Q3 2025 Bragg Gaming Group Inc Earnings Call
Only 25 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 would like to ask a question. During this time simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question. Please press star one again. Thank you I would now like to turn the call over.
Robby Bressler: Okay, thanks, guys.
As Stephen Kilmer head of Investor Relations for <unk> Group. Please go ahead.
Robby Bressler: Thank you. Thank you.
Yeah.
Operator: Your next question comes from the line of Michael Shelton of FRC. Please go ahead.
Thank you.
Everyone and thank you for joining us for broad gaming group's third quarter 2025 earnings call.
Michael Shelton: Morning. I was wondering if you guys could tell me what's keeping Bragg from earning a regular and consistent operating income. Excuse me. Secondly, what do you expect the stock price to be in three years, and what type of systems, strategies, and structures are you going to put in place in order to achieve that number?
My name is Stephen Kilmer, and originally came onboard into managed products IR function.
I'm not quite in house supply, nor would I say that I worked for an external agency.
I think the best way for me to describe myself as Alabama private proximal head of IR.
As a reminder that function for technology competition within diabetes and before that I worked for one of the top full tax newswire as well as the investment advisor eventually became Merrill Lynch Canada.
Robby Bressler: Thanks for the question. I'll start with the operating income portion. I assume you mean from an IFRS perspective. We do have fairly significant development costs that get amortized. There also is some purchase price amortization that's occurring from our acquisitions that we've done. Things like brand and other have a bit of a tail. We do have a lot of amortization and depreciation that puts us in a loss position. I think we're getting better and better. I think what we look at from our performance and how we gauge our performance is looking at our adjusted EBITDA. That's our CapEx, and that's very key for us to make sure that we are actually generating cash from our operations. We're focused on that, and we are positive on that this quarter. We think that ratio can continue to improve.
My contact information is at the bottom of today's press release, and I hope to get to know many of you as well as we move forward.
With that said some housekeeping for this call.
If you are connected to our online webcast today, you should see our third quarter earnings presentation on your screen.
And they still have control of the flip the slides yourself as you listen to this call.
If you are joining by telephone. Please note that you can find our third quarter earnings presentation as well as financial results press release financial statements and MD&A on our website at investors thought product offerings.
Please note that certain statements on this call may constitute forward looking information our future oriented financial information.
A full explanation of risk factors is available on the second slide on our third quarter 2025 earnings presentation titled forward looking statements as well as in the recently filed press release and other public clouds.
<unk> disclaims any obligation except as required by law to update or revise any forward looking statements, whether because of new information future events or otherwise.
Robby Bressler: We think at full efficiency, we could be 30% to 50% in terms of having that cash conversion ratio occur. In terms of future-looking stock price, can't comment on that. We're focused on operating as strong as we can, providing the best results that we can, optimizing our structure, producing solid cash flow, and margin improvements. We are confident that with the path that we're on, we're going to increase value for shareholders.
And forward looking statements made on this call speak only as of the date of this call.
On the call Frank Radian group's CEO, Natasha <unk> and CFO Ravi Chrysler will discuss the company's third quarter performance, followed by a question and answer session.
I'd now like to turn the call over to Natasha.
Thank you Stephen and good morning, everyone.
Thank you for joining us for Brac gaming groups third quarter.
2025 earnings call.
We're bragg.
Matevž Mazij: Thank you.
Listed on the NASDAQ and the Toronto stock exchange.
And we are a specialist supplier of games and technology, the regulated I gaming market.
Operator: There are no further questions at this time. With that, I will turn the call back over to Robby Bressler, CFO, for closing remarks. Please go ahead.
We create and deliver cutting edge online casino games.
Robby Bressler: Thank you. Thank you, everyone, for joining the call today. We look forward to updating you on our progress as it continues. Appreciate everyone's support, and have a great day.
Both from our own in House studios and from top tier in demand partner Studios.
We empower online casino sports betting and lottery operators to launch <unk>.
Operator: Ladies and gentlemen, this concludes today's call. We thank you for participating. You may now disconnect your lines.
Run scale and optimize their apps and websites.
And through everything we do we enhance the end user experience by leveraging advanced analytics and AI to drive engagement and smarter more efficient I gaming operations.
During the third quarter, we continued to see high double digit growth in our focus markets of the U S.
Hey, where.
