Bragg Gaming Reports Fourth Quarter and Full Year 2023 Financial Results, Confirms Formation of Special Committee
- Revenue for Bragg Gaming Group increased by 10.4% to EUR 93.5 million in full-year 2023.
- Adjusted EBITDA grew by 26.3% to EUR 15.2 million in 2023.
- Gross profit rose by 10.8% to EUR 49.9 million in 2023, with a gross profit margin of 53.4%.
- Bragg's strategic efforts led to growth in revenue, gross profit, and Adjusted EBITDA in 2023.
- The company maintained its dominant position in the Netherlands as the leading PAM provider.
- Challenges in the Dutch market are expected to persist, with further adjustments anticipated in 2024.
- Bragg signed several Tier 1 content distribution agreements and launched content in new regulated markets.
- The company expects further growth in global adoption of proprietary and exclusive third-party content in 2024.
- Bragg provided updated 2024 revenue and Adjusted EBITDA guidance, expecting growth in both metrics.
- The Board of Directors formed a special committee to review the Company's strategic alternatives.
- No timetable has been established for the completion of the strategic review process.
- Bragg will host an investor conference call on March 26, 2024, to discuss its financial results.
- Gross profit decreased by 7.3% to EUR 12.0 million in the fourth quarter of 2023.
- Adjusted EBITDA decreased by 23.7% to EUR 2.8 million in Q4 2023.
- Revenue decreased by 1.4% to EUR 23.4 million in the fourth quarter of 2023.
- The Company's operational loss for the period was EUR 0.4 million in Q4 2023.
- The special committee formed to review strategic alternatives has not made any decisions yet.
Insights
The reported financial results of Bragg Gaming Group demonstrate a robust year-over-year growth in revenue and Adjusted EBITDA, signaling a positive trajectory for the company. The increase in gross profit margin, albeit slight, indicates improved efficiency in generating revenue. From a financial perspective, the growth in wagering revenue is a strong indicator of the company's expanding market presence, particularly in the competitive iGaming sector.
However, the decline in fourth-quarter gross profit and Adjusted EBITDA margins suggests potential headwinds or strategic shifts that may impact profitability. Investors should monitor the company's cost optimization strategies and how they balance with investment in growth initiatives. The forecast for 2024 with single-digit to mid-teen percentage growth in revenue and Adjusted EBITDA suggests a conservative yet positive outlook, reflecting the company's confidence in its strategic direction and market opportunities.
Bragg Gaming Group's focus on proprietary content and their Player Account Management (PAM) platform positions them well within the iGaming industry, which is experiencing a shift towards personalized and differentiated gaming experiences. The mention of expansion into new regulated markets and partnerships with Tier 1 operators underscores the company's strategic growth initiatives. This expansion is critical as it diversifies the company's revenue streams and reduces dependency on specific markets or partners.
With the iGaming sector's rapid growth, Bragg's emphasis on exclusive third-party content and its own proprietary titles could cater to the increasing demand for unique gaming experiences. The company's ability to launch a significant number of new titles in various geographical markets is a testament to its agility and responsiveness to market trends. However, the competitive landscape and regulatory changes, especially in the Dutch market, present challenges that require close observation for potential impacts on the company's performance.
The formation of a special committee to explore strategic alternatives, including potential sales, mergers, or acquisitions, indicates that Bragg is actively considering options to maximize shareholder value. This move could lead to significant changes in the company's structure and strategy. Investors and stakeholders should be aware of the implications of such strategic decisions, which could either unlock value or introduce new risks.
It's also important to note that the company's renegotiation of terms with a key partner, which has impacted its financials, reflects the dynamic nature of contract negotiations in the iGaming industry. The ability to navigate these negotiations while maintaining profitability and market position is crucial. As the company is not providing further comments on the strategic review process, stakeholders should stay informed through official announcements and regulatory filings to understand the potential outcomes and their timing.
