Gross Profit Rises 22% to €12.2 Million (USD
$13.4 Million) Reflecting Higher Revenue and 170 Basis Point
Improvement in Gross Profit Margin to 53.5%
Adjusted EBITDA Improves 28.1% to €3.9
Million (USD $4.3 Million)
Reiterates Full Year 2023 Guidance for
Revenue of €93-97 million (US $102.2-106.6 Million) and Adjusted
EBITDA of €14.5-16.5 million (US $15.9-18.1 Million); Midpoint
Implies Revenue Growth of 12% and AEBITDA Growth of 28% 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 first
quarter of 2023. The Company also reiterated its growth targets for
full year 2023 revenue and Adjusted EBITDA.
Summary of 1Q23 Financial and
Operational Highlights
Euros (millions)(1)
1Q23
1Q22
Change
Revenue
€
22.9
€
19.4
18.1
%
Gross profit
€
12.2
€
10.0
22.0
%
Gross profit margin
53.5
%
51.8
%
170
bps
Adjusted EBITDA(2)
€
3.9
€
3.0
28.1
%
Adjusted EBITDA margin
17.0
%
15.7
%
130
bps
Wagering revenue
€
5.2
B
€
3.8
B
35.7
%
(1)
Bragg’s reporting currency is
Euros. The exchange rate provided is USD $1.00 = €0.91. 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
“We extended our momentum in the first quarter with the strong
growth reflecting the continued success of our initiatives to
diversify the business towards being a content-driven iGaming
solutions provider in a growing number of North American and
European markets,” said Yaniv Sherman, Chief Executive Officer for
Bragg. “We generated record first quarter revenue of EUR €22.9
million (USD $25.2 million), gross profit of EUR €12.2 million (USD
$13.4 million), and Adjusted EBITDA of EUR €3.9 million (USD $4.3
million), marking gains of 18%, 22% and 28%, respectively, over
1Q22 levels. These results include the benefit of growing
contributions from higher margin proprietary and exclusive
third-party games, and platform solutions which helped drive a
170-basis point year-over-year improvement in our gross profit
margin to 53.5%.
“We continue to make consistent progress in scaling the
distribution of our new in-house developed and exclusive
third-party content, launching with an additional six operators in
three North American markets and eight operators in five European
markets to date in 2023, including our first entry with new
proprietary content in Pennsylvania, Mexico, Italy and Belgium. So
far in 2023 we have launched 26 new proprietary and exclusive games
globally as we continue to optimize the cadence of our new game
releases. The pace of our new game releases is expected to
accelerate in the second half of the year which we believe will
further strengthen our foundation to deliver meaningful revenue and
cash flow growth while we make consistent progress on our mid-term
goal of growing gross profit margin to approximately 60%.”
Mr. Sherman concluded, “Our start to 2023 demonstrates our
ability to successfully deliver strong near-term financial
performance as we continue to successfully execute on our plan to
drive consistent profitable revenue growth and increasing cash
flow. As reflected by the midpoints of our 2023 full year revenue
and Adjusted EBITDA growth targets of 12% and 28%, respectively,
Bragg has significant underlying business momentum and we are
confident that we will continue to extend this momentum and create
new near- and long-term shareholder value.”
First Quarter 2023 and Recent Business Highlights
- New content and new RGS technology rollout continued with 1Q23
launches in New Jersey with DraftKings, Caesars, Resorts and
Mohegan Sun
- Entered Belgium iGaming market in February, launching
proprietary content with market leader Napoleon Sports and
Casino
- Continued growth in Switzerland, launching content with three
new local online casino operators since January 1, 2023
- Entered Mexico iGaming market in April with market leader
Caliente Interactive
- Entered Italy iGaming market in April with leading local games
distributer Microgame
- New content and new RGS technology went live in Pennsylvania in
May with Rush Street Interactive
First Quarter 2023 Financial Results and other Key Metrics
Highlights
- Revenue increased by 18.1% to €22.9 million (USD $25.2 million)
compared to €19.4 million (USD $21.3 million) in 1Q22.
- Wagering revenue generated by customers of €5.2 billion (USD
$5.7 billion) increased from €3.8 billion (USD $4.2 billion) in
1Q22.
