Q3 2023 Bragg Gaming Group Inc Earnings Call
Hello, everyone and welcome to D. Brad Gaming Group third quarter 2023 earnings Conference call. As you may have noticed it has been taking a few minutes longer than normal to get everyone. Connected. So we're just going to wait another two or three minutes for folks to join we thank you very much for your patience and we will be right back with you.
And stay tuned.
[music].
And thank you for standing by I would like to welcome everyone to the Brag Gaming group third quarter 2023 earnings 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. If you'd like to ask a question. During this time simply press star followed by the number one on your telephone keypad once again star one and if you'd like to withdraw your question Press Star one again. Thank you.
I would now like to turn the call over to you need Spielberg Chief strategy Officer for Brad Gaming Group <unk>. Please go ahead.
Thank you operator, good morning, everyone and thank you for joining our third quarter 2023 earnings conference call.
Albert Chief strategy Officer for broad gaming group I'll be hosting today's call alongside my colleagues CEO of <unk>, who will comment on our third quarter performance and relent Galore, Our CFO will review and discuss our third quarter financial results.
You have not already done so you can follow our earnings call presentation from our website at investors Dark Brown Dot group, that's investors with an S. Dot broad dot group in a section called latest presentation.
On this call will review <unk> financial and operating results for the third quarter of 2023 and following our prepared remarks, we'll open the conference call to a question and answer period.
On 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 securities law.
Statements about expected growth perspective results strategic outlook in financial and operational expectations opportunities and projections rely on a number of assumptions concerning future events, including market and economic conditions business prospects or opportunities future plans and strategies technological developments and anticipated.
<unk> trends and regulatory changes that may affect the corporation and its subsidiaries and their respective customers and industries. 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 and which could cause the actual results performance or achievement of the comps.
We need to be materially different.
Can be no assurances that these assumptions or estimates are accurate or that any of these expectations will prove accurate for a complete discussion of these factors. Please refer to our recently filed the press release and other publicly available disclosure.
Behind us I'd like to turn the call to our CEO Matteo del.
Good morning, everyone.
Paresh mozzie mature men and C O Bragg.
And I'm going to run through our operational highlights from the quarter.
Then I'll hand over to our CFO rune and convert who'll take you through the financials.
Afterwards, I'll take a few of the points in little more detail wrapping up with our outlook and summary, and then run in and I will be happy to take your questions.
Turning now to slide four I want to run through some of the key points of third quarter the quarter in which I was appointed CEO I have a long history of Brock I. Originally founded Auris gave me back in 2012.
Running the company until I sold or extra drag in 2018.
As a part of that process I also became <unk> largest shareholder.
I continue as CEO voice until in 2021 is to back from operations enjoying brags board of directors as a director I have strongly supported our U S acquisition was for gaming and its been games.
It was involved in developing our U S expenditure strategy I was subsequently appointed chair of the board earlier this year and then CEO at the end of August of this year.
By appointing me as the CEO of the board with seeking to align and streamline the interest of <unk> shareholders with company operations.
And to unlock shareholder value, which is something I aim to do.
So I'm delighted to be back and reporting on another quarter in which we continued to make good progress on our goals.
After rolling as presented the financials I'm going to talk a little about our extended agreement with bet City.
Which will see us continue supplying our Pam content and content aggregation Tibet city into 'twenty to 'twenty five.
And I'm also going to reiterate and expand a little on the key pillars of <unk> strategy of how we aim to take the business to the next level and to become the premier content and technology supplier to the growing global gaming industry.
Our content roadmap is going very strong we are on track to launch 68 exclusive game titles globally. This year.
Putting our output along the top tier of online casino game developers on the market almost half of these titles are from our proprietary Black Studios brands.
Generating higher gross profits for the business and we intend to continue at this space.
During the third quarter, we were pleased to see two of our powered by <unk> titles entered the top 25, new slot ranking published by others and criteria.
The success of there was lot by blueberry and Ultra rush Goldman Steve from incredible technologies.
It is a testament to our strategy in the U S.
