Q1 2025 Bragg Gaming Group Inc Earnings Call
Yeah.
Eric: Good morning, everyone. My name is Eric and thank you for joining the first quarter 'twenty to 'twenty five earnings conference call for bread Gaming group.
Matteo Mozzie: Oh, certainly hand, the call over to Brad gaming group's CEO Matteo Mozzie.
Matteo Mozzie: Who will comment on bags first quarter 'twenty twenty-five performance.
Speaker Change: <unk> CFO, Robbie Bressler, who will review and discuss the company's first quarter 2025 financial results.
Speaker Change: I would like to remind you if you have not already done. So that you can review brags result presentation on the company's investor website.
Speaker Change: Investors Dot Brag dog group.
Speaker Change: That's investors thorough within that.
Speaker Change: Then go to the events and presentations section.
Speaker Change: On this call there'll be a review of Greg's financial and operating results for the first quarter of 2025.
Speaker Change: Following these prepared remarks, the conference call will be open to a question and answer period.
Speaker Change: I would like to remind you that certain statements made on this conference call and the responses to various questions may constitute forward looking information or future oriented financial information within the meaning of applicable securities laws.
Speaker Change: If you have not already done so please familiarize yourself with bags full explanation of these risk factors are available on the second slide of Greg's first quarter 'twenty twenty-five earnings presentation, which is titled forward looking statements.
Speaker Change: And which is published on the website at investors Dot Greg Doug Group.
Speaker Change: This information is also available in bags recently filed first quarter of 2025 press release and other publicly available disclosure.
Matteo Muggy: I'd like to turn the call now to Matteo Muggy.
Matteo Muggy: Chief Executive officer of break.
Matteo Mozzie: Good morning, everyone. My name is my theory, Mozzie I'm the CEO of <unk>.
Matteo Mozzie: On this call today, I'll start with our first quarter highlights and operational updates.
Matteo Mozzie: I'll pass the line to Robbie who will discuss our latest financial results.
Matteo Mozzie: When Robin has given his commentary on the numbers.
Matteo Mozzie: I'll discuss more about our strategy and operations.
Matteo Mozzie: As well as our outlook for the rest of 2025.
Matteo Mozzie: And after that Robin and I will be more than happy to answer any questions. You may have.
Matteo Mozzie: For those of you that are not familiar with broad who exactly is Brock gaming group.
Speaker Change: We're not just another name in the gaming World.
Speaker Change: First where are the architects of user experience.
Speaker Change: We create and deliver cutting edge casino games.
Speaker Change: Straight from our own studios.
Speaker Change: And alongside a handpicked selection of the most disruptive third party creators out there.
Speaker Change: Second word the silent engine behind some of the Giants of I gaming sports betting and I lottery.
Speaker Change: We empower operators to launch into the markets and dominate their markets with our proprietary player account management solution.
Speaker Change: And a full in house built delivery and engagement tech stocks.
Speaker Change: We are an online casino sports betting and Lori operators with the tools to launch flawlessly.
Speaker Change: Scale relentlessly.
Speaker Change: And optimized for maximum success.
Speaker Change: Forget glitches forget headaches, we deliver power and control to our partners.
Speaker Change: And third we're obsessed with the player.
Speaker Change: We don't just look at data we decode it.
Speaker Change: We leveraged the information coupled with advanced analytics and cutting edge AI.
Speaker Change: To supercharge payer engagement.
Speaker Change: We maximize revenue potential and build slaughter more efficient I gaming operations.
Speaker Change: In short we're building the future of user experience.
Speaker Change: This is Brian gaming group and what you're about to hear is going to redefine your expectations.
Speaker Change: In the first quarter of 2025, we are reporting 7.1% revenue growth.
Speaker Change: <unk> to the same quarter last year.
Speaker Change: And I'm also highlighting that excluding the Netherlands Rev.
Speaker Change: Revenue growth was a robust 27% over the same period.
Speaker Change: As is widely reported the Netherlands market has slowed in recent quarters due to regulatory pressures.
Speaker Change: A challenge faced by all operators and suppliers, serving the regulated market there.
Speaker Change: I am pleased that Brian has shown resilience under these pressures.
Speaker Change: It is reducing the exposure to the Netherlands.
Speaker Change: And is seeing strong growth in markets, such as the United States in Brazil.
Speaker Change: Which I'll talk about more later.
Speaker Change: I'm delighted to share that we are executing on strategy and moving the metrics that we believe are most important to increase shareholder value.
Speaker Change: This includes demonstrating operational leverage which we did in Q1.
Speaker Change: Improving our product mix with a greater proportion of margin accretive revenue.
Speaker Change: And increased cash generation, which we did in Q1 as well.
Speaker Change: And Ravi will talk more about this when he takes you through the financials.
Speaker Change: After that I will talk about how broad is growing in the expanding U S online casino market.
Speaker Change: And not only is the market as a whole growing but we saw triple digit growth in the U S. G. G are derived from <unk> proprietary content.
Speaker Change: Such as our recent smash hit Dragon powered Triple gold produced.
Speaker Change: Produced by our in House studio Wall Street gaming.
Brian: Operationally, Brian has had a busy first quarter of 2025 with significant developments across the business.
Brian: As we announced during the quarter on the first of January we launched our content in the newly regulated Brazilian I gaming market.
Brian: E strategic territory for us.
Brian: As we expect 10% of our revenue this year to come from the Lat am region.
Brian: We also announced our games development and remote game server technology agreement with Caesars digital.
Brian: Leveraging the value of our in house game development expertise as well as our proprietary technology.
