Bragg Gaming Group has appointed Matevž Mazij as the company’s new permanent chief executive effective immediately.
Mazij is Bragg’s current chairman of the board and also the firm’s largest shareholder as the founder of Oryx Gaming.
Oryx was acquired by Bragg in 2018 and powered the company’s original PAM, aggregation and RGS gaming technology platforms.
Mazij replaces Yaniv Sherman as CEO, who lasted just one year in the top job.
“The change was made following a thorough evaluation by the board and to ensure the optimal alignment of the best interests of the company and its stakeholders,” said the Bragg board in a statement.
Bragg reported an 18.9% rise in revenue to €24.7m for Q2 2023 as adjusted EBITDA climbed 51.3% to €4.7m.
At the time, Sherman said Bragg was confident it had the right strategies and infrastructure in place to fortify its position as a leading B2B iGaming content provider.
“On behalf of the board of directors and the entire Bragg team, I would like to thank Yaniv for his leadership, commitment, and contributions to the company,” said Holly Gagnon, lead independent director of the board.
“The board remains focused on supporting the company’s senior management team as they continue to execute on initiatives that drive profitable growth and the creation of new, sustainable shareholder value.”
Gagnon added that Mazij’s significant industry experience and deep knowledge of Bragg should help the company to meet its key strategic objectives.
Mazij commented: “Following several years of serving on the board, I am excited to return to an operational role to lead the company towards continued top-line and cash flow growth.
“Bragg possesses many opportunities to further grow our scale of operations across North America, Europe and evolving global regulated iGaming markets.
“I look forward to working with senior management and all of our team members to bring fresh perspectives that can amplify our ability to continue our successful execution of the growth strategies that we established following the acquisitions of Wild Streak Gaming and Spin Games in 2021 and 2022, respectively,” he added.
Shares in Bragg Gaming Group fell by more than 7% today (11 November), despite the firm reporting a 62.3% rise in revenue to €20.9m in Q3 2022.
Revenue growth was primarily driven by the onboarding of new customers in various jurisdictions, the supplier said, particularly in the Netherlands.
Based on H1 2022 GGR reports from the Dutch regulator together with Bragg’s internal data, the supplier estimated that it currently holds a market share of 33% in the Netherlands.
In Q3 2022, gross profit increased by 57.6% compared to the same period in 2021 and reached €10.4m, with the gross profit margin seeing a slight decrease to 50%.
Adjusted EBITDA for the quarter was up by 51.6% to €2.2m, at an adjusted EBITDA margin of 10.7%, a slight decline of 80 basis points from the same period in the previous year.
Cost control remained high on Bragg’s agenda. The revenue increase, an all-time high for the Nasdaq-listed company, helped to reduce the net loss for the period to €2m from €2.5m in Q3 2021.
Moreover, during the quarter Bragg secured an $8.7m convertible debt facility to strengthen its working capital, which had been significantly reduced as a result of its $30m acquisition of Spin Games.
Bragg ended the quarter with €17.2m of cash and positive cash flow from operations. The company said total operational costs continued to scale down since last year and amounted to 39.2% as a proportion of total revenue.
In addition, Bragg said its product mix continues to be trending towards turnkey solutions and proprietary content, which means increases in revenue are generally associated with lower costs of sales.
Commenting on Bragg’s success in the Netherlands, CEO Yaniv Sherman said: “I think what we are seeing is typical for a re-regulated market that re-opened. There was a lot of pent-up demand in the market.”
However, Sherman also pointed out that he expects to see continued growth in the Dutch market, especially when other dominant brands enter the market.
Bragg’s platform launched on day one of the re-regulated Dutch iGaming market’s launch in October 2021, with local brands BetCity.nl, Jack’s Casino, Holland Casino and Toto.
Two additional brands, betnation.nl and comeon.nl, went live in October and November 2022, respectively.
“Based on recent data, we believe, we are now the leading B2B platform in the market.
“This is a great case study and another testimony of our team’s ability to offer a scalable and customisable solution to a wide range of brands in a highly regulated and competitive environment,” Sherman added.
Bragg Gaming Group CEO Yaniv Sherman on the Dutch market: “Based on recent data, we believe, we are now the leading B2B platform in the market.”
Sherman further commented that the firm’s library of proprietary and exclusive third-party games grew consistently throughout 2022 and that growth will accelerate in 2023 and beyond.
“We also continue to further differentiate our content library through new exclusive iGaming content distribution agreements with leading third-party game development studios,” he said.
In October, Bragg entered into an agreement with Sega Sammy Creation (SSC) for the exclusive rights to distribute select titles from SSC’s content portfolio to iGaming operators in the US, UK and other global markets.
Based on its Q3 performance, the supplier reconfirmed its previous guidance and expects full year revenue between €76m and €80m, giving adjusted EBITDA between €10m and €11m.
Looking to 2023, Bragg’s initial expectation is to deliver low-double-digit revenue growth and at least 20% adjusted EBITDA growth.
Investors, however, remained cautious. Shares in the Toronto-headquartered company were trading nearly 8% lower today (11 November).