Partnering with successfully I'm familiar land baseball brands, and bringing them online exclusively available on the market by a broad.
Our U S rollout of our newest content and technology continues with recent launches with local market leaders bet MGM in New Jersey, and with Bond you wouldn't Michigan in Connecticut, and we're pleased to be able to leverage.
Our slot production capabilities to build and released a bespoke game for Caesars digital with Lady luck Casino Egyptian Magic, which is now available exclusively to players of Caesars Palace online casino in Michigan.
In New Jersey.
Our ability and capacity to build bespoke game titles is an additional differentiation point, where we can deliver added value.
To our customers and build long term growth.
In other markets, we continue to rollout our content with new customers in Italy, we have launched with two operators in the market locally.
The slide deck.
And in Ontario, We went live with that 365 and in the U K, we launched games with Union bed, which is one of the kindred.
<unk> brands.
With that I'm now going to hand over to Ronan to present, our third quarter financials Bryan.
Thank you Matteo with Sharon Good morning, everyone I'll begin my comments on slide six.
As Matteo she indicated earlier the third quarter 2023 was another positive step.
Digital journey.
We continue to execute against our mission and strategic plan and we can say that in our financial and operational results.
In the third quarter total revenue.
8% year over year to $22 6 million euros, continuing our growth momentum since the fourth quarter of 2021.
The growth was mainly derived organically.
Existing customer base launching financial year, 'twenty, one and 'twenty two in particular, the Pam and turnkey solution customers in the Netherlands.
Together with content offering and a solid revenue performance from the Wall Street gangs to your customers.
Third quarter, However showed a slight sequential drop of eight 5% as a result of Betsy D revised extended commercial terms.
From an operational Kpis perspective.
Local wagering generated by gains in content offered by the book during the quarter was up by 24, 6% from the same period in the previous year to $5 7 billion versus corporate 6 billion euros in the same period last year.
As you can see from the wagering childhood or right inside <unk> ongoing positive momentum from the fourth quarter of 2021, which demonstrates our ability to transform and diversify our operations.
Gross profit for the quarter increased by 13, 5% to $11 9 million euros with gross profit margin slightly increased to 52, 5% or 50% in the same period last year.
The gross profit is primarily the result of increased revenue performance in all content product.
While recording slightly lower Perm and managed services revenue, which also as a result of bad Sydney renegotiated extended commercial terms.
Adjusted EBITDA for the quarter was up by 75% to $3 8 million euros with adjusted EBITDA margin, reaching 64, 9%.
An improvement of 620 basis points from the same period in the previous year.
The changes margins, mainly as a result of scale in revenue, while maintaining control investment in salaries and subcontractors and other operational costs as part of the company's strategy to expand software development product and senior management functions.
Operating loss increased by <unk> 5 million to $2 1 million, mainly as a result of the one off termination of an employment contract.
Loss from the first consideration where.
We're pleased with the current trading and we are reiterating our 2023 revenue guidance range of 95 to 97 million and adjusted EBITDA range of 15, five to $16 5 million euros.
As you can see on slide seven.
Gross profit margin continued to show a growing momentum since the fourth quarter of 2021 due to the changing product mix.
We continue to execute against our mission and strategic plan and we are scaling up our business in line with both our revenue growth and the continued movement in product mix as indicated on the right hand side of the slide.
Gross profit increased by 13, 5% to $11 9 million euros with margin increasing from previous year, but.
250 basis points to 52, 5%.
In the third quarter revenue growth year over year was driven mainly by the Dutch Pam and turnkey customers outperformance together with improvement of our content offering.
In the third quarter constant revenue segment, offering, which including aggregated third party exclusive third party and proprietary content increased to $17 9 million euros and represented 79, 4% of total revenue as opposed to 69, 9% on previous year, highlighting <unk> execution.
Of the content strategy.
Proprietary content development is positively progressing both in the U S and EU markets by increasing both distribution and games performance is that Mattel has indicated we have recently marked another key milestone with our recent launch of our newest tech stack in New Jersey with bet MGM.
As indicated in the previous quarters.