Brian: The first game to launch under this partnership Caesars Palace signature multi hand blackjack surrender.
Brian: It was released just this week and we congratulate seizes newly established in house game studio.
Brian: Empire Creative on this launch and the first of many more to come.
Brian: We continue to the North American rollout of our exclusive content with our lot of Quebec launch and we've doubled down on our commitment to expanding our localized games portfolio in key markets around the world with our investment in rapid play an exciting Brazilian casino content studio.
Speaker Change: At the board level I congratulate Holly Garden recently appointed chair of the board.
Speaker Change: Moving up from her excellent recent service as lead independent director.
Speaker Change: And allowing me to focus on leading our operations as CEO.
Speaker Change: Lastly, we repaid 5 million U S dollars.
Speaker Change: All of our $7 million secured credit note.
Speaker Change: While at the same time, extending the repayment of the remaining 2 million U S dollars until June 2025.
Speaker Change: While we realize a new credit facility with improved terms.
Ravi: Now I'm going to turn the line over to Ravi to discuss our financial results.
Speaker Change: Robbie.
Speaker Change: Thank you, Matt and good morning to everyone I will now cover our financial results for the first quarter of 2025.
Speaker Change: Total revenue for Q1, 2025, with $25 5 million euros up 7% compared to Q1 2024.
Speaker Change: As expected overall top line performance in Q1 trails, our Q4 run rate. This trend is consistent with seasonal patterns in the casino market, where Q1 is typically the softest quarter of the year.
Speaker Change: Factoring out the Netherlands, which decreased 19% compared to Q1 2024 due to regulatory changes such as deposit limits imposed on players' gaming taxes increases of 4% <unk> revenue was up a robust 27%.
Speaker Change: The revenue growth, we see outside of the Netherlands underscores the strong fundamentals of the business and reflects an exciting trajectory in growing markets such as the U S.
Speaker Change: Erika.
Speaker Change: With a higher concentration of revenue coming from proprietary content Q1, 2025 gross profit margin rose by 612 basis points to 56% compared to Q1 2024.
Speaker Change: While the Netherlands contracted in Q1 2025 compared to Q1 2024, we expect conditions to improve as the operators on our Pam maintained strong market positions subscale competitors, each rising margin pressures for some out.
Speaker Change: At the same time regulators are intensifying efforts to combat black market activity, our positive trend across Europe that supports <unk> focus on regulated markets. We are extremely excited about the triple digit growth of our U S revenue in Q1 F 2025, compared to the same period last year.
Speaker Change: Year.
Speaker Change: We're also encouraged by the recent developments out of Ohio, This week, which signals real momentum towards the possibility of legalization of casino in that state.
Speaker Change: We're well positioned to capitalize on these opportunities our integrations with leading operators are already in place and the incremental cost for us to launching new states such as Ohio is minimal.
Speaker Change: Edition of Ohio alone could expand the total U S casino market by more than 20% or 2 billion U S dollars a major opportunity for Greg as we continue to scale in regulated and North American markets.
Speaker Change: Moving to the bottom line performance in cash adjusted EBITDA grew by 19, 7% to $4 1 million Euro in Q1 2025 compared to Q1 2024.
Speaker Change: Our adjusted EBITDA margin was 16% or 169 basis points higher than the same period last year.
Speaker Change: Turning to cash flow, we generated $4 5 million euro in operating cash during Q1 2020 bonds at 61% increase from $2 8 million generated in Q1 2024.
Speaker Change: A key metric that we use to assess our operational cash performance is adjusted EBITDA less capitalized development costs in.
Speaker Change: In Q1, 2025, adjusted EBITDA less capitalized development costs amounted to $1 4 million Euro up 49% compared to Q1 2024 with a conversion ratio of 34%.
Speaker Change: Finally, excluding nonrecurring exceptional items and FX related impacts, we delivered 0.9 million euro in free cash highlighting the positive cash contribution for our increasingly proprietary content focus revenue mix.
Speaker Change: Q1 bottom line performance and cash generation illustrates our ability to achieve operational leverage and focus the business on capturing more profitable revenue.
Speaker Change: Turning to our product mix, we saw strong momentum in Q1 2025, driven by a continued shift towards high value products.
Speaker Change: Proprietary content reached a record 15, 5% of total revenue, reflecting the growing success of our in house titles, particularly in North America.
Speaker Change: Revenue from proprietary content grew 62% year over year to $3 9 million Euro up from $2 5 million in Q1 2024, a key milestone in our strategic focus on owned IP.
Speaker Change: Expanding our proprietary offering remains a core strategic priority you didn't have those margins deepens, operator relationships and strengthen our competitive position as demand for differentiated content continues to grow.
Speaker Change: Our patent turnkey solutions delivered solid growth with revenue rising to $5 2 million Euro in Q1, 2025, or 25% of total revenue up from 18, 5% a year ago.
Speaker Change: At the same time aggregated third party content declined to 45% of revenue down 570 basis points year over year. This deliberate shift in our product mix continues to drive profitability.
Speaker Change: As a result, both margins and cash flows are improving highlighting the operational leverage from scale and proprietary content and the high margin platform solutions. We expect this positive trajectory to continue with our evolving product mix as a key driver of sustained margin expansion and <unk>.
Speaker Change: Long term value creation.
Speaker Change: Turning to the balance sheet as of March 31, 2025, we held $10 8 million euro in cash and cash equivalents.
Speaker Change: Subsequent to the quarter, we repaid 5 million USD 7 million USD secured prom note outstanding.
