Q3 2021 Bragg Gaming Group Inc Earnings Call
Ladies and gentlemen, this is the operator today's conference is scheduled to begin momentarily until that time your lines will again be placed on music hold thank you for your patience.
[music].
Good morning, My name is Lisa and I will be your conference operator today.
At this time I would like to welcome everyone to the Brac Gaming Group Q3, 2021 conference call.
All lines have been placed on mute to prevent any background noise.
After the Speakers' remarks, there will be a question and answer session.
I would like to ask a question. During this time simply press Star then the number one on your telephone keypad.
If you would like to withdraw your question press the pound key.
I would now like to turn the call over to Mr. Richard Carter C. E. O. Please go ahead Sir.
Thank you operator, good morning, everyone and thank you for joining <unk> third quarter 2021 earnings conference call.
Albert Chief strategy Officer for broad gaming group.
Hosting today's call alongside my colleagues Chief Executive Officer, Richard Carter, who will comment on our third quarter performance and provide an update on the progress, we're making with our growth initiatives.
<unk>, our CFO will review, our third quarter results and our guidance for the fourth quarter of 2021 as well as projections for 2022.
If you have not already done so you can download our Q3 earnings call presentation from our website at Www Dot Bob B R. E. G G Doc games forward slashing Buster.
Called Investor presentation. The presentation, we will review today's call 2021 third quarter earnings presentation.
On this call will review <unk> financial and operating results for the third quarter of 2021. Following our prepared remarks, we'll open the conference call to a question and answer period.
I'll start the call with some brief cautionary remarks regarding certain statements that may be made on this call certain statements made on this conference call and our responses to various questions may constitute forward looking information or future oriented financial information within the meaning of applicable security laws statements about expected growth perspective results strategic outlooks in financial and operational.
Expectations opportunities and projections rely on a number of assumptions concerning future events, including market economic condition business prospects or opportunities future plans and strategies technological developments and anticipated events or trends and regulatory changes that may affect the corporation and its subsidiaries and their respective customers and <unk>.
Industry.
While we believe these assumptions to be reasonable they are subject to a number of risks uncertainties and other factors many of which are outside the company's control, which could cause the actual results performance or achievements of the company to be materially different.
No assurance that these assumptions or estimates are accurate or that any of these expectations will prove accurate.
Complete discussion of these factors please refer to our recently filed press release and other publicly available disclosure.
With that said I'd like to turn the call them outdoor CEO Richard Carter Richard.
Good morning, everyone throughout the third quarter, we achieved significant progress with our strategic growth initiatives, including expanding existing customer relationships building out the pipeline of premium in house, I gaming content, and providing our content offering to new markets.
Result, we are transforming <unk> into a leading global com.
Focus b to B, a gaming provider on our progress on this front is evidenced in the third quarter results just a quick note as.
As Ronan and I'll review, the third quarter performance all comments will reference the results in Europe.
For the third quarter, we reported revenue of $12 9 million, which is up approximately 10% year over year.
In addition unique players were up 14, 4% to $2 1 million and wagering revenue was up four 8% to $3 2 billion.
Given the strong third quarter performance.
Our performance to date in the current quarter and all four the outlook. We have raised our 2021 full year revenue guidance to a range of 55 million to 56 million.
And our adjusted EBITDA lot look to between $6 6 million and $6 8 million.
While also raising all 2022 revenue outlook to a range of $59 million to $61 million on all 2022, adjusted EBITDA outlook to between six and 7 million. These results and our forward expectations represent strong performance.
The underlying growth in our non German market.
We expect our revenue mix to continue to reflect the decline in the percentage we derived from recurring revenue in the German market going forward, even as we continue performing in line with our expectations and following the implementation of the new regulatory regime.
July the first this year beyond the strong Q3 financial performance recent progress on our growth initiatives include continued market expansion, we entered 2021 serving markets that accounted for a time of approximately $2 $8 billion.
And we believe that by the end of 2022, we can address markets with a time, although the $18 billion in.
In particular.
Pending all supply a license in Greece, and entering the newly regulated markets in the Netherlands, we're delivering on our strategy of expansion in regulated market.
