Bragg sees net loss widen despite revenue growth in Q1

30 June 2020

Toronto-listed supplier Bragg Gaming Group has put a €5.7m (£5.2m/$6.4m) net loss in the first quarter primarily down to the remeasurement of deferred and contingent costs related to its acquisition of Oryx Gaming.

Revenue in the three months through to 31 March amounted to €8.8m, up 44% from €6.1m in the same period last year.

Bragg said that this growth was down to organic growth from its existing customer base, supported by the addition of new clients including Admiral Group, SkillOnNet and Lottoland.

Chief executive Dominic Mansour also noted the supplier’s focus on expanding its presence in the US igaming market, with plans to build on recent partnerships with Kambi and Seneca in the country.

“We’re very pleased that we've been able to build on the strong trajectory that we achieved in 2019,” Mansour said. “We’ve continued to emphasise revenue diversification and have delivered strong growth across our operators, with the introduction of new features and functionality on our platforms.

“We have continually improved our content pipeline and have signed multiple new customers globally.”

Looking at spending for the quarter, selling, general and administrative expenses were up 10% year-on-year to €4.1m.

Bragg said this was primarily due to the increase of salaries and subcontractors, which rose 35% to €2.4m as it expended its software development, product and analytics functions. Share-based payments spending in the period declined 85.7% from €700,000 to €100,000.

Gross profit for the quarter was up by 38% from €2.9m to €4.0m, while adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) rocketed by 100% to €800,000.

Bragg said this growth was underpinned by ongoing investment and innovation in its technology and product offering, including the hard launch of the Oryx Hub data analytics and customer engagement platform.

However, despite these increases, Bragg saw its net loss widen from €2.0m in Q1 of last year to €5.7m. The supplier said this was due to the “remeasurement of deferred and contingent consideration” due to the vendor of the Oryx purchase, which amounted to €5.0m in additional costs. 

Bragg annonuced in May that it had amended the earn-out due to KAVO Holdings, the business from which it acquired Oryx. The earn-out, originally due on 30 June, has been pushed back to 30 September, with Bragg engaging Canaccord Genuity to advise as it works on raising funds to make the payment.

Looking to the second quarter, Bragg said it has performed well in the period and expects revenue to increase 30% year-on-year as a result.

As such, Bragg said its full-year guidance remains unchanged, with the business on track to post between €35m and €38m in revenue, which would represent an increase of around 43% on the prior year. Adjusted EBITDA is also expected to climb from €1.2m in 2019 to between €5.2m and €5.6m.