Where we saw 86% year over year revenue growth and in Brazil, which saw revenue growth of 80% compared to the same period last year.
The USA was a key driver of the 35% year over year growth overall that we haven't seen in proprietary content revenue and we continue to rollout strong titles from our proprietary game Studios, which include Wall Street gaming and ophthalmic slot lap.
Speaker #1: Good morning, ladies and gentlemen, and thank you for standing by. My name is Calvin, and I will be Good time, I would like to welcome everyone to the Bragg Gaming Group Q3, 2025 earnings conference call.
Overall revenue growth when factoring out the Netherlands.
A jurisdiction, which I'll discuss further later in this call.
Was 20% up.
Compared to the third quarter of last year.
Speaker #1: 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 would like to ask a question during this time, simply press star, followed by the number one on your telephone keypad.
Demonstrating the continued demand for <unk> products and services in regulated I gaming markets around the world.
During the quarter, we continued to showcase our games development expertise with the rollout of two new bespoke online casino games developed for a partner hard rock in the United States.
Speaker #1: If you would like to withdraw your question, please press star one again. Thank you. I would now like to turn the call over to for Bragg Gaming Group.
Speaker #1: Stephen Kilmer, Head of Investor Relations I'm not quite in at Prague , nor would I say that I work for an external agency .
Speaker #1: Please go
Among many other game launches.
Speaker #2: Thank you. Good
We secured a tier one credit line with bank of Montreal.
Speaker #2: morning, everyone, and thank you for joining ahead.
Underscoring brags credit worthiness.
We continue to be focused on optimizing our cost structure, which allows us to deliver operational leverage.
Speaker #1: I think the me to that I'm myself is best way for of fractional head IR been running that function for . I've technology since the mid 90s , and before that I worked for one of the top tech newswires , as well as an advisor at what Lynch became Merrill Canada .
And as Robin will now go into in more detail.
Speaker #1: companies investment My information is at of today's eventually the bottom and I hope to get to know release , many of you as well as we move forward .
We are pleased to be reporting revenue gross profit and adjusted EBITDA in line with our expectations for the third quarter of the year.
I'll be back to discuss some of these points in more detail. After you have heard from our Chief Financial Officer, Robert Bressler.
Speaker #1: some With that for this call housekeeping connected to our webcast . If you're today , you should third quarter earnings see our presentation on your screen should have control to flip the listen to this call yourself .
Who will now discuss the third quarter financials.
Robbie.
Thank you Matt.
In the third quarter of 2025 revenue was $26 8 million euro up 2% year over year.
Speaker #1: . If you have joined telephone , please note that you can find our . well as financial results . And you Press by financial and mDNA on our As you investors Group website .
Excluding the Netherlands revenue grew a strong 20% underscoring continued execution of our diversification strategy and the strength of our high growth markets.
Speaker #1: note that Please certain statements on this statements forward looking slides or future oriented financial information . A explanation of full risk available on the factors is second slide , our in quarter 2020 earnings presentation titled Looking Statements , as well as recently filed press other release and filings , Bragg claims any obligation except as required law , to by update revise any or forward looking statements , whether because of new information , future events or otherwise , and forward looking statements made on this call speak as of the call in the .
As expected the Netherlands remains impacted by regulatory changes with revenue down 22% year over year.
The region now represents a smaller share of our total revenue as our business outside the Netherlands accelerates.
Much of the underlying growth was led by North America and in Brazil.
Which together accounted for 22 presents of our total revenue for the quarter up from 12% a year ago.
Speaker #1: On this call . Bragg Gaming Group Inc. , Matevz Mazij and CFO CEO will discuss the company's third quarter performance , date of this by a question and session .
Our other markets primarily across Europe.
<unk>, 4% growth supported by steady performance from our content aggregation and turnkey solutions.
Speaker #1: I'd answer now like to turn the call over to Matej .
Speaker #2: Thank you , Steven , and good morning everyone . Thank you for joining us for Bragg Gaming Group Inc. quarter call 2020 earnings third .
From a strategic point of view the quarter reflects clear progress towards our goal of building a higher margin more diversified business.
Speaker #2: Where Bragg listed on the Nasdaq and the dual Toronto Stock Exchange . And we are a specialist supplier of games and technology to regulated iGaming .
We continue to shift our revenue mix towards proprietary content, which grew 35% year over year in Q3 and remains our best performing margin contributor.
