Bragg Gaming Group, Inc. Q3 FY2024 earnings call

• The Board concluded the strategic review process, determining none of the proposals received reflected the company's intrinsic value. - Third quarter saw 16% topline growth, with strong U.S. content growth, including accelerated revenue from proprietary content studios. - Launched sixth PAM customer in the Netherlands with Hard Rock Casino and Kambi Sportsbook in the Dutch market. - Strengthened executive leadership team, realigned commercial strategy to regional focus, and prepared for Brazil's regulated market launch on January 1, 2025. - Differentiated products through modular solutions, data warehouse flexibility, proprietary technology, and vertically integrated suite.

In the third quarter of 2024, total revenue was EUR26.2 million, a record high. PAM and Turnkey operations revenue was EUR5.7 million, representing 21.8% of total revenue (compared to EUR4.6 million, 20.6% in Q3 2023). Content revenue was EUR20.5 million, making up 78.2% of total revenue (compared to EUR17.9 million, 79.4% in Q3 2023). Gross profits grew 18% to EUR14 million, adjusted EBITDA grew 7% to EUR4.1 million.

• Reiterated 2024 revenue guidance of EUR102 million to EUR109 million and adjusted EBITDA guidance of EUR15.2 million to EUR18.5 million, tracking to the lower end of ranges. - 2025 outlook positive with expected sustained double-digit topline growth, expanding bottom line margins, and increased operational leverage.

Forward-looking statements and general market/regulatory risks mentioned, with a reminder to refer to Bragg's filings for full risk factors.

Q: Good morning, everyone. Thanks for taking my question. I want to start on the guidance. Implied 4Q revenue is somewhere high-double-digits. But first, should we expect that kind of exit rate as we head into 2025? And second, what markets do you foresee driving some of that elevated growth?

A: In terms of Q4 outlook and then into 2025, double-digit growth is possible. The U.S. is seen as an opportunity for continued growth, and Brazil's regulated market launch on January 1, 2025, is a key market for increased revenue.

Q: Great. And then maybe bigger picture, unpacking the enhancing shareholder value comment, I think it’s fair to assume that investing in your business would be on the top of that list. Can you just maybe help us understand what else that comment might mean? Are we thinking share repurchases, M&A, etcetera?

A: Share repurchases not currently the best use of excess capital, but M&A and investing in commercialization through talent and pipeline opportunities are considered.

Q: Hi. Good morning, Mats and Robbie. It does look like you had your best quarter ever in the U.S. on a quarterly perspective. Is that just the bass of having better market coverage or have you changed your go-to-market approach there? And then as a follow-up, how big do you think the U.S. can be for Bragg next year?

A: It's a combination of increased market coverage, strengthened executive team, and better content pipeline. The U.S. could become a meaningful part of revenue concentration in the coming year, potentially in double-digit percentage of total revenue.

Q: Hi. This is Jack Codera calling in for Jack Vander Aarde. Thanks for taking my question. Given that you’re kind of ready for this day one regulated Brazil, do you have any view on what portion of that market you will be able to capture? And any view on an estimate of how meaningful that market will be relative to your existing markets?

A: It's too early to determine exact market share, but existing relationships and plans for PAM in Brazil suggest significant revenue increase and importance of the market for Bragg.

Q: Does Bragg have a perspective on whether it be B2B or B2C on how crypto is affecting the market? Do you see any strategic moves that the market’s adopting that might have a sort of headwind or tailwind effect to your business?

A: Regulators may consider crypto as a depositing/withdrawing method over time, which would be a net positive as it increases TAM and GER in regulated jurisdictions, benefiting Bragg.