Full Year 2023 Revenue Rises
Full Year Gross Profit Rises
Summary of FY23 and 4Q23 Financial and Operational Highlights
|
|
|
|
|
|
|
|
|
|
Euros (millions)(1) |
|
4Q23 |
|
4Q22 |
|
Change |
|
||
Revenue |
|
€ |
23.4 |
|
€ |
23.7 |
|
(1.4) |
% |
Gross profit |
|
€ |
12.0 |
|
€ |
13.0 |
|
(7.3) |
% |
Gross profit margin |
|
|
51.5 |
% |
|
54.9 |
% |
-330 |
bps |
Adjusted EBITDA(2) |
|
€ |
2.8 |
|
€ |
3.7 |
|
(23.7) |
% |
Adjusted EBITDA margin |
|
|
11.9 |
% |
|
15.4 |
% |
-350 |
bps |
Wagering revenue |
|
€ |
6.1 |
B |
€ |
5.1 |
B |
18.1 |
% |
|
|
|
|
|
|
|
|
|
|
Euros (millions)(1) |
|
FY23 |
|
FY22 |
|
Change |
|
||
Revenue |
|
€ |
93.5 |
|
€ |
84.7 |
|
10.4 |
% |
Gross profit |
|
€ |
49.9 |
|
€ |
45.1 |
|
10.8 |
% |
Gross profit margin |
|
|
53.4 |
% |
|
53.2 |
% |
20 |
bps |
Adjusted EBITDA |
|
€ |
15.2 |
|
€ |
12.1 |
|
26.3 |
% |
Adjusted EBITDA margin |
|
|
16.3 |
% |
|
14.2 |
% |
210 |
bps |
Wagering revenue |
|
€ |
22.4 |
B |
€ |
17.7 |
B |
26.6 |
% |
(1) |
|
Bragg’s reporting currency is Euros. The exchange rate provided is US |
(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
Matevž Mazij, Chief Executive Officer for Bragg, commented:
“Through Bragg’s strategic efforts to establish the business as a premier content-focused iGaming B2B provider and our meticulous control over expenses, we achieved growth in revenue, gross profit, and Adjusted EBITDA in 2023, along with a 210bps improvement in Adjusted EBITDA margin to
“In the Netherlands, the Company maintains its dominant position as the leading PAM provider, serving five customers with our PAM solutions in the region. We are experiencing growth in the Czech market and are exploring new opportunities for expanding with our PAM platform, content aggregation, player engagement tools, and managed services in various international jurisdictions.
“Upon closer examination of the Dutch market, it is evident that challenges have arisen due to increased competition and new regulations since July. These challenges are expected to persist, with further adjustments anticipated in 2024. Additionally, in Q4 2023, the Company extended its agreement with Entain Plc to supply its PAM platform to BetCity.nl, Entain’s Dutch iGaming operator, until 2025. However, this extension required renegotiating terms. These dynamic variables reduce customer concentration, and at the same time our broader business is thriving and poised for sustained, increasingly profitable growth.
“Additionally, the global distribution of our proprietary and exclusive third-party content is rapidly expanding, particularly among an increasing number of Tier 1 operators. We anticipate a further surge in the global adoption of these games in 2024. Last year, we successfully launched a total of 29 new proprietary online titles worldwide, including 26 proprietary titles newly introduced to the European online casino markets and 15 proprietary titles newly introduced to the North American online casino markets. We expect to maintain or exceed this pace of game releases this year.
“By continuously expanding our portfolio of higher-margin proprietary and exclusive third-party games to a wider range of new partners at an accelerated pace, we are well positioned for long term growth in top-line revenue, gross profit, and Adjusted EBITDA, along with improved operating margins.
“Our strategic actions have positioned Bragg as an essential content source for leading international iGaming operators, strengthening our groundwork for consistent and profitable development. With confidence, we affirm our readiness with the appropriate strategies, financial strength, and infrastructure to maintain our business momentum while executing initiatives that foster cash flow growth and generate added value for our shareholders.”
Full Year and Fourth Quarter 2023 Business Highlights
- The Company’s signed several Tier 1 content distribution agreements including with Betsson, 888/William Hill, and PokerStars.
-
The Company launched content in new regulated markets including in
Belgium with Napoleon Sportsbook and Casino, inItaly with Microgame and inMexico with Caliente. -
Proprietary and exclusive games roll-out continued including with multiple new
U.S. operators and in international markets including inSpain , theU.K. andSwitzerland . -
Positive proprietary and exclusive content traction in
North America from the fourth quarter onwards. -
Fourth quarter highlights included launching proprietary content, aggregation and Fuze™ player engagement with Superbet in
Brazil , rolling out new content with BetMGM inNew Jersey , and announcing a PAM extension with BetCity.nl including content and product delivery.
Fourth Quarter 2023 Financial Results and other Key Metrics Highlights
-
Revenue decreased by
1.4% toEUR 23.4 million (USD 25.2 million ) compared toEUR 23.7 million (USD 25.5 million ) in 4Q22 reflecting the revised commercial terms agreed with a key strategic partner that took effect during the quarter. -
Wagering revenue generated by customers of
EUR 6.1 billion (USD 6.6 billion ) increased fromEUR 5.1 billion (USD 5.5 billion ) in 4Q22. -
Gross profit decreased by
7.3% toEUR 12.0 million (USD 12.9 million ) fromEUR 13.0 million (USD 14.0 million ) in 4Q22 with gross profit margins decreased by 330bps to51.5% from54.9% mainly related to the revised commercial terms agreed with a key strategic partner that took effect during the quarter -
Adjusted EBITDA decreased by
23.7% toEUR 2.8 million (USD 3.0 million ) fromEUR 3.7 million (USD 4.0 million ) in 4Q22 with Adjusted EBITDA margins decreasing by 350bps to11.9% from15.4% due to the decline in the gross profit offset by improvement in costs optimisation. -
Operational loss for the period was
EUR 0.4 million (USD 0.4 million ), a decrease ofEUR 0.6 million (USD 0.6 million ) from the same period in the previous year in 4Q22, primarily due to the lower gross profit while reducing selling, general and administrative expenses.
