Gross Profit Rises 61.6% to €13.0 Million
(US $14.0 Million) Reflecting Higher Revenue and 390 Basis
Point Improvement in Gross Profit Margin to 54.9%
Adjusted EBITDA Improves by 128.3% to €3.6
Million (US $3.9 Million)
Full Year 2022 Revenue Rises 45.3% to €84.7
Million (US $91.1 Million) and Adjusted EBITDA Grows 64.0% to €12.1
Million (US $13.0 Million)
Updates Full Year 2023 Guidance for Revenue
of €93-97 million (US $100.0-104.3 Million) and Adjusted EBITDA of
€14.5-16.5 million (US $15.6-17.7 Million)
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 fourth
quarter and full year ended December 31, 2022. The Company also
provided an update on its strategic growth initiatives and updated
its growth targets for 2023 revenue and Adjusted EBITDA.
Summary of 4Q22 Financial and
Operational Highlights
Euros (millions)(1)
4Q22
4Q21
Change
Revenue
€
23.7
€
15.8
50.3
%
Gross profit
€
13.0
€
8.0
61.6
%
Gross profit margin
54.9
%
51.0
%
390
bps
Adjusted EBITDA(2)
€
3.7
€
1.6
128.3
%
Adjusted EBITDA margin
15.4
%
10.1
%
530
bps
Wagering revenue
€
5.1
B
€
3.1
B
65.4
%
Euros (millions)
FY22
FY21
Change
Revenue
€
84.7
€
58.3
45.3
%
Gross profit
€
45.1
€
28.3
59.2
%
Gross profit margin
53.2
%
48.6
%
460
bps
Adjusted EBITDA
€
12.1
€
7.4
64.0
%
Adjusted EBITDA margin
14.2
%
12.6
%
160
bps
Wagering revenue
€
17.7
B
€
14.3
B
24.0
%
(1)
Bragg’s reporting currency is
Euros. The exchange rate provided is US $1.00 = €0.93. 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 concluded a transformational 2022 with another quarter of
record results, as fourth quarter revenue, gross profit and
Adjusted EBITDA grew significantly compared to the fourth quarter
of 2021 and exceeded our prior expectations,” said Yaniv Sherman,
Chief Executive Officer for Bragg. “In the fourth quarter of 2022,
we generated year over year revenue growth of 50.3% to €23.7
million (US $25.5 million), a 61.6% increase in gross profit to
€13.0 million (US $14.0 million), a 390-basis point improvement in
gross profit margin to 54.9%, and a 128.3% increase in Adjusted
EBITDA to €3.6 million (US $3.9 million). These record results
highlight Bragg’s ongoing substantial momentum as we continue to
successfully diversify our operations from serving primarily
central-European iGaming markets to become a global, content-led,
iGaming solutions provider with extensive distribution across North
America and Europe. Our successful execution on our operating
priorities is also evident in our record full year results, as
revenue, gross profit and Adjusted EBITDA grew 45.3%, 59.2% and
64.0%, respectively, over the 2021 full year period.
“With the full integration of our Wild Streak Gaming and Spin
Games acquisitions and our four game development studios hitting
their stride and consistently growing their game development
output, Bragg has the foundation to scale as a global business.
Reflecting our content-led focus, since the beginning of 2022, we
have launched our new proprietary and exclusive third-party content
with six operators in three U.S. markets as well as in multiple
additional global iGaming markets.
“Our ability to generate consistent revenue and margin growth
reflects our approach to differentiate our iGaming content by
internally developing a steady stream of player-popular games (20
games across the globe in 2022) complemented by exclusive
third-party games from leading development studios (23 games in
2022). This approach provides our operating partners with content
that engages their players at higher levels, as the peak revenue
generation of our newest premium proprietary and third-party games
has been excellent and the performance tail for these games is
significantly longer than similar games. We are confident that the
acceleration of our development of proprietary games and
third-party exclusive games will help us gain further market share
in our existing markets as well as in new markets, particularly in
North America.”
