage, I would say, we're very well positioned to further growth with the same teams and the same operation we have today. Speaker 200:39:04So yes, there's a lot of growth, there's Speaker 700:39:06a lot of opportunities for optimization, but I think we're already there. I think what we're seeing right now, What we will be seeing right now is more commercial and more revenue coming from the same team, from the same Functionality and infrastructure we have right now. Speaker 600:39:25Thanks for that context. My second question is around the BetCity contract. I was just wondering, it's nice to see the risk contained here. Is the final outcome in line with what you were expecting as you started Negotiations and are there any other opportunities to work with That Citi that came out of those negotiations. Speaker 200:39:55Yes. So our original agreement had a 5 year term with a 12 month termination notice. So we're happy that we managed to secure the extension of the deal and obviously in line with our expectation. PetSeed and Entain as a group are a key partner of ours and We're proud of what we have achieved together. We've been having a very constructive dialogue over the recent past And we hope to be able to power the BetCity brand and Tain Group as a global powerhouse going forward. Speaker 200:40:32We are right now very focused on making sure that BetCity continues to effectively utilize our products And continues to grow. And I think it's positive that We have secured the longevity of the deal and we have Now a clear pathway of continued support of Entain's strategic initiatives in the market. Entain, as a like I said, a global operator, Presents a large opportunity for us as a content provider, For us as an aggregation solution provider and for us as an engagement solution provider, so we will work Together with, Entain and BetCity to implement these solutions into their B2C network Across all different jurisdictions in 2024 and always 2025 and Hopefully achieve similar success as with BetCity. Speaker 600:41:48Okay. Thanks for that. Lastly, just a quick one for Ronen. On the working capital, free cash flow, you guys are expecting continue to improve and grow. Just wondering if there's any color you could give in terms of how working capital ebbs and flows in the coming quarters, if you require capital to scale just from a working capital perspective? Speaker 700:42:16Yes. So, as you've seen in the last 9 months of operation, The working capital relatively remained the same, 6.3 percent, it's about 6.6 percent, drop to 6.3 percent, Speaker 200:42:29Of course, with Speaker 700:42:29a high adjusted EBITDA compared to previous year. So, we believe that in the next couple of I would say, the next 9 months, We'll be able to generate relatively the same type of profits. We are definitely Investment in our software development costs, which I think Speaker 200:42:47is going to be relatively the same. I don't think Speaker 700:42:49there's a big expectation to be much higher than that. We can serve the debt. That's what we're doing. And I think excluding the changes in working capital in the last 9 months period, we definitely could serve that And the working capital would probably will improve with everything we're doing right now. So I'm quite confident that it will be Slightly higher than we were seeing right now compared to what we did so far. Speaker 700:43:16And we will improve that at least about €3,000,000, €4,000,000 in the next couple of 9 months time. That's on the basis that we're going to secure the debt and we're paying on a regular basis to avoid any dilution to the shareholders. Speaker 600:43:37Thanks for taking my questions. I'll pass the line. Operator00:43:40Thanks, Daniel. And our final question today comes from the line of Sid De Laury with Cormark Securities. Sid, please go ahead. Speaker 800:43:49Hey, good morning guys. Thanks for taking my question. Firstly, just on the Ontario market, maybe if you can speak about the general In Q3, you're now live in Bed 365, Rush Street Interactive and maybe a couple others. It seems like there was minimal Sequential growth on the number of live operators and just given that dynamic, do you see your future growth in Ontario from penetrating further with current operators Speaker 200:44:20Hi. So we are seeing future Growth coming from existing operators, like I said, we are going to grow our wallet share with these existing Content only operators and I believe they present a revenue growth opportunity As well as new operators coming into the market. Ontario has been a market That is growing slower than expected, but I believe that we are going to be able to Increase our presence in the market through existing and new operators like I said. Speaker 800:45:02Okay. Thanks. And then just going back to the PAM extension agreement with Antenna and BetCity, nice to see obviously. Your PAM market share in Netherlands also remains resilient. Any commentary you can provide on the competitive landscape there? Speaker 800:45:18And if you have opportunities now With more localized content to penetrate further in that market with more operators other than that city. Speaker 200:45:29Yes, we are we have established ourselves As a leading PAM solution provider in this market, we believe that we have more opportunities to grow as a PAM And aggregation solution provider in this market. And we also believe that We are going to be able to leverage our position as a leading PAM solution provider and aggregation solution provider in the market To grow our wallet share, like I said, in the market and I think that Netherlands has been a great market for us in the last over the last 2 years, and we believe that we are going to be able to Maintain our position in the market moving forward. Speaker 800:46:27Okay. And then just one last one for me. Just on the M and A landscape here, we've seen some industry consolidation over the last few weeks, As you also alluded to in your prepared remarks, do you see any opportunities in the near term to be acquisitive at a credit multiples? And if so, would you focus be primarily on gaming studios or somewhere else? Speaker 200:46:50Yaniv, do you want to take this question? Speaker 100:46:52Yes, sure. Thanks, Ed, and thanks for the question. We can see from recent M and A activity in the market that Obviously, capital markets are undervaluing