Speaker Change: We remain on track to pay the remaining balance in Q2, 2025 and have made strong progress towards securing a lower comp standby revolving working capital facility. The facility is expected to enhance our financial flexibility and position us to pursue high impact strategic growth opportunities.
Matt: I'll now hand, the call back over to Matt.
Matt: Thank you Robbie.
Speaker Change: I've spoken about the potential of the U S market extensively during this call and the U S is and will continue to be an extremely important focus for Brock.
Speaker Change: Firstly, we're seeing robust overall market expansion in the U S with the online casino vertical our specialty in Pennsylvania, Michigan, New Jersey, Delaware and Connecticut.
Speaker Change: Growing 25% in the past year.
Speaker Change: The online sports betting market in the same states has contracted by 8% during the same period.
Speaker Change: During the same period, which saw U S online casino GTR grow by 25% in a year.
We saw a 338% increase in the GTR generated in these U S gaming states.
Speaker Change: From <unk> proprietary online casino content.
Speaker Change: For brags online casino content overall, including our partner studios.
Speaker Change: That growth was 155% in the past year.
Speaker Change: With casino booming the momentum is growing for new states to open up to online casino regulation.
Speaker Change: The $9 5 billion U S online casino market in 2025 is projected to be worth over 75 billion U S dollars at maturity.
As we continue to grow at a faster rate than this expanding market, we're extremely bullish about the opportunity for Brock.
<unk> scalable model allows expansion into new regulated states with minimal incremental costs as.
Speaker Change: As we already have commercial agreements in technical integrations in place with all the leading U S market operators.
Speaker Change: Such as droppings bond you bet, MGM, Caesars Rush Street and Golden Nugget.
Speaker Change: We're perfectly positioned to capitalize on this growing online casino market.
Speaker Change: And we are already growing at a faster rate than the market.
Speaker Change: In our other big key market a lot of time.
Speaker Change: We're making great progress as well.
Speaker Change: To recap, we launched in Brazil on the first day of the regulated market opening on January one 2025.
Speaker Change: As can be expected when a prereqs and market adopts a new regulatory framework.
Speaker Change: First month of the new market was a little soft.
Speaker Change: But it has picked up strongly and we remain very bullish for the rest of the year in Brazil.
Speaker Change: Both with our existing customers in the country and with the many new customers, we have and the delivery pipeline.
Speaker Change: By launching on the first day of market opening.
Speaker Change: We are strategically positioned for strong growth in Brazil's gaming market.
Speaker Change: Which is expected to generate $1 5 billion U S dollars in its first year.
Speaker Change: That growth will according to projections from age to gathering capital continue in the coming years with Brazil is online casino market expected to reach three 7 billion U S dollars by 2030.
Speaker Change: Supporting our Brazilian operations is our partnership and investment in rocket play.
Speaker Change: Specialist Brazilian game studio, which builds premium.
Speaker Change: Culturally attuned casino content that resonates with local Brazilian and Latin American players.
Speaker Change: Not only does this expand and enrich our localized content portfolio, but our strategic partnership includes the option for <unk> to acquire a controlling interest in the studio in the future.
Speaker Change: Robbie and I have talked about our increasing revenue diversification and our decreasing reliance on the Netherlands and on our largest customer in the country Best City.
Speaker Change: Since 2022.
Speaker Change: That city has become a lower margin customer for us.
Speaker Change: We project that in the full year of 2025 around 80% of revenues from this customer will be generated from our lowest margin vertical casino content aggregation.
Speaker Change: In 2020 to less than 60% of the revenue mix from Betsy became from aggregation.
Speaker Change: Over the same period, we have expanded in territories outside of the Netherlands.
Speaker Change: While in the Netherlands itself changing regulations have put increasing pressure on all operators and suppliers.
Speaker Change: In that market.
Speaker Change: The result is that bet city has steadily dropped from being 42% of total revenue for <unk> in 2022.
Speaker Change: To a projected 16% in the full year of 2025.
Speaker Change: And on this trend, we no longer expect that city to be our biggest customer next year.
Speaker Change: In fact should bet city exercised an option to migrate to our proprietary tech stack.
Speaker Change: We would anticipate a minor impact on <unk> bottom line.
Speaker Change: Now I'm going to tell you why <unk> is well placed to capture value in regulated <unk> gaming markets.
Speaker Change: Firstly against the backdrop of tightening regulations, and increasing enforcement by I gaming regulators in the U S and globally.
Speaker Change: We are uniquely positioned in the market as a NASDAQ listed regulated gaming market supplier.
Speaker Change: With a truly global reach.
Speaker Change: Most of our competitors offering online casino content and technology do not have the same regulated market focus.
Speaker Change: All product range as we do.
Speaker Change: We have an expanding profile in the U S market as a tier one gaming content partner <unk>.
Speaker Change: Having partnered with the likes of draft Kings Plaza, Jewel that MGM, Caesars and hard rock.
Speaker Change: We're well placed to capture value in regulated markets globally.
Speaker Change: And there is substantial value creation ahead for context <unk> enterprise value is currently approximately 110 million U S dollars, which is approximately five times the midpoint of guidance adjusted EBITDA figure for 2025 of approximately.
Speaker Change: $22 5 million U S dollars.
Speaker Change: Other companies in the sector have been acquired at enterprise valuations of 14 X of their EBITDA.
Speaker Change: <unk>, a strong case for value creation through investment with black.
Speaker Change: We're laser focused on creating growth opportunities in 2025 from our high margin proprietary gaming products are fully owned online casino content portfolio and our in house bills technology and.
Speaker Change: We're accelerating the strong momentum we have seen both this quarter and over the past year.
