Bragg Gaming Group (TSX:BRAG, NASDAQ:BRAG) posted third-quarter results that saw its revenue jump 9.9% year-over-year as its newest markets performed above expectations.
The Toronto-based global gaming technology and content group also raised its revenue and profit guidance for the current year and its revenue forecast for 2022.
For the period ended September 30, 2021, Bragg Gaming reported revenue of €12.9 million (US$15.2 million), compared to €11.7 million (US$13.8 million) in 3Q 2020, inclusive of a full quarter of contributions from Wild Streak.
The company noted that wagering revenue rose 4.8% to €3.2 billion (US $3.8 billion) compared to €3 billion (US$3.6 billion) in the third quarter a year earlier. Similarly, the number of unique players using Bragg games through its Oryx Hub content distribution platform shot up 14.4% to 2.1 million, from 1.9 million in the same period a year earlier.
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Significantly, gross profit increased by 30.1% to €6.6 million (US$7.8 million) from €5.1 million (US$6 million) in the quarter, reflecting higher revenue and an 8-basis point margin improvement to 51.4%. The company chalked up the margin expansion to the “continued 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”.
The company narrowed its net loss for the quarter by €0.7 million to €2.5 million (US$2.9 million) due to the higher gross profit and a reduction in costs related to deferred consideration payable, partially offset by an increase in employee costs and fees related to the company’s listing on the Nasdaq.
Bragg Gaming had cash and equivalents as of September 30, 2021, of €20.3 million (US$24 million).
“Bragg’s strong 2021 third-quarter financial performance and our increased guidance reflects the contributions from our comprehensive growth initiatives, including the consistent progress we have achieved with new market diversification and our ability to offer more new high-performing propriety and exclusive third-party online content,” Bragg Gaming CEO Richard Carter said in a statement.
“During the 3Q, our newest markets performed above our expectations and this momentum continues in the current quarter. Besides the benefits from new market penetration, our recent proprietary games from our in-house development studios are also driving growth.”
Carter noted that the company’s technology advantages, combined with its ability to offer an increasing number of proprietary and third-party exclusive games, are likely to drive strong financial results as the company continues to expand into new North American and European markets.
“This includes the further penetration of our more recently entered markets such as the Netherlands where we have quickly achieved an attractive double-digit market share. Overall, our market expansion initiatives are expected to increase our total addressable market six-fold in 2022 to more than US$18 billion,” added Carter. “Our acquisition of Spin Games, which we expect to complete by year end, will also help accelerate our entry into North American iGaming markets.”
The company said it intends to increase the number of proprietary online games developed by its internal development studios, as well as the number of exclusive third-party games.
“From zero in-house developed games in 2020, we have established a strong proprietary new game pipeline and expect that an increasing proportion of our exclusive titles launched next year will be internally developed,” said Carter.
Raises 2021 revenue guidance
Bragg raised its outlook for full-year 2021 expected revenue to €55-56 million (US$65-66 million) and adjusted EBITDA, or earnings before interest, taxes, depreciation, and amortization, to €6.6-6.8 million (US$7.8-8 million), compared to its previously provided revenue and adjusted EBITDA full-year outlook of €49 million (US$57.8 million) and €5.4 million (US$6.4 million), respectively.
In addition, the company raised its full year 2022 revenue guidance to a new range of €59-61 million (US$70-72 million), compared to the initial expected range of €54 million to €56 million (US$63.7 million to US$66.1 million).
“Our updated guidance highlights the momentum we are achieving in our business…driven by our growth initiatives focused on entering new markets, adding new clients and developing and releasing more proprietary titles,” said Carter.
Content licensing deal with Bluberi
In a separate statement, Bragg Gaming said it has forged an exclusive global content licensing agreement with Bluberi, a popular casino gaming content provider based in Las Vegas.
Backed by more than 25 years of industry experience, Bluberi boasts a library of over 100 titles developed for land-based Class II, Class III, and tribal lottery system (TLS) markets, including popular titles such as Colossal Dragons and Waves of Fortune.
Content from Bluberi’s extensive portfolio of slot games will be adapted for the online market by an experienced team led by Doug Fallon, who is the Bragg group director of content and founder of Wild Streak Gaming, the premium Las Vegas-based content studio acquired by Bragg in June 2021.
The agreement allows for distribution of Bluberi’s portfolio of player-popular land-based content through Bragg’s network across Europe and North America. “The agreement allows for omni-channel distribution whereby the same games can be offered to land-based and online operators,” said the company.
“Adapting popular land-based titles for distribution in the online space is an initiative we have already seen huge success with via the games developed by our Wild Streak studio,” said Carter. “Bluberi’s slot content portfolio continues to grow in popularity with land-based players, and we are excited to now be able to add their titles to our rapidly growing omni-channel offering.”
Contact the author Uttara Choudhury at uttara@proactiveinvestors.com
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