companies, successful companies, and we've seen recent examples in the acquisition of Aristocrat of the Spire and Obviously, the recent acquisition that was announced yesterday between Sega Sammy and GaN, companies that are trading at much Lesser valuations than what companies are willing to pay for in terms of cash and that in our opinion is the true value Companies and I think that is not within the capital markets today. That's on the landscape in general. But in terms of acquisition, we We have everything that we need in house in terms of the content studios, in terms of the distribution agreements and especially the technology. Speaker 100:47:42We're looking to continue to grow the business and expand within our customers and to new customers and in new jurisdictions. And if there is an opportunity on us to be acquisitive, then of course, we'll look into it. And of course, as a public company, there are a lot of other opportunities to be In the M and A space, and that's something that we are open to and always are on the lookout for. Speaker 800:48:09I'm sorry. So in terms of potential targets, would they primarily be focused towards Content producer as in gaming studios or somewhere else? Speaker 100:48:20Mostly content. I mean, we have all the tools in house that we need in terms of technology, the distribution and the licensing. And so if we were to be acquisitive, it would be about content and differentiated content that is localized The jurisdictions where we operate in and what are the jurisdictions that we want to operate in. Speaker 800:48:39Okay. Thanks for the color, Anup. I'll pass it by. Operator00:48:43Thanks, Ed, and thanks to all our callers with questions today. And with that, I will now turn the Call back over to Yaniv Spielberg for closing remarks. Yaniv, the floor is yours. Speaker 100:48:54Guys, thanks everybody for joining our call. Thank you Thank you for being interested in Bragg. We're closing another very successful quarter and we look forward to hosting you on our next quarterly call. In the meantime, have a great day everyone. Operator00:49:10And ladies and gentlemen, that does conclude today's call. Thank you all for joining and you may now disconnect.Read morePowered by Conference Call Audio Live Call not available Earnings Conference CallBragg Gaming Group Q3 202300:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsSlide DeckInterim report Bragg Gaming Group Earnings HeadlinesBragg Gaming Group To Settle USD 5 Million of Secured Promissory Note; Short-term Extension Agreement Reached for Remaining USD 2 MillionApril 25 at 1:30 PM | businesswire.comBragg Gaming Partners with and Invests in Brazilian Specialist Online Casino Studio RapidPlayApril 10, 2025 | tmcnet.comTrump Orders 'National Digital Asset Stockpile'‘Digital Asset Reserve’ for THIS Coin??? Get all the details before this story gains even more tractionApril 25, 2025 | Crypto 101 Media (Ad)Bragg Gaming Group Inc. (NASDAQ:BRAG) Q4 2024 Earnings Call TranscriptMarch 24, 2025 | msn.comHaywood Sticks to Its Buy Rating for Bragg Gaming Group Inc (BRAG)March 21, 2025 | markets.businessinsider.comJMP Securities Sticks to Its Buy Rating for Bragg Gaming Group Inc (BRAG)March 21, 2025 | markets.businessinsider.comSee More Bragg Gaming Group Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like Bragg Gaming Group? Sign up for Earnings360's daily newsletter to receive timely earnings updates on Bragg Gaming Group and other key companies, straight to your email. Email Address About Bragg Gaming GroupBragg Gaming Group (NASDAQ:BRAG) provides business to business online gaming technology platform and casino content aggregator worldwide. The company offers a range of games, including slot, table, card, video bingo, scratch card, and virtual sports, as well as live dealer games. It also provides player account management platform, a multi-channel and cross-product that enables operators to manage the entire product suite using one shared account and one wallet for casino, lottery, sportsbook, and other operations; and Fuze, a single integrated platform that delivers third party gaming content. In addition, the company offers turnkey and managed services; and holds various content distribution rights through partnerships with selected third-party studios. It offers its products under the Wild Streak, Spin, Atomic Slot Lab, Indigo Magic, Oryx Gaming, iCasino, and sportsbook brands. The company was formerly known as Rockies Financial Corporation and as changed its name to Bragg Gaming Group Inc. in 2018. 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There are 9 speakers on the call. Operator00:00:00You for standing by. I would like to welcome everyone to the Bragg Gaming Group Third Quarter 2023 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. Thank you. Operator00:00:27I would now like to turn the call over to Yaniv Spielberg, Chief Strategy Officer for Bragg Gaming Group. Yaniv, please go ahead. Speaker 100:00:37Thank you, operator. Morning, everyone, and thank you for joining our Q3 2023 earnings conference call. I'm Yenny Spilberg, Chief Strategy Officer for Bragg Gaming Group. I'll be hosting today's call alongside my colleagues, CEO, Mateusz Mazi, who will comment on our Q3 performance and Ronen Kanur, our CFO, We'll review and discuss our Q3 financial results. If you have not already done so, you can follow our earnings call presentation from our website at investors. Speaker 100:01:06Bragg. Group, that's investors with an s, dot bragg. Group, in the section called Latest Presentation. On this call, we'll review BRAGG's financial and operating results for the Q3 of 2023. And following our prepared remarks, we'll open the conference call to a question and answer period. Speaker 100:01:25I'll start the call with some brief cautionary remarks Regarding certain statements that may be made on this call, certain statements made on this conference call and our responses to various questions may constitute forward looking information for future oriented financial information within the meaning of applicable securities law. Statements about expected growth, prospective results, Strategic outlooks and financial and operational expectations, opportunities and projections rely on a number of assumptions concerning future events, Including market and economic conditions, business prospects or opportunities, future