Bragg Gaming Group Inc. Q2 FY2025 earnings call

• Operational updates: Revenue grew 4.9% Y/Y, gross profit up 10.8% Y/Y with margin at 52.7%, adjusted EBITDA down 4.3% Y/Y. Prioritizing margin and cash flow over aggressive revenue expansion. - Cost synergies: Advancing planned realization of cost synergies, expected to provide EUR 2 million in annualized cash savings. - Netherlands performance: Outperforming in a challenging regulatory environment, down 17% vs 25% industry decline. - U.S. market: Proprietary online casino content saw 270% GGR increase Y/Y; launched in New Jersey, Pennsylvania, and Michigan; Ohio, Illinois, and New York seen as key battleground states. - Brazil: Launched on first day of regulated market opening, 56% pro forma revenue growth Y/Y; strategic investment in RapidPlay. - Key hires: Scott Milford as EVP, Group Content; Luka Pataky as EVP of AI and Innovation; launched AI-first initiative to be AI-first by 2027.

In Q2 2025, revenue was $26.1 million, a 4.9% year-over-year increase. Excluding the Netherlands, growth was 21%. Gross profit grew by 10.8% year-over-year to EUR 13.7 million, with a gross profit margin increasing by 280 basis points to 52.7%. Adjusted EBITDA for Q2 2025 was EUR 3.5 million, a decrease of 4.3% from the same period in 2024. The PAM and turnkey segments generated $3.8 million, which was 14.6% of total revenue. Aggregated content made up 49.4% of revenue, and proprietary content contributed 14.8% of total revenue in Q2 2025, up significantly from 10.8% a year ago.

• Revised full-year guidance: Revenue expected to be EUR 106 million to EUR 108.5 million, adjusted EBITDA EUR 16.5 million to EUR 18.5 million. - Midpoint of revised range shows adjusted EBITDA margin within 0.5% of previous guidance. - Focus on margin-accretive product mix and cash generation; expect adjusted EBITDA margins to be a few points higher in second half of 2025 vs first half.

• Regulatory changes in the Netherlands affecting the market. - Increasing gaming taxes in key markets like Brazil, the Netherlands, and Romania. - Market stagnation in some regions due to competition (e.g., online lottery in states with iGaming). - FX impact, with euro weakening against the U.S. dollar having a slight impact on guidance.

Q: A lot of good partnership wins in the U.S. year-to-date and a lot of positive commentary on the call around that part of the business. As I look at the results in the second quarter, revenue down about 50%. Can you maybe just help us bridge some of the revenue contribution from Hard Rock and Caesars that you saw in the first quarter and then just kind of performance as we headed into the second quarter? Then maybe you originally gave a guidance or you gave the outlook of that could potentially be 15% of revenue for the full-year. Maybe just where that stands today?

A: Sure, Jordan. Thanks for the question. Yes, I do think that there is a path for us to get to that 15% marker, as we previously mentioned, of our 2025 revised revenue targets now. We do think the Hard Rock deal will continually add revenue through the second half of this year. That's factored into our revised guidance, as well as where we think the -- how Caesars will perform in the second half of the year. We are very optimistic of what we've seen in the U.S. The U.S. iCasino market is just flourishing immensely. We're still seeing really strong growth in the states where both iCasino and sports are regulated. iCasinos continually outperformed. We do believe that the U.S. -- our U.S. focus is paying off and will continually pay off for us as we continue to gain market share.

Q: Then just maybe 2 follow-ups here. One, in the press release, you talked about highly accretive growth opportunities ahead for the business. You kind of touched on a few during the call, but maybe can you just consolidate how you're thinking about what these future opportunities might look like specifically? Then the second follow-up is, was there any FX impact to guidance for the full-year?

A: Yes. In terms of FX, yes, there's a slight impact. The euro has weakened against the U.S. dollar. We're seeing a bit of an impact there, but I'd say not a big pervasive impact. Sorry, remind me of the first part of your question?

Q: Just around, in the press release, you said the highly accretive growth opportunities. Can you just maybe elaborate or expand on how you think about those opportunities?

A: Yes. Really, where we see highly accretive opportunities for our business is on the proprietary content side. We really are upping our game. We brought in Scott Milford from Aristocrat. We're really increasing our bench strength and what we can do and what we can produce on the proprietary content side. I think we've done -- actually, I'm confident we've done a great job to penetrate the U.S. market. I think we have a lot of growth opportunity to do that in other markets where we have dominant positions. The Netherlands specifically, although it is a contracting market, we are outperforming the market in the sense that -- the total market is down 25%, but we're only down 18%. We still see the Netherlands as a great opportunity for us to keep pushing good proprietary content and further move our profitability. That's where we're focused, looking at the assets that we have, looking at the positions we have in markets and how best do we leverage that to promote what we see as our most profitable product, proprietary content.