We are targeting gross profit margin improvements to exceed 60%, but full year 2025, mainly by increasing the proportion of revenue which comes from proprietary content Pam solutions.
Moving to slide eight adjusted EBITDA amounted to $3 8 million euros against an operating loss of $2 1 million the.
The gap was driven by the following noncash exceptional items.
Appreciation and amortization and the increase in intangible amortization as part of the spin games acquisition in June 2022 increased level of investment in software development and a change in the useful life of customer relationship <unk>.
<unk> payment.
Chart four awards granted to senior management during the period proposal of Dsos Recs and options. During the period, one off charge of 0.5 million euros was incurred relating to discounted contractor relationships often employee.
Exceptional costs, mainly associated with the discounted contractor relationship of employee and the total value of zero point $6 million.
And gain on Remeasurement of deferred consideration is mainly associated with the acquisition of spring games in June 2022 on the total outstanding deferred liability. It was adjusted to reflect the change in our current fair value.
Moving to slide nine as you can see on the slide we ended the third quarter with cash balance of $7 9 million compared to $11 3 million euros of December 31, 2022, with outstanding liability of $5 $5 million of convertible securities.
During the third quarter and post quarter end the company made cash repayment of $2 5 billion U S dollars, leaving an outstanding balance of $4 $5 million as of today's date.
We expect to continue exercising our rights to pay down the existing convertible security subject to ongoing management assessments.
Our net working capital at the end of September $2026, 3 million, which excluding deferred consideration and convertible debt this compared to $6 6 million at the beginning of the year.
On a cash flow perspective for the nine months ended September 32023, a total of $6 2 million euros generated from operating activities with underlying performance, reaching $10 2 million.
Offset by negative movement in working capital and income tax of 4 million euros.
A total of $6 6 million euros invested in intangible assets, mainly related to the capitalization of software development cost in the period.
And the total of $2 6 million euros used in finance activities, which predominantly related to the repayment of loans in relation to the convertible security in the total of $2 3 million euros looking forward management are projecting a positive free cash flow from operations. While there is no capex for technology, that's required in the business.
In addition management is confident that there are no current financing or debt requirement needs for the business.
With that I will hand over back to materials to continue a business and operational activities.
Thank you Ronan.
As a recently appointed CEO and with this is my first time reading our earnings call I want to remind everyone of the great business that we built.
And of the exciting future we have ahead of us.
<unk> is an award winning supplier in the growing multibillion dollar I gaming market, we have over 450 employees in seven offices across North America, Europe and in India.
We are licensed or certified to offer I gaming products in over 25 regulated jurisdictions globally.
Including the largest markets in the U S and Europe, such as New Jersey, Pennsylvania, Michigan.
UK and Italy.
Our customers number over 200 and include names such as bet MGM Draft Kings banned U in the U S and maintain Super bet and flutter in Europe.
In view of recent M&A activity in the I gaming space I believe that a drag we have built something very unique in the market.
There are very few companies in this space that are able to offer what we can.
Which includes our full product suite of content content aggregation sports book delivery, Pam promotional tools and managed services.
With this product suite, we're uniquely positioned to be able to deliver full turnkey I gaming solution in regulated markets and in a landscape where more and more markets are on the cusp of regulation.
With that in mind, I will take a few minutes to refine and reflect on <unk> strategy, which I haven't fundamentally changed since coming in as CEO, but we have refined and expanded.
And we now plan to accelerate <unk>.
Firstly, our proprietary and exclusive games roadmap has been a renewed focus for us since we integrated the wall Street gaming business.
<unk> in 2021.
Brock Studios are our in House Studios, which now include Wall Street gaming spin games and gaming as well as two New studios, we launched last year atomic slot lab and Indigo magic.
Gains from Brack Studios, which are also built on our own technology and distribute it through our own network generates close to 100% gross profit margin for us.
So these are an important part of how we will deliver the overall gross profit and adjusted EBITDA margin targets that we have set for ourselves that ronen mentioned earlier.
In a moment on the next slide I'll show you. How we are doing in terms of roadmap delivery for a black studio content.