plans and strategies, technological developments and anticipated events, Trends and regulatory changes that may affect the corporations and its subsidiaries and their respective customers and industries. While we believe these assumptions to be reasonable, they are subject to a number of risks, uncertainties and other factors, many of which are outside the company's control which could cause the actual results, performance or achievements of the company to be materially different. There can be no assurances that these assumptions or estimates are accurate Any of these expectations will prove accurate. For a complete discussion of these factors, please refer to our recently filed press release and other publicly available disclosure. Speaker 100:02:39With that behind us, I'd like to turn the call to our CEO, Mateusz. Mateusz? Speaker 200:02:44Good morning, everyone. I'm Mateusz Mazi, Chairman and CEO of Bragg. And I'm going to run through our operational highlights from the quarter. Then I'll hand over to our CFO, Ronnen Kanur, who will Take you through the financials. Afterwards, I'll take a few of the points in little more detail wrapping up with our outlook and summary, and then Ronen and I We'll be happy to take your questions. Speaker 200:03:10Turning now to Slide 4, I want to run through some of the key points of 3rd quarter, The quarter in which I was appointed CEO. I have a long history at Bragg. I originally founded Oryx Gaming back in 2012, Running the company until I sold ORIX to Bragg in 2018. As a part of that process, I also became Bragg's largest shareholder. I continued as CEO of Borix until in 2021, I stepped back from operations and joined Bragg's Board of Directors. Speaker 200:03:42As a Director, I have strongly supported our U. S. Acquisitions, Wild Street Gaming and Spin Games, and was involved in developing our U. S. Expansion strategy. Speaker 200:03:53I was subsequently appointed Chair of the Board earlier this year and then CEO at the end of August of this year. By appointing me as CEO, the Board was seeking to align streamline the interest of Bragg's shareholders with company operations and to unlock shareholder value, which is something I aim to do. So I'm delighted to be back and reporting on another quarter in which we continue to make good progress on our goals. After Ronen has presented the financials, I'm going to talk a little about our extended agreement with BetCity, which will see us continue supplying our PAM content And content aggregation to BetCity into 2025. And I'm also going to reiterate and expand a little on the key pillars of Bragg's strategy of how we aim to take the business to the next level and to become a premier content and technology supplier to the growing global iGaming Industry. Speaker 200:04:52Our content roadmap is going very strong. We are on track to launch 68 exclusive game titles globally this year, Putting our output among the top tier of online casino game developers on the market, almost half of these titles are from Our 3 Bragg Studios brands generating higher gross profit for the business and we intend to continue at this pace. During the Q3, we were pleased to see 2 of our Powered by Bragg titles enter the top 25 new slot rankings published by Eilis and Kriedcik. The success of Devil's Lock by Blueberry and Ultra Rush Golden Steve from Incredible Technologies is a testament to our strategy in the U. S. Speaker 200:05:37We're partnering with successful and familiar land based slot brands and bringing them online exclusively available in the market via Bragg. Our U. S. Rollout of our newest content and technology continues with recent launches with local market leaders BetMGM in New Jersey And with FanDuel in Michigan and Connecticut, and we're pleased to be able to leverage our slot production capabilities In other markets, we continue to roll out our content with new customers. In Italy, we have launched with top 2 operators in the market, Lotto, Optica and In Ontario, we went live with Bet365 and in the UK, we launched games with Unibet, which is one of the Kindred's With that, I'm now going to hand over to Ronnen to present our Q3 financials. Speaker 200:06:58Ronen? Thank you, Mateusz, and good morning, everyone. I'll begin my comments on Slide 6. As Matteo indicated earlier, the Q3 of 2023 was another positive step in our digital journey. We continue to execute against our mission and strategic plan, and we can see that in our financial and operational results. Speaker 200:07:21In the Q3, total revenue were up by 8% year over year to €22,600,000 continuing our growth momentum since the Q4 of 2021. The growth was mainly derived organically to our existing customer base launched in financial year 'twenty one and 'twenty two, In particular, the PAM and 10 kit solution customers in the Netherlands, together with content offering and a solid revenue performance from the Wall Street Gaming Studio customers. 3rd quarter, however, showed a slight sequential drop of 8.5% as a result of Bad City revised extended commercial terms. From an operational KPI perspective, total wagering generated by games and content offered by the group during the quarter was up by 24.6 percent from the same period in the previous year to €5,700,000,000 versus €4,600,000,000 in the same period last year. As you can see from the wagering chart on the right hand side, Bragg saw ongoing positive momentum from the Q4 of 2021, which demonstrates our ability to transform and diversify our operations. Speaker 200:08:31Gross profit from the quarter increased by 13.5 percent to €11,900,000 With gross profit margin slightly increased to 52.5% from 50% in the same period last year. The gross profit is primarily the result of increased revenue performance in all content products, while recording slightly lower PAM and managed services revenue, which also, as a result of Bat City, renegotiated extended commercial terms. Adjusted EBITDA for the quarter was up by 70.5 percent to €3,800,000 with adjusted EBITDA margin reaching 16.9%, an improvement of 6 20 basis points from the same period in the previous year. The change in margins mainly as a result of scale in revenue, while maintaining control investment in salaries and subcontractors and other operational costs as part of the company's strategy to expand software development, product and senior management functions. Operating