Speaker Change: Our guidance figures for 2025 project in 18% uptick in revenue to a midpoint of 120 point 25 million euros.
Speaker Change: And a 28% increase in our adjusted EBITDA to midpoint of $20 25 million euros.
Speaker Change: And we have a robust pipeline of opportunities, which have the potential to create additional upside to these existing guidance figures.
Speaker Change: We're checking the boxes of key metrics that we believe unlock Bronx true value.
Speaker Change: We're demonstrating operational leverage we're increasing bottom line margins and we're improving cash generation.
Speaker Change: Thank you for listening I'd like to take this opportunity to pay tribute to the entire <unk> team.
Speaker Change: For their continued unwavering hard work and commitment during the first quarter of 2025 and beyond.
Speaker Change: And now I will turn the line back to the operator, and Robbie and I will be happy to take any questions.
Speaker Change: We will now begin the question and answer session. So I'd like to ask a question. Please press star followed by the number one on your telephone keypad.
Speaker Change: Your first question comes from the line of Jordan Bender with citizens.
Speaker Change: Please go ahead.
Speaker Change: Good morning.
Speaker Change: You called out some of the best city headwinds, but Pam revenue did increase pretty nicely in the quarter. So two questions on that one is where are you seeing the strengths and pan revenue outside of the Netherlands, and the best City headwind and then second your Pam guidance of flat for the year implies a pretty material <unk>.
Speaker Change: <unk>.
Speaker Change: Just kind of wondering what you're seeing outside of the Netherlands.
Speaker Change: That would cause that from what you saw in the first quarter. Thank you.
Speaker Change: Matt.
Speaker Change: Happy to take that.
Speaker Change: Sales in Red Robin Garner I was on mute sorry.
Speaker Change: So yes, we are seeing.
Speaker Change: In the Netherlands, we are as mentioned on the call and in our remarks that we are seeing a contraction in that market.
We do see other opportunities in Europe, and we're seeing.
Speaker Change: Good growth and good opportunities coming across.
Speaker Change: Our pipeline to be able to rollout our Pam in other jurisdictions, but we are being very very particular about making sure Tim.
Speaker Change: Opportunities are going to be able to be scalable in a fashion thats going to.
Speaker Change: Justify the cost of investment to do that but we're quite pleased with the amount of interest. There is I think there's a bit of a trend amongst operators, who are looking to expand outside of their core markets.
Speaker Change: Necessarily revamping their tech stack to do that being able to get a tech stack into a different jurisdiction is not an easy feat for P&C, operator, and a lot of BDC operators are much more.
Speaker Change: To make the investment in marketing spend and player acquisition costs, rather than re banking their tech stack. So the the amount of coverage, we have with our pan sets us up extremely well to be able to service that need.
Speaker Change: And then if I elaborate on the territories were.
Speaker Change: We're looking at a number of territories together with our existing operators and operators that are currently not on our list of clients.
Speaker Change: These jurisdictions.
Speaker Change: In Europe are the jurisdictions that are expected to regulate I gaming.
Speaker Change: In the near future.
Speaker Change: We have mentioned some of these jurisdictions in the past.
Speaker Change: Certainly Finland.
Speaker Change: France to a certain extent.
Speaker Change: Depending on the timing of deregulation, obviously and then there are.
Speaker Change: Jurisdictions like.
Speaker Change: New Zealand that is expected to regulators in the future.
Speaker Change: And our existing markets, where we are.
Speaker Change: Currently supplying content and content aggregation.
Speaker Change: Such as Canada.
And in Brazil.
Robby: Great. Thank you for that and just a follow up Robby.
Speaker Change: Unclear on the on the debt facility understanding we're kind of in a wait and see mode on the ultimate financing.
Speaker Change: It does appear that business is on stable footing growth trajectory for the year looking strong. So curious how you look to get opportunistic utilizing that cash once the final debt facility is in place. Thank you.
Speaker Change: Sure, Yes, and as mentioned looking for right strategic investments to enhance our business. So if there is opportunities to get into partnerships.
Speaker Change: Somewhat similar to what we've done with rapid play where we can get a good fitting into.
Speaker Change: Good entry point into a country.
Speaker Change: From an actual boots on the ground situation and be able to leverage the outputs of the studio light rapid play.
Speaker Change: Really for all of Latin America, and perhaps even the world the cost of development of content and the quality that comes out of rapid play is extremely.
Speaker Change: Exciting and we really think we can leverage opportunities like that to enhance what we're doing across the world.
Speaker Change: Great. Thank you very much.
Speaker Change: Your next question comes from the line of Jeff <unk> with Stifel.
Speaker Change: Please go ahead.
Speaker Change: Hey, guys. Good morning, Thanks for taking our questions.
Speaker Change: Bit of a strategic question here I was hoping you might just expand a little bit further on the ongoing and targeted shift from aggregated content over to first party tag.
Speaker Change: Step back just how do you see that mix evolving let's say over the next three to five years, what are sort of the key levers to get there and just how should we think about the overall scale of potential margin accretion as you execute on that strategy.
Speaker Change: Yes.
Speaker Change: Thanks for the question.
Speaker Change: Aggregation.
Speaker Change: It's definitely something that we're not looking to move away from it is just we want it to be less and less strategic for us and what it does is it provides a good entry point to be integrated with the operators. So thats step one in our mind. The next step is getting our proprietary content flowing as much as we can.
Speaker Change: So we think that trend is just going to keep continuing and continuing I do think from a margin perspective.
Speaker Change: I believe this company at full scale should be in the 20%.
