Bragg re-iterates full-year guidance after posting Q3 net loss

Revenue was up 8.0% year-on-year to €22.6m (£19.7m/$24.2m) in the three months to 30 September. Bragg says growth in Q3 was helped by a switch to higher-margin products such as in-house proprietary content.

Aside from revenue growth, there was plenty going on at Bragg in Q3. The headline news was Matevž Mazij joining as its new CEO in August. He replaces Yaniv Sherman, who was only in the role for just over a year.

While Bragg’s bottom line reads a net loss for the quarter, new CEO Mazij is upbeat about Q3. In particular, he picked out the new and extended partnerships as evidence of its long-term growth plans.

Q3 highlights include launching content with FanDuel in Michigan and Connecticut and penning a global distribution deal with 888. Bragg also signed a content partnership with PokerStars, launched new games with Kindred-owned Unibet in the UK and went live with Bet365 in Ontario.

“The global availability of our proprietary and exclusive third-party content is accelerating, particularly with a growing number of Tier 1 operators,” Mazij said. “We expect our global market penetration for these games to accelerate further in Q4 and throughout 2024.

“During Q3, we launched 12 new proprietary and exclusive third-party games in the largest four regulated online casino markets in the US and we expect to continue to release games at this cadence or higher over the next 12 months. 

“We are also expanding our presence in Europe where we have introduced 15 proprietary and exclusive third-party games during Q3, including with several new customers in the region. We continue to have the leading PAM in the Netherlands which is live with operators that we estimate account for approximately 30% of the gross gaming revenue generated in the market.”

Higher costs leave Bragg at net loss for Q3

While revenue was higher year-on-year, spending was also up in Q3. Cost of revenue edged up 1.9% to €10.7m, while selling, general and administrative expenses increased 8.3% to €13.0m.

Bragg also noted a €1.1m loss on remeasurement of deferred consideration and a further €450,000 in net financing costs. This left a pre-tax loss of €2.6m, wider than the €1.9m loss posted last year.

After paying €364,000 in income tax and accounting for a €611,000 negative cumulative translation adjustment, net loss was €3.6m, compared to the €213,000 profit in 2022. It was noted, however, that last year’s total included €2.2m in positive cumulative translation adjustment.

In addition, adjusted EBITDA was 72.7% higher year-on-year at €3.8m for Q3.

Year-to-date net loss reaches €4.8m

Looking at the nine-month period to 30 September and revenue was up by 18.1% to €37.9m. However, as was the case in Q3, expenses were higher across several areas.

Selling, general and administrative costs climbed 13.4% to €38.0m, while there was also a €387,000 net loss on remeasurement of deferred consideration. Bragg gained some of this back via a €435,000 gain on settlement of convertible debt.

After accounting for a further €1.4m in net finance costs, Bragg posted a pre-tax loss of €1.8m, compared to €1.5m in 2022. Tax payments totalled €1.3m and there was also a negative cumulative translation adjustment of €1.8m.

This resulted in a net loss of €4.8m, wider than €4.4m last year. However, adjusted EBITDA was again higher, rising 48.8% to €12.5m.

Bragg re-iterates earnings guidance despite reduced revenue

Based on these figures, Bragg has reiterated its guidance for the full-year ended 31 December.

Revenue is expected to be within the range of €95.0m to €97.0m. In addition, adjusted EBITDA should hit between €15.5m and €16.5m.

Looking to the future, Mazij remains positive, focusing on revenue growth and long-term potential for Bragg.

“These results reflect, in part, a revenue mix shift to higher-margin products,” he said. “These include in-house created proprietary content, exclusive third-party content and turn-key player account management and managed services partnerships, alongside our ongoing cost control actions.

“As we continue to introduce more higher-margin proprietary and exclusive third-party games to more new partners at a faster pace, we expect to generate further top-line, gross profit and adjusted EBITDA growth as well as higher operating margins.”