New Proprietary Online Content and New
Market Entry to Drive Near- and Long-Term Growth
Raises Full Year 2021 Revenue Guidance to
EUR €49.0 million (USD $57.8 Million2) and
Adjusted EBITDA of EUR €5.4 million (USD $6.4 million) and
Initiates Full Year 2022 Revenue Guidance
Bragg Gaming Group (TSX:BRAG, OTC: BRGGF) ("Bragg" or the
"Company"), a global B2B gaming technology and content provider,
today reported its financial results for the second quarter ended
June 30, 2021 and provided an update on its strategic growth
initiatives.
Summary of Q2-21 Financial and Operational
Highlights
Euros (Thousands)
Q2-21
Q2-20
% Change
Revenue
€15,491
€12,145
27.6%
Adjusted EBITDA
€1,900
€1,751
8.5%
Adjusted EBITDA margin
12.3%
14.4%
-2.1%
Operational
Q2-21
Q2-20
% Change
Wagering revenue (Euros)
€3.8B
€3.3B
15.9%
Unique players3
2.3M
1.9M
21.0%
Revenue / top 10 customers
57%
64%
-11.3%
Select Recent Strategic Development Progress
- Bragg completed the acquisition of Wild Streak LLC (“Wild
Streak”) on June 2, 2021. Wild Streak, a leading U.S. and
European-focused proprietary casino content studio, provides Bragg
with a library of nearly 40 casino content titles as well as
expertise in game design, slot mathematics, and advanced game
mechanics and features. As of June 30, 2021 Wild Streak had seven
online casino games live in key iGaming markets including in New
Jersey, the UK and other regulated jurisdictions in Europe which
have helped grow Wild Streak’s revenues and Adjusted EBITDA by 149%
and 940%, respectively, in the first half of 2021 compared to the
same period in 2020. Bragg launched its first Wild Streak online
game in Michigan last month, to a strong player response.
The acquisition of Wild Streak will
significantly help transform the Company’s business going forward
as it continues to shift from primarily providing third-party
online gaming content to be predominantly focused on providing
in-house developed proprietary online gaming content that carry
higher gross profit margins. Wild Streak’s product roadmap
currently contemplates the release of six new games through the end
of 2021 and 12 new games next year.
- Bragg continues to make progress with the U.S. and Canadian
licensing process in connection with its previously announced,
pending acquisition of Spin Games LLC (“Spin Games”) and expects to
complete the acquisition in the fourth quarter, pending regulatory
approval from various U.S. states’ gaming commissions. The
technical integration between Spin Games and the Company’s Oryx Hub
distribution platform is complete and the combined offering will
deliver the benefits of Oryx’s advanced player engagement, data
tools and platform technology alongside Spin Games’ U.S. market
content and operator relationships, providing a differentiated and
widely distributed iGaming product offering.
Following completion of the transaction,
Bragg will gain access to key strategic operator relationships in
the U.S. where Spin Games has over 30 customers including leading
iGaming operators. The Company plans to leverage these
relationships to initially cross-sell its existing European casino
content followed by the new, proprietary online casino content
currently being developed to address the U.S. and Canadian markets.
Spin Games’ remote games server and casino content are fully
licensed and distributed in the U.S. states of New Jersey,
Pennsylvania and Michigan, and is licensed and pending go-live in
British Columbia, Canada. Spin Games has a proprietary content
portfolio of more than 30 in-house developed games, including
content in emerging and trending categories such as slots, video
poker, action bingo and keno. Spin Games will also augment Bragg’s
existing content portfolio with numerous popular third-party titles
from well-known, land-based slot manufacturers.
- Bragg’s Oryx Gaming is live in various European online gaming
markets, the largest of which by revenue contribution is Germany.
Following the new iGaming regulatory regime in Germany which became
effective on July 1, 2021, revenue contributions from Germany are
expected to decline in the second half of 2021 and into 2022
compared to historical levels. These changes are fully anticipated
in Bragg’s growth forecasts and are expected to be offset by strong
growth in both new and existing markets as well as from new
clients, from increased profit margins as a result of the Company’s
focus on developing more proprietary content, and from
acquisitions. Bragg continues to make progress with diversifying
its European market penetration including recent activations in
Spain, Denmark and Greece, as well as being fully prepared to enter
the Netherlands when the newly regulated market opens, anticipated
on October 1, 2021.