loss increased by €500,000 to €2,100,000 mainly as a result of a one off termination of an employment contract and a loss from deferred consideration. Speaker 200:09:41We are pleased with the current trading and we are reiterating our 2023 revenue guidance range of €95,000,000 to €97,000,000 and adjusted EBITDA range of €15,500,000 to €16,500,000 As you can see on Slide 7, the gross profit margin continued to show a growing momentum since the Q4 of 2021 Due to the change in Bragg product mix, we continue to execute against our mission and strategic plan, and we are scaling up our business in line with both our revenue growth And the continued movement in product mix, as indicated on the right hand side of the slide. Gross profit increased by 13.5 percent to €11,900,000 with margin increasing from previous year by 250 basis points to 52.5%. The Q3 revenue growth year over year was driven mainly by the Dutch PAM and 10 gs customers' outperformance together with the improvement of our content offering. In the Q3, content revenue segment offering, which including aggregated third party, exclusive third party and proprietary content, Increased to €17,900,000 and represented 79.4 percent of total revenue as opposed to 69.9% on previous year, highlighting Bragg's execution of the content strategy. Proprietary content development is positively progressing both in the U. Speaker 200:11:06S. And EU markets By increasing both distribution and games performance, and as Ed Mateusz indicated, we have recently marked another key milestone with our recent launch of our newest Tech Stack In New Jersey with BetMGM. As indicated in the previous quarters, we are targeting gross profit margin improvements to exceed 60% But full year 2025, mainly by increasing the proportion of revenue which comes from proprietary content, TAM and 10Q solutions. Moving to Slide 8, adjusted EBITDA amounted to €3,800,000 against an operating loss of €2,100,000 The GAAP was driven by the following non cash and exceptional items: depreciation and amortization, the increase in intangible is part of the Spin Games acquisition in June 2022, increased level of investment in software development and a change in the useful life of customer relationship. Shared Best Payment, the charge for awards granted to senior management during the period composed of DSUs, RECs and options. Speaker 200:12:10During the period, one off charge of €500,000 was incurred relating to discounted contractor relationship of an employee. Exceptional costs, mainly associated with the discounted contractor relationship of employee in the total value of 600,000 And gain on remeasurement of deferred consideration is mainly associated with the acquisition of Spin Games in June 2022 On the total outstanding deferred liability, that was adjusted to reflect the change in our current fair value. Moving to Slide 9. As you can see on the slide, we ended the Q3 with cash balance of $7,900,000 compared to €11,300,000 of December 31, 2022, with outstanding liability of US5.5 million dollars of convertible security. During the Q3 and post quarter end, the company made cash repayment of US2.5 million dollars leaving an outstanding balance of US4.5 million dollars As of today's date, we expect to continue exercising our rights to pay down the existing convertible security, subject to ongoing management assessments. Speaker 200:13:17Our net working capital at the end of September 2023 is €6,300,000 which is excluding deferred consideration and convertible debt. This compares to €6,600,000 at the beginning of the year. From a cash flow perspective, for the 9 months ended September 30, 2023, A total of €6,200,000 generated from operating activities with underlying performance reaching €10,200,000 offset by negative movement in working capital and income tax of €4,000,000 A total of €6,600,000 invested in intangible assets, mainly related to the capitalization of software development costs in the period and the total of €2,600,000 used in finance activity, which predominantly related to the repayment of loans in relation to the convertible security in the total of €2,300,000 Looking forward, management are projecting a positive free cash flow from operations, while there is no CapEx or technology debt required in the business. In addition, management is confident that there are no current financing or debt requirements needs for the business. With that, will hand over back to Mateusz to continue our business and operational activities. Speaker 200:14:27Thank you, Ronen. As a recently appointed CEO and with this as my first time leading our earnings call, I want to remind everyone of the great business that we've built and of the exciting future we have ahead of us. Bragg is an award winning supplier in a growing multibillion dollar iGaming market. We have over 450 employees in 7 offices across North America, Europe and in India. We are licensed We're certified to offer iGaming products in over 25 regulated jurisdictions globally, including the largest markets in the U. Speaker 200:15:04S. And Europe, New Jersey, Pennsylvania, Michigan, the UK and Italy. Our customers number Over 200 and include names such as BetMGM, DraftKings, FanDuel in the U. S. And Intain SuperBet and Flutter in Europe. Speaker 200:15:24In view of recent M and A activity in the iGaming space, I believe that at Bragg we have built something very unique in the market. There are very few companies in the space that are able to offer what we can, which includes our full product suite of content, content aggregation, sports book delivery, PAM, Promotional Tools and Managed Services. With this product suite, we're uniquely positioned to be able to deliver full turnkey iGaming solution in regulated markets and in a landscape where more and more markets are on the cusp of regulation. With that in mind, I want to take a few minutes to refine and reflect on Bragg's strategy, which I haven't fundamentally changed since coming in as CEO, but which we have refined and expanded and we now plan to accelerate. Firstly, our proprietary and Bragg Studios are our in house studios, which now include Wall Street Gaming, Spin Games and ORIX Gaming, As well as 2 new studios we launched last year, Atomic Slot Lab and Indigo Magic. Speaker 200:16:41Games from Bragg Studios, which are also built on our own technology and distributed through our own