• Total Revenue: EUR 26.2 million, a 15.9% increase compared to Q3 2023.
• Gross Profit: EUR 14 million, up 18% year over year.
• Gross Profit Margin: 53.5%, an increase of 99 basis points.
• Adjusted EBITDA: EUR 4.1 million, a 7% increase.
• Adjusted EBITDA Margin: 15.6%, slightly lower than 16.9% in the same period last year.
• Proprietary Content Revenue Growth: 40% increase globally compared to Q3 2023.
• Cash and Cash Equivalents: EUR 11.6 million as of September 30, 2024.
• Net Working Capital: EUR 11.3 million, excluding deferred consideration and promissory note.
• Full Year Revenue Guidance: EUR 102 to 109 million.
• Full Year Adjusted EBITDA Guidance: EUR 15.2 to 18.5 million.

• Warning! GuruFocus has detected 4 Warning Signs with BRAG.

Release Date: November 14, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Bragg Gaming Group Inc (NASDAQ:BRAG) reported a 16% year-over-year increase in revenue for Q3 2024, reaching a record high of EUR 26.2 million.
• Gross profits grew by 18% to EUR 14 million, with a gross profit margin increase of 99 basis points to 53.5%.
• The company experienced a 40% increase in proprietary content revenue globally, driven by growth in the US market.
• Bragg Gaming Group Inc (NASDAQ:BRAG) successfully launched new partnerships and expanded existing ones, including with Caesars Entertainment in Pennsylvania and Ontario.
• The company is preparing for the launch of the regulated market in Brazil, indicating a strategic focus on expanding into new high-growth markets.

Negative Points

• The strategic review process concluded without any proposals that reflected the company's intrinsic value, indicating potential challenges in maximizing shareholder value through mergers or sales.
• Adjusted EBITDA margin decreased slightly to 15.6% from 16.9% in the same period last year.
• The company is tracking to the lower end of its full-year 2024 revenue and adjusted EBITDA guidance.
• There are new regulatory challenges in the Netherlands, including monthly deposit limits, which could impact revenue.
• Despite growth, the US market still represents a relatively small base, suggesting that significant scaling is needed to achieve meaningful revenue contributions.

Q & A Highlights

Q: Should we expect high double-digit revenue growth in Q4 to continue into 2025, and which markets will drive this growth? A: Robbie Bressler, CFO: Double-digit growth is achievable, with the US being a significant driver due to its compounding growth. We also have plans for Brazil's regulated market launch on January 1, 2025, which presents substantial revenue opportunities.

Q: Can you elaborate on the strategy for enhancing shareholder value? Are share purchases or M&A considered? A: Robbie Bressler, CFO: Share purchases are not the best use of capital currently. The focus is on commercializing our products, leveraging our strong pipeline, and investing in regional talent to drive sales.

Q: What factors contributed to the US market being your best quarter ever, and how significant will the US market be next year? A: Robbie Bressler, CFO: Increased market coverage and strategic hiring have enhanced our market penetration. We expect the US to become a significant part of our revenue, potentially reaching double-digit percentages of total revenue.

Q: How will gross margins and EBITDA margins evolve next year? Will growth be smooth or weighted towards the second half? A: Robbie Bressler, CFO: Margin growth is expected over time, driven by product mix and proprietary content. Specific timing will be clearer in early January when we provide 2025 guidance.

Q: What is your outlook for the Brazilian market post-regulation, and how significant will it be for Bragg? A: Matevz Mazij, CEO: While exact numbers post-regulation are uncertain, we expect significant revenue growth. We are well-positioned to be a leading platform in Brazil, with plans to launch our PAM in the next 12-24 months.

Q: How is the crypto market affecting your business, and do you see any strategic moves in this area? A: Robbie Bressler, CFO: Currently, regulators are not accepting crypto for deposits in regulated gaming. However, if this changes, it could positively impact us by increasing gaming activity in regulated jurisdictions.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.