- The Company is expanding into new global online gaming markets
including Europe’s two largest iGaming markets, the U.K. and Italy,
and the Company expects to obtain appropriate licenses and
certification for both of these countries in Q4 2021. In the U.S.,
the Company is in the process of applying for licenses in New
Jersey, Pennsylvania and Michigan. Overall, the Company expects to
move from supplying its products in markets with a combined total
addressable market (“TAM”) for online casino of US$2.8 billion in
2021, to markets with a combined online casino TAM of US$18.4
billion in 2022, presenting significant revenue uplift
opportunities.
- During the quarter The Company launched eleven new exclusive
games via its Oryx remote games server in partnership with
third-party studios, and two new proprietary games from its
in-house Oryx Gaming studio. In addition, Wild Streak launched two
new games during the quarter.
- The Company expects to increase its output of games produced
from its in-house studios, which capture a greater share of the
value chain compared to the distribution of third-party games.
Illustrating this progress, in 2020 the Company released zero games
developed by in-house studios and this year it expects to release
five games in Europe from its proprietary Oryx Gaming studio,
representing 11% of all exclusive games released via the Oryx
remote games server (“RGS”) this year. In 2022, the Company’s Oryx
Gaming studio expects to release 19 proprietary games in Europe,
representing 33% of exclusive games released via the Oryx RGS in
the region that year. In addition, in 2022 the Oryx Gaming studio
expects to release four proprietary games in the U.S., and the
Company’s Wild Streak studio expects to release ten proprietary
games in the U.S. for a total of 14 fully-owned online slot game
titles expected to go live in the region, and representing 37% of
all exclusive games expected to be launched by the Company in the
U.S. in 2022. The increased proportion of in-house games released
is expected to benefit the Company’s gross profit margin
profile.
- As previously disclosed, Bragg has submitted an application to
list its common shares on the Nasdaq Stock Market.
“Bragg had strong 2021 second quarter financial performance
while also continuing to advance our in-house content development
strategy and new market entry plans, including entry into the North
American market, while also making progress on our Germany
mitigation strategies. Overall, our comprehensive growth
initiatives are expected to contribute to revenue and Adjusted
EBITDA growth over the balance of this year and more meaningfully
in 2022,” said Richard Carter, CEO of Bragg Gaming Group. “Second
quarter revenue rose 27.6% to EUR €15.5 million (USD $18.3
million), generating Adjusted EBITDA of EUR €1.9 million (USD $2.2
million) representing year-over-year Adjusted EBITDA growth of
8.5%. Our effectiveness in helping online casino operators connect
with players is clearly reflected in the 21% year-over-year
increase in the number of unique players using Bragg content, and
in the 41 new customers using our games and services we’ve added
over the last twelve months.
“Throughout the second quarter, we made meaningful progress with
our strategic growth initiatives including expanding existing
customer relationships, building out a pipeline of premium in-house
iGaming content, and providing our content and offerings to new
markets throughout North America and Europe. These and other
strategies are transforming Bragg into a leading content focused,
B2B iGaming provider and will help drive growth as we leverage our
scalable technology stack, which features industry unique player
engagement tools, and proprietary intellectual property to address
the burgeoning global online casino markets. We believe our growth
initiatives will not only help to rapidly mitigate the near-term
impact from the new Germany regulatory structure, but more
importantly will help drive our execution on future revenue growth
opportunities and lead to significant expansion of our EBITDA
margins over the medium term."
“Our recent acquisition of Wild Streak brings to Bragg a
fast-growing leading game development studio with a strong online
content pipeline and expands on the in-house development
capabilities of our Oryx Gaming studio. Wild Streak currently has
seven online games live in New Jersey and other non-U.S. markets
including Dragon Power, which has been a top performing title in
New Jersey since its release in May 2020. In the six-month period
ending June 30, 2021, Wild Streak’s online gaming revenue has risen
rapidly, and we expect ongoing growth as their pace of new game
introductions increases going forward."