network, generate close to 100% gross profit margin for us. So these are an important part of how we will deliver the overall gross profit and adjusted EBITDA margin targets that we have set for ourselves That Ronen mentioned earlier. In a moment on the next slide, I'll show you how we are doing in terms of roadmap delivery for our BracStudio content. The rest of our exclusive casino games portfolio is made up of games from our Powered by Brack partners, such as Blueberry, Incredible Technologies, Gamamat, Kingshow Games and many others. These games differentiate our games portfolio and include big names from both the land based and online spaces, Games that are in demand and which are available online only to customers of Bragg. Speaker 200:17:33So we are leveraging our increasing portfolio And our production capabilities mean that we can offer locally adapted games titles in each of these markets. As you saw from the recent game we built for Caesars Digital, Lady Luck Casino Egyptian Magic, we are also in a position of strength We will also continue to grow our content distribution network in regulated markets. This means focusing on our relationship with Tier 1 and Tier We want to continue to grow in large regulated markets where Bragg Online Casino content is still underrepresented, And these markets offer plenty of scope for growth. We are clearly focused on content rollouts In the United States, but markets such as UK, Switzerland, Italy, Holland and Ontario are also important to our content delivery growth We are closely watching regulatory developments as many markets which currently have no legal framework for online casino Or those which currently have restrictive frameworks are reviewing their laws with a trend towards more jurisdictions opening up Regularly iGaming in the near future, as well as watching for the next states to adopt online casino in the United States, we're well positioned To enter or expand in Latin American markets and newly regulated European markets. Speaker 200:19:22As these new markets regulate, we will explore All opportunities, not just for our content, but also for our full product suite, including PAM and content aggregation, and I'll talk more about it In a moment. A key differentiated product that we developed is Fuze. This is our multi award Winning promotions platform that allows operators to run promotions such as free rounds, tournaments, missions and quests To gamify and reward players and these work across both casino, lottery and sports betting products. All Bragg content customers, whether for Bragg Studios, powered by Bragg, aggregated content or sports betting products that we deliver Already have access to Fuze and Fuze driven campaigns resulted in significantly more traffic, Better conversion rates, better retention rates and higher lifetime value, which is beneficial both to our customers And to us, and we are now focused on working together with our customers to roll out with more Fuse driven promotions, And we're now also able to offer Fuze as a standalone promotion platform for both casino and sportsbook, and we have already integrated our first As we continue to develop Fuse with more in demand features coming soon, We're also excited to be developing this proprietary functionality to create differentiated and unique casino content categories We're the name of creating a niche for Bragg content in a crowded marketplace. Speaker 200:21:02We at Bragg are extremely proud Our full product suite, which includes our proprietary and exclusive content, aggregated content, sports book delivery, PAM, managed services, Fuze promotional tools and data and reporting products. We have over 200 customers, including Compelling new time and full turnkey propositions with the aim of expanding our platform business to new brands and new markets. And as always, we continue to invest in our product to refine, improve and to explore opportunities in new jurisdictions. Our strategy is focused on expanding recurring profitability through our culture of continuous improvement with an eye On opportunities for increased automation and lower cost to serve. This way, we will continue to expand our profit pools and gross profit and adjusted EBITDA Margins. Speaker 200:22:20So to conclude, Bragg's long term ambition is to maximize shareholder value Moving to Slide 13. We extended the agreement with Betten BV, where we have agreed to continue supplying our PAM, that's player account management platform and our content and content aggregation to its flagship brand in the Netherlands, BetCity, into 2025. We partnered with BetCity to launch The brand back in October 2021 when the newly regulated Dutch market opened, and we're proud of our part in helping BetCity become One of the leading online sports betting and casino brands in the Netherlands today, and we're extremely delighted to continue to build On the success with them, as a part of the extension deal, we will integrate several new third party content suppliers for the Dutch market, Further strengthening our localized content portfolio, but we will also continue to deliver content from our proprietary Brack Studios, From our Powered by Bragg partners and we will continue to be the exclusive content aggregator for BetCity via our product delivery technology for the duration of the agreement. Moving to Slide 14. On Slide 14, I want to give you an update on how we're doing as a developer and distributor of exclusive online casino games. Speaker 200:24:01We are on track to release 68 games titles globally for a full year of 2023, Putting our output up there with the biggest game studios on the market. Proprietary and Exclusive game production has been a renewed focus for us in the past 2 years. So I'm very proud of development We have built and of the quality of the games that we are releasing, as well as ramping up our online casino games production, We are maintaining a strategic balance with approximately half of the titles coming from our own BRAC studios, which generate High margins for us and half of it coming from our Powered by Bragg partners bringing diversity, richness and in demand studio brand store portfolio. As you can see, in the second half of twenty twenty three, our content releases significantly increased and we plan to continue at this So in summary, our 3rd quarter Revenue rose 8% year over year to €22,600,000 