The rest of our exclusive casino games portfolio is made up of games from our powered by <unk> partners, such as blueberry incredible technologies Gamont King show games and many others.
These gains differentiate our games portfolio and include Big names from both the land based and online spaces game.
Games that are in demand and which are available online only two customers of <unk>.
So we are leveraging our increasing portfolio of exclusive games to build brand recognition in North America, Europe, and Latin America, and the size of our portfolio and our production capabilities mean that we can offer locally adapted games titles in each of these markets.
As you saw from the recent gaming built foresees, a digital Lady luck Casino Egyptian magic.
We are also in a position of strength when it comes to our ability to deliver in demand custom and exclusive content for our partners.
We will also continue to grow our content distribution network in regulated markets. This means focusing on our relationship with tier one and tier two operators, who offer scale in multiple markets and we are content for multiple markets too much we want to continue to grow in large regulated markets were back online.
Cause casino content is still under represented.
And these markets offer plenty of scope for growth.
We are clearly focused on content rollouts in the United States, but markets, such as U K, Switzerland, Italy.
Portland, and Ontario are also important to our content delivery growth paths.
We are closely watching regulatory developments as many markets, which currently have no legal framework for online casino or those which currently have restrictive frameworks.
We are reviewing their laws with a trend towards more jurisdictions opening up regulated gaming in the near future as.
As well as watching for the next states to adopt online casino in the United States, we are well positioned to.
To enter or expand in Latin American markets and newly regulated European markets.
As these new markets regulated we will explore all opportunities not just for our content, but also for our full product suite, including Pam and content aggregation and I'll talk more about that in a moment.
A key differentiated product that we developed as views this as a multi award.
Winning promotions platform that allows operators to run promotions, such as free rounds tournaments missions and quest.
To Gamify and reward players and these work across both casino lottery and sports betting products.
All brands constant customers, whether for Brac studios powered by Brian.
Aggregated content or sports betting product that we deliver already have access to fuse and fused driven campaigns.
The resulted in significantly more traffic.
Our conversion rates better retention rates and higher lifetime value, which is beneficial both to our customers and to US and we are now focused on working together with our customers to rollout with Morpheus driven promotions.
And we are now also able to offer fuze as a standalone promotional platform for both casino and sports book.
And we have already integrated our first customers under this model.
As we continue to develop fused with more in demand features coming soon we're also excited to be developing this proprietary functionality to create differentiated and unique casino content categories, where the name of creating a niche for broad content in a crowded marketplace.
We at <unk> are extremely proud of our full product suite, which includes our proprietary and exclusive content.
Aggregated content sports book delivery.
Pam managed services.
Fused promotional tools and data and reporting products.
We have over 200 customers, including some of the biggest names in the United States Europe and globally.
Upselling, our promotional tools aggregation services and turnkey services to existing content customers is a key growth channel for us.
Likewise, we are working with our integrated sports book partners to create compelling new Pam and full turnkey propositions.
With the aim of expanding our platform business to new brands and new markets and as always we continue to invest in our product to refine improve and to explore opportunities in new jurisdictions.
Our strategy is focused on expanding recurring profitability through our culture of continuous improvement with an eye on opportunities for increased automation and lower cost to serve this.
This way, we will continue to expand our profit pools in gross profit and adjusted EBITDA margins.
So to conclude brags long term ambition is to maximize shareholder value by becoming a premier gaming content.
Technology provider.
Moving to slide 13.
We extended the agreement with better NPV.
Where we have agreed to continue supplying our Pam that's player account management platform and our content and content aggregation.
So its flagship brand in the Netherlands, but city into 2025.
We partnered with <unk> to launch the brand back in October 2021, when the newly regulated Dutch market opened.
And we're proud of our part in helping <unk> become one of the leading online sports betting and casino brands in the Netherlands today and where.
Extremely delighted to continue to build on this success with them as a part of the extension deal we will integrate several new third party content suppliers for the Dutch market.
Further strengthening our localized content portfolio.