With an initial batch of game certified and offered by our Oryx Hep distribution platform our performance to date in the Netherlands is roughly five times above our initial expectations and we have already achieved an approximate 25% share of that market.
We are making consistent progress with our goal of entering additional new markets to fuel our growth.
Our progress on this front continues in Q4.
However, we entered into an integration agreement would place that that would result in a full range of oryx hub games being available for European and global operators that you slides the playtech games marketplace platform.
These leading operators in Spain, Italy, Switzerland, the Netherlands, the U K, Mexico, and Latin America.
Our partnership with Playtech is another milestone in our market expansion as it furthers our ability to get more of our content to leading I gave me all prices.
Then after that content to more players globally last week, we announced a new platform deal with Guzman Mccook brands in the Czech Republic, a half billion dollar a ton market. This deal with a major brand in the industry said that grows are a gaming platform business as well as extending a regulated market reach we expect this operates it to be.
Live in the second quarter of 'twenty to 'twenty two.
We are also on track to generate initial contributions from the UK and Italian markets in the first half of FY 'twenty, two and we expect to see initial revenue from the entire market for the first half of 'twenty to 'twenty two.
We also continued to achieve significant progress with our content development strategy and showcased all dummies titles RGB life in Amsterdam and at G. TUI in Las Vegas.
The favorable reception on the licensing side.
Submitted applications in key European markets, such as the U K and North America, including New Jersey, Pennsylvania, Michigan and are in the process of submitting an application in Ontario.
Ready for when the market opens to I gaming, which is now expected in Q1 2022.
Finally on this slide we announce a new content partnership like riding Lawn Baseball studio Library, which I'll come back to review in more detail shortly.
Turning now to slide seven I noted earlier that all performance beyond the nonrecurring revenue, we generate from Germany is helping to offset the impact of the regulatory changes in Germany.
More importantly, helping to drive year on year improvement.
On your market its not performing above our expectations.
For example, all revenue growth compared to our expectations heading into Q3 was driven by $2 5 million euros from nonrecurring German operations, No point 5 million euros from a stronger than expected start for new launches and from central core existing customers No point 2 million from better than expected.
<unk> online contact royalties. This all helped drive the higher than expected revenue in Q3 compared to our expectations heading into the quarter I was all recurring revenue from Germany was in line with our forecast for the period.
Now turning to slide eight as I mentioned earlier, our entry into new markets in particular, the Netherlands, which has been exceptionally strong out of the gate, coupled with new client wins on a ramp up with operators launched earlier in the year give us significant amount in the current quarter continues to progress.
We now anticipate that's all new clients are chosen 2021 will deliver 170% revenue growth quarter over quarter, which translates into incremental revenue of approximately $2 8 million euros quarter on quarter based on our upgraded FY 2021 revenue Gaza existing client revenue.
Also seen them, all step up and growth and I'll talk about by more than 30% over September which also underpins all current revenue in the quarter combined with new client launches. This is anticipated to drive underlying quarterly sequential revenue growth over Q3 of over 60%, excluding Germany based on.
On U F 'twenty, one guidance now moving onto the content slug.
Consolidated group director of content Stockpiling joins us following our acquisition of Wall Street gaming in June we announced a shift towards development of more proprietary content, which we believe will generate higher gross profit margins on higher EBITDA. In addition, we are working to secure more exclusive content with select third party partner Studios, which are.
Allows us to provide an enriched unique localized offering to our customers and markets around the world.
We've been showcasing our new startup.
<unk> product strategy analytics games segmentation technology tools and content partners, our industry trade shows where our IGD live in Amsterdam at the end of September the global Gaming Expo in Las Vegas at the beginning of October next week, we'll be at Sigma and multiple.
Oh Gee chewy, we presented for the first time to U S operators, our product plans, including taking a number of highly successful and well known wall Street Lambaste titles online, but by all fused player engagement tools, which allow bonus thing told them. It's with other players on the creation of missions in quest and an engaging with layer that sits over the top of the game.
These features are proven to boost player activity were the result of increased wagering.
Well received at the show.