Speaker #2: We market and create deliver cutting edge online casino games , both from our own in-house studios and from top tier demand partner in studios .
This transition is a key driver of our expanding profitability profile.
Our gross margin continues to trend upwards.
Speaker #2: We empower online casino sports and betting lottery operators to launch , run , scale and optimize their apps and websites . And through everything we do , we enhance the end user by leveraging experience analytics advanced AI and to drive and smarter , engagement more efficient iGaming operations .
Supported by the growing contribution from proprietary content.
In Q3 gross profit increased 5% year over year to $14 7 million with gross margin improving 115 basis points.
254, 7%.
Reflecting sequential improvements versus Q2.
Speaker #2: quarter , we see high continued to digit double growth in During the third our focus markets of the USA , where we saw 86% year over year growth revenue , and in Brazil , which saw revenue growth of 80% compared to the same period last year .
Adjusted EBITDA also grew 9% Q4 dollars 4 million Euro with adjusted EBITDA margins rising 100 basis points to 16, 6% benefiting from actions to optimize processes and realize efficiencies, which kicked off in the prior quarter.
Speaker #2: The USA driver the was a key year of overall that we have seen in proprietary content revenue , and we continue to roll out strong titles from our proprietary game studios , which include Wall Street Gaming and Atomic Slot Lab .
We expect these operational leverage benefits to continue into Q4.
Moving to the balance sheet, we remain focused on maintaining a strong and flexible balance sheet as Matt noted during the quarter. We successfully completed our new working capital revolving credit facility with bank of Montreal.
Speaker #2: Overall revenue growth when factoring out the Netherlands , a jurisdiction which I'll discuss further later in this call , was 20% up compared to the third quarter of last year , demonstrating the continued demand for brands , products services in regulated iGaming and markets the around world .
This facility enhances our liquidity position.
<unk> continued investment in high growth margin accretive initiatives and significantly lowers our borrowing costs.
Finally, we are seeing the benefits of a more margin accretive revenue mix continued disciplined in optimizing internal processes and structures and profitable growth from our expanding footprint in North America and Brazil.
Speaker #2: During the quarter , we continued to showcase games our development expertise with the rollout of two new bespoke online casino games developed for our partner , hard Rock in the States United .
Speaker #2: many other Among launches . We secured a tier one credit line with the Bank of Montreal , underscoring brags credit . We worthiness continue to be focused on optimizing structure , which allows us to deliver operational leverage .
Our strategy is delivering we are becoming a more efficient diversified and higher margin business and we remain confident in our ability to deliver sustainable long term growth and shareholder value.
Going into 2026, we are very focused on continuing to optimize our product mix and optimize our internal processes and structures and we believe that there are significant opportunities to refine and improve our margins and cash flow.
Speaker #2: And our cost Ravi as will now into , in more detail , we are pleased to be revenue reporting , gross and EBITDA in line with adjusted expectations for the third quarter of the year .
Speaker #2: I'll be back to discuss some of these points in more detail . After you have heard from our chief Financial Officer , Robert Bressler , who will now third quarter discuss the financials .
With that I'll pass the line back to Mt.
Thank you Robbie.
We've been talking about the growing vertical of proprietary casino content at Bragg.
Speaker #2: Ravi .
And how we have made a strategic focus because it's a high margin product.
Speaker #3: Thank you . Matt . In the third quarter revenue of 2025 , was €26.8 million , up 2% year over year . Excluding the Netherlands , revenue grew a 20% , strong underscoring continued our execution of diversification strategy strength and the of our high growth markets .
Which supports growing gross profit and EBITDA margins.
Online casino content that we own also delivers compounding recurring.
And long term revenues, we talked about our 35% year over year increase in proprietary content revenue.
What is especially encouraging is that half of our proprietary content revenue in the third quarter of this year.
Speaker #3: As expected, the Netherlands remains impacted by regulatory changes, with revenue down 22% year over year. The region now represents a smaller share of our total revenue, as our business outside the Netherlands drove much of the accelerated growth, particularly in North America and Brazil, which together accounted for 22% of our total revenue for the quarter, up from a year ago.
Came from the United States, making the U S. Our strongest market for our fully owned casino game IP.
And the U S market continues to grow according to H <unk> gambling capital the U S online casino market will grow from around $10 billion.
In 2025 to over $30 billion in 2030.