But we will also continue to deliver content from our proprietary Black studios.
From a powered by <unk> partners, and we will continue to be the exclusive content aggregator for best city via our product delivery technology for the duration of the agreement.
Moving to slide 14.
On slide 14, I want to give you an update on how we're doing as a developer and distributor of exclusive online casino games.
We are on track to release 68 games titles.
I believe for a full year of 2023.
Putting our output up there with the biggest game studios on the market.
Proprietary and exclusive games production has been a renewed focus for us in the past two years.
So I am very proud of development capacity, we have built and of the quality of the games that we're releasing.
As well as ramping up our online casino games to production, we are maintaining a strategic balance with approximately half of the titles coming from our own <unk> studios, which generate high margins for us and half of it coming from our powered by <unk> partners.
Bringing diversity richness and in demand studio brand store portfolio.
As you can see.
In the second half of 2023.
Our content releases significantly increased and we plan to continue at this cadence into 2024 and beyond.
So in summary, our third quarter revenue rose, 8% year over year to $22 6 million euros.
Gross profit was 11 9 million euros, and adjusted EBITDA was up 75% year over year to $3 8 million euros.
We have extended our agreement with <unk> to continue as their exclusive Pam content and content aggregation partner into 2025.
We have our strategic pillars in place that will underpin our growth going forward, and which will drive shareholder value and our exclusive content production roadmap is firing on all cylinders with 68 online casino title is on track to be launched in the full year of 2023, including 30 from our proprietary <unk>.
Studios.
Current trading is in line with our expectations. So we reiterate our guidance for 2023 of 95% to 97 million euros in revenues and 15 five to $16 5 million in adjusted EBITDA.
The midpoint of these ranges represent 13, 3% revenue growth and 32% adjusted EBITDA growth compared to our 2022 performance.
I want to thank you all very much for attending this presentation today and now rolling in I would be happy to take any questions you might have.
Thank you.
And at this time I would like to remind everyone in order to ask a question press star and the number one on your telephone keypad. Once again star one on your telephone keypad, and we will pause just a moment to compile the Q&A roster.
Okay. It looks like our first call is color is John Luca <unk> with Haywood Securities John Luca. Please go ahead.
Hi, Good morning, guys and congrats on another good quarter I'm just wondering if we can start off on the news from earlier this week.
I think you did a good job of providing color mats, but the extension like does it take you through 25 were at the start of 'twenty five.
And I'm curious if you can speak to how the company expects the revenues.
Like mix to shift from this one customer over the duration of this extension agreement.
Luca.
So the exact details of the commercial times remaining obviously subject to the parties is only is there.
Sensitive commercial terms, we by negotiating this deal with focused on keeping the palm and aggregation deal and it's in place until September 2025.
And.
We reduced managed services resources, which maintain or D as in house.
<unk>.
Moving forward we are.
We're going to.
We work pretty aggressively.
On.
Decreasing the exposure to.
One of our top clients and we are going to work very aggressively.
In the direction of growing our content proprietary content portfolio of clients the tier ones that we have signed recently and the increasing number of aggregation in time clients, where we believe that we have.
A very good opportunity to leverage that position and grow our proprietary and powered by Brock content revenue with them.
Great color Thanks, Matt.
And so on your commercial efforts with all the recent tier ones that have been signed over the last quarter or so I'm just wondering how you're thinking about 2024 at this point from a growth perspective combined with your cadence of games comment.
Accelerating it appears that 2024, it could be even growth you're then.
<unk> 23 at this point just curious for your comment on that.
Sure. So we now have agreements with most of the tier one operators, but they don't represent top customers for Bragg.
Our plan in 2024, and 25 as well as to grow our wallet share with all of these existing content only operators as well as existing Pam and aggregation operators as they present, a great revenue growth opportunity for our proprietary empowered by Brac content.
We are also looking to establish ourselves in markets that we're in but we are underrepresented and finally.
Newly regulated markets in Latam in Europe are a great opportunity for our Pam aggregation engagements and constant products with these tier one operators that we already signed with and new operators that.