- Gross profit increased 22.0% to €12.2 million (USD $13.4
million) from €10.0 million (USD $11.0 million) in 1Q22,
representing a gross profit margin of 53.5%. Gross profit in 1Q23
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 €0.5 million (USD $0.5 million), an
improvement from a net loss of €0.7 million (USD $0.8 million) in
1Q22, primarily due to the higher gross profit and lower corporate,
professional and sales and marketing costs, partially offset by
increases in total employee costs, depreciation and amortization,
and IT and hosting costs.
- Adjusted EBITDA was €3.9 million (USD $4.3 million), an
increase of 28.1% compared to €3.0 million (USD $3.3 million) in
1Q22, representing an Adjusted EBITDA margin of 17.0%, compared to
15.7% in 1Q22.
- Cash flow from operations was €6.4 million (USD $7.0 million),
an increase of €2.5 (USD $2.7 million) compared to 1Q22.
- Cash and cash equivalents as of March 31, 2023 was €15.1
million (USD $16.6 million) and net working capital, excluding
deferred consideration, was €7.7 million (USD $8.5 million).
Reiterates Full Year 2023 Revenue and Adjusted EBITDA
Guidance
Bragg today reiterated its 2023 full year revenue and Adjusted
EBITDA guidance originally provided on March 21, 2023. The Company
expects revenue to rise approximately 10% to 15% to €93-97 million
(US $102.2-106.6 million) and Adjusted EBITDA to increase
approximately 20% to 36% to €14.5-16.5 million (US $15.9-18.1
million).
Investor Conference Call
The Company will host a conference call today, May 10, 2023, at
8:30 a.m. Eastern Time, to discuss its first 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
Or join the webcast at https://investors.bragg.games under the
Media section.
A replay of the call will be available until May 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-month period ended March 31, 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 LOSS AND COMPREHENSIVE LOSS
(In thousands, except per
share amounts)
Three Months Ended March
31,
2023
2022
Revenue
22,859
19,360
Cost of revenue
(10,639
)
(9,340
)
Gross Profit
12,220
10,020
Selling, general and administrative
expenses
(11,906
)
(10,200
)
Gain on remeasurement of derivative
liability
(64
)
—
Gain on remeasurement of consideration
receivable
—
37
Gain on remeasurement of deferred
consideration
270
—
Operating Income (Loss)
520
(143
)
Net interest expense and other financing
charges
(596
)
(152
)
Loss Before Income Taxes
(76
)
(295
)
Income taxes
(400
)
(425
)
Net Loss
(476
)
(720
)
Items to be reclassified to net loss:
Cumulative translation adjustment
(558
)
584
Net Comprehensive Loss
(1,034
)
(136
)
Basic and Diluted Loss Per
Share
(0.02
)
(0.04
)
Millions
Millions
Weighted average number of shares -
basic and diluted
22.1
20.0
BRAGG GAMING GROUP
INC.
INTERIM UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(in thousands)
As at
As at
March 31,
December 31,
2023
2022
Cash and cash equivalents
15,122
11,287
Trade and other receivables
12,495
16,628
Prepaid expenses and other assets
1,977
1,823
Total Current Assets
29,594
29,738
Property and equipment
729
660
Right-of-use assets
1,322
576
Intangible assets
40,569
41,705
Goodwill
31,662
31,662
Other assets
47
47
Total Assets
103,923
104,388
Trade payables and other liabilities
18,282
19,549
Deferred revenue
703
746
Income taxes payable
1,396
1,113
Lease obligations on right of use assets -
current
395
294
Deferred consideration - current
1,121
1,176
Derivative liability - current
1,136
1,320
Loans payable
—
109
Total Current Liabilities
23,033
24,307
Deferred income tax liabilities
1,201
1,201
Non-current lease obligations on right of
use assets
1,010
344
Convertible debt
5,572
6,648
Deferred consideration
2,001
2,121
Other non-current liabilities
233
233
Total Liabilities
33,050
34,854
Share capital
111,517
109,902
Broker warrants
38
38
Shares to be issued
6,982
6,982
Contributed surplus
21,503
20,745
Accumulated deficit
(72,703
)
(72,227
)
Accumulated other comprehensive income
3,536
4,094
Total Equity
70,873
69,534
Total Liabilities and Equity
103,923
104,388
BRAGG GAMING GROUP
INC.
UNAUDITED SELECTED FINANCIAL
GAAP AND NON-GAAP MEASURES
(in thousands)
Three Months Ended March
31,
EUR 000
2023
2022
Revenue
22,859
19,360
Operating income (loss)
520
(143
)
EBITDA
3,229
1,433
Adjusted EBITDA
3,894
3,040
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230510005203/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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