Gross Profit Rises 18.9% to €13.8 Million
(USD $15.2 Million); Adjusted EBITDA Grows 51.3% to €4.7 Million
(USD $5.2 Million)
Updates Full Year 2023 Guidance Ranges with
Midpoints Implying Revenue Growth of 13% and AEBITDA Growth of 32%
over Full Year 2022
Bragg Gaming Group (NASDAQ: BRAG, TSX: BRAG) ("Bragg" or the
"Company"), a global B2B content-driven iGaming technology
provider, today reported record financial results for the second
quarter ended June 30, 2023. The Company also updated its revenue
and Adjusted EBITDA growth targets for full year 2023.
Summary of 2Q23 Financial and Operational
Highlights
Euros (millions)(1)
2Q23
2Q22
Change
Revenue
€
24.7
€
20.8
18.9
%
Gross profit
€
13.8
€
11.6
18.9
%
Gross profit margin
55.9
%
55.9
%
0
bps
Adjusted EBITDA(2)
€
4.7
€
3.1
51.3
%
Adjusted EBITDA margin
19.2
%
15.1
%
410
bps
Wagering revenue
€
5.5
B
€
4.2
B
31.2
%
(1)
Bragg’s reporting currency is Euros. The
exchange rate provided is EUR €1.00 = USD $1.1. 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 focus the business to be a leading
content-driven iGaming B2B provider combined with disciplined
expense management, resulted in record second quarter operating
results,” said Yaniv Sherman, Chief Executive Officer for Bragg.
“Second quarter revenue and gross profit both rose nearly 19% year
over year to €24.7 million (USD $27.2 million) and €13.8 million
(USD $15.2 million), respectively, while Adjusted EBITDA increased
more than 50% to €4.7 million (USD $5.2 million). These results
reflect, in part, our continued shift towards a revenue mix of
higher-margin products including in-house created proprietary and
exclusive third-party content, turn-key Player Account Management
(“PAM”) and managed services partnerships. The mix shift helped
drive a 410-basis point improvement in our Adjusted EBITDA margin
to 19.2%, an all-time quarterly record.
“During the second quarter we further advanced our efforts to
scale the global distribution of our proprietary and exclusive
third-party content. We continue to grow our distribution in North
America as in the first six months of this year we launched our
proprietary and exclusive third-party content across seven
operators in three North American markets. We are similarly focused
on expanding our presence in Europe as we launched with ten
operators in five European markets in the same time frame,
including now being live with nearly all of the operators in
Switzerland and having the leading PAM in the Netherlands. With our
successes on this front, we continue to accelerate our new game
launches, with 30 new proprietary or third-party exclusive games
introduced globally in the first half of the year, and up to 40
additional new games expected to be introduced by year end. The
growing distribution of our new games to new partners demonstrates
the significant value and engagement of our content as well as our
progress in transforming Bragg into a must-have content supplier
for leading global iGaming operators.”
Mr. Sherman concluded, “With significant and ongoing progress on
our key strategic initiatives Bragg is positioned to deliver
further year over year revenue and cash flow growth in the second
half of 2023 and beyond. Our balance sheet and strong cash flow has
us well capitalized to execute on our growth initiatives. We are
confident we have the right strategies and infrastructure in place
to continue fortifying our position as a leading B2B iGaming
content provider and that our business momentum will create new
value for our shareholders.”
Second Quarter 2023 and Recent Business Highlights
- New content and RGS technology went live with Rush Street
Interactive in Pennsylvania, with FanDuel in Michigan and
Connecticut, and with WynnBet in New Jersey
- Entered into new global distribution agreements with Tier 1
operators 888 Holdings and PokerStars (Flutter)
- These agreements will expand the reach of Bragg’s content in
leading European markets such as the UK, Italy, Portugal, Spain,
Denmark, Sweden and in the U.S. in New Jersey, Michigan and
Pennsylvania
- Launched for the first time in the Eurasian territory of
Georgia with Adjarabet
- Expanded Switzerland and Spain reach with six new
customers
- Since April 1, 2023, the Company has made four monthly cash
payments to Lind Global Fund II LP (Lind”) in the aggregate amount
of USD $2.0 million, in lieu of conversion into common shares,
avoiding further dilution. The total outstanding balance of the
convertible security as of August 10, 2023, is USD $6.0 million
- Bragg expects to utilize cash flow from operations to make
similar monthly cash payments to further reduce the Lind
convertible security
Second Quarter 2023 Financial Results and other Key Metrics
Highlights
- Revenue increased by 18.9% to €24.7 million (USD $27.2 million)
compared to €20.8 million (USD $22.9 million) in 2Q22
- Wagering revenue generated by games and content offered by the
Company increased by 31.2% to €5.5 billion (USD $6.1 billion)
compared to €4.2 billion (USD $4.6 billion) in 2Q22
- Gross profit increased by 18.9% to €13.8 million (USD $15.2
million) from €11.6 million (USD $12.8 million) in 2Q22,
representing a gross profit margin of 55.9%
- Net income for the period was €0.4 million (USD $0.4 million),
an improvement from €0.1 million (USD $0.1 million) in 2Q22
- Adjusted EBITDA increased by 51.3% to €4.7 million (USD $5.2
million) compared to €3.1 million (USD $3.4 million) in 2Q22,
representing an Adjusted EBITDA margin of 19.2% compared to 15.1%
in 2Q22
- For the six-month period ended June 30, 2023, total cash flow
from operations was €5.2 million (USD $ 5.7 million) compared to
€7.6 million (USD $ 8.4 million) for the first six months of
2022.
