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Bragg Gaming Group 2021 Third Quarter Revenue Rises 9.9%

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Bragg Gaming Group 2021 Third Quarter Revenue Rises 9.9%

 

New Proprietary Online Content, Market Expansion and Customer Additions
Driving Continued Quarterly Growth and Increased Forward Outlook

Raises Full Year 2021 Revenue Guidance to EUR €55-56 million (USD $65-66 Million[1])

and Adjusted EBITDA to EUR €6.6-€6.8 million (USD $7.8-8.0 million); Increases Full Year 2022 Revenue Guidance by 9% to €59-61 million (USD $70-72 Million)

Bragg Gaming Group, a global B2B gaming technology and content provider, today reported financial results for the third quarter ended September 30, 2021, provided an update on its strategic growth initiatives and raised its full year 2021 revenue and Adjusted EBITDA and full year 2022 revenue guidance.

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Summary of Q3-21 Financial and Operational Highlights

Euros (Thousands) Q3-21 Q3-20 % Change
Revenue € 12,874 € 11,714 9.9%
Adjusted EBITDA € 1,418 € 1,834 -22.7%
Adjusted EBITDA margin 11.0% 15.7% -4.7%
Operational Q3-21 Q3-20 % Change
Wagering revenue (Euros) € 3.2B € 3.0B 4.8%
Unique players[2] 2.1M 1.9M 14.4%
Revenue / top 10 customers 54.3% 55.6% -1.3%

 

Select Recent Strategic Development Progress

  • On August 27, Bragg’s common shares began trading on the Nasdaq Global Select Market.
  • Bragg continues to diversify its European market penetration, including earlier activations in Spain and Denmark followed by Greece in the third quarter.
  • In October, the Company entered the newly regulated market in the Netherlands with operators including state-owned Holland Casino, the state-owned Lottery (Nederlandse Loterij) and BetCity.nl.
  • In October, the Company entered into an integration agreement with Playtech that will see the full range of ORYX Hub games become available to operators utilizing the Playtech Games Marketplace™ platform in markets such as Spain, Italy, Switzerland, the Netherlands, the UK, Mexico and Latin America. The Company believes the integration with Playtech offers material medium and long-term growth opportunities for its existing third-party content and for its future in-house developed proprietary content. In addition, the agreement with Playtech will further drive Bragg’s strategic shift into new regulated markets and focus on supplying larger Tier 1 iGaming operators.
  • During the third quarter the Company launched nine new customers.
  • The Company continues to actively pursue and prepare for entry into new online gaming markets, including Europe’s two largest iGaming markets, the UK and Italy. Contributions from these two markets are expected to begin in 2022. The Company has applied for licenses in New Jersey, Pennsylvania and Michigan, and is in the process of applying for a license in Ontario.
  • During the third quarter, the Company launched 13 new exclusive games via its ORYX Hub in partnership with third-party studios, and two new proprietary games from its in-house studio.
  • As of September 30, 2021 the Company’s Wild Streak game development studio had nine online casino games live in key iGaming markets such as New Jersey, Michigan, the UK and other regulated European jurisdictions. Wild Streak also recently expanded its relationship with Sega Sammy Creation Inc., whereby Sega Sammy will develop two additional Wild Streak games that are popular in social and online casinos — Dragon PowerTM and Egyptian MagicTM — for land-based casinos.
  • The Company expects to complete its acquisition of Spin Games LLC (“Spin Games”) in the current quarter, pending final regulatory approvals from various U.S. states’ gaming commissions. Upon completion of the transaction, Bragg will gain access to key strategic operator relationships in the U.S. where Spin Games has over 30 customers, including leading iGaming operators. The Company has completed the technical integration between Spin Games and its ORYX Hub distribution platform.

CEO Comments

“Bragg’s strong 2021 third quarter financial performance and our increased guidance reflects the contributions from our comprehensive growth initiatives, including the consistent progress we have achieved with new market diversification and our ability to offer more new high-performing propriety and exclusive third-party online content,” said Richard Carter, CEO of Bragg Gaming Group.

“During the third quarter, our newest markets performed above our expectations and this momentum continues in the current quarter to-date. Besides the benefits from new market penetration, our recent proprietary games from our in-house development studios are also driving growth. Third quarter revenue rose 9.9% year over year to EUR €12.9 million (USD $15.2 million) while Adjusted EBITDA decreased by 22.7% to EUR €1.4 million (USD $1.7 million) primarily reflecting our ongoing investments in our development teams and infrastructure to support our growth initiatives.

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“Bragg continues its transformation into a leading, content-focused, B2B iGaming provider with a scalable technology stack featuring unique player engagement tools that consistently drive strong game performance. Our technology advantages, combined with our ability to offer an increasing number of high-performing proprietary and third-party exclusive games, are expected to boost our ability to deliver strong financial results as we continue to expand our presence into new North American and European markets. This includes the further penetration of our more recently entered markets such as the Netherlands where we have quickly achieved an attractive double-digit market share. Overall, our market expansion initiatives are expected to increase our total addressable market (“TAM”) six-fold in 2022 to more than USD $18 billion. Our acquisition of Spin Games, which we expect to complete by year end, will also help accelerate our entry into North American iGaming markets driven first by high-performing European online content to be closely followed by proprietary content developed specifically to address the U.S. and Canadian markets.