<unk> are coming.
Coming out of these newly regulated.
Landscapes.
Okay, that's great.
And insurance and my last question here.
As it pertains to the American markets.
In the U S, particularly.
Are you doing anything differently or is it pretty much the same kind of execution plans from a growth perspective in the U S.
Okay.
Well as discussed in the presentation in 2023, we will eventually rollout 69 titles both in the U S and Europe.
Preliminary data suggests that the content performs well.
<unk> is now live in the four largest U S gaming markets being Pennsylvania, New Jersey, Michigan in Connecticut, but its proprietary content.
And we continue to rollout with more operated brands in these states further expanding its reach.
So answer to your question, we launched our content portfolio and Pennsylvania with Rush Street Interactive and have also launched.
Content would find you in Michigan in Connecticut and win back in New Jersey, and we expect this trend to continue into 2024 and 2025.
I I.
I would like to also say that we're very excited about the U S.
I want to remind everyone that our business is extremely successfully in Europe and that we're one of the largest content aggregators and leading Pam providers in Europe.
We expect to leverage.
Our expertise.
Going into the U S and become a leading content provider and I gave me partners to global operators in U S. Only operators, obviously, such as an <unk> flutter.
Battery <unk> and others.
Okay. Thank you for the color mats and congrats again on the quarter. So that's a good work.
Thank you.
Thanks, John Luca <unk>.
And our next question comes from the line of Jordan Bender with JMP Securities Jordan. Please go ahead.
Great. Thanks for taking my question actually just mentioned brush treat in your prior comments. They are the new operator, starting here soon in the state of Delaware.
Neil online platforms I was wondering.
What does that kind of mean and can you kind of frame the revenue operator potential revenue opportunity for the company.
Over the course of 'twenty five.
24 and 25, thank you.
Hi, So it's probably too early to discuss the revenue opportunities for 'twenty five we.
I believe that Rush Street is a obviously a great operator that they have.
It's an extremely good team an extremely good product and I believe that theyre going to use.
All of that to significantly grow.
G G R.
In the state of Delaware.
We plan to be.
Very high on their priority list of content providers.
For that state exactly what the revenues are going to be it's probably too early to discuss.
Understood.
And then in terms of your player and wager growth nice growth in the quarter, but from a wage or per player perspective, youre seeing a little bit of a deceleration.
Year to date, and especially here in the third quarter or is that just a function of mix or is there something in the underlying consumer just spending less thank you.
Yes. So this is mainly connected to the seasonality.
Third quarter is usually slower than first and second quarter.
Yeah.
I guess from a from a growth perspective.
First half down roughly 5% in the third quarter is down about 24 is that it.
Is there anything kind of in that.
Okay.
I wouldn't say there's anything.
In that any underlying.
<unk> <unk>.
The reason that we would be able to identify.
Understood. Thank you very much.
Thanks Jordan.
And our next question comes from the line of <unk> <unk> with eight capital. Please go ahead.
Thanks, guys. Thanks for taking my questions and Matt Congrats on the role looking forward to working with you.
Let's talk about some of the European market, specifically, the UK and Italian markets you've been in these markets for some time some meaningful wins how are you thinking about those two markets just given how large they are and how meaningful they could be for your for your revenues moving forward.
Yes. So we were in we started with these markets.
Anywhere between 24, and 12 months ago, and we were.
We were using this time to integrate with with clients. These are obviously.
Pretty heavily regulated markets.
We believe that they are a great opportunity for us.
Content only proposition and we.
We believe that we were largely underrepresented.
In those markets and we feel that these markets represent a great growth opportunity for our content in 'twenty four and 'twenty five.
Okay excellent.
And then just the content in different European markets, you've obviously had success how easily transferable are those markets from say.
The Netherlands into the UK, and then into Germany, and just like how does that all work and do you find that there's minimal heavy lifting or investment that needs to go into.
Launching this content in different markets.
Okay.
We are integrated with most of the clients that are operating across these markets. So the heavy lifting has been has been done in the past.
While we need to do now is we need to use our data and build local.