Bragg Gaming Group has consolidated its acquired companies under a single brand, with Oryx Gaming, Spin Games and Wild Streak Gaming all adopting the Bragg name.
New York and Toronto-listed supplier Bragg was established in 2018 with the acquisition of Oryx Gaming, which was initially founded in Ljubljana, Slovenia, in 2012.
In 2021, Bragg acquired Wild Streak Gaming and and earlier in 2022, Bragg bought Spin Games and launched in North America.
The company’s Oryx Gaming offices in Slovenia will become Bragg Ljubljana, while Spin Games in the US and India will transform into Bragg Reno and Bragg Chennai respectively.
Yaniv Sherman, CEO of Bragg Gaming Group, commented: “As we consolidate our group companies under the single brand of Bragg, we celebrate the heritage, values and successes of Oryx Gaming, Spin Games and Wild Streak Gaming which have built us into the company we are today, and which will propel us into our next phase as a global iGaming provider.
“We’re incredibly proud of the work that all of our colleagues have put in over the years which are the foundations we continue to build on.
“We’re sure that the renewed focus that our consolidation brings will be positively felt across our hubs in Toronto, Las Vegas, London, Ljubljana, Malta and Chennai and it will signal a new exciting era of growth for us all under the same umbrella with aligned values and goals,” he added.
Bragg Gaming Group CEO Yaniv Sherman: “We’re sure that the renewed focus that our consolidation brings will be positively felt across our hubs in Toronto, Las Vegas, London, Ljubljana, Malta and Chennai and it will signal a new exciting era of growth for us all under the same umbrella with aligned values and goals.”
Bragg will also open a new Las Vegas office this year, providing a base for existing employees from Wild Streak Gaming and Spin Games, as well as for new hires. This adds to the existing Bragg offices in Toronto, London and Malta.
These hubs, its technology, services and turnkey offering will move forward with the single brand of Bragg Gaming Group, however, the content output will retain its internal game studio marques: Wild Streak Gaming, Spin Games, Atomic Slot Lab, Indigo Magic, and Oryx Gaming.
The unified Bragg brand will enhance the representation of the company’s international presence as it continues to grow in existing and new regulated markets, the company said.
Bragg Gaming Group has secured an investment of $8.7m from New York-based institutional fund manager The Lind Partners.
The funding, provided by the Lind Global Fund II LP, will come in the form of a convertible security, with a face value of $10m.
The Nasdaq-listed supplier will receive net proceeds of approximately $8.2m after fees.
The funding provides an important capital injection for the B2B game technology and content provider and will be used to aid the company’s growth initiatives.
Bragg’s Q2 financial results showed that its $30m acquisition of Spin Games had reduced the company’s working capital significantly.
Bragg held cash and cash equivalents of €11m at the end of Q2, down €300k on the same period last year, as a result of the €9m paid in cash towards the acquisition during the quarter.
“We highly appreciate the confidence demonstrated by Lind, and we are excited about the opportunity this growth capital affords Bragg,” said Yaniv Sherman, CEO of Bragg Gaming Group.
“This investment provides capital we intend to deploy in a return-focused manner, to further strengthen our foundation for continued top line and cash flow growth,” he added.
Sherman commented further: “For more than a decade, Lind has demonstrated a tremendous record of success supporting growth companies, and we are confident that Bragg is well positioned to further deliver on our strategic initiatives.
“Importantly, since the beginning of 2021, our focus on enhancing our proprietary content development capabilities and our continued expansion into new regulated iGaming markets, including North America, have driven a significant increase in Bragg’s revenue as well as margin expansion, which has resulted in strong adjusted EBITDA growth.”
Bragg Gaming CEO Yaniv Sherman: “This investment provides capital we intend to deploy in a return-focused manner, to further strengthen our foundation for continued top line and cash flow growth.”
Sherman said this is reflected in Bragg’s expectations for full year 2022 revenue and adjusted EBITDA, with projected growth of 34% and 46%, respectively.
The face value of the convertible security will have a 24-month maturity date and can be paid in cash or be converted into common shares in the company at a conversion price equal to 87.5% of the five-day volume weighted average price immediately prior to each conversion. Shares issued upon conversion are subject to a 121-day lock-up period once the deal is closed.
The funding agreement and the issuance of the related securities have been conditionally approved by the Toronto Stock Exchange. Closing of the deal is subject to final TSX approval.
“Lind is extremely excited about its investment in Bragg,” said Phillip Valliere, managing director at The Lind Partners.
“Bragg has rapidly grown its gaming technology businesses and continues to expand its footprint globally.
“We look forward to working with Bragg’s high-caliber management team as it further expands and penetrates new key gaming markets while continuing to drive profitability,” he added.
The Lind Partners manage institutional funds which provide growth capital to small- and mid-cap companies publicly traded in the US, Canada, Australia and the UK.
Lind’s funds make direct investments ranging from $1m to $30m, invest in syndicated equity offerings and selectively buy assets on market.
Since 2011, the fund manager has completed more than 100 direct investments totalling over $1bn in transaction value.