“We also intend to increase the number of proprietary online games developed by our internal development studios, as well as the number of exclusive third-party games we offer, which will support our focus on growing Adjusted EBITDA margins. From zero in-house developed games in 2020, we have established a strong proprietary new game pipeline and expect that an increasing proportion of our exclusive titles launched next year will be internally developed. Given the significantly better economics associated with the distribution of our proprietary content, leveraging our leading player engagement tools with our proprietary games remains one of our highest priorities as it will lead to consistent top and bottom line growth.”

Mr. Carter concluded, “Our ability to simultaneously generate positive Adjusted EBITDA while investing to grow our scale and technology capabilities enables Bragg to more effectively help online casino operators connect with their players, resulting in consistent market expansion and market share improvement. As a result, we continue to deliver strong near-term financial performance while further establishing the foundation for sustainable Adjusted EBITDA growth, as reflected in our raised full year 2021 outlook as well as the increase in our outlook for 2022 revenue growth. Notably, our updated guidance highlights the underlying momentum we are achieving in our business that is being driven by our growth initiatives that are focused on entering new markets, adding new clients and developing and releasing more proprietary titles.”

Third Quarter 2021 Financial Results and other Key Metrics Highlights

  • Revenue increased by 9.9% to EUR €12.9 million (USD $15.2 million) in Q3 2021 compared to EUR €11.7 million (USD $13.8 million) in Q3 2020, inclusive of a full quarter of contributions from Wild Streak.
  • Wagering revenue generated by customers increased 4.8% to EUR €3.2 billion (USD $3.8 billion) compared to EUR €3.0 billion (USD $3.6 billion) in Q3 2020.
  • The number of unique players using Bragg games via its Oryx Hub distribution platform and content increased by 14.4% to 2.1 million, from 1.9 million in Q3 2020.
  • Gross profit increased by 30.1% to EUR €6.6 million (USD $7.8 million) from EUR €5.1 million (USD $6.0 million) in Q3 2020, reflecting higher revenue and an 8.0 basis point margin improvement to 51.4%. The margin expansion is primarily the result of the continued shift towards a higher proportion of revenues from iGaming and turnkey services, which have lower associated cost of sales when compared to games and content.
  • Net loss for the period was EUR €2.5 million (USD $2.9 million), a decline in the net loss of EUR €0.7 million (USD $0.8 million) from Q3 2020, primarily due to the higher  gross profit and a reduction in costs related to deferred consideration payable, partially offset by the incremental increase in employee costs and exceptional professional fees as a result of the Nasdaq listing.
  • Adjusted EBITDA was EUR €1.4 million (USD $1.7 million), a decrease of 22.7% compared to EUR €1.8 million (USD $2.2million) in Q3 2020. Adjusted EBITDA margin decreased by 4.7 basis points to 11.0%, reflecting increased salary and subcontractor costs as part of the Company’s investment in the expansion of its software development, product and management functions.
  • Cash and cash equivalents as of September 30, 2021 was EUR €20.3 million (USD $24.0 million)

Raises Full Year 2021 Revenue and Adjusted EBITDA Guidance and Full Year 2022 Revenue Guidance

Reflecting the Company’s operating momentum related to operations in newer markets and an increasing number of customers, Bragg today raised its outlook for 2021 full year expected revenue to EUR €55-56 million (USD $65-66 million) and Adjusted EBITDA to EUR €6.6-6.8 million (USD $7.8-8.0 million), compared to its previously provided revenue and Adjusted EBITDA full year outlook of EUR €49 million (USD $57.8 million) and EUR €5.4 million (USD $6.4 million), respectively. In addition, the Company raised its full year 2022 revenue guidance to a new range of EUR €59-61 million (USD $70-72 million), compared to the initial expected range of EUR €54 million to EUR €56 million (USD $63.7 million to USD $66.1 million) which was provided on August 11, 2021 and provided Adjusted EBITDA guidance of EUR €6-7 million (USD $7.1-8.3 million).

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Compliance Updates

Tennessee Sports Wagering Council Takes Action Against Illegal Sportsbook

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The Tennessee Sports Wagering Council through its executive director issued $50,000 in fines to Bovada.lv, an unlicensed and therefore illegal sportsbook operating in Tennessee.

Bovada failed to comply with cease and desist letters delivered to addresses in Curaçao, and Council investigators placed wagers through Bovada’s platform on three separate occasions, including as recently as October 16, 2024.

The Sports Gaming Act authorizes the Council to impose a $10,000 fine for the first offense of accepting wagers without a license, which rises to $15,000 for the second offense, and $25,000 for the third offense. Subsequent offenses may lead to the imposition of a $25,000 fine for each occurrence, an occurrence being a single wager accepted in Tennessee.

