Bragg Gaming Group Inc. Q2 FY2026 earnings call

Strategic Priorities

• The company's renewed group-wide strategy prioritizes margin and cash flow performance over aggressive revenue expansion, focused on core technology, content, and platform products.
• The long-term strategic direction remains: proprietary content first, AI-driven operations, reduced low-margin aggregation volume, and a transition from component supplier to ecosystem architect for operator platforms.

Restructuring and Cost Reduction

• On July 9, 2026, the company announced a further 19% reduction to its global workforce, adding €6 million in incremental annualized cash savings. Total expected annualized savings from combined 2026 restructuring now reaches €10.5 million.
• Gross compensation costs (pre-capitalization) decreased 14% year-over-year in Q2 2026, proving cost reduction measures are effective in maintaining margin through sequential revenue decline. Full annualized savings will fully flow through financial results starting in Q4 2026 and 2027 after one-time severance payments are completed.

Acquisitions and Governance Updates

• Bragg closed the acquisition of Drayton International after quarter end, with Matt Davey joining as non-executive chairman. Drayton expands Bragg's addressable market into advanced deposit wagering (ADW), which is available in over 30 US states, compared to traditional iGaming's presence in 7 US states. Drayton also brings an equity stake in 5 game development studios and 3 wholly-owned technology and distribution platforms, plus an AI module that aligns with Bragg's AI-first strategy to lower content creation unit costs.
• Don Robertson resigned from the board of directors, and Jordan Gnat, a 30-year gaming and sports media industry veteran and co-founder of Boardwalk Capital, will join the board in his place.

Commercial Operational Highlights

• Launched 80+ proprietary content titles on day one of Alberta's newly opened regulated Canadian market.
• Successfully launched proprietary content with Bet365 in the UK, marking strong penetration into the key market.
• Signed an agreement to power 7-Eleven's new Belgian online sportsbook, integrating Bragg's sportsbook and Fuse engagement tools.
• Supported Super Technology's SuperBet brand launch into the regulated Greek market via RGS and Hub aggregation.

Bragg Gaming Group reports overall Q2 2026 revenue of €22.9 million, a 12% year-over-year decrease from €26.1 million in Q2 2025. Gross profit came in at €11.8 million (51.7% gross margin), down from €13.7 million (52.7% gross margin) year-over-year. Adjusted EBITDA remained flat at €3.5 million, while adjusted EBITDA margin expanded to 15.4% from 13.3% year-over-year. For the first half of 2026, total revenue was €48.5 million (down 6% YoY), and adjusted EBITDA remained flat at €7.5 million. The proprietary content segment, Bragg's highest margin product, grew 44% year-over-year driven by strong traction in the US and Canadian North American markets. Other segment performance: Legacy turnkey contracts in the Netherlands declined 14% year-over-year following customer migration away from Bragg's PAM platform; Brazilian revenue was flat as suppliers moved to direct supply integrations, which reduced low-margin volume but improved retained revenue quality; other European markets saw lower revenue due to customer-specific factors and tighter local regulatory conditions.

• Bragg is withdrawing its full-year 2026 standalone guidance that was issued prior to the Drayton International acquisition, as the integration is still in early planning stages and management does not have a reasonable basis to provide a combined forecast at this time.
• Prior to withdrawal, standalone Bragg (excluding Drayton) was tracking below the low end of the prior revenue guidance range, at the low end of the prior adjusted EBITDA range, and at the upper end of the implied adjusted EBITDA margin range.
• Management's current focus is on integrating and optimizing the combined business, aligning product and technology roadmaps, realizing identified efficiencies, and establishing a long-term operating model and cost base before issuing new guidance.

• Top-line revenue weakness outside of the core North American proprietary content business stems from multiple headwinds: 1) Brazilian market softening, as third-party suppliers have transitioned from using Bragg as an intermediary to direct-to-operator supply, reducing low-margin intermediary revenue; 2) more impactful-than-expected regulatory changes in European jurisdictions including Croatia, which introduced tighter customer acquisition and advertising restrictions that hurt revenue; 3) softer development revenue from the Wild Street studio partnership; 4) ongoing legacy contract roll-off in the Netherlands following customer migration away from Bragg's PAM platform; 5) continued regulatory tightening across multiple European markets that suppresses regional revenue performance.
• The acquisition of Drayton International brings near-term forecasting uncertainty, as the combined business requires integration work to align product roadmaps, assess the independent trajectory of Drayton's five studio equity investments, and identify cross-business synergies.

Q: What is driving standalone revenue below prior guidance levels, and what is the current growth trajectory of the newly acquired Drayton business? / A: Three key unanticipated headwinds pushed revenue below the prior guidance range: suppliers in Brazil shifting to direct operator supply reducing Bragg's low-margin intermediary revenue, more impactful-than-expected advertising and customer acquisition regulatory changes in Croatia, and softer development revenue from the Wild Street studio partnership. Cost cuts have offset most revenue pressure, keeping adjusted EBITDA at the low end of the prior guidance range within margin targets. Drayton integration is still in early days, so management cannot yet provide specific growth details. Drayton aligns with Bragg's strategy by expanding US market reach to 30+ states via ADW, adding 100+ proprietary titles and five studios to shift the revenue mix to higher-margin IP, and adding AI tools that lower content production costs.

Q: Were any unanticipated new market catalysts or launches not factored into the original withdrawn guidance, and how will gross margin and operating expenses trend in the second half of 2026? / A: The Alberta market launch was already planned and factored into original guidance, with no new unanticipated market expansions. Management declined to provide detailed second half 2026 margin and OpEx guidance while integrating Drayton. The small Q2 2026 gross margin decline was driven by one-off items; excluding these items, core gross margin is ~55.7%, in line with prior levels and improving as the revenue mix shifts to higher-margin proprietary content.

Q: Why can't management provide standalone core business guidance after withdrawing combined guidance, when will the full €10.5 million in annual cost savings be realized, and what key milestones should investors watch for? / A: Management chose to withdraw all guidance because the Drayton acquisition is material to the combined business, and they want time to fully assess synergies and trajectories of Drayton's five separate studio investments before issuing a new forecast. Most one-time severance costs will be cleared by the end of 2026, with full annualized savings fully flowing through financial results starting in Q4 2026 and 2027. The key milestone to watch is continued high growth of North American proprietary content, which is already growing 44% year-over-year, as integration of Drayton's US-focused assets progresses.