“Further, our pending acquisition of Spin Games LLC (“Spin
Games”) will accelerate our entry into North American iGaming
markets, help us port high-performing European online content into
North America, and bring a wealth of U.S. market and compliance
expertise to Bragg. We expect our pipeline of internally developed
premium content will increase to 33 new online games in 2022 up
from five games produced by our Oryx Gaming studio in 2021. Our
ability to develop and commercialize our own game content and marry
it with our leading player engagement tools such as tournaments and
jackpots is one of our highest priorities as this combination
offers significant economic advantages, boosting wagers and
generating greater gross profit margins when compared to the
distribution of third-party content."
“As we continue to transition to the distribution of internally
developed content, we remain focused on growing the number of
markets we serve. We are moving forward with further expansion in
the U.S. and preparing for the introduction of our games in Ontario
when that market opens, which is expected before year-end. While we
will continue to serve the German market, we are diversifying away
from our historic revenue concentration in that market based on our
entrance into new North American and international iGaming markets
such as the U.K. and Italy, which are the two largest European
markets. Our market expansion and revenue diversification
initiatives will help offset the anticipated revenue decline in
Germany related to the new regulatory regime, as reflected in our
expectation that full year 2021 revenues will rise 5.6%
year-over-year. We expect our entry into new markets will be a
significant driver of growth throughout 2022 as we expect to
increase the TAM we can address more than 500% to over US$18
billion.”
Mr. Carter concluded, “Bragg possesses many competitive
advantages including proprietary, modern technology and development
resources that enable us to innovate rapidly and develop content
quickly. With our technology platform, growing proprietary premium
content portfolio, value-added player engagement tools, and global
distribution capabilities, we believe Bragg is well positioned to
capture a growing share of the large global iGaming market. These
factors, combined with our low capitalized expenditure requirements
and predominantly fixed cost operating model, will enable Bragg to
grow revenue and Adjusted EBITDA margins that results in near and
long-term Adjusted EBITDA growth and creates value for our
shareholders.”
Second Quarter 2021 Financial Results and other Key Metrics
Highlights
- Revenue increased by 27.6% to EUR €15.5 million (USD $18.3
million) in Q2 2021 compared to EUR €12.1 million (USD $14.3
million) in Q2 2020, inclusive of 28 days of contributions from
Wild Streak.
- Wagering revenue generated by customers increased 15.9% to EUR
€3.8 billion (USD $4.5 billion) compared to EUR €3.3 billion (USD
$3.9 billion) in Q2 2020.
- The number of unique players[4] using Bragg games via its Oryx
Hub distribution platform and content increased by 21.0% to 2.3
million, from 1.9 million in Q2 2020.
- Gross profit increased by 37.5% to EUR €7.0 million (USD $8.3
million) from EUR €5.1 million (USD $6.0 million) in Q2 2020,
reflecting higher revenue and a 3.3% margin improvement to 45.4%.
The margin expansion is primarily the result of the continued
revenue mix shift towards a higher proportion of revenues from
iGaming and turnkey services, which have lower associated cost of
sales when compared to games and content.
- Net loss for the period was EUR €2.3 million (USD $2.8
million), an increase of EUR €1.9 million (USD $2.3 million) from
Q2 2020, primarily due to incremental increase in employee costs,
exceptional professional fees as a result of the Nasdaq listing
efforts, offset by increased gross profit and a reduction in costs
in relation to deferred consideration payable.
- Adjusted EBITDA was EUR €1.9 million (USD $2.2 million), up
8.5% compared to EUR €1.8 million (USD $2.1 million) in Q2 2020,
and the Adjusted EBITDA margin decreased by 2.1% to 12.3%,
reflecting increased salary and subcontractors’ costs as part of
the Company’s investment in the expansion of its software
development, product and management functions.