Gross profit was €11,900,000 And adjusted EBITDA was up 70.5 percent year over year to €3,800,000 We have extended our agreement with BetCity to continue as their exclusive PAM content and content aggregation partner into 2025. We have our strategic pillars in place that will underpin our growth going forward and which will drive shareholder value. Speaker 200:25:39And our exclusive content production roadmap is firing on all cylinders with 68 online casino titles on track to be launched in the full year of 2023, including 30 from our proprietary Bragg Studios. Current trading is in line with our expectations, so we reiterate our guidance to €16,500,000 in adjusted EBITDA. The midpoints of these ranges represent 13.3% revenue growth and 32% adjusted EBITDA growth compared to our 2022 performance. I want to thank you all very much for attending this presentation today. And now Ronen and I would be happy to take any questions you might have. Operator00:26:33Thank you. And we will pause just a moment to compile the Q and A roster. Okay. It looks like our first Caller is Gianluca Tucci with Haywood Securities. Gianluca, please go ahead. Speaker 300:26:58Hi, good morning guys and congrats on another good quarter. I'm just wondering, if we can start off on the news from earlier this week. I think you did a good job of providing color, Mats. But the extension, like does it take you through 2025 or at the start of 2025? And I'm curious if you can speak to how the company expects the revenue, like mix Speaker 200:27:35So the exact details of the commercial terms remain obviously subject to the parties' eyes only as they are sensitive commercial terms. We By negotiating this deal, we focused on keeping the PAM and Aggregation deal and it's in place until September 2025. And we reduced managed services resources, which Antein already has in house. Moving forward, we are going to work very aggressively on decreasing the exposure to 1 of our Top clients and we are going to work very aggressively in the direction of growing our Content proprietary content portfolio of clients, the Tier 1s that we have signed recently and the increasing number of Aggregation and PAM clients where we believe that we have a very good opportunity to leverage that position and grow our Proprietary and powered by Bragg content revenue with them. Speaker 300:28:49Great color. Thanks, Matt. And so on your commercial efforts, with all the recent Tier 1s that have been signed over the last quarter or so, I'm just wondering how you're thinking about 2024 at this point from a growth perspective, combined with your cadence of games comment accelerating, It appears that 2024 could be even growthier than 2023 at this point. Just curious for your comment on that. Speaker 200:29:18Sure. So we now have agreements with most of the Tier 1 operators, but they don't represent top customers for Bragg. Our plan in 2024 2025 as well is to grow our wallet share with all of these existing content only operators, As well as existing PAM and aggregation operators as they present a great revenue growth opportunity for our proprietary empowered by Brac content. We are also looking to establish ourselves in markets that we're in, but we are underrepresented. And finally, Newly regulated markets in LatAm and Europe are a great opportunity for our PAM aggregation engagement and content products with these Tier 1 operators that we already And new operators that are coming out of these newly regulated landscapes. Speaker 300:30:14Okay. That's great. And my last question here, as it pertains to the American markets In the U. S. Particularly, are you doing anything differently or like is it pretty much the same kind of execution plans from a growth perspective in the U. Speaker 300:30:32S? Speaker 200:30:36Well, as discussed in the presentation, in 2023, we will eventually roll out 69 titles, Both in the U. S. And Europe and preliminary data suggest that the content performs well. Bragg is now live in The 4 largest USI gaming markets being Pennsylvania, New Jersey, Michigan and Connecticut with its proprietary content. And we continue to roll out with more operator brands in these states, further expanding its reach. Speaker 200:31:06To answer your question, we launched our content portfolio in Pennsylvania with Rush Street Interactive and have also launched content with FanDuel in Michigan And we expect this trend to continue into 2024 2025. I would like to also say that we're very excited about the U. S. And I want to remind everyone that our business is Successfully in Europe and that we're one of the largest content aggregators and leading PAM providers in Europe and we expect to leverage Our expertise coming into the U. S. Speaker 200:31:44And become a leading content provider in iGaming partners to Global operators and U. S. Only operators, obviously, such as Zendesk and Flutter, Pet 365s and others. Speaker 300:31:57Okay. Thank you for the color, Mats, and congrats again on the quarter. Keep up Speaker 200:32:01the good work. Thank you. Operator00:32:03Thanks, Gianluca. And our next question comes from the line of Jordan Bender with JMP Securities. Jordan, please go ahead. Speaker 400:32:12Great. Thanks for taking my question. You actually just mentioned Rush Street in your prior comments. They are the new operator starting here soon in the state of Delaware To run the online platforms, I was wondering what does that kind of mean and can you kind of frame the revenue Speaker 200:32:39Hi. So it's probably too early to discuss the revenue opportunities for 2025. We I believe that Rush Street is obviously a great operator that they have an extremely good team and extremely good product. And I believe that they're going to use all of that to significantly grow the GGR in the state of Delaware. And we plan to be Very high on their priority list of content providers for that state. Speaker 200:33:17Exactly what the revenues are going to be is probably too early to discuss. Speaker 400:33:22Understood. And then In terms of your player and wager growth, nice growth in the quarter, but from a wager per player perspective, you're seeing a little bit of a deceleration Year to date and especially here in the Q3, is that just a function of mix or is there something in the underlying consumer, just spending less? Thank you. Speaker 200:33:45Yes. So this is mainly connected to the seasonality. 