As we obtained licenses to enter more markets in Europe, North America and globally will further diversify our product offerings through our internal studio development, which select content partners. This brings me to my next slide.
Today, we announced blueberry latest exclusive content partner Liberty is a Las Vegas based slot studio city in the U S and Canadian markets with a portfolio of about 100 game titles.
Already popular with players in the land based casinos.
This new partnership will allow brag to tape library slot portfolio online with exclusive global online distribution rights firewall network.
Further underpins our commitment to bringing the right content to our customers and our local market, while leveraging our global distribution network to introduce new gaming content to players wherever they may be ultimately, bringing new reached 12 partners. Additionally, this partnership allows for Omnichannel distribution, whereby the same games will be all sorts of lung.
Based on online operators.
Trends in all three of its only going to increase and become more ubiquitous in the industry.
Demand to be able to consume content on that.
Our multichannel seamless experience Doug fallen has a track record of success were taking well lundbeck titles adapting them to the online market and a new partnership with blueberry should add to his success on all proposals.
Moving onto the next slide.
Wall Street was also a key driver of our third quarter upsides for the contribution of <unk> 9 million euros or.
Our acquisition of Wall Street has been and will remain a key catalyst in our go forward transformation as we continue to shift from primarily providing third party online content towards providing in house online content that carries significantly higher gross profit margins as well.
The 30th Wall Street has nine online casino games lighting Chi I gaming market, including New Jersey, where the gains have been lives since 2018 and more recently in Michigan as well as in the U K and other regulated jurisdictions in Europe. We currently expect wall Street to release, a minimum of 12 games next year with that.
Pick up in the following years and ultimately driving material long term growth.
Finally.
As I noted on our second quarter call wall streets, offering will benefit from the large distribution network available through the oryx odd yeah I'm from full integration with a fuse player engagement tools, which are proven to help drive improved game performance.
On the next slide we're showing the strong performance of the full Wall Street types was launched this year outside of North America with a partner like not to play.
These gains combined to generate record G. G. All numbers during Q3. The Gainesville also showed a very strong player loyalty for example, Congo cash, which we launched in early January generated GTR in Q3 that we're at 70% of the levels seen in Q1, which is very encouraging.
We rolled out the fifth Wall Street types will be pragmatic play Big one last week and we expect to launch a further five wall Street titles under this partnership in 2022.
Slide you can see the continued strength and stability of wall Street's Dragon powered game in New Jersey over the last year.
Dragon part first launched New Jersey in May 2020.
It remains among the top grossing online slots in that market since its launch about 17 months ago, which is exceedingly long time for a game to maintain top opponents.
But the games performance in August this year was a record month of Dragon power when it generated almost $1 million in gross gaming revenues in New Jersey alone.
Currently planning to rollout drug in power and Michigan and West Virginia later, this quarter and expect to release additional wall Street classes across the U S market.
1022.
Turning now to the ongoing expansion of our near and medium term time.
Our focus is on the online casino segment as this represents the largest opportunity in all key North American and European market.
Online casino is also much more profitable for all prices and online sports betting.
Our entry into the Dutch market, which follows activations in market, such as Greece to supply the regulated market.
And before about Spain, and Denmark, we now address an increasing proportion of the 14 billion estimates at European online casino market.
We're making consistent progress with our UK market plans, while we have applied for a license unexpected be live in the first half of 'twenty to 'twenty two.
U K market is estimated at $5 $5 billion.
Also in the process of certifying games for the Italian market unexpected to generate initial revenue from this market also in the first half of next year.
<unk> is an estimated 2 billion dollar online casino market.
We're continuing to grow in the U S first with Wall Street, and then we spin games and we expect to complete that acquisition later this quarter during the third quarter spin games announced it has obtained its license in Connecticut, I think to its existing U S distribution in New Jersey, Pennsylvania, Michigan. Following the completion of this transaction, we will gain access to.
More than 30 key strategic relationships in the U S, including we are drafting Golden Nugget and Penn National We plan to initially cross sell our popular European Casino content, after which we will introduce a new proprietary online casino games, which are under development, specifically address the U S and Canadian on.
<unk> casino players.
