Bragg Gaming Group has reported a drop in gross profit and adjusted EBITDA in the first quarter of 2024, with the latter declining by over 10 per cent year-over-year.
Explaining the decrease, CEO Matevž Mazij stated that it was due to an extension and renegotiation of its agreement with Entain to provide its PAM platform to BetCity.nl, but the group is confident in its long-term growth and profitability.
In addition, Mazij said the igaming technology provider is making “encouraging progress” regarding its strategic alternatives review process.
Q1 results
Publishing its Q1 results, Bragg declared a 4.2 per cent increase in revenue in comparison to the same period last year to €23.8m (Q1 2023: €22.9m).
Mazij noted that the YoY growth was attributed to organic growth from its current client base, the addition of new customers in multiple markets, as well as “impressive results” from its in-house Wild Streak Gaming casino games studio.
However, as previously mentioned, the group’s gross profit and adjusted EBITDA declined in comparison to the previous year.
Gross profit dropped by 2.8 per cent to €11.9m (2023: €12.2m) with a margin of 49.9 per cent (2023: 53.5 per cent), while adjusted EBITDA fell by 12.4 per cent to €3.4m (2023: €3.9m) with a margin of 14.3 per cent (2023: 17 per cent).
Mazij commented: “Although gross profit and adjusted EBITDA saw modest decreases in the first quarter, stemming from the extension and renegotiation of our agreement with Entain Plc to provide our PAM platform to BetCity.nl through 2025, we maintain a strong belief in our ability to achieve long-term growth and profitability.
“Our proprietary and exclusive third-party content continues to gain ground with an increasing number of top-tier operators globally, and we introduced a total of 19 new exclusive titles worldwide in the first quarter of 2024.
“Additionally, as we continue to make encouraging progress on our strategic alternatives review process, it’s important to emphasise that we are operating the business as usual and remain laser-focused on capitalising on growth opportunities.”
Bragg declared an operational loss for Q1 of €1.3m, down from operational income of €520,000 in Q1 2023 due to the “reduction in gross profit alongside increase in selling, general and administrative expenses and loss on remeasurement of deferred consideration”.
The group reported a net loss for the period of €1.9m, down from the net loss of €476,000 in Q1 2023.
Cash flow generated from operations came in at €2.7m, down YoY (2023: €3.6m) due to movement in working capital. As of March 31, cash and cash equivalents was €7.7m and net working capital, excluding deferred consideration and convertible debt, was €3.8m.
Future optimism
However, following the conclusion of the quarter, Bragg announced the issuance of a secured promissory note in the principal amount of €6.5m ($7m) from certain entities controlled by the company’s Managing Director of Group Content, Doug Fallon.
In addition, the group has appointed former Digital Gaming Corporation executive Neill Whyte as Chief Commercial Officer, bringing over 18 years of igaming experience to the company.
Bragg has also reiterated its 2024 full-year revenue guidance range of €102m to €109m and its full-year adjusted EBITDA range of €15.2m to €18.5m.
Mazij concluded: “While the strategic review process progresses, we remain bullish on the opportunities ahead as the trend of igaming regulation continues worldwide. We see exciting potential in newly regulating markets like Brazil, Peru and Finland, as well as untapped opportunities in regions like Africa that we are actively exploring.
“The strategic moves we have made have established Bragg as a vital content provider for premier international igaming operators, reinforcing our base for reliable and lucrative growth.
“Equipped with the appropriate strategies, financial resources, and talent, we are well-prepared to maintain our business momentum while pursuing initiatives that foster cash flow growth and deliver increased value to our shareholders.”