Mr. Sherman concluded, “We are executing well on our many growth
opportunities to deliver profitable revenue growth and increasing
cash flow going forward. In addition to our content focus, our
growth drivers include our ability to provide an industry-leading
PAM and our state-of-the art FUZE game-optimization technology to
drive higher player engagement which results in higher revenues and
lifetime player value for iGaming operators. We also expect the
development and introduction of proprietary games in North America
and Europe will accelerate in the second half of 2023 which will
further benefit our margins and drive our operating momentum. As a
result, our outlook for 2023 revenue of €93-97 million (US
$100.0-104.3 million) and Adjusted EBITDA of €14.5-16.5 million (US
$15.6-17.7 million) - with the midpoints of the ranges representing
year-over-year growth of 12% and 28%, respectively - demonstrates
the strength of our operating model. We are excited about the
opportunities 2023 presents as we continue to execute on our
strategic priorities to create long-term shareholder value.”
Fourth Quarter 2022 and Recent Business Highlights
- Bragg’s new content went live in Michigan with BetMGM
- Entered Belgium market with debut partner Napoleon Sports and
Casino
- Entered into an agreement with Sega Sammy Creation Inc. (“SSC”)
for the exclusive rights to distribute select titles from SSC’s
popular content portfolio to iGaming operators in the U.S., U.K.
and other global markets
- The Company’s new content recently went live in New Jersey with
Caesars Sportsbook & Casino, DraftKings, Rush Street
Interactive’s Betrivers.com, and Resorts Digital Gaming.
Fourth Quarter 2022 Financial Results and other Key Metrics
Highlights
- Revenue increased by 50.3% to €23.7 million (US $25.5 million)
compared to €15.8 million (US $17.0 million) in 4Q21.
- Wagering revenue generated by customers of €5.1 billion (US
$5.5 billion) increased from €3.1 billion (US $3.3 billion) in
4Q21.
- Gross profit increased 61.6% to €13.0 million (US $14.0
million) from €8.0 million (US $8.6 million) in 4Q21, representing
a gross profit margin of 54.9%. Gross profit in 4Q22 reflects a
change in product mix towards turn-key Player Account Management
(“PAM”) customers, managed services and proprietary content,
resulting in improved gross profit and Adjusted EBITDA compared to
the year-ago period.
- Net loss for the period was €0.9 million (US $1.0 million), an
improvement from a net loss of €2.0 million (US $2.2 million) in
4Q21, primarily due to the higher gross profit partially offset by
an increase in total employee costs, depreciation and amortization,
IT and hosting costs, transactional and exceptional costs, sales
and marketing expense and other operational and travel costs.
- Adjusted EBITDA was €3.6 million (US $3.9 million), an increase
of 128.3% compared to €1.6 million (US $1.7 million) in 4Q21,
representing an Adjusted EBITDA margin of 15.4%, compared to 10.1%
in 4Q21.
2022 Full Year Financial Results and other Key Metrics
Highlight
- Revenue increased by 45.3% to €84.7 million (US $91.1 million)
compared to €58.3 million (US $62.7 million) in 2021.
- Wagering revenue generated by customers of €17.7 billion (US
$19.0 billion) increased from €14.3 billion (US $15.4 billion) in
4Q21.
- Gross profit increased 59.2% to €45.1 million (US $48.5
million) from €28.3 million (US $30.4 million) in 2021,
representing a gross profit margin of 53.2%.
- Net loss for the period was €3.5 million (US $3.8 million), an
improvement from a net loss of €7.5 million (US $8.1 million) in
2021, primarily due to the higher gross profit partially offset by
an increase in selling, general and administrative expenses and a
gain on the remeasurement of deferred consideration.
- Adjusted EBITDA was €12.1 million (US $13.0 million), an
increase of 64.0% compared to €7.4 million (US $8.0 million) in
2021, representing an Adjusted EBITDA margin of 14.2%, compared to
12.6% in 2021.
- Cash flow from operations was €5.8 million (US $6.2 million),
an increase of €5.7 compared to €0.1 million (US $0.1 million) cash
flow from operations in 2021.