Speaker Change: Margin region, and I think we're making the right moves to get there I'm actually confident we're making the right moves to get there and just one example of that is are our run rates.
Speaker Change: This is this is also looking beyond just EBITDA looking at actually cash conversion our run rate for capitalized costs for 2024 was about $3 million and we came in under that for this quarter. So we're decreasing our capitalized cost our development cost, but we are scaling and we're scaling in a law.
Speaker Change: Out of that development cost is going into the U S market, specifically and as we've shown in our results that market and that investment is scaling very significantly and it is very concentrated on proprietary content. So the trend is that we should be moving to more <unk>.
Speaker Change: Margin accretive results and I do think that will continue into our future. The one thing we love about proprietary content.
Speaker Change: With content it could really resonate for a long period of time, and we're seeing that with titles that are coming out in the U S.
That's great. Thanks, Ravi and then if I could ask one more sort of high level strategic one but shifting over to the fuse engagement capabilities, just how wide that addressable market do you envision for this platform and how should we think about sort of the drivers to get more customer adoption is it just kind of tie in blocking and tackling and marketing are there tax free.
Speaker Change: <unk> points that can still be solved just any thoughts there on the outlook for more partnerships would be great. Thanks.
Speaker Change: So on fuse we.
Speaker Change: We have.
Speaker Change: You know a number of integrations into a number of tier one operators in the market some of them have their own technology that Tibet or that.
Speaker Change: Sort of.
Speaker Change: Covers the basic functionalities that choose those deliveries, but we're looking at maybe tier two and tier three operators don't necessarily have the.
Speaker Change: The sophisticated tools to convert retain engage.
Speaker Change: Managed loyalty.
Speaker Change: Managed data as well to certain extent manager bonuses.
Speaker Change: Casino bonuses in particular.
Speaker Change: And thats what views perfectly fits.
Speaker Change: Into the Tech stack picture into the architecture of the <unk>.
Speaker Change: <unk> Tech stack that.
Speaker Change: And operator uses.
Speaker Change: Fuse is.
Speaker Change: A an element of our product portfolio that is built in a way that once you have integrated our aggregation platform our hub our content delivery platform.
Speaker Change: It works for all the content providers that are delivered through that platform, including obviously, our proprietary content. It works automatically without proprietary content, so excuse us few different.
Speaker Change: Two different functions in that respect it allows us to properly place.
Speaker Change: And aggressively promote our content with the.
Speaker Change: The feature set that we have.
Speaker Change: We have developed for that.
Speaker Change: But it also allows the operator to then expand on that and add more content providers.
Speaker Change: Into the mix.
Speaker Change: And.
Speaker Change: Place and promote third party content as well which is.
Speaker Change: Essentially then allowing them to increase the cadence of Kpis such as.
Speaker Change: <unk> sizes session lengths.
Speaker Change:
Speaker Change: Lifetime value at the end of the day.
Speaker Change: And then there's another function which is.
Speaker Change: Fuse features we're trying to.
Speaker Change: Build our proprietary content portfolio using those features.
Speaker Change: And we will see more of that in the future. So excuse does not necessarily just the standalone product that we're trying to market into the into the into the BTC organizations. He has multiple different functions in our ecosystem and we see a very bright future for the product.
Speaker Change: That's great. Thank you Paul best of luck.
Speaker Change: Thank you.
Speaker Change: The next question.
Lesson comes from the line of Dan Luca Tucci with Haywood Securities.
Speaker Change: Please go ahead.
Speaker Change: Hi, good morning, guys.
Speaker Change:
Speaker Change: Pretty good performance in the U S and Brazilian markets.
Speaker Change: Just when it comes to the U S are you doing anything differently today than in years past is there any particular partner that's that's.
Speaker Change: Forming or is it a change in overall market strategy, just wondering what's what's causing this growth here and if you expect this type of growth to continue for the rest of the year.
Speaker Change: Thanks for the question we are strategically invested.
Speaker Change: In in rolling out a higher cadence of content titles in the U S and we brought in talent.
Speaker Change: On the commercial and on the development side to accelerate that and that's one thing that we haven't had historically is that cadence of titles and bench strength to be able to get with operators and get them interested in promoting our content. So this.
Speaker Change: We're very happy that.
Speaker Change: Our our investment is working extremely well and we see this continuing and what's extremely exciting about the U S.
Speaker Change: I'm very happy to hear the announcement about Ohio, and how that market is going to be regulated and high casino hopefully could be in the near future could be as quick as Q1 of next year.
Speaker Change: We're so well situated to.
Speaker Change: Go into new territories, like that which could be up to $2 billion and high casino <unk>.
Speaker Change: We're integrated with the top operators the cost for us to do this is minimal and we're proving that we do have meaningful content that works with U S. Players, so that opportunity and the way we've situated ourselves we really couldnt be happier and pleased with how are you.
Speaker Change: That strategy is playing out.
Robby: That's good color. Thanks Robby.
Speaker Change: And then just secondly.
Speaker Change: Perhaps for Mats you invested in the studio.
Speaker Change: In Brazil, not too long ago, you clearly see an opportunity there for outsized growth.
Speaker Change: How big are you, hoping that market gets for you guys in the context of market share do you see a scenario where you are in the market leader conversation for content or Pam in Brazil.
Speaker Change: Yeah. So we're very optimistic about Brazil, we currently.
Speaker Change: We're currently trending towards.
Speaker Change: After market our integrations are.
Speaker Change: Our integrations are.
Speaker Change: Getting bigger and bigger the list of operators getting bigger and bigger.
Speaker Change: And.