The agreement with Bragg contains restrictions on how much of the convertible security may be converted in any particular month, which is limited to 1/20 of the outstanding balance or $1m if the exchange volume is above a specified minimum. Conversions may also be accelerated in certain circumstances.
In addition, Bragg has the option at any time to buy back the entire remaining balance of the convertible security. However, in this case Lind will have the right to convert up to 1/3 of the outstanding amount into shares.
In connection with the funding, Lind will be issued a warrant to purchase up to 979,048 common shares at a price of C$9.28 per share for a period of 60 months.
The Benchmark Company is acting as exclusive financial adviser to Bragg in connection with the funding agreement.
Bragg Gaming Group’s revenue increased by 34.2% to €20.8m in Q2 2022 to mark the company’s best quarterly result to date.
Gross profit at the B2B gaming technology and content provider climbed by 65.5% to €11.6m, while the company’s gross profit margin reached 55.9%.
Bragg said the company’s product mix has changed considerably since last year and is now trending towards turnkey solutions and proprietary content, which is positively affecting the margin since an increase in revenue is associated with a lower costs of sales.
Bragg finished the quarter with a reported positive net income of over €100,000 compared to the corresponding period’s net loss of €2.3m, primarily due to higher gross profit and lower professional fees and transactional costs.
However, this was partially offset by an incremental increase in employee costs, sales and marketing expense, and higher depreciation and amortisation.
“Our operating momentum highlights our continued success in serving a growing base of customers in an expanding number of regulated global iGaming markets,” commented Yaniv Sherman, who joined Bragg as CEO in July.
In addition, the New York-listed supplier reported adjusted EBITDA of €3.1m, representing an increase of 62.9% compared to Q2 of last year.
Based on the Q2 performance, Bragg has raised its 2022 revenue and EBITDA guidance to new ranges of €76m-€80m and €10m-€11m respectively.
Bragg CEO Yaniv Sherman: “Our operating momentum highlights our continued success in serving a growing base of customers in an expanding number of regulated global iGaming markets.”
Organic growth from Bragg’s existing client base was a defining feature of Q2 performance, while the company managed to onboard new strategic customers in various jurisdictions, mainly in the Netherlands but also in Germany, chief strategy officer Yaniv Spielberg said.
Q2 was an eventful period for the company. Bragg entered Ontario’s regulated market and completed the $30m acquisition of Spin Games, which marks a key milestone in its US strategy.
However, the acquisition reduced Bragg’s working capital significantly. Bragg’s Q2 results showed cash and cash equivalents of €11m, down €300k on Q2 of last year, which reflects €9m paid in the quarter for the acquisition of Spin Games.
Sherman said following the 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”.
Bragg has four in-house game studios 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 our execution against our content development and distribution strategy will result in a higher level of desirable ‘real estate’ allocation on leading iGaming operator sites, leading to higher player engagement that drives further top-line growth and margin improvement,” Sherman concluded.
Bragg expects to have released around 22 proprietary games by the end 2022, which represents a 120% increase from 2021.
In addition, the company aims to supplement its internal game development efforts with exclusive agreements to distribute games from established popular third-party studios.
Yaniv Sherman will be appointed Bragg Gaming Group CEO effective 1 July, according to the supplier.
Bragg has been led by chairman Paul Godfrey since November, after he took on the role of interim CEO following previous chief executive Richard Carter’s exit from the business as part of a broader strategic review. Bragg said today that Sherman’s appointment marks the conclusion of that review.
Sherman joins the business from 888, where he most recently served as the operator’s senior vice president and head of US.
In that role, Sherman oversaw the creation of a 15-year joint venture which allows 888 to use the Sports Illustrated brand in the US. He also signed new partnerships with the Delaware Lottery and Caesars Entertainment, and developed 888’s US customer support and online marketing teams.
In addition, Sherman also headed 888’s bingo-focused B2B arm Dragonfish, before facilitating its divestment from the business in 2021.
Prior to his role as head of US, Sherman was SVP and head of commercial development at 888, during which time he oversaw corporate development, gaming content and electronic payments partnerships, as well as market research and competitive intelligence.
Yaniv Sherman: “I am honoured and excited to join Bragg’s strong and deep leadership team and help drive the company’s ongoing growth.”
Commenting on Sherman’s appointment, Bragg chairman Godfrey said: “We’re delighted to welcome Yaniv Sherman to Bragg Gaming Group as our new chief executive officer.
“His extensive industry experience and strong record of success, including many years of senior management leadership and accomplishments for a leading global iGaming operator, makes him ideally suited to lead the company’s ongoing execution of our successful growth initiatives.”
Sherman added: “I am honoured and excited to join Bragg’s strong and deep leadership team and help drive the company’s ongoing growth.
“Bragg’s business momentum reflects consistent execution on its strategic growth initiatives, including its successful entry into new European regulated iGaming markets since the beginning of 2021.
“In addition, the recent additions of the Spin Games and Wild Streak Gaming studios represent an attractive opportunity for growth and continued expansion of Bragg’s offerings in the North American market, as they integrate their content, products and services with the core Bragg team and platform to offer a differentiated, best-in-class online gaming proposition to existing and future partners,” he added.