3rd quarter is usually Slower than 1st and second quarter. Speaker 400:33:58I guess from a growth perspective, First half down roughly 5% and the 3rd quarter is down about 24%. Is that is there anything kind of in that? Speaker 200:34:13I wouldn't say there's anything in that any underlying Reason that we would be able to identify. Speaker 400:34:25Understood. Thank you very much. Speaker 100:34:28Thank you. Operator00:34:29Thanks, Jordan. And our next question comes from the line of Adir Kadvi with 8 Capital. Adir, please go ahead. Speaker 400:34:39Thanks guys. Thanks for taking my questions and Matt, congrats on Speaker 500:34:42the role, looking forward to working with you. I just wanted to talk about some of the European markets, specifically the U. K. And Italian markets. You've been in these markets for some time, some meaningful wins. Speaker 500:34:53How are you thinking about those 2 markets just given how large they are and how meaningful they could be for your revenues moving forward? Speaker 200:35:04Yes. So we were in we started with these markets Anywhere between 24 12 months ago. And we were using this time to integrate with clients. These are Obviously, very heavily regulated markets. We believe that they are a great opportunity for our Content only proposition and we believe that we were largely underrepresented In those markets and we feel that these markets represent a great growth opportunity For our content in 2024 and 2025. Speaker 500:35:48Okay, excellent. And then just The content in different European markets, you've obviously had success. How easily transferable are those markets from, say, the Netherlands into the UK and then into Germany. And just like how does that all work? And do you find that there's minimal heavy lifting or investment that needs to go into launching this content in different markets? Speaker 200:36:16We are integrated with most of the clients that are operating across these markets. So the heavy lifting has been done in the past. And what we need to do now is we need to use our data and build local Custom content that is going to fit the requirements of these markets and effectively Place the content, position the content and promote the content with these operators and use our engagement tools that will allow us to create certain unique and Specific categories within the content portfolio to be able to compete with existing content providers in these markets. I'm very positive about the progress that we have made over the last 12 months. And I believe that we have a great future ahead of us With the 2 proprietary studios and roadmaps that have been put in place with these 2 proprietary studios And powered by Bragg Studios that are developing content for these local markets in Europe. Speaker 500:37:26Excellent. Thanks guys. Congrats on Speaker 400:37:27the quarter. I'll pass the line. Speaker 200:37:29Thank you. Speaker 400:37:30Thanks, Operator00:37:37And our next question comes from the line of Daniel Rosendert. Daniel, please go ahead. Speaker 600:37:44Hi, Mats and Ronen. My first question comes around cost controls and automation. So we're seeing some of the benefits take place here in the quarter, but just wondering how much more leverage do you have in terms of implementing Speaker 200:38:07Ronen, you want to take this? Sure. Daniel, good morning, Speaker 700:38:12everyone. So we Implemented at the beginning of last year. We implemented at the beginning of this year, so we implemented quite Speaker 200:38:18a lot of cost controls. Speaker 700:38:21Some of the areas that Only focus on our growth and what we actually need to grow and to diversify in different markets, different products and of course, The new content we're producing. Of course, there's a lot of room for optimization. It's from every single department. But I would have to say from Speaker 200:38:41a business perspective today, majority of the work is automated, majority of Speaker 700:38:45the process is automated. We Becoming more efficient in the way we're operating, the way we're actually building games. We are investing in our technology. We actually have at this stage, I would say, we're very well positioned to further growth with the same teams and the same operation we have today. Speaker 200:39:04So yes, there's a lot of growth, there's Speaker 700:39:06a lot of opportunities for optimization, but I think we're already there. I think what we're seeing right now, What we will be seeing right now is more commercial and more revenue coming from the same team, from the same Functionality and infrastructure we have right now. Speaker 600:39:25Thanks for that context. My second question is around the BetCity contract. I was just wondering, it's nice to see the risk contained here. Is the final outcome in line with what you were expecting as you started Negotiations and are there any other opportunities to work with That Citi that came out of those negotiations. Speaker 200:39:55Yes. So our original agreement had a 5 year term with a 12 month termination notice. So we're happy that we managed to secure the extension of the deal and obviously in line with our expectation. PetSeed and Entain as a group are a key partner of ours and We're proud of what we have achieved together. We've been having a very constructive dialogue over the recent past And we hope to be able to power the BetCity brand and Tain Group as a global powerhouse going forward. Speaker 200:40:32We are right now very focused on making sure that BetCity continues to effectively utilize our products And continues to grow. And I think it's positive that We have secured the longevity of the deal and we have Now a clear pathway of continued support of Entain's strategic initiatives in the market. Entain, as a like I said, a global operator, Presents a large opportunity for us as a content provider, For us as an aggregation solution provider and for us as an engagement solution provider, so we will work Together with, Entain and BetCity to implement these solutions into their B2C network Across all different jurisdictions in 2024 and always 2025 and Hopefully achieve similar success as with BetCity. Speaker 600:41:48Okay. Thanks for that. Lastly, just a quick one for Ronen. On the working capital, free cash flow, you guys are expecting continue to improve and grow. Just wondering if there's any color you could