Speaker Change: We have only started deploying our proprietary content that has only been.
Speaker Change: Three four months of.
Speaker Change: It was doing business there, we definitely see a large potential what is going to be the market share that we're going to get there it's definitely.
Speaker Change: Something that we are not able to tell right now it's a it's going to be.
Speaker Change: It's going to be interesting to see how this market is going to develop in the future, we're certainly going to see.
Speaker Change: Lots of.
Speaker Change: Let's say changes in the market. There is there are few different.
Speaker Change: Proposals on the table by the government how to tap.
Speaker Change: Tax operations.
Speaker Change: Before the regulation and then we'll see how the operators are going to react to it but.
Speaker Change: Again, very optimistic about the market in general we're perfectly positioned to.
Speaker Change: Serviced the operators with our delivery.
Speaker Change: And engagement Tech stocks.
Speaker Change: We're looking at the opportunities for Pam and we're going to start building our proprietary content portfolio on the top of whatever we have already delivered by our proprietary studios.
Speaker Change: With rapid play obviously rapid play is something that where we're expecting to rollout in the next couple of quarters and we'll see what the results that they're going to be.
Speaker Change: Okay. Thanks, guys I'll pass the line.
Speaker Change: Your next question comes from the line of David Mcfadden with core Mark Security. Please go ahead.
David Mcfadden: Oh, great. Thank you a couple of questions.
David Mcfadden: Just on Brazil. It was nice to see the amount of revenue guidance January in Q1 from that market I'm just wondering.
David Mcfadden: Did you have all your clients on board right away or did you.
David Mcfadden: For them as the quarter went through.
David Mcfadden: Just wondering it seems like that could be quite a bit of revenue for you.
David Mcfadden: Yes, so we did scale.
David Mcfadden: Integrations, but we did have good amounts on day, one there with a little bit of sluggishness in the market on the BDC, operator side and getting their customers changed over from pre regulators to regulated so a lot of BDC operators started slower than probably anticipated, but as the.
David Mcfadden: Month as the quarter moved things became much more.
David Mcfadden: More positive in terms of up result, so we we see Q1 as.
David Mcfadden: A good start but not indicative of where we're going to go with Brazil, where Brazil is going to go.
David Mcfadden: We're.
David Mcfadden: Get excited about the run rates, we're seeing now and as we increase those integrations.
David Mcfadden: <unk>.
David Mcfadden: More and more confident that Brazil is going to be.
David Mcfadden: It's very significant for us and as Matt was saying, there's a lot of opportunities that are coming across us rapid play opportunity gives us even more bench strength to be able to service the market.
David Mcfadden: So.
David Mcfadden: Quite pleased on how Brazil is playing out.
David Mcfadden: Okay.
David Mcfadden: And then just on Ohio.
David Mcfadden: When do you expect that that could go lives.
David Mcfadden: So what we're hearing.
Speaker Change: None of this has still has legislative I guess risk to it although indications are very positive.
Speaker Change: It could be as early as March 31, 2026, that's what we're hearing from our legal advisers.
Speaker Change: Which is quite quick and that.
Speaker Change: Yes.
Can't say enough how positive sign that is for the U S. Ohio as mentioned is a sizable market.
Speaker Change: Regulators in states are understanding the value and I casino.
Speaker Change: Casino is growing much faster in the states, where there's dual regulation of sports and casino sports is actually contracting.
Speaker Change: So for states to realize more tax revenue and to capitalize on a market. That's there and when I say, it's there there's there's the sweeps market. The sweepstakes I casino market Thats been operating for a number of years in the U S.
Speaker Change: Relies on sweepstakes legislation.
Speaker Change: As its legal basis, and the amount of money, that's being made and untaxed.
Speaker Change: Is is really really impressive, but it's also opening for regulators to see the amount of demand that there is and how much money tax revenue wise is being left on the table. So good indication on in Ohio, and I'm excited that hopefully will be more news in the U S and the <unk>.
Speaker Change: Your future.
Speaker Change: Okay.
Speaker Change: So assuming Ohio goes live is there.
Or do you anticipate there's any significant operator that you are not a.
Speaker Change: Working with.
Speaker Change: Now we are.
Speaker Change: We have 90% coverage in all existing casino markets and that's because we're integrated with all the top operators, there's nothing unique about Ohio, it's already regulated for sports.
Speaker Change: It's dominated by drop King span dual bet MGM and.
Speaker Change: And the likes of those which were all integrated with so we see this.
Speaker Change: As just all positive incremental exposure with minimal cost.
Speaker Change: To deploy.
Speaker Change: Okay.
Speaker Change: So in your presentation, you called out the potential for bad city to potentially move to.
Speaker Change: Another tech stack of time proprietary tech stack.
Speaker Change: <unk>.
Speaker Change: Any idea on when.
Speaker Change: And tango vaccine that can call on this decision.
Speaker Change: No we don't have that date we.
Speaker Change: We I mean, they have announced that.
Speaker Change: On their earnings calls in previous years.
Speaker Change: But we do not have a date when that decision is going to be right.
Speaker Change: But as illustrated its really a much less significant impact to us as our business has evolved and we do think our relationship with best City.
Speaker Change: With entertainment.
Speaker Change: This is very fluid and quite strong we do think there are services, we will provide.
Speaker Change: To best City beyond just the tech stack. So the relationship May evolve, we havent nothing formally hasn't been determined.
Speaker Change: But again this is insignificant to to what we're doing now and we've completely de.
Speaker Change: The risks ourself from being exposed to that one customer and we've highlighted that in our investor deck and it's.