- Cash and cash equivalents as of June 30, 2021 was EUR €21.0
million (USD $24.7 million)
Raises Full Year 2021 Guidance and Initiates Full Year 2022
Revenue Guidance
Bragg today provided full year revenue and Adjusted EBITDA
guidance, inclusive of contributions from Wild Streak. The Company
expects revenue of EUR €49 million (USD $57.8 million) and Adjusted
EBITDA of EUR €5.4 million (USD $6.4 million), compared to its
prior, pre-acquisition guidance of revenue of EUR €47 million (USD
$55.5 million) and Adjusted EBITDA of EUR €4 million (USD $4.7
million). This also compares to 2020 full year revenue and Adjusted
EBITDA of EUR €46.4 million (USD $54.8 million) and EUR €5.5
million (USD $6.5 million), respectively. In addition, Bragg
initiated full year revenue guidance for 2022 of EUR €54 million to
EUR €56 million (USD $63.7 million to USD $66.1 million).
Investor Conference Call
The Company will host a conference call today, August 11, 2021,
at 8:30 a.m. Eastern Time, to discuss the second quarter 2021
results. During the call, management will review a presentation
that will be made available at http://www.bragg.games/investors a
few minutes before the start of the call.
To join the call, please use the below dial-in information:
US/Canada: (844) 965-3274 UK: 0203 547 8613 / 0800 051 7107
International: (639) 491-2382 Passcode: 7796169
A replay of the call will be available for seven days following
the conclusion of the live call. In order to access the replay,
dial (416) 621-4642 or (800) 585-8367 (toll-free) and use the
passcode 7796169.
Cautionary Statement Regarding Forward-Looking
Information
This news release may contain forward-looking statements or
"forward-looking information" within the meaning of applicable
Canadian securities laws ("forward-looking statements"), including,
without limitation, statements with respect to the following: the
Company's strategic growth initiatives and corporate vision and
strategy; financial guidance for 2021 and 2022, expected
performance of the Company's business; expansion into new markets;
the impact of the new German regulatory regime, expected future
growth and expansion opportunities; expected benefits of
transactions, including the acquisition of Wild Streak and Spin;
expected future actions and decisions of regulators and the timing
and impact thereof. Forward-looking statements are provided for the
purpose of presenting information about management’s current
expectations and plans relating to the future and allowing readers
to get a better understanding of the Company's anticipated
financial position, results of operations, and operating
environment. Often, but not always, forward-looking statements can
be identified by the use of words such as "plans", "expects" or
"does not expect", "is expected", "budget", "scheduled",
"estimates", "forecasts", "intends", "anticipates" or "does not
anticipate", or "believes", or describes a "goal", or variation of
such words and phrases or state that certain actions, events or
results "may", "could", "would", "might" or "will" be taken, occur
or be achieved.
All forward-looking statements reflect the Company's beliefs and
assumptions based on information available at the time the
statements were made. Actual results or events may differ from
those predicted in these forward-looking statements. All of the
Company's forward-looking statements are qualified by the
assumptions that are stated or inherent in such forward-looking
statements, including the assumptions listed below. Although the
Company believes that these assumptions are reasonable, this list
is not exhaustive of factors that may affect any of the
forward-looking statements. The key assumptions that have been made
in connection with the forward-looking statements include the
following: the impact of COVID-19 on the business of the Company;
the closing of the acquisition of Spin; the integration of Wild
Streak; the regulatory regime governing the business of the
Company; the operations of the Company; the products and services
of the Company; the Company's customers; the growth of Company's
business, the meeting minimum listing requirements of Nasdaq; which
may not be achieved or realized within the time frames stated or at
all; the integration of technology; and the anticipated size and/or
revenue associated with the gaming market globally.