In the cease and desist letters, the Council ordered Bovada to allow all Tennessee users to withdraw any funds currently held by the unlicensed sportsbook.

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“The Sports Wagering Council recommends that Tennessee users of Bovada withdraw their funds immediately. Our primary role is the protection of the public interest through a safe, regulated environment, and Tennessee sports bettors need to know that just because they can access a sports betting website or app inside Tennessee’s borders does not mean it is licensed to do business here,” Mary Beth Thomas, Executive Director of Tennessee Sports Wagering Council, said.

Legal sportsbook operators provide important bettor protections not found in the illegal market. If an individual wagers with unlicensed sportsbooks, their sensitive financial and personal information may not be protected and could even be shared with criminal enterprises. The bettor’s money could be withheld or disappear without a way to recover it.

The SWC is working closely with its network of law enforcement at the state and federal level to eradicate illegal sportsbooks such as Bovada and others.

Tennessee is the largest “online-only” sports betting market in the US, with more than $4.7 billion wagered in Tennessee last fiscal year through online sportsbooks licensed by the Council.

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Gambling in the USA

Phoenix Link by Aristocrat Gaming Now Lighting Up Casino Floors

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The hottest new game from Aristocrat Gaming, Phoenix Link, is now live on casino floors, with Yaamava’ Resort & Casino being the first in North America to offer the highly-anticipated game. As the next evolution of the international hit game, Dragon Link, Phoenix Link features player-favorite mechanics from top games with all-new themes, features, and bonuses.

“We have been humbled by the incredible global fanfare Dragon Link has received over the years but are never ones to rest on our laurels. The teams have been working tirelessly on a follow-up that brings together all the player-favorite elements in a new and exciting way with Phoenix Link as the proud result. We were thrilled to partner with Yaamava’ to premiere Phoenix Link with flair, excitement, and celebration,” said Victor Duarte, executive vice president of product for Aristocrat Gaming.

Phoenix Link players will enjoy the game’s additional denominations, configurations, and jackpots on each of the launch game theme titles. Gameplay features include Hold & Spin, Free Games with multiplier wilds or twin spin reels, Phoenix Mystery trigger, and more new bonus twists. Phoenix Link is available on the Neptune Single cabinet.

“Yaamava’ is thrilled to host yet another world premiere in gaming with the launch of Phoenix Link by Aristocrat Gaming. Our Club Serrano members are already raving about this captivating extension of the player-favorite Dragon Link. It’s a great addition to the Yaamava’ gaming floor,” said Kenji Hall, General Manager of Yaamava’ Resort & Casino at San Manuel, said.

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Latest News

Panel on the benefits of regulation in the Mexican iGaming market

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On November 6, the iGaming industry in Mexico is preparing for a key event in which the benefits and challenges that regulation has brought to the Mexican market will be discussed. Under the title “Benefits of Regulation in the Mexican Market”, this panel will offer an in-depth look at the impact of regulation on transparency, competition and consumer protection, critical issues in the new digital era of iGaming.

The event, moderated by Geraldine Alexandra García Torres, Media Manager of Digital Gaming News, will feature the participation of recognized figures in the sector such as Daniel Magariños, representative of BMM Testlabs, and Hermilo Peregrina Cabrera of Prometeo IT Solutions. Both panelists will contribute their extensive knowledge and experience in regulation and certification in the Mexican market, and will analyze with the public the challenges and opportunities that companies face in an increasingly competitive and regulated context.

BMM Testlabs, who will participate as a Gold Sponsor, underlines with its sponsorship the importance of regulation to strengthen the iGaming sector in Mexico and demonstrates its commitment to progress and transparency in the Mexican market. For its part, Kushki joins as a Silver Sponsor, promoting the dialogue and analysis necessary for the industry.

Daniel Magariños, from BMM Testlabs, expressed his enthusiasm for participating in this digital webinar: “It has been a pleasure to be able to share our comments as a Laboratory on a market like the Mexican one and exchange opinions with a reference like Hermilo and the company Prometeo IT Solutions, with its excellent track record in this market. A relaxed talk with a lot of learning that I hope will be interesting for the attendees.”

For his part, Hermilo Peregrina, from Prometeo IT Solutions, highlighted the relevance of these spaces for dialogue: “Thank you to Conferencias iGaming for the invitation to participate in this panel. Thanks to Geraldine for coordinating us, and it was a pleasure to share ideas and opinions with my friend Daniel from BMM Testlabs, who has extensive experience in international regulations and certifications.”

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Sponsor Support

The panel has the support of important sponsors who recognize the relevance of regulation in the development of the iGaming market in Mexico. Among them, BMM Testlabs as Gold Sponsor, and Kushki as Silver Sponsor.

Event Details:

Date: November 6

Time: 10:00 a.m. (Mexico)

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Registration: Register here

Don’t miss the opportunity to be part of this essential conversation for the future of the industry. Secure your place and access a key analysis on the dynamic iGaming market in Mexico!

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