Custom content that is going to.
Fifth third of requirements of these markets and effectively place the content positioned to content and promote the concept with these operators and use our engagement tools that will allow us to create certain unique and specific categories within the content portfolio to be able to compete with existing content providers in these markets.
I'm very positive about the progress that we have made over the last 12 months.
And I believe that we have.
Great future ahead of us with.
With the two proprietary studios and Roadmaps that have been put in place with these two proprietary studios and <unk> studios that are developing content for these local markets in Europe.
Excellent. Thanks, guys congrats on the quarter ill ask Wayne.
Thank you thank you Dear.
And one final reminder, if you'd like to ask a question star one on your telephone keypad once again star one and our next question comes from the line of Daniel Rosenberg Daniel. Please go ahead.
I imagine Ron and my first question comes around cost controls and automation. So we're seeing some of the benefits take place here in the quarter, but just wondering how much.
More leverage do you have in terms of implementing our other automation into your operations that could.
Keep yielding strong results.
Gordon you want to take this.
Sure Danielle good morning, everyone.
So we implemented at the beginning of last year, we had said at the beginning of this year. So we implemented quite a low cost controls.
Some of the areas that.
Only focus on our growth and what we actually need to grow and to diversify in different markets different products and of course of course, the new content.
We're producing.
Of course, there's a lot of room for innovation is from every single Department.
But I would have to say for a business perspective to date. The majority of the work is automated the majority of the process with automated.
<unk>.
Having more efficient in the way we are operating the way we actually built in gains we are we investing in our technology. We actually have at this stage I would say, we're very well positioned to further growth with the same teams and the same operation we have today.
Yes, there is a lot of growth in the broad opportunity support organization.
But I think we're already there I think what we're seeing right now what we will be seeing right now is more.
Commercial and more revenue coming from from the same team from the same functionality and infrastructure, we have right now.
Thanks for that context.
My second question is around the pet city contract I was just wondering.
Nice to see the risks contained here is the final outcome in line with what you were expecting as you started.
Negotiations and are there any other opportunities to work with that city that that came out a dozen negotiations.
Yes, so our original agreement that a five year term with a 12 month termination notice of where we're happy that we managed to secure.
<unk> secured the extension of the deal and obviously in line with our expectation.
Betsy it and entertain as a group are a key partner of ours and we're proud of what we have achieved together.
We've been having a very constructive dialogue over the recent past and we hope to be able to power the <unk> brand and maintain group as a global powerhouse.
Going forward.
Yeah.
We are right now very focused on making sure that city continues to effectively utilize our products in and continues to grow.
And I think it's positive that.
That.
We have.
Security.
Linearity of the deal and we have.
Now a clear pathway have continued.
Support <unk> strategic initiatives in the market.
And Dane is like I said, a global operator.
Presents a large opportunity for us as a.
Content provider.
For us as an aggregation solution provider and for us as an engagement.
<unk> solution provider, so we will work.
Together with.
Maintaining that city to implement these solutions into their b to C network.
Across.
Across all different jurisdictions in 2024, and obviously 2025 and hopefully achieve.
Similar success as with Betsy D.
Okay, Thanks for that and lastly.
Just a quick one for ronen on the working capital.
Free cash flow you guys are expecting to do continue to improve and grow just wondering if theres any.
Color you could give in terms of how working capital ebbs and flows in the coming quarters.
If you require capital to scale just.
Just from my working capital perspective.
Okay.
Yes so.
As you've seen in the last nine months of operation the working capital relatively remained the same $6 three.
About six six to $6 three.
Of course, with a higher adjusted EBITDA compared to previous year. So we believe that in the next couple of I would say the next nine months.
We'll be able to generate relatively the same type of process.
Funding our investment in our software development cost, which I think is going to be relatively the same I don't think theres, a big expectations would be much higher than that we can serve the debt. That's what we're doing and I think excluding the changes in working capital in the last nine months period, we definitely can said that and the working capital would probably will improve with everything we're doing right.
Now so I'm quite confident that it will be.
