Bragg Gaming (US:BRAG)2025-11-13 14:30Financial Data and Key Metrics Changes - In Q3 2025, revenue was EUR 26.8 million, up 2% year-over-year, with a strong 20% growth when excluding the Netherlands [9] - Gross profit increased 5% year-over-year to EUR 14.7 million, with gross margin improving 115 basis points to 54.7% [10] - Adjusted EBITDA grew 9% to EUR 4.4 million, with adjusted EBITDA margins rising 100 basis points to 16.6% [10] Business Line Data and Key Metrics Changes - Proprietary content revenue grew 35% year-over-year, making it the best-performing margin contributor [10][12] - The U.S. market accounted for half of the proprietary content revenue in Q3 2025, highlighting its significance [12] - Revenue from North America and Brazil together accounted for 22% of total revenue for the quarter, up from 12% a year ago [9] Market Data and Key Metrics Changes - The U.S. market saw an 86% year-over-year revenue growth, while Brazil experienced an 80% increase compared to the same period last year [6][16] - Non-Netherlands revenue is projected to rise from 51% in 2022 to 68% in 2025, indicating improved geographic diversification [15] Company Strategy and Development Direction - The company is focused on building a higher-margin, more diversified business, with a strategic emphasis on proprietary content [10][12] - Plans to optimize product mix and internal processes are in place to enhance margins and cash flow [11][17] - The company aims to capitalize on newly regulating jurisdictions, such as Finland, which is set to launch its regulated iGaming market in January 2027 [15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth potential of the U.S. online casino market, projected to grow from around $10 billion in 2025 to over $30 billion by 2030 [12] - The company maintains its full-year 2025 guidance, projecting revenue between EUR 106 million and EUR 108.5 million, and adjusted EBITDA between EUR 16.5 million and EUR 18.5 million [17] Other Important Information - The company secured a tier-one credit line with the Bank of Montreal, enhancing liquidity and lowering borrowing costs [7][11] - The Netherlands market remains impacted by regulatory changes, with revenue down 22% year-over-year, but the company is focused on growth in other markets [9][14] Q&A Session Summary Question: Thoughts on proprietary content growth and SG&A increase - Management indicated that there are opportunities for structure and process optimization, which should help in realizing operational leverage next year [21][22] Question: Impact of BetCity migration - The migration is expected to occur in the first half of the year, with minimal impact on earnings due to mitigation strategies [24] Question: Growth drivers in U.S. and Brazil - The company is focused on increasing market share and revenue from margin-accretive products in Brazil, leveraging existing relationships [28] Question: Balance sheet optimization - Management expressed satisfaction with the new credit facility and indicated ongoing efforts to optimize cost structures for improved liquidity [31] Question: Consistency in operating income - The company highlighted significant development costs and amortization affecting operating income, but is focused on improving cash generation from operations [36]