2023 Full Year Financial Results and other Key Metrics Highlight
-
Revenue increased by
10.4% toEUR 93.5 million (USD 100.5 million ) compared toEUR 84.7 million (USD 91.1 million ) in 2022. -
Wagering revenue generated by customers of
EUR 22.4 billion (USD 24.1 billion ) increased fromEUR 17.7 billion (USD 19.0 billion ) in 2022. -
Gross profit increased
10.8% toEUR 49.9 million (USD 53.7 million ) fromEUR 45.1 million (USD 48.5 million ) in 2022, representing a gross profit margin of53.4% . -
Adjusted EBITDA ended
EUR 15.2 million (USD 16.3 million ), an increase of26.3% compared toEUR 12.1 million (USD 13.0 million ) in 2022, representing an Adjusted EBITDA margin of16.3% , compared to14.2% in 2022. -
Cash flow from operations was
EUR 11.7 million (USD 12.6 million ), an increase ofEUR 6.0 million (USD 6.5 million ) compared toEUR 5.8 million (USD 6.2 million ) of cash flow from operations in 2022. -
Cash and cash equivalents as of December 31, 2023 was
EUR 8.8 million (USD 9.5 million ) and net working capital, excluding deferred consideration and convertible debt, wasEUR 5.1 million (USD 5.5 million ).
Full Year 2024 Revenue and Adjusted EBITDA Guidance
Bragg provided an update on its expectations for 2024 full year revenue and Adjusted EBITDA growth with revenue expected to rise
Review of Strategic Alternatives
The Board of Directors confirms that it has formed an ad hoc special committee, chaired by independent Board member Don Robertson, to undertake a review of the Company’s strategic alternatives. The special committee has been appointed to consider and explore strategic alternatives, which may include the sale of the Company or of its assets, a merger, financing, further acquisitions, or other strategic alternatives. No timetable to complete the strategic review process has been established, nor have any decisions been made relating to strategic alternatives at this time. There can be no assurances that any transaction will be completed.
The Company will not be providing further comment on the status of the strategic review process at this time and intends to provide further updates as circumstances warrant and in accordance with applicable securities laws. While the strategic review process is ongoing, the Company’s management remains committed to executing the Company's strategy and business plan with the full support of the Board.
Investor Conference Call
The Company will host a conference call today, March 26, 2024, at 8:30 a.m. (Toronto Time), to discuss its fourth quarter and full year 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 and
Participant Toll Dial-In Number (International): 1 (646) 307-1963
Conference ID: 1909159
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 April 2, 2024, following the conclusion of the live call. To access the replay, dial (647) 362-9199 or (800) 770-2030 (toll-free) and use the passcode 1909159.
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 2024, 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; the outcome of the strategic alternatives review process; 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 contained in this press release or the conference call 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; any disruptions to operations as a result of the strategic alternatives review process; 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, 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
BRAGG GAMING GROUP INC. CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS (In thousands, except per share amounts) |
|||||
|
|
|
|||
|
Year Ended December 31, |
||||
|
2023 |
2022 |
|||
Revenue |
93,519 |
|
84,734 |
|
|
Cost of revenue |
(43,580 |
) |
(39,652 |
) |
|
Gross Profit |
49,939 |
|
45,082 |
|
|
|
|
|
|||
Selling, general and administrative expenses |
(50,824 |
) |
(46,764 |
) |
|
Loss on remeasurement of derivative liability |
(47 |
) |
13 |
|
|
Gain on settlement of convertible debt |
595 |
|
— |
|
|
Gain on remeasurement of consideration receivable |
— |
|
37 |
|
|