- Cash and cash equivalents as of December 31, 2022 was €11.3
million (US $12.2 million) and net working capital, excluding
deferred consideration, was €6.6 million (US $7.1 million).
Updated Full Year 2023 Revenue and Adjusted EBITDA
Guidance
Bragg provided an update on its expectation for 2023 full year
revenue Adjusted EBITDA growth with revenue expected to rise
approximately 10% to 15% to a range of €93-97 million (US
$100.0-104.3 million) and Adjusted EBITDA expected to increase
approximately 20% to 36% to a range of €14.5-16.5 million (US
$15.6-17.7 million). Given the stronger than previously anticipated
4Q22 revenue and Adjusted EBITDA, Bragg’s updated guidance reflects
an increase from the initial expectations provided at the time the
Company reported 3Q22 results in November 2022.
Investor Conference Call
The Company will host a conference call today, March 21, 2023,
at 8:30 a.m. Eastern Time, to discuss its fourth quarter and full
year 2022 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
Or join the webcast at
https://investors.bragg.group/events-and-presentations/events/default.aspx.
A replay of the call will be available until March 28, 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 2022, 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 year
ended December 31, 2022.
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.
CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS (In
thousands, except per share amounts)
Year Ended December
31,
2022
2021
Revenue
84,734
58,319
Cost of revenue
(39,652
)
(29,998
)
Gross Profit
45,082
28,321
Selling, general and administrative
expenses
(46,764
)
(34,676
)
Gain on remeasurement of derivative
liability
13
—
Gain on remeasurement of consideration
receivable
37
98
Gain on remeasurement of deferred
consideration
804
—
Loss on disposal of intangible assets
—
(89
)
Operating Loss
(828
)
(6,257
)
Net interest expense and other financing
charges
(1,098
)
(340
)
Loss Before Income Taxes
(1,926
)
(6,597
)
Income taxes
(1,558
)
(826
)
Net Loss
(3,484
)
(7,423
)
Items to be reclassified to net loss:
Cumulative translation adjustment
1,525
2,590
Items that will not be reclassified to net
loss:
Remeasurement of employee obligations
85
44
Net Comprehensive Loss
(1,874
)
(4,789
)
Basic and Diluted Loss Per
Share
(0.16
)
(0.39
)
Millions
Millions
Weighted average number of shares -
basic and diluted
21.4
19.5
BRAGG GAMING GROUP INC.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (in
thousands)
As at
As at
December 31,
December 31,
2022
2021
Cash and cash equivalents
11,287
16,006
Trade and other receivables
16,628
8,454
Prepaid expenses and other assets
1,823
2,442
Consideration receivable
—
56
Total Current Assets
29,738
26,958
Property and equipment
660
252
Right-of-use assets
576
579
Intangible assets
41,705
30,845
Goodwill
31,662
24,728
Other assets
47
28
Total Assets
104,388
83,390
Trade payables and other liabilities
19,549
14,357
Deferred revenue
746
27
Income taxes payable
1,113
784
Lease obligations on right of use assets -
current
294
149
Deferred consideration - current
1,176
—
Derivative liability - current
1,320
—
Loans payable
109
—
Total Current Liabilities
24,307
15,317
Deferred income tax liabilities
1,201
1,243
Non-current lease obligations on right of
use assets
344
451
Convertible debt
6,648
—
Deferred consideration
2,121
—
Other non-current liabilities
233
184
Total Liabilities
34,854
17,195
Share capital
109,902
100,285
Broker warrants
38
38
Shares to be issued
6,982
13,746
Contributed surplus
20,745
18,385
Accumulated deficit
(72,227
)
(68,743
)
Accumulated other comprehensive income
4,094
2,484
Total Equity
69,534
66,195
Total Liabilities and Equity
104,388
83,390
BRAGG GAMING GROUP INC.
SELECTED FINANCIAL GAAP AND NON-GAAP MEASURES (in
thousands)
Year Ended December
31,
EUR 000
2022
2021
Revenue
84,734
58,319
Operating loss
(828
)
(6,346
)
EBITDA
7,626
(1,549
)
Adjusted EBITDA
12,062
7,354
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230321005409/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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