give in terms of how working capital ebbs and flows in the coming quarters, if you require capital to scale just from a working capital perspective? Speaker 700:42:16Yes. So, as you've seen in the last 9 months of operation, The working capital relatively remained the same, 6.3 percent, it's about 6.6 percent, drop to 6.3 percent, Speaker 200:42:29Of course, with Speaker 700:42:29a high adjusted EBITDA compared to previous year. So, we believe that in the next couple of I would say, the next 9 months, We'll be able to generate relatively the same type of profits. We are definitely Investment in our software development costs, which I think Speaker 200:42:47is going to be relatively the same. I don't think Speaker 700:42:49there's a big expectation to be much higher than that. We can serve the debt. That's what we're doing. And I think excluding the changes in working capital in the last 9 months period, we definitely could serve that And the working capital would probably will improve with everything we're doing right now. So I'm quite confident that it will be Slightly higher than we were seeing right now compared to what we did so far. Speaker 700:43:16And we will improve that at least about €3,000,000, €4,000,000 in the next couple of 9 months time. That's on the basis that we're going to secure the debt and we're paying on a regular basis to avoid any dilution to the shareholders. Speaker 600:43:37Thanks for taking my questions. I'll pass the line. Operator00:43:40Thanks, Daniel. And our final question today comes from the line of Sid De Laury with Cormark Securities. Sid, please go ahead. Speaker 800:43:49Hey, good morning guys. Thanks for taking my question. Firstly, just on the Ontario market, maybe if you can speak about the general In Q3, you're now live in Bed 365, Rush Street Interactive and maybe a couple others. It seems like there was minimal Sequential growth on the number of live operators and just given that dynamic, do you see your future growth in Ontario from penetrating further with current operators Speaker 200:44:20Hi. So we are seeing future Growth coming from existing operators, like I said, we are going to grow our wallet share with these existing Content only operators and I believe they present a revenue growth opportunity As well as new operators coming into the market. Ontario has been a market That is growing slower than expected, but I believe that we are going to be able to Increase our presence in the market through existing and new operators like I said. Speaker 800:45:02Okay. Thanks. And then just going back to the PAM extension agreement with Antenna and BetCity, nice to see obviously. Your PAM market share in Netherlands also remains resilient. Any commentary you can provide on the competitive landscape there? Speaker 800:45:18And if you have opportunities now With more localized content to penetrate further in that market with more operators other than that city. Speaker 200:45:29Yes, we are we have established ourselves As a leading PAM solution provider in this market, we believe that we have more opportunities to grow as a PAM And aggregation solution provider in this market. And we also believe that We are going to be able to leverage our position as a leading PAM solution provider and aggregation solution provider in the market To grow our wallet share, like I said, in the market and I think that Netherlands has been a great market for us in the last over the last 2 years, and we believe that we are going to be able to Maintain our position in the market moving forward. Speaker 800:46:27Okay. And then just one last one for me. Just on the M and A landscape here, we've seen some industry consolidation over the last few weeks, As you also alluded to in your prepared remarks, do you see any opportunities in the near term to be acquisitive at a credit multiples? And if so, would you focus be primarily on gaming studios or somewhere else? Speaker 200:46:50Yaniv, do you want to take this question? Speaker 100:46:52Yes, sure. Thanks, Ed, and thanks for the question. We can see from recent M and A activity in the market that Obviously, capital markets are undervaluing companies, successful companies, and we've seen recent examples in the acquisition of Aristocrat of the Spire and Obviously, the recent acquisition that was announced yesterday between Sega Sammy and GaN, companies that are trading at much Lesser valuations than what companies are willing to pay for in terms of cash and that in our opinion is the true value Companies and I think that is not within the capital markets today. That's on the landscape in general. But in terms of acquisition, we We have everything that we need in house in terms of the content studios, in terms of the distribution agreements and especially the technology. Speaker 100:47:42We're looking to continue to grow the business and expand within our customers and to new customers and in new jurisdictions. And if there is an opportunity on us to be acquisitive, then of course, we'll look into it. And of course, as a public company, there are a lot of other opportunities to be In the M and A space, and that's something that we are open to and always are on the lookout for. Speaker 800:48:09I'm sorry. So in terms of potential targets, would they primarily be focused towards Content producer as in gaming studios or somewhere else? Speaker 100:48:20Mostly content. I mean, we have all the tools in house that we need in terms of technology, the distribution and the licensing. And so if we were to be acquisitive, it would be about content and differentiated content that is localized The jurisdictions where we operate in and what are the jurisdictions that we want to operate in. Speaker 800:48:39Okay. Thanks for the color, Anup. I'll pass it by. Operator00:48:43Thanks, Ed, and thanks to all our callers with questions today. And with that, I will now turn the Call back over to Yaniv Spielberg for closing remarks. Yaniv, the floor is yours. Speaker 100:48:54Guys, thanks everybody for joining our call. Thank you Thank you for being interested in Bragg. We're closing another very successful quarter and we look forward to hosting you on our next quarterly call. In the meantime, have a great day everyone. Operator00:49:10And ladies and gentlemen, that does conclude today's call. Thank you all for joining and you may now disconnect.Read morePowered by