S market is currently estimated to have a run rate of more than 3 billion and that number will grow considerably while the Canadian online casino market inclusive of offshore operators.
Day estimates it up just a little above half a billion dollars.
Total online casino market is expected to grow materially to an estimated tam of between two and 3 billion over the next several years with Ontario alone representing about 2 billion a doctor in person at a time, if you extrapolate the new Jersey online casino spend per household to the Ontario addressable adult population.
In conclusion, our 2021 third quarter performance highlights progress across an array of initiatives to underpin the strength of our business in Christ.
Foundation for long term growth.
Momentum for Brexit expanding library of indicative I gaming content continues to build across a growing base of regulated market.
Highlighted by our recent entry into the Dutch market.
Performing well ahead of our internal expectations I'm seeing strong traction for our content and third party content to be distributed.
All content led strategy, coupled with a growing penetration of the market with all player account management platform I've seen strong success.
And it's positioned us for significant adjusted EBITDA growth and related margin expansion opportunities going forward in particular, we have laid the foundation to bring a proven success in the U S and Canadian market through a wall Street acquisition and through the addition of new content partners such as blueberry.
We continue to build our global footprints of licenses market, we have obtained a license to supply the regulated market in Greece.
Successfully launched our games platform in all its yes, and then Michael Lynn and RMG has been certified as fully compliance and the newly regulated German market. We have applied for UK license, which we expect will go live in the first half of 'twenty to 'twenty two.
We're in the process of certifying also screens for the Italian market and we have applied for a license in Belgium, we have.
Also apply for licenses in New Jersey, Pennsylvania, Michigan.
We're in the process of applying for a license in Ontario and have applied for a license in the Bahamas. All business model is unique in the industry, but we have very minimal capital expenditure requirements to further build out platform.
Long side, our growing base of proprietary in house developed content, let us pause.
<unk> to generate high margins.
Michigan profitability finally, we have a strong balance sheet no debt and generate positive adjusted EBITDA provides.
Providing us with the financial flexibility to pursue investments in content and technology when needed. So.
To augment our portfolio and build out our library that makes us an ideal partner for I gaming operators in the U S. Canada Europe, another key worldwide market.
With that I will now turn the call over to Ronan will take you through the financials and our updated expectations for the balance of 2021 2022.
Thanks, Richard Good morning, everyone.
I'll begin my comments on slide 20.
Third quarter revenue was up nine 9% year over year to $12 9 million euros. The increase in revenue was driven by organic growth from existing global customers as well as from a full quarter of revenue contribution from our stake acquisition.
Gross profit increased by 31% to $6 6 million euros, and with margin, increasing as well by England eight basis points to 51, 4%, which primarily attributed to higher proportion of revenue derived from our platform and managed services alongside with Wall Street games revenue, which has no coastal sale.
Compared to gains in content, which have third party costs associated more about gross profit will be explained in the next one.
Adjusted EBITDA for the quarter ended $1 4 million euros down only by 0.4 million euros.
Adjusted EBITDA margin ended 11%, which is four seven basis points down when compared to the previous year and this is due mainly to increased salary and subcontractor costs, given our ongoing investment in expanding our software development product and management functions across the enterprise.
Net loss was $2 5 million euros compared to $3 2 million euros in the prior year period. The year over year increase was primarily driven by the incremental increase in employee costs as well as professional services fees, which were incurred due to the NASDAQ listing. These increased costs were offset in part by the expanding gross profit margin.
And the reduction in deferred and contingent consideration payable.
From Kpis perspective, wagering revenue generated by customers increased by four 8% year over year to $3 2 billion and the number of unique players using Brad games via Oryx hub distribution platform increased by 14, 4% to $2 1 million.
Also as we noted last quarter, we have continued to retain 100% of our customers since 2019, and while our customer retention remained solid our dependence on our top 10 customers has improved.
Revenue from our top customers declined to 54, 3% of total revenue compared to 55, 6% in Q3 2020, a trend we expect to continue.
As you can see from the revenue and gross profit margin slide.
The gross profit margins in our growth trajectory since Q2, 2020, and we are scaling up in line with our revenue growth and movement in the product mix as presented in the chart in the bottom of this line.
