Bragg Gaming Group has announced the formation of an ad hoc special committee to review its strategic alternatives, including the possible sale of the company and its assets.
The special committee announcement comes alongside the igaming technology provider declaring growth across revenue, gross profit and adjusted EBITDA within its 2023 full-year financial statement, but declines year-over-year across these metrics in the fourth quarter.
Bragg’s board of directors have formed an ad hoc special committee to undertake a review of the company’s strategic alternatives.
To be chaired by independent board member Don Robertson, the special committee will consider and explore strategic alternatives, which may include the sale of the company or its assets, a merger, financing, further acquisitions or other strategic alternatives.
The provider added that a timetable for the completion of the strategic review process is yet to be set, nor have any decisions related to strategic alternatives been made, and there can be no assurances that any transaction will be completed.
Bragg Gaming’s 2023 growth
Publishing its financials, Bragg reported a Q4 revenue decrease of 1.4 per cent to €23.4m (Q4 2022: €23.7m) which it says was impacted by “revised commercial terms agreed with a key strategic partner that took effect during the quarter”.
Wagering revenue during the quarter improved by 18.1 per cent to €6.1bn (Q4 2022: €5.1bn), while gross profit fell by 7.3 per cent to €12m (Q4 2022: €13m) with a margin of 51.5 per cent (Q4 2022: 54.9 per cent) due to the key strategic partner commercial terms revision mentioned earlier.
With a decline in gross profit being offset by cost optimisation improvements, adjusted EBITDA in Q4 decreased by 23.7 per cent to €2.8m (Q4 2022: €3.7m) with margins of 11.9 per cent (Q4 2022: 15.4 per cent).
Operational loss for the period stood at €400,000, a €600,000 decrease in comparison to the same period the previous year primarily due to the lower gross profit while reducing selling, general and administrative expenses.
During the quarter, Bragg launched its proprietary content, aggregation and Fuze player engagement in Brazil with Superbet, brought new content in New Jersey with BetMGM and also announced a PAM extension with BetCity.nl including content and product delivery.
For the full year, Bragg reported a 10.4 per cent revenue increase to €93.5m (2022: €84.7m), while wagering revenue increased to €22.4m (2022: €17.7m).
The company’s gross profit rose by 10.8 per cent to €49.9m (2022: €45.1m) with a margin of 53.4 per cent (2022: 53.2 per cent), while adjusted EBITDA improved by 26.3 per cent to €15.2m (2022: €12.1m) with a margin of 16.3 per cent (2022: 14.2 per cent).
Cash flow from operations stood at €11.7m, a €6m increase (2022: €5.8m), while cash and cash equivalents, as of December 31, 2023, was €8.8m and net working capital, excluding deferred consideration and convertible debt, was €5.1m.
Matevž Mazij, CEO for Bragg, commented: “Through Bragg’s strategic efforts to establish the business as a premier content-focused igaming B2B provider and our meticulous control over expenses, we achieved growth in revenue, gross profit, and adjusted EBITDA in 2023, along with a 210bps improvement in adjusted EBITDA margin to 16.3 per cent.
“These achievements are attributed, in part, to a reconfiguration of our revenue mix, favouring higher-margin products like internally developed proprietary content, and our comprehensive player account management platform, all while maintaining stringent cost control measures.”
Challenges in the Netherlands
Mazij highlighted Bragg’s “dominant position as the leading PAM provider” in the Netherlands, while also experiencing growth in the Czech market and exploring new opportunities for its offerings in other jurisdictions to continue growing globally.
However, the CEO brought attention to challenges faced in the Dutch market due to increased competition and new regulations coming into place.
He said: “Upon closer examination of the Dutch market, it is evident that challenges have arisen due to increased competition and new regulations since July. These challenges are expected to persist, with further adjustments anticipated in 2024.
“Additionally, in Q4 2023, the company extended its agreement with Entain Plc to supply its PAM platform to BetCity.nl, Entain’s Dutch igaming operator, until 2025. However, this extension required renegotiating terms.
“These dynamic variables reduce customer concentration, and at the same time our broader business is thriving and poised for sustained, increasingly profitable growth.”
2024 outlook
Looking at the year ahead, Bragg expects to maintain or exceed its pace of 2023 game releases in 2024.
Throughout last year, 29 new proprietary online titles were launched in online casino markets worldwide, including 26 titles in European markets and 15 titles in North American markets.
“By continuously expanding our portfolio of higher-margin proprietary and exclusive third-party games to a wider range of new partners at an accelerated pace, we are well positioned for long-term growth in top-line revenue, gross profit, and adjusted EBITDA, along with improved operating margins,” added Mazij.
Bragg has also provided an update on its 2024 full-year revenue and adjusted EBITDA guidance, with growth expected to occur in both metrics.
Revenue is expected to improve by up to 16.6 per cent to a range of €102m to €109m, while adjusted EBITDA is expected to grow by up to 21.7 per cent to a range of €15.2m to €18.5m. Midpoints of the revenue and adjusted EBITDA guidance represent YoY growth of 12.8 per cent and 10.9 per cent, respectively.
Mazij concluded: “Our strategic actions have positioned Bragg as an essential content source for leading international igaming operators, strengthening our groundwork for consistent and profitable development.
“With confidence, we affirm our readiness with the appropriate strategies, financial strength, and infrastructure to maintain our business momentum while executing initiatives that foster cash flow growth and generate added value for our shareholders.”