(Loss) gain on remeasurement of deferred consideration |
(440 |
) |
804 |
|
|
Operating (Loss) |
(777 |
) |
(828 |
) |
|
|
|
|
|||
Net interest expense and other financing charges |
(2,149 |
) |
(1,098 |
) |
|
(Loss) Before Income Taxes |
(2,926 |
) |
(1,926 |
) |
|
|
|
|
|||
Income taxes |
(910 |
) |
(1,558 |
) |
|
Net (Loss) |
(3,836 |
) |
(3,484 |
) |
|
Items to be reclassified to net loss: |
|
|
|||
Cumulative translation adjustment |
(1,174 |
) |
1,525 |
|
|
|
|
|
|||
Items that will not be reclassified to net loss: |
|
|
|||
Remeasurement of employee obligations |
(3 |
) |
85 |
|
|
Net Comprehensive (Loss) |
(5,013 |
) |
(1,874 |
) |
|
|
|
|
|||
Basic (Loss) Per Share |
(0.17 |
) |
(0.16 |
) |
|
Diluted (Loss) Per Share |
(0.17 |
) |
(0.16 |
) |
|
|
|
|
|||
|
Millions |
Millions |
|||
Weighted average number of shares - basic |
22.6 |
|
21.4 |
|
|
Weighted average number of shares - diluted |
22.6 |
|
21.4 |
|
|
BRAGG GAMING GROUP INC. CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (in thousands) |
|||||
|
|
|
|||
|
As at |
As at |
|||
|
December 31, |
December 31, |
|||
|
2023 |
2022 |
|||
Cash and cash equivalents |
8,796 |
|
11,287 |
|
|
Trade and other receivables |
18,641 |
|
16,628 |
|
|
Prepaid expenses and other assets |
1,655 |
|
1,823 |
|
|
Total Current Assets |
29,092 |
|
29,738 |
|
|
Property and equipment |
640 |
|
660 |
|
|
Right-of-use assets |
3,233 |
|
576 |
|
|
Intangible assets |
38,133 |
|
41,705 |
|
|
Goodwill |
31,921 |
|
31,662 |
|
|
Other assets |
348 |
|
47 |
|
|
Total Assets |
103,367 |
|
104,388 |
|
|
|
|
|
|||
Trade payables and other liabilities |
21,846 |
|
19,549 |
|
|
Deferred revenue |
— |
|
746 |
|
|
Income taxes payable |
917 |
|
1,113 |
|
|
Lease obligations on right of use assets |
709 |
|
294 |
|
|
Deferred consideration |
1,513 |
|
1,176 |
|
|
Derivative liability |
471 |
|
1,320 |
|
|
Convertible debt |
2,445 |
|
— |
|
|
Loans payable |
— |
|
109 |
|
|
Total Current Liabilities |
27,901 |
|
24,307 |
|
|
Deferred income tax liabilities |
852 |
|
1,201 |
|
|
Lease obligations on right of use assets |
2,568 |
|
344 |
|
|
Convertible debt |
— |
|
6,648 |
|
|
Deferred consideration |
1,426 |
|
2,121 |
|
|
Other non-current liabilities |
373 |
|
233 |
|
|
Total Liabilities |
33,120 |
|
34,854 |
|
|
|
|
|
|||
Share capital |
120,015 |
|
109,902 |
|
|
Broker warrants |
— |
|
38 |
|
|
Shares to be issued |
3,491 |
|
6,982 |
|
|
Contributed surplus |
19,887 |
|
20,745 |
|
|
Accumulated deficit |
(76,063 |
) |
(72,227 |
) |
|
Accumulated other comprehensive income |
2,917 |
|
4,094 |
|
|
Total Equity |
70,247 |
|
69,534 |
|
|
Total Liabilities and Equity |
103,367 |
|
104,388 |
|
|
BRAGG GAMING GROUP INC. SELECTED FINANCIAL GAAP AND NON-GAAP MEASURES (in thousands) |
||||||||||||
|
|
|
|
|
|
|
|
|
||||
|
|
Three Months Ended December 31, |
|
Year Ended December 31, |
||||||||
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||
Revenue |
|
23,357 |
|
|
23,681 |
|
93,519 |
|
|
84,734 |
|
|
Operating income (loss) |
|
(431 |
) |
|
162 |
|
|
(777 |
) |
|
(828 |
) |
EBITDA |
|
3,327 |
|
|
2,682 |
|
|
12,290 |
|
|
7,626 |
|
Adjusted EBITDA |
|
2,786 |
|
|
3,650 |
|
|
15,236 |
|
|
12,062 |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20240326798318/en/
Yaniv Spielberg
Chief Strategy Officer
Bragg Gaming Group
info@bragg.games
James Carbonara
Hayden IR
646-755-7412 or James@HaydenIR.com
Source: Bragg Gaming Group Inc.
FAQ
What was the percentage increase in Bragg Gaming Group's full-year 2023 revenue?
How much did Adjusted EBITDA grow by in 2023 for Bragg Gaming Group?
What was the gross profit margin for Bragg Gaming Group in 2023?
In which market does Bragg Gaming Group maintain its dominant position as the leading PAM provider?
What strategic efforts led to growth in revenue, gross profit, and Adjusted EBITDA for Bragg Gaming Group in 2023?
What did the Board of Directors of Bragg Gaming Group form to review the Company's strategic alternatives?
When will Bragg Gaming Group host an investor conference call to discuss its financial results?