As we indicated in the Paas platform and proprietary content products are carrying limited third party costs, which giving us the ability to scale up gross profit margins.
The contribution of full three months of revenue from Wall Street gaming and internal content revenue, adding approximately 3.8 basis points to the margins in Q3 and will continue going forward.
Finally, bragging targeting gross profit margin to increase by 2020 for up to 60% of the total revenue.
On this slide how we reconcile our operating loss to a positive adjusted EBITDA in the 2021 third quarter adjusted EBITDA was $1 4 million.
That's an 11% margin against an operating loss of 2.2 million.
The gap can be defined by the following noncash and exceptional items.
The first ship is payment in the world to the new directors management and employees in Q1 and in Q3.
Transaction and acquisition costs.
Fences related to the acquisition of wants to games and spin games and deployment of the Corporation M&A strategy.
And exceptional costs, which include legal and professional fees on the NASDAQ listing and other nonrecurring regulatory and legal matters.
Moving on to slide 23 as of the end of September 2021 <unk> has a solid balance sheet and continues to deliver strong cash flow performance.
Cash balances as of September 30 was 20 million euros compared to 26 million euros as of December 31st 2020 with no debt facility.
Networking capital was 11 4 million compared to $6 7 million at the beginning of the year.
We continue to project positive free cash flow generation and as a reminder, our business strategy requires little capex related to technology that requirement.
From a cash flow perspective in the nine months ended September 32021, we settled the 11th one 5 million euros for the traditional oryx, we paid $8 2 million euros for the acquisition of Westwood games and continue to capitalize software development costs as part of the investment in our technology.
With our quarterly results out of the way, we raise the outlook for the 2021 and fourth quarter and full year driven by performance in our U S market, a growing number of customers worldwide and our expanding portfolio of in house games offered by a wild streak and our oryx Adia, we now expect 2021.
Year revenue of $55 million to $56 million compared to the 49 million euros. As previously announced we also expect twin 21 full year adjusted EBITDA of $6 six to $6 8 million compared to $5 4 million euros discussed previously.
We are also increasing our outlook for 2022 given the building momentum across our entire enterprise, which has us establishing a foundation for sustainable long term growth. We now expect full year 2022 revenue.
59 to 61 million euros compared to our initial guidance of 64 to 66 million euros, which we provided on our second quarter call on 11 of focus.
We also expect full year adjusted EBITDA of six to 7 million euros.
With that I will turn the call back to the operator, so that Richard and I can take your questions. Thank you.
At this time I would like to remind everyone. If you would like to ask a question. Please press Star then the number one on your telephone keypad.
Your first question comes from the line of Neal Gilmer with Haywood Securities.
Yeah. Good morning, Thanks, very much and congrats on a strong quarter in the increased guidance.
I've got a few questions here will probably hit two of them and then paas aligned here I.
I guess first of all it was sort of stood out with some of your comments. There was your success in the Netherlands I'm wondering if you can.
Provide a little bit more commentary on you know how do you think you've gained market share in a fairly short period of time and is that something that you can leverage as you enter the new markets and have similar success there.
Yeah, Hi, I'll tell you that.
Turning to you.
In terms of I think it was quite a unique circumstance in the Dutch market I mean, what happened isn't necessarily going to be replicated in other markets, but effectively you had the closing down of the market.
And then you had it re regulated so I'm.
I'm sure you've seen a lot of the key players left.
Left the market.
And that left a big opportunity to companies like Brock.
With a market leading platform to go in stock market also with all content and to take material market share on day one so.
I think it's not something that we'd expect to replicate in other markets going forward, just because of the uniqueness of what happened in Holland.
Okay alright, thank you.
And then taking a look at your comments about your total addressable market that sort of you started into this year. So I think you said $2 8 billion and I think you said by the end of next year 18 billion.
You contrast that with what you have as far as revenue growth implied in your guidance in the revenue guidance seems a little bit conservative.
Given what you guys had been and been able to accomplish to date so.
Is there a decent amount of decrease continued in the German market that you are factoring into that guidance, just judging me and when you take a look at how much your addressable market increase.