Forward-looking statements involve known and unknown risks,
future events, conditions, uncertainties and other factors that may
cause actual results, performance or achievements to be materially
different from any future results, prediction, projection,
forecast, performance or achievements expressed or implied by the
forward-looking statements. Such factors include, among others, the
following: risks related to the Company’s business and financial
position; that the Company may not be able to accurately predict
its rate of growth and profitability; the risks associated with the
completion of the acquisition of Spin and ability to satisfy
closing conditions; risks associated with the integration of Wild
Streak; risks associated with general economic conditions; adverse
industry events; future legislative and regulatory developments;
the inability to access sufficient capital from internal and
external sources; the inability to access sufficient capital on
favorable terms; realization of growth estimates, income tax and
regulatory matters; the increased costs associated with meeting the
minimum listing requirements on Nasdaq; the ability of the Company
to implement its business strategies; competition; economic and
financial conditions, including volatility in interest and exchange
rates, commodity and equity prices; changes in customer demand;
disruptions to our technology network including computer systems
and software; natural events such as severe weather, fires, floods
and earthquakes; and risks related to health pandemics and the
outbreak of communicable diseases, such as the current outbreak of
COVID-19. Although the Company has attempted to identify important
factors that could cause actual actions, events or results to
differ materially from those described in forward-looking
statements, there may be other factors that cause actions, events
or results not to be as anticipated, estimated or intended. There
can be no assurance that forward-looking statements will prove to
be accurate, as actual results and future events could differ
materially from those anticipated in such statements. Accordingly,
readers should not place undue reliance on forward-looking
statements.
The Company disclaims any intention or obligation to update or
revise any forward-looking statements whether as a result of new
information, future events, or otherwise, except in accordance with
applicable securities laws.
Non-IFRS Financial Measures
Statements in this news release make reference to "Adjusted
EBITDA", which is a non-IFRS (as defined herein) financial measure
that the Company believes is appropriate to provide meaningful
comparison with, and to enhance an overall understanding of, the
Company's past financial performance and prospects for the future.
The Company believes that "Adjusted EBITDA" provides useful
information to both management and investors by excluding specific
expenses and items that management believe are not indicative of
the Company's core operating results. "Adjusted EBITDA" is a
financial measure that does not have a standardized meaning under
International Financial Reporting Standards ("IFRS"). As there is
no standardized method of calculating "Adjusted EBITDA", it may not
be directly comparable with similarly titled measures used by other
companies. The Company considers "Adjusted EBITDA" to be a relevant
indicator for measuring trends in performance and its ability to
generate funds to service its debt and to meet its future working
capital and capital expenditure requirements. "Adjusted EBITDA" is
not a generally accepted earnings measure and should not be
considered in isolation or as an alternative to net income (loss),
cash flows or other measures of performance prepared in accordance
with IFRS. Adjusted EBITA is more fully defined and discussed, and
reconciliation to IFRS financial measures is provided, in Company's
Management's Discussion and Analysis ("MD&A") for the second
quarter ended June 30, 2021.
About Bragg Gaming Group
Bragg Gaming Group (TSX:BRAG, OTC: BRGGF) ("Bragg") is a growing
global gaming technology and content group and owner of leading B2B
companies in the iGaming industry. Since its inception in 2018,
Bragg has grown to include operations across Europe, North America
and Latin America and is expanding into an international force
within the global online gaming market.
Bragg’s ORYX Gaming delivers proprietary, exclusive and
aggregated casino content via its in-house remote games server
(RGS) and ORYX Hub distribution platform. ORYX offers a full
turnkey iGaming solution, including its Player Account Management
(PAM) platform, as well as managed operational and marketing
services.
Nevada-based Wild Streak Gaming is Bragg's wholly owned premium
U.S. gaming content studio. Wild Streak has a popular portfolio of
casino games that are offered across land-based, online and social
casino operators in global markets including the U.S. and UK.
In May 2021, Bragg announced its planned acquisition of
Nevada-based Spin Games, B2B gaming technology and content provider
currently servicing the U.S. market. Spin holds licenses in key
iGaming-regulated U.S. states and supplies Tier 1 operators in the
region. Find out more.
__________________________________
1 Adjusted EBITDA is a non-IFRS measure. For important
information on the Company’s non-IFRS measures, see “Non-IFRS
Financial Measures” below. 2 Bragg Gaming’s reporting currency is
Euros. The exchange rate provided for U.S. dollars is 1.18. Due to
fluctuating currency exchange, this rate is provided for
convenience only. 3 “Unique players" are defined as individuals who
made a real money wager at least once during the period.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210811005337/en/
Yaniv Spielberg Chief Strategy Officer Bragg Gaming Group
info@bragg.games
Joseph Jaffoni, Richard Land, James Leahy JCIR 212-835-8500 or
bragg@jcir.com
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