Speaker Change: It's quite a strong development for us and again it shows how resilient. This business has been and is we've we've had to veer from other jurisdictions because of regulatory changes.
Speaker Change: This company keeps adapting.
Speaker Change: Finding the right opportunities to deploy in and being able to capture meaningful.
Speaker Change: Revenue in those jurisdictions.
Speaker Change: Okay. So I understand that you do.
Speaker Change: Did sign a 10 year deal to your extension at that city, when does that actually come up for renewal or as they expire.
Speaker Change: It expires at the end of the.
Speaker Change: 2025 to 30 <unk> December 2025.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: For migration to occur.
Speaker Change: It's from a technical point of view, it's virtually impossible to do an effective migration in a six month period.
Speaker Change: We haven't heard anything formal but we do not believe that it's a likely 2026.
Speaker Change: Occurrence, but again, we're we've moved so far off of.
Speaker Change: <unk> been so focused on that we want to maintain a good relationship with Citi.
Speaker Change: Not.
Speaker Change: Not overly worried about what happens in the Appalachian chip.
Speaker Change: Okay. So given you haven't heard any chance it would seem that the status quo is going to continue right.
Speaker Change: Even if they decided to migrate our Ugandan migrate I mean, we are going to do whatever it takes to hell.
Speaker Change: <unk> to seamlessly migrate mean theres going to be minimal decrease in that revenue because.
Speaker Change: Our.
Speaker Change: Desire our expectation is to continue the relationship with <unk>.
Speaker Change: <unk> as a content provider as an engagement tool providers.
Speaker Change: Delivery providers.
Speaker Change: We have a number of different products that we have in our portfolio that we believe in pain could use in the future both on the <unk> brand and other brands. So if they decide tomorrow that there.
Speaker Change: They want to migrate we're going to be.
Speaker Change: Obviously, if we are going to prepare a migration plan.
Speaker Change: And work against that migration plan, but we don't have any definitive data in our hands today as to when is that decision going to be made and what the migration timeline could potentially look like it's on an <unk> side to the side.
Speaker Change: When and how they.
Speaker Change: Potentially wanted to do that.
Speaker Change: Okay.
Speaker Change: And then just lastly, just on the new credits.
Speaker Change: On the new credit facility.
Speaker Change: What do you expect.
Speaker Change: Vendor to use as.
Speaker Change: Our security our collateral.
Good question, so it will be our accounts receivable.
Speaker Change: So this will be a pure working capital loan that.
Speaker Change: Really.
Speaker Change: He is not secured against the whole.
Speaker Change: The whole the whole.
Speaker Change: All assets of the business.
Speaker Change: Current prom note.
Speaker Change: But thats the intended structure for it.
Speaker Change: Okay.
Speaker Change: Just getting and just the general corporate lines secured against cash flow the best asset class.
Speaker Change: Pat.
Speaker Change: We've looked at all options that are going to meet our needs and make most sense for us and I think we're optimistic that the option that we're pursuing is it's solid decreases the cost of boring flexible we don't need to pull on it when it's not needed with a very low standby costs.
Speaker Change: So.
Speaker Change: I think we're moving we're moving in the right direction and getting a facility thats right for what we need.
Speaker Change: Okay, alright, thank you so much.
Speaker Change: Your next.
Jack: Question comes from the line of Jack <unk> with Maxim Group. Please go ahead.
Jack: Hi, This is Jack good Erik calling in for Jack Vander Ark, Thanks for taking my questions.
Jack: Can you give us an update on the coverage in Brazil, <unk> coverage and then to touch on a prior question given Brazil punching at about 8% of revenue in <unk>.
Speaker Change: You see potential contribution upside beyond that 10% you've referenced.
Jack: Jack Thanks for the question.
Jack: I do think Brazil potentially could outperform.
Jack: We're quite optimistic about is as I said coverage wise, we do think will be a 50% plus it is a little bit more segmented Brazil than U S. So it takes a little bit more time and but.
Jack: But we are hitting top operators our relationship with rapid play actually really helps us.
Jack: Further that coverage the principles behind rapid play are very well known in Brazil and our.
Jack: Our good strategic partners to help us move to a larger distribution network. So quite excited as to how thats going to progress.
Jack: Okay Awesome and then.
Jack: If you could touch on potential extension again, you've mentioned, Ohio.
Jack: Given the recent legislature in Alberta is that an attractive expansion target and then you mentioned kind of the legislative risk or uncertainty.
Jack: Are there any markets you're thinking of other than Ohio that are kind of near term events. Thanks.
Jack: I mean.
Speaker Change: Alberta definitely is strategic for us and.
Speaker Change: Canada has a very similar model in the sense that theres top operators that dominate and I think Alberta will follow suit. We've also launched with local provincial operators like lot of Quebec and look for opportunities to do that both in British Columbia and Alberta.
Speaker Change: In terms of sorry remind me what the second part of your question was.
Speaker Change: You mentioned, some legislative risk, meaning like Theres timing as to when these things happen, but are any markets other than Ohio, you mentioned, Ohio is kind of a near term <unk> March 2026 that is there any markets you're thinking of as kind of near term events.
Speaker Change: There is rumblings about Illinois, we've heard Indiana, New York has been discussed for a long period of time.
Speaker Change: To be honest I haven't heard this level of excitement and.
Speaker Change: Low risk on a jurisdiction actually being able to get the legislation route and I have with Ohio.
Speaker Change: This is.
Speaker Change: This is a great development I do think.
Speaker Change: Potential for a bit of a domino effect.
Speaker Change: A few great.