So there are quite a few moving parts in terms of Germany, now or actually I think if you look and go through the detail. It was actually a slight increase in our expectations for the 2020 to that.
But in terms of just how it works from a time perspective so.
You know as we enter a new market given it's the COVID-19 the U K.
You're probably looking at a ramp up.
In terms of rolling the content.
Getting all of the integrations all of the legal contracts done.
Your at least probably 12 months so although all time increases once we get access to the U K market by let's call it five $5 billion to $6 billion.
Actually it takes us several quarters to get embedded in to start generating revenue and then the material material I'll, let you know that will will increase so.
You know, we've obviously tried to be prudent because it's.
It's a new market and these things take a little bit of time.
With machines, that's sort of a.
A ramp up over a sort of a four to six quarter basis. So I have to sort of six quarters, we'd be expecting to sort of hit about 75% of the market.
Okay. That's helpful. So then obviously then that really drives the revenue growth into 2023 rate, that's sort of where you hit sort of that four fold yeah, absolutely and obviously you know where it was razor focused on trying to bring that ramp up forward, but as we sit here right now it.
It is obviously quite difficult to predict the timing on that quarter to quarter.
We're obviously working very very hard spring that forward. So you know we don't obviously look to do better than that but yeah. That's basically the background to two up to that.
That's great Richard Thanks appreciate your answers.
Alright, thank you.
Your next question comes from the line of thought here Godby with eight capital.
Good morning, guys. Thanks for taking my questions I.
I missed the part on Germany, where you kind of broke down the Germany revenue. If you could just maybe go through that just quickly one more time for me I appreciate it.
What are you referring to in particular on Germany, just I think D.
The offset I think you guys had mentioned I just caught the tail end of it you mentioned that some of the recurring revenue from Germany and being offset by.
Sorry, it's a nonrecurring revenue from Germany.
By continuing we're trying maybe if you could just go through that I hope that kind of pretty important.
So just to give a bit more just to get a bit more color on sort of what shape.
The performance in Q3, so basically.
As we as we gave guidance and headed into the quarter. We were looking at sort of doing about $9 8 million of revenue.
Obviously, you ended up doing a lot more than that.
And the the sort of drivers of that is partly a we did an additional just under $2 million of revenue out of Germany, which is normally call nonrecurring.
And we did that additional revenue because of the continuing regulatory uncertainty.
And the continuing lack of clarity around licenses, which effectively.
And then did the timeframe beyond our initial expectations.
There was a lot of back and forth going on with our clients showing was evident that are going through the licensing process.
And then there were failing to get information back. So we decided to make a decision in September a while we just decided to just IP block. So if we hadn't done any clarity by the time, we just IP blocks customers and then once they find out in the future then that will obviously.
Allow them.
To to come back into the market. So that's predominantly.
The sort of color behind what happened in Germany underlying it's still trading in line with our expectations on a recurring basis.
Okay fantastic.
And then I saw one thing just on Dragon power going into Michigan and West Virginia later on in the year do you find that that gain is easily translate into those markets. Similarly, well if it's done in new Jersey over these past years that you kind of mentioned.
It's a very good question.
I think given if we take other content that's worked very very well in new Jersey.
And is replicating its success in Michigan.
And then you know that's what we based on so well the games are performing extremely well in new Jersey have been roll Downs, Michigan has performed.
You know as well.
In in Michigan, So we think hum.
That should be the same as well in Michigan.
Okay. Good to hear and then just lastly, just one more from me just in terms of M&A, obviously, they've seen an uptick in M&A overall.
And the industry.
Can you maybe talk about your thoughts on M&A and what how you guys are thinking obviously, the wild streak and spin acquisitions that have been done but are you thinking about anything else just given the uptick in M&A in the industry.
No I mean, I think we've spoken before and you know I think it's inevitable that there's going to be more M&A and it's going to continue as we saw.
The cycles in Europe, and I'm sure, we're going to see the same.
In the North American market in terms of.
But today I think we have the building blocks in place.
And we have a very clear vision.
In terms of where we are heading so as of right now.
We're not really focused on M&A, we're focused on execution.
And deliberate.
