Bragg reports record second quarter financial results
Bragg Gaming Group has reported record financial results for the second quarter ended June 30. The Company also provided an update on its growth initiatives and raised its full year 2022 revenue and Adjusted EBITDA guidance.
Yaniv Sherman, chief executive officer for Bragg Gaming Group, said: “Our strong second quarter results include significant year-over-year growth, as well as quarterly-sequential improvements for revenue, gross profit, gross profit margin and Adjusted EBITDA.”
“In the 2022 second quarter, we generated quarterly records for revenue of EUR €20.8 million (USD $21.3 million), gross profit of EUR €11.6 million (USD $11.9 million), gross profit margin of 55.9%, and Adjusted EBITDA of EUR €3.1 million (USD $3.2 million). Our operating momentum highlights our continued success in serving a growing base of customers in an expanding number of regulated global iGaming markets, with turnkey iGaming solutions that power their businesses, including proprietary and exclusive third-party content.
Sherman added: “Following the completion in June of our acquisition of Spin Games, Bragg possesses the product development capabilities, industry expertise and licensed footprint across Europe and North America to achieve further and consistent progress on our content and market expansion growth initiatives. Our content development and distribution efforts, led by our four in-house game studios, are focused on leveraging proprietary design, game mechanics and math capabilities to develop games that address local player preferences across European and North American markets. We expect to release approximately 22 proprietary games this year representing a 120% increase from 2021, with our game development roadmap poised to accelerate our new game releases next year and beyond. In addition, we will supplement our internal game development efforts with agreements for Bragg to exclusively distribute games from established popular third-party studios. We expect our execution against our content development and distribution strategy will result in a higher level of desirable ‘real estate’ allocation on leading iGaming operators’ sites, leading to higher player engagement that drives further top-line growth and margin improvement.
“The North American iGaming market continues to grow. We expect to leverage our expertise and differentiated product and technology advantages to drive consistent growth with leading operators in these markets. This includes content localization and customization that addresses popular online and land-based themes.”
Sherman concluded: “Reflecting our strong performance through the first half of the year and our ongoing business momentum, we are raising our guidance for 2022 full year revenue and Adjusted EBITDA to new ranges of EUR €76-80 million (USD $78-82 million) and EUR €10-11 million (USD $10-11 million), respectively. As demonstrated by our operating results to-date in 2022, our success with these efforts is driving strong top-line growth and margin improvement, highlighting our ability to deliver near- and long-term shareholder value.”
Second Quarter 2022 Financial Results and other Key Metrics Highlights
Revenue increased by 34.2% to EUR €20.8 million (USD $21.3 million) compared to EUR €15.5 million (USD $15.9 million) in 2Q21.
Wagering revenue generated by customers of €EUR 4.2 billion (USD $4.3 billion) increased from EUR €3.8 billion (USD $3.9 billion) in 2Q21. Wagering revenue in 2Q22 reflects a change in product mix towards PAM, managed services and proprietary content, resulting in improved gross profit and Adjusted EBITDA.
Gross profit increased 65.5% to EUR €11.6 million (USD $11.9 million) from EUR €7.0 million (USD $7.2 million) in 2Q21, reflecting higher revenue and a 1,060 basis point year-over-year margin improvement to a quarterly record 55.9%.
The margin expansion is primarily the result of 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 higher mix of iGaming revenues includes an increase in revenues from proprietary games which have no cost of sales.
Net income for the period was EUR €0.1 million (USD $0.1 million), an improvement from net loss of EUR €2.3 million (USD $2.4 million) in 2Q21, primarily due to higher gross profit and lower professional fees and transactional costs, partially offset by an incremental increase in employee costs, sales and marketing expense, and higher depreciation and amortization.
Adjusted EBITDA was EUR €3.1 million (USD $3.2 million), an increase of 62.9% compared to EUR €1.9 million (USD $1.9 million) in 2Q21. Adjusted EBITDA margin increased by 260 basis points to 14.9%, reflecting the Company’s increased scale and an improvement in the product mix of iGaming and turnkey services. Adjusted EBITDA margin decreased by 40 basis points on a quarterly sequential basis.
Cash and cash equivalents as of June 30, 2022 was EUR €11.0 million (USD $11.3 million) which reflects the EUR €9.0 million (USD $9.2 million) paid in the quarter for the acquisition of Spin Games.
Bragg raised its outlook for 2022 full year expected revenue and Adjusted EBITDA to new ranges of EUR €76-80 million (USD $78-82 million) and EUR €10-11 million (USD $10-11 million), respectively. The midpoints of the 2022 revenue and Adjusted EBITDA guidance ranges represent growth of 34% and 46%, respectively, over the reported full year 2021 revenue and Adjusted EBITDA. The higher 2022 Adjusted EBITDA outlook includes the impact of continued investments in the business focused on driving further top-line growth. Bragg’s prior guidance for the 2022 full year was for revenue of EUR €68-72 million (USD $70-74 million) and Adjusted EBITDA of EUR €9.5-10.5 million (USD $9.7-10.7 million).