A compound annual growth rate of 26% over the next five years.
Speaker #3: Our other 12% a year , primarily across Europe , delivered 4% growth , steady supported by performance from our content aggregation and down solutions .
By the end of the third quarter of 2025, we have launched 35, new proprietary casino games and that's just so far this year.
But we have been building our portfolio of games for several years now.
Speaker #3: From a strategic point of view , quarter the reflects clear towards progress goal of building a higher margin , more diversified business . We continue to shift our revenue towards mix proprietary content , which grew over year in Q3 and 35% year best performing margin .
Speaker #3: From a strategic point of view, the quarter reflects clear progress towards the goal of building a higher margin, more diversified business. We continue to shift our revenue towards a mix of proprietary content, which grew year-over-year in Q3, and 35% year-over-year as our best performing margin contributor. This transition is a key driver of our expanding profitability profile.
And 70% of all proprietary content revenue in the third quarter of 2025.
Came from games that we release before 2025.
So we're demonstrating longevity are strong player retention in industry terms.
And we are delivering long term recurring revenues from a growing mountain of fully owned IP.
As I mentioned earlier third quarter 2025 revenues in Brazil.
Speaker #3: Our gross continues to trend margin upwards , supported by the growing proprietary content contribution from in Q3 , gross profit increased 5% year year over to 14.7 million , gross with margin improving 115 basis points to 54.7% , reflecting sequential improvements versus Q2 EBITDA also grew 9% adjusted €4.4 million , with adjusted EBITDA margins to rising 100 basis points to 16.6% , benefiting from actions to optimize processes and realize efficiencies , which kicked off in the prior quarter .
Up 80% compared to the same period last year, which was pre regulation hi.
Highlighting a successful regulated market entry this year for black.
We are on target to see 10% of revenues coming from this important jurisdiction in the full year of 2025.
Now I want to touch on why we're talking about our performance in terms of the Netherlands, and non Netherlands revenue.
The Netherlands continues to be an important market for <unk> and we are proud to be a market, leading I gaming supply in the jurisdiction.
With approximately 30% of the entire regulated market gross gaming revenue running through our products and technology.
This market share has been stable for us for several years now.
Speaker #3: We expect these operational leverage benefits to continue into Q4 . Moving to the balance We remain focused on maintaining a sheet . strong and balance flexible sheet .
However, with increasing and well documented headwinds facing regulated operators in the Netherlands.
<unk> our customers.
We're especially interested and proud of the growth we're seeing in regulated markets outside of the Netherlands, such as the United States and Brazil.
Speaker #3: Matt's noted As during the quarter , we successfully our new completed working capital revolving credit facility with Bank of Montreal . This facility enhances our liquidity position , supports continued investment in high growth margin , accretive initiatives , and significantly lowers our borrowing costs .
Our 20% year over year growth in other markets over 80% in some.
Shows what we can achieve when factoring out the unusual market conditions currently seen in the Netherlands.
Speaker #3: Finally , we are seeing the benefits of a more margin accretive revenue mix , continued disciplined in optimizing internal processes and structures and profitable growth from our expanding footprint in North America and Brazil .
Our geographic diversification has consistently improved over the past four years.
With non Netherlands revenue rising from 51% of all revenues in 2022.
So a projected 68% of all revenues in 2025.
Speaker #3: Our strategy is delivering . We are becoming a more efficient , diversified and higher margin business , and we remain confident in our ability to deliver term and growth shareholder sustainable , long value .
And as our industry continues to grow and evolve.
We expect to continue this trend of diversified growth.
Newly regulated jurisdictions, such as Finland.
Speaker #3: Going into 2026 , very we are focused continuing on optimize to product our mix and optimize our internal processes and structures , and we believe that there's significant opportunities to refine and improve our margins and cash flow with that , I'll the line pass back to Matt .
Which has announced the launch of its regulated I gaming market in January 2027.
Offer great potential ahead for companies like <unk>.
As we have previously communicated we expect one of our customers in the Netherlands that city to migrate off the brake Pam and H one of next year.
Speaker #2: Thank you . Robbie . We've been talking about growing of vertical proprietary casino content at Brag the , and how we have made it strategic focus because it's a high margin supports growing gross And EBITDA margins .
And also as previously communicated we expect the impact on the bottom line post migration next year.