Awesome. Thank you very much Richard I'll pass the line.
Thank you.
Your next question comes from the line of Matthew Lee with Canaccord.
Hi, great job on the quarter guys.
Maybe just a housekeeping question just start can.
Can you give us a little bit of additional color into what prompted that 2022 guidance increase maybe from a geographical perspective.
Is maybe the European market doing better than expected or is it more of a European expansion I'm, sorry, North American expansion thing.
Yeah.
Morning.
I think in terms of we don't really want to get broken down into each individual market, but I think clearly.
We've rolled out into some new markets recently.
And we've signed some.
Some interesting deals with with.
With some major operators and that effectively is driving the increase and that's going to be spread across multiple markets, but yes. I think the majority of the increase is driven outside of North America.
Great and then you know maybe it can be.
Some color on the economics of the Bluebird deal I assume that the revenue share, but given that you are putting more effort in supporting the content over to the online market is that revenue split up maybe a bit more favorable than a traditional content deal.
I don't really want to get into the real.
And as an ounce of of the Bluebird deal apart from I think you know, we're very excited to be partnering with.
With with Blueberry, we think is a fantastic deal.
<unk> companies I think it's a good deal to break.
And I'm sure it'll be also a very very good deal for Bluebird given you know the distribution that we can also to a company like that.
So and I think it'll be obviously you've already.
Incremental to our small business from a from a revenue and profitability perspective over the medium term.
Great and then lastly in terms of margin expansion I think I heard you say, 60% gross margin by 2024.
Can you help us understand where that comes from is it primarily if I'm, making you know more content proprietary or something else.
Yeah, I mean, it comes from quite a few leave as well as we pivot away from taking third party content.
Owning our own content and at the same time, we're obviously expanding other high margin areas of the business. So the platform business.
<unk> is beginning to ramp up very very significantly.
So you'll see that during.
The quarters of this year, you're starting to see a positive incremental contribution from that side of the business and I think Ronan also highlights it.
Wall Street acquisition.
Roughly I think because it's three 4% Ronan to the gross profit margin you operate. So that's also helping in terms of the ramp up and as we go through next.
Next year and thereafter with producing more in our content and our platform is continuing to to increase done that's how you get the the expansion.
The gross profit margin.
Alright, thanks, so much.
All right.
Your next question comes from the line of Lisa Thompson with Zacks.
<unk> research.
Good morning.
Good morning.
Just had a couple more questions could you talk a little bit about.
What your experience has been with spin now that you've been around him. Another three months to change any of your expectations on their performance or how you might be able to rollout.
Differently than what you had been thinking.
So in terms of yes, I mean, just remember that we still have a.
Closed this deal with spin so that's not expected to close until mid December but in terms of we've been obviously working very very closely together in terms of preparation for our combination and obviously the entry into the North American market. So we.
We were at G TUI as a as I spoke with spoke about in our presentation and we had a fantastic reception.
From from operators, they're looking at both the the Oryx Wall Street Wall Street spin products.
I think overall, obviously over the last three months.
We've announced today the Sleepy deal and we wouldn't have been able to do that blue b deal without without spin.
What they brought to the to the whole overall offering so that was obviously a very very important and that's where I was having obviously a lot of value.
We've also.
They've also broke Connecticut was it not a market that we didnt vision envisioned when we did this transaction.
And we're also working on Ontario, So I.
I think they've added a lot over the last three months and I'm sure they'll continue to do so as we move forward.
Yes.
Alright, and then one other thing I'm curious about I mean other than the countries, you're pursuing and talking about already where where is the biggest opportunity for you. That's still out there and how do you approach entering new countries like is there some sort of methodology.
Deciding what you're gonna do.
Look I think I think we've already laid out the big opportunities for us Oh, yeah. The U K.
Italy Holland was the big opportunity, we've obviously talked about that today and obviously, we've got off to a better if I could stop there.
But the U K is the biggest regulated online casino marketing world and whatnot that so that's really the big opportunity for us in terms of how do we Ah <unk>.
<unk> are in that market well, we need to have good content.
And doing deals like blueberry today.
The Wall Street acquisition, we made earlier this year.
