Bragg revenue soars in H1 as CEO Mansour steps back

Toronto-listed gaming content supplier Bragg Gaming Group saw revenue grow 74.2% year-on-year  in the first half of its fiscal year, aided by its second quarter contribution doubling as demand for online casino rose under lockdown.

However the business will temporarily be without chief executive Dominic Mansour, who has taken paid leave for personal reasons. He will be replaced by Adam Arviv on an interim basis, who will also join the Bragg board until its next shareholder meeting.

Revenue for the six months ended 30 June climbed to €20.9m, of which €12.1m came from games and content, up 85.3%. Software platform and licensing fees contributed a further €7.4m, while Bragg reported €765,000 in revenue from turnkey and management services, and €639,000 from other sources.

Fees for third party content hosted on its content aggregation platform rose as a result of the higher demand for Bragg’s products and services, to €11.9m. However, the increase in revenue meant the supplier’s gross profit for the period was up 64.4% to €9.1m.

Adjusted EBITDA for the period came to €2.5m.

After selling, general and administrative expenses of €8.2m, and a €5.2m loss on the remeasurement of deferred and contingent considerations (related to its Oryx acquisition), Bragg’s H1 operating loss was reduced to €4.3m. Once €945,000 in interest expenses were factored in, the business’ pre-tax loss was up marginally to €5.3m, though after income taxes of €741,000.

However, its loss from discontinued operations – the divested GiveMeSport business – was reduced to €88,000, meaning its net loss declined to €6.1m. After a €161,000 foreign exchange adjustment on continuing operations, and a €15,000 loss on discontinued, was factored in, Bragg’s comprehensive loss for the quarter was down was down 6.9% to €5.9m.

This followed a strong second quarter in which revenue more than doubled year-on-year, rising 106.7% to €12.1m. EBITDA for the quarter came to €1.8m, compared to an €0.3m loss in the prior year.

While revenue-related costs for the period more than doubled, once administrative expenses and charges stemming from the remeasurement of deferred and contingent considerations, Bragg posted an operating profit of €762,000, compared to a €3.2m loss in Q2 2019.

The second quarter, at a time when lockdowns imposed as a result of novel coronavirus (Covid-19) confined players to their homes, saw many turn to gambling for entertainment, Bragg said. This led to increased demand for its products, with 11 new clients signed up during the period.

Bragg also rolled out a new data analytics and customer engagement platform, to further accelerate growth going forward.

After interest expenses, income taxes and a €228,000 gain on discontinued operations was factored in, its net loss for the quarter was reduced to €392,000. After currency adjustments, this resulted in a comprehensive net loss was reduced 95.1% year-on-year to €273,000.

“We're extremely pleased with the substantial progress we've achieved so far in 2020,” Bragg chairman Paul Pathak said.

“We've delivered strong revenue and EBITDA growth and have made great strides in diversifying our revenues and reaching new audiences.”

As a result of the strong first half performance, Bragg has revised its 2020 revenue forecast, which it now expects to come in between €38m to €40m, up from the €35m to €38m range disclosed following its first quarter results.

EBITDA is expected to finish between €5.2m and €5.6m, a significant jump from 2019’s full-year total of €1.0m.

However, for an unspecified period, it will be under the leadership of Arviv, chairman of Legacy Eight Group, a private equity fund focused on acquiring and operating online gaming businesses.

Legacy Eight was a shareholder in Oryx prior to that acquisition, and took a 19% stake in Bragg following that deal closing.

“We're pleased to welcome Adam to the board and we thank him for taking on the role of interim chief executive officer,” Pathak said. “We're confident his appointment to the board will assist with the successful execution of Bragg's existing strategic plan.”

Arviv will oversee a capital raising drive, supported by Canaccord Genuity, to pay the earn-out agreement struck with Oryx vendor Kavo Holdings. That was originally due by 30 June, but has been rescheduled to 30 September.