To be been more due to the margin profile of that particular customer.
Our Pam and full technology and content portfolio remains in strong demand in the Netherlands as well as in regulated jurisdictions around the world.
Speaker #2: Online profit . that content we own which also delivers compounding recurring and long product , revenues . term We talked about our 35% year over year increase in proprietary content revenue .
And we look in particular to those markets outside of the Netherlands to continue to drive our revenue and margin growth in 2026 and beyond.
Speaker #2: What is especially encouraging is that half of our proprietary content revenue in the third quarter of this year came from United the , making the US our strongest market for States fully casino owned game IP .
<unk> is well placed to capture significant value in the world's most attractive regulated I gaming markets.
We saw record third quarter revenue and focused growth markets, 86% up year over year in the United States and.
Speaker #2: And the US market continues to grow , according to Gambling H2 , Capital . The US online market from casino will grow around 10 billion USD in to 2025 30 billion USD in 2030 , a compound annual growth rate of over the next five years .
And 80% in Brazil.
We continue to release more proprietary games and this fully owned IP continues to deliver recurring high margin revenue for us.
Proprietary content revenue increased 35% compared to the same period last year.
And now makes up 16% of all revenue split by product mix.
Speaker #2: By the end of the quarter third of 2025 , we have launched 35 new proprietary casino games , and just that's far this year over , we have been building our portfolio of games several for years , and 70% of all content third quarter proprietary of 2025 revenue in the came from games that we now released before 2025 .
When factoring out the Netherlands contraction, which I discussed earlier.
We are pleased to see 20% revenue growth year over year across our other markets.
And as we continue to diversify our revenue streams. We are on track to book, 68% of all revenue from non Netherlands markets in 2025.
Speaker #2: So demonstrating longevity . we're strong player Our retention in industry terms , and we are term delivering long revenues growing mountain owned of fully mentioned earlier , third As I quarter in Brazil are up 80% compared to the from our period last year , which was pre IP highlighting a 2025 revenues successful year for market Brag entry this .
As we keep our focus on improving product mix processes and margins.
Delivering operational leverage and having delivered on target third quarter overall revenue growth of 2% and.
And adjusted EBITDA growth of 9%.
I can confirm we are maintaining our full year 2025 guidance.
We project full year 2025 revenue of between 106 million euros.
Speaker #2: We are on target see to 10% of coming from revenues this important jurisdiction in the regulated full year of 2025 . Now I want to touch why we're talking on about our performance in of the terms Netherlands and non Netherlands revenue Netherlands .
And $108 5 million euros.
And adjusted EBITDA of between $16 5 million euros, and $18 5 million euros.
Our combination of rapid growth in the United States and Brazil, the increasing contribution of our high margin proprietary content.
Speaker #2: continues to be important an market for brag , and we're proud to be a market iGaming The supplier in the leading jurisdiction with approximately 30% of the entire regulated market gross gaming revenue running through our technology products and .
And the resulting margin expansion positions us strongly for the future.
Thank you.
Robbie and I are now available to take any questions you may have.
Speaker #2: This market share has been stable for several us for now years . However , with increasing and well headwinds facing regulated operators in the Netherlands , including our customers were interested and especially proud of the growth we're seeing in regulated markets outside of the such as the United Netherlands , States and Brazil .
Ladies and gentlemen, we will now begin the question and answer session I would like to remind everyone to ask a question. Please press the star button, followed by the number one on your telephone keypad. If he would like to withdraw your question. Please press star one again one moment. Please for your first question.
Your first question comes from the line of Jordan Bender of citizens. Please go ahead.
Speaker #2: Our 20% year over year growth in other markets , over 80% in some shows . What we can achieve when factoring out the unusual market conditions currently seen in the Netherlands .
Everyone. Thanks for taking the question good morning.
Flow through in the quarter guidance for the fourth quarter also in place nice flow through margin expansion.
Do you want to touch on some of the cost buckets here, you know without getting into guidance for next year. It sounds like proprietary content and what we can see here is trending pretty nicely growing strongly.
Speaker #2: Our geographic diversification has consistently improved past over the four years , with non Netherlands revenue rising from 51% of all revenues in 2022 to a projected 68% of all revenues in 2025 .
How should we think about that progressing and the impact it has on margins into next year, and then kind of a say Pos bucket question here.
G&A it looks like it has picked up pretty substantially year to date anything you can call out there. Thank you.