Given how we're building out all our own in House Studios, that's how we're going to be able to execute and to commercialize the business and to enter new markets and that's really the focus.
Over the next six to 12 months and then they're obviously going to be new markets like Ontario.
On the old.
We will probably focus a lot more as we get into 2020 two in Latam. So we'll talk a bit more about that.
On future calls.
Really for us the sort of key focus near term is.
UK, Italy, Holland, and then leveraging into the North American market.
Okay, Great look forward to it. Thank you that's my only question.
Thank you very much.
Your next question comes from the line of David Mcfadden with Cormack Securities.
Oh, Yes, hi, a couple of questions.
So obviously you guys have done quite well in the Netherlands that would double digit market share right in the gate as more operators and from the market do you think that you can sustain that level of market share.
Well, we're not assuming we are going to sustain that number one we're obviously hopeful we can and.
We will continue with our very hard I mean part of that is going to be just looking at how and when other operators come back into the market.
It's very difficult right now to predict.
Although the people of segment some of the big operators that left the market, we'll potentially get licensed in.
Q2, some people are saying they wanted that license to toll nature.
So and I think that's really that.
That's really going to be where we end up in terms of market shares.
I think the interesting thing is that the.
Operators were supporting obviously are able to go and do the affiliate deals basically creates a moat around them. So I think they'll definitely have.
Been a very strong position to defend themselves once other operators coming to the market.
But in terms of our assumptions.
In terms of 2022, and <unk> 23, with such we're not assuming that we're going to be staying at those market shares now.
Hopefully, we'll do better than those assumptions.
Okay.
And you know you've highlighted blueberry in your presentation.
I was just wondering can you give us an idea on how successful blueberries games on land Bank sign just wondering how they would transact online.
I don't have that data.
Mind to be honest with you I think you can get that data quite easily I think in terms of the buzz in the industry.
These guys have been doing better and better every year. So I think the continued to take market share. So the.
The gains really resonate with the casinos, we've spoken to them but.
But I don't have the exact data in terms of where that games ranked us as others, but we can we can definitely get a hold of them.
Okay, and then just a mild street.
It appears as though maybe that's.
The company is performing better than your expectation so far is that isn't that crossroads.
Sorry isn't in line.
So fall slightly ahead of our expectations yet.
Okay. Okay, and then you mentioned Dragon power.
And we did $1 million in GCI from New Jersey alone was that for.
Q3 or was that for a bit longer than that.
That was for the month.
Oh for a month.
Mhm Okay.
Momentum with aunt Jemima asthma.
I think I've said was August.
I'll come out confirming an email it comes from both the top line I think it was okay Ronan.
Do you have the number.
Oh, no I think it's the.
You said Richard Yeah amongst.
Check this one I think it was I think it was August so I'll.
I'll come back to it if it wasn't.
Okay, I mean, the idea and the idea of this slide is just clearly to show that this.
This guy has been established.
And it continues to perform month on month.
She's had been increasing.
So which is obviously unusual for the majority of our casino concept.
And I think that's and we're trying to make the point that.
Because its land based background both prices is going to correct. These games it's a.
Much longer process and that's what drives.
This type of performance.
Mhm.
Okay. Okay. That's great. Thank you.
Thank you.
Once again, if he would like to ask a question. Please press Star then the number one on your telephone keypad. Your next question comes from the line of Mike Shelton with FRC.
Good morning, guys. I was wondering if you could talk a little bit about the sports betting opportunity that you may be seeing in the U S and how you think about that from a long term visions standpoint.
Good morning to you to be honest with you. It's not we're not really focused on sports betting, especially from a north American perspective.
Yeah, there are lots of other people have.
The product offering.
There's obviously a lot better than all of us. So it's just not something that we've touched on we think the bigger opportunities.
The online casino.
And that's why we're focused on them.
Thank you.
At this time there are no further questions I would like to turn the call back over to you on this bill Burke for closing remarks.
Thank you very much for joining our call and we appreciate the questions and the insight.
See you all of our next call. Thanks, a lot.
Thank you.
Thank you very much. This concludes today's conference you may now disconnect.
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