Likely higher than what we're seeing right now compared to last until compared to what we did so far.
And.
And we will we'll improve that cliff.
It seems the three 4 million euros in the next couple of 99 months with non lifetime.
On the basis that we're going to secure the debt and we are paying on a regular basis.
To avoid any dilution to shareholders.
Thanks for taking my questions I'll pass the line.
Thanks Danielle.
And our final question today comes from the line of Sid <unk> with core Mark Securities said. Please go ahead.
Hey, good morning, guys. Thanks for taking my question.
Firstly, just on the Ontario market, maybe if you can speak about the general landscape. In Q3, you are now live in bed 365 Rush Street interactive and maybe a couple of others.
It seems like there was minimal sequential growth on the number of live operators and just given that dynamic do you see your future growth in Ontario from penetrating further with current operators or from new operators coming back to the market.
Yeah.
So we are seeing future growth coming from existing operators like I said, we are going to grow our wallet share with these existing.
Content only operators.
And I believe they present a revenue growth opportunity.
As well as new operators coming coming into the market.
Ontario has been.
A market that.
Is growing slower than expected, but I believe that.
We are going to be able to increase our presence.
In the market through existing and new operators like I said.
Okay. Thanks, and then just going back to the patent extension agreement with MTN <unk> nice to see honestly.
<unk> market share in Netherlands also remains resilient and any commentary you can provide.
On the competitive landscape, there and if you have opportunities now with more localized content to penetrate further in that market with more operators other than that treaty.
Yeah.
Yes, we are.
We have established ourselves as a leading <unk> solution provider in this market.
We believe that we have more opportunities to grow as a pan and aggregation solution provider in this market.
And.
We also believe that.
We are going to be able to leverage our position as a leading <unk> solution provider and aggregation solution provider in the market to grow.
Sure.
<unk> wallet share like I said in the market and and I think that Netherlands has been a great market for us in the last over the last two years and we believe that we are going to be able to maintain.
Our position.
And the market moving forward.
Okay and then just one last one for me just on the M&A landscape here, we've seen some industry consolidation over the last few weeks.
Also related to in your prepared remarks, do you see any opportunities in the near term to be acquisitions at accretive multiples.
So would your focus be primarily on gaming studios or somewhere else.
<unk> do you want to take this question.
Yes sure. Thanks Ted.
Thanks for the question.
We can see from recent M&A activity in the market that.
Obviously capital markets are undervalued <unk> companies successful company that we have seen recent examples.
And the acquisition of aristocrats of aspire and obviously the recent acquisition that was announced yesterday between them.
Like a semi and Gan companies that are trading at much lesser evaluations and what companies are willing to pay for in terms of cash and that in our opinion is the true value of companies and I think that is not where the capital markets today.
That's on the landscape in general but in terms of.
We have.
Everything that we need in house in terms of the content studios in terms of the distribution agreements and especially the technology. We're looking to continue to grow the business and expand within our customers and to new customers and in new jurisdictions and if there is there opportunity on us to be acquisitive and of course, we will look into it and of course as a public company.
There are a lot of other opportunities to be.
In the M&A space and that's something that we are open to an always on the lookout for.
I'm, sorry, so <unk>.
Potential targets would be primarily the focus towards.
Content producer I think gaming studios or.
Somewhere else.
Most of the content I mean, we have all the tools in house that we need in terms of the technology the distribution and the licensing and so if we were to be acquisitive. It would be about content and differentiated content that is localized.
Restrictions, where we operate in.
The jurisdictions that we want to operate in.
Okay. Thanks for that color any opex right.
Okay.
Thanks, Ed and thanks to all of our callers with questions today and with that I will now turn the call back over to you and Ive Spielberg for closing remarks, you need the floor is yours.
Thanks, everybody for joining our call. Thank you for being interested in Brad.
We're closing another very successful quarter, and we look forward to hosting you on our next quarterly call.
Have a great day everyone.
And ladies and gentlemen that does conclude today's call. Thank you all for joining and you may now disconnect.
Thank you.
Yeah.
Okay.
Yeah.
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