Speaker Change: Start moving more aggressively on that.
Speaker Change: And some other states followed suit, but it doesn't.
Speaker Change: We've mentioned the staff the launch right now.
Speaker Change: I casino market is worth about $9 5 billion.
Speaker Change: <unk>, one market is going to increase that by 20%.
Speaker Change: And that's not insignificant $3 billion market.
Speaker Change: Large, especially when it's dominated by a handful of operator, especially when we come in day, one with significant coverage in terms of our product hitting.
Speaker Change: Market so.
Speaker Change: Yes.
Speaker Change: For us to see significant movement in concentration of U S.
Speaker Change: Of our U S story.
Speaker Change: It doesn't it's not contingent on.
Speaker Change: A significant number of new markets coming on we can.
Speaker Change: See the growth, even without new entrants, but with new entrants that takes the scalability of our story and really ample supply quite quickly.
Speaker Change: Thank you that's helpful.
Speaker Change: Thanks.
Speaker Change: The next question comes from the line of and this demography with Boston as asset management.
Speaker Change: Please go ahead.
Ravi: Not as Ravi. Thank you for taking my question I appreciate it.
Speaker Change: A question on your 2025 guidance it implies a pretty heavy step up in growth for the remainder of the year.
Speaker Change: What gives you confidence in the trajectory on a sequential basis from the $25 $5 million you just printed thank you.
Speaker Change: Yes. Thanks.
Speaker Change: One historically always is a light quarter. So it's not unexpected that Q1 comes in late and it's not indicative of the run rate that we believe will happen through the year.
Speaker Change: A lot of the points that we brought out on a call specially the bit of a sluggish start in Brazil.
Speaker Change: See there still opportunity to potentially outperform that market.
Speaker Change: We do see.
Speaker Change: Aggressive growth rates as we mentioned in the U S and.
Speaker Change: A lot of pipeline opportunities that are getting much closer to being.
Speaker Change: Active and closed.
Speaker Change: And we also think that the.
Speaker Change: The trend that's happening fairly quickly in in Europe with regulators is going to keep having a very solid knock on effect to us and we do think.
Speaker Change: The Netherlands market could become more more more bullish and kind of bottom out from where it was.
Speaker Change: Where it's been because of regulatory regulatory changes.
Speaker Change: So we see opportunities there and the regular regulatory mindset that I believe is changing a little bit in Europe is <unk>.
Speaker Change: Really going after operators, our suppliers, who supply content in both black markets and clean markets.
Speaker Change: Something that regulators are just finding unacceptable and it's a way to really lowered the black market.
Speaker Change: Layer experience and there is sizable operators, who have conundrums that half two.
Speaker Change: That are being affected by that and we think we're so well placed for for any disruption on that side and even any net benefit to the whole regulated community when the black market goes down because we're so focused on the regulated markets. We think that we're going to see some.
Speaker Change: Good developments in in.
Speaker Change: Various European jurisdictions.
Speaker Change: The sort of regulatory mindset changes.
Speaker Change: Understood appreciate that could you maybe just talk a little bit about the margin differential between your proprietary content versus the aggregate of content.
Speaker Change: Sure.
Speaker Change: In some ways, it's night and day just from a gross profit perspective, our aggregated content is.
Speaker Change: Somewhere between lets say, 9% to 12%.
Speaker Change: Our gross profit on proprietary to 100% so a lot of cost on the aggregated site are shaved off the top.
Speaker Change: So the margins are quite thin when you get down to actual.
Speaker Change: Adjusted EBITDA were proprietary content a lot of the costs associated with the development.
Speaker Change: Our capitalized.
Speaker Change: And a lot of the.
Speaker Change: A lot of the Bottomline impact is quite solid, but we don't just stop at looking at adjusted EBITDA as mentioned in my remarks looking at adjusted EBITDA less capitalized cost is a very important metric, which we gauge our performance and we're seeing positive movements in that and as I.
Speaker Change: <unk>.
Speaker Change: Our capex spend run rate for 2024 was about $3 million a quarter.
Speaker Change: We came under that this quarter and a lot of that a lot of our costs were associated with the U S market and to see the already return on that investment that we're making in the U S is extremely promising.
Speaker Change: Okay.
Speaker Change: Understood and then maybe last one for me do you believe there is a near term opportunity to strike similar.
Speaker Change: Deals like.
Speaker Change: The one you signed with Caesars.
Speaker Change: We do.
Speaker Change: The desire for operators to have bespoke content and have their own content capabilities.
Speaker Change: It's something a lot of North American operators are focused on and the success of the Caesars situation as is is great.
Speaker Change: We are in discussions to.
Speaker Change: Developments.
Speaker Change: Work with other operators to create bespoke content very similar so yes, we think that is a trend that will continue.
Speaker Change: Again, the Caesars partnership has really shown us and the industry that our capabilities are tech is very highly viewed.
Speaker Change: And I think that's promising for us.
Speaker Change: Thank you very much I'll pass the line.
Speaker Change: Thank you.
Speaker Change: I'll now turn the call back over to Robert <unk> for closing remarks. Please go ahead.
Speaker Change: Great just want to thank everyone.
Speaker Change: For their participation. We are really excited about what 2025 is going to deliver we appreciate the constant support we have from investors and analysts and we believe we're driving the key metrics for this business that are going to unlock massive value for <unk> shareholders look forward to speaking in a.
Speaker Change: A couple of months and.
Speaker Change: We'll end it there thank you.
Speaker Change: Yes.
Speaker Change: Ladies and gentlemen, this concludes today's call. Thank you all for joining and you may now disconnect.
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