- Cash and cash equivalents as of June 30, 2023, was €10.7
million (USD $11.8 million) and net working capital, excluding
deferred consideration, was €8.3 million (USD $9.1 million)
Updates Full Year 2023 Guidance
Reflecting the business momentum through the first half of the
year as well as ongoing discussions in regard to optimizing key
customer partnerships for the long-term, Bragg today updated its
2023 full year revenue guidance range to €95-97 million (US
$104.5-106.7 million) and its full year Adjusted EBITDA to
€15.5-16.5 million (USD $17.1-18.2 million).
Investor Conference Call
The Company will host a conference call today, August 10, 2023,
at 8:30 a.m. Eastern Time, to discuss its second 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 August 17, 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; the impact of the
new German regulatory regime, expected future growth and expansion
opportunities; expected benefits of transactions; 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 impact of any public health measures on the business
of the Company; 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” provides useful
information to both management and investors by excluding specific
expenses and items that management believe are not indicative of
the Company’s core operating results. “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. Adjusted EBITDA is more fully defined and discussed, and
reconciliation to IFRS financial measures is provided, in Company’s
Management’s Discussion and Analysis (“MD&A”) for the three and
six-month period ended June 30, 2023.
About Bragg Gaming Group
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 INCOME (LOSS) AND
COMPREHENSIVE (LOSS) INCOME (In thousands, except per share
amounts)
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
Revenue
24,729
20,794
47,588
40,154
Cost of revenue
(10,903
)
(9,167
)
(21,542
)
(18,507
)
Gross Profit
13,826
11,627
26,046
21,647
Selling, general and administrative
expenses
(13,082
)
(11,305
)
(24,988
)
(21,505
)
Loss on remeasurement of derivative
liability
(115
)
—
(179
)
—
Gain on settlement of convertible debt
204
—
204
—
Gain on remeasurement of consideration
receivable
—
—
—
37
Gain on remeasurement of deferred
consideration
438
469
708
469
Operating Income
1,271
791
1,791
648
Net interest expense and other financing
charges
(368
)
(126
)
(964
)
(278
)
Profit Before Income Taxes
903
665
827
370
Income taxes
(526
)
(575
)
(926
)
(1,000
)
Net Income (Loss)
377
90
(99
)
(630
)
Items to be reclassified to net loss:
Cumulative translation adjustment
(585
)
1,601
(1,143
)
(1,143
)
Net Comprehensive (Loss) Income
(208
)
1,691
(1,242
)
(1,773
)
Basic Income (Loss) Per Share
0.02
0.00
(0.00
)
(0.03
)
Diluted Income (Loss) Per Share
0.02
0.00
(0.00
)
(0.03
)
Millions
Millions
Millions
Millions
Weighted average number of shares -
basic
22.3
21.0
22.0
20.9
Weighted average number of shares -
diluted
23.6
21.8
23.3
20.9
BRAGG GAMING GROUP INC. INTERIM
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL
POSITION (in thousands)
As at
As at
June 30,
December 31,
2023
2022
Cash and cash equivalents
10,742
11,287
Trade and other receivables
16,515
16,628
Prepaid expenses and other assets
3,387
1,823
Total Current Assets
30,644
29,738
Property and equipment
692
660
Right-of-use assets
1,242
576
Intangible assets
39,520
41,705
Goodwill
31,662
31,662
Other assets
47
47
Total Assets
103,807
104,388
Trade payables and other liabilities
19,337
19,549
Deferred revenue
408
746
Income taxes payable
1,229
1,113
Lease obligations on right of use assets -
current
342
294
Deferred consideration - current
899
1,176
Derivative liability - current
1,006
1,320
Loans payable
—
109
Total Current Liabilities
23,221
24,307
Deferred income tax liabilities
1,201
1,201
Lease obligations on right of use assets -
non-current
973
344
Convertible debt
4,532
6,648
Deferred consideration - non-current
836
2,121
Other non-current liabilities
233
233
Total Liabilities
30,996
34,854
Share capital
117,061
109,902
Broker warrants
38
38
Shares to be issued
3,491
6,982
Contributed surplus
21,596
20,745
Accumulated deficit
(72,326
)
(72,227
)
Accumulated other comprehensive income
2,951
4,094
Total Equity
72,811
69,534
Total Liabilities and Equity
103,807
104,388
BRAGG GAMING GROUP INC. UNAUDITED
SELECTED FINANCIAL GAAP AND NON-GAAP MEASURES (in
thousands)
Three Months Ended June
30,
Six Months Ended June
30,
EUR 000
2023
2022
2023
2022
Revenue
24,729
20,794
47,588
40,154
Operating income
1,271
791
1,791
648
EBITDA
4,525
2,674
7,754
4,107
Adjusted EBITDA
4,742
3,135
8,636
6,175
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230810152084/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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