Speaker #2: And as our industry continues to grow and evolve , we expect to continue this trend of diversified growth . Newly regulating jurisdictions such as Finland , which has announced the launch of its regulated iGaming market in January 2027 , offer great potential ahead for companies like Brag , as we have previously communicated , we expect one of our customers in the Netherlands , Bet City , to migrate off the brag in Pam next H1 of year and also previously as expect the communicated , we impact on the bottom line post next year to be minimal due to the margin profile of that particular customer .
Thanks for the question Jordan I'll start with the second question in terms of our run rate compared to 2024 as Youre seeing we.
We do think there is opportunity for structure and process optimization. We started that process in Q2 continued it through this quarter and we're going to continue it into 2024. So we do think there's opportunities too.
<unk> mentioned realized operational leverage next year through optimizations of structures and processes.
Your second question in terms of proprietary content.
Speaker #2: and full Our Pam technology and content portfolio remains in strong demand in the Netherlands , as well as in regulated jurisdictions around the world .
We do.
We do believe that.
There is a.
Lots of opportunity for growth, especially in the U S.
Speaker #2: And we look in those markets particular to the Netherlands to continue to drive our revenue and margin growth in 2026 and beyond . Brag is well placed to capture significant value in the world's most attractive , regulated iGaming markets .
We in terms of cadence of titles that are going out and investment.
It should continue through 2026.
We will be coming out with more comments on 2026 performance and guidance.
Probably early in the new year, but.
Speaker #2: We saw record third quarter revenue in focus growth markets , 86% up year over year in the United States and 80% in Brazil .
We do think proprietary content that we're very confident that proprietary content is going to be a key accelerator in driving better margin performance and cash generation and as a reminder, only 12% of the U S population is under regulated XI casino and also <unk>.
Speaker #2: We continue to release more proprietary games , and this fully owned IP continues to deliver recurring , higher margin revenue for us proprietary content .
Speaker #2: Revenue increased 35% compared to the same period last year , and now makes up 16% of all revenue . When split by product mix .
<unk> is growing substantially in the jurisdictions, where it is legalized.
I noted just a.
Speaker #2: When factoring out the Netherlands contraction , which I discussed earlier , we are pleased to see 20% revenue growth over year across our other markets .
Anecdotally I dropped team has mentioned that they were up 25% on their accuracy performance for Q3, So I casino in the U S is really humming and we're well positioned to.
Speaker #2: And as we continue to diversify our revenue, we're on track to book 68% of all revenue from non-Netherlands markets in 2025.
Capitalize on that.
Great. Thank you.
And I do just want to follow up on that city here for a second.
Speaker #2: As we keep our focus on mix improving product , processes and margins , delivering operational leverage and having delivered on target third quarter overall revenue growth of 2% and adjusted EBITDA growth of 9% , I can confirm we are maintaining our full year 2025 guidance .
Is that going to be a complete roll off all at once or is it going to happen over time and then the.
The earnings impact being minimal is that a gross impact or is that net of any mitigation that you might do throughout the year.
It definitely would be net of mitigation like the opportunity for us to either redeploy resources or optimize our resources will be present with a customer like that are rolling off in terms of them actually migrating off we're still working with.
Speaker #2: We project full year revenue of 2025 between €106 million and €108.5 million , and adjusted EBITDA of between €16.5 million and €18.5 million .
<unk> and team to solidify that plan and as mentioned this will be something that most likely will occur in the first half of the year.
Speaker #2: Our combination of rapid growth in the United States and Brazil, the increase in contribution of our high proprietary content, and the margin expansion positions us strongly for the future.
We're exploring opportunities and ways to.
Make sure that that process happens extremely smooth and is beneficial for both sides.
Speaker #2: Thank you . Robbie and I are now available to take any questions you may have .
Great. Thank you very much thank you.
Your next question comes from the line of Gianluca Tucci of Haywood Securities. Please go ahead.
Speaker #4: Ladies and gentlemen , we will now begin the question and answer session . I would like to remind everyone to ask a question .
Hi, good morning, guys.
Speaker #4: Please press the start button followed by the number one on your telephone keypad . If you would like to withdraw your question , please press star one again .
First question could you, perhaps walk us through a couple of the growth drivers in the U S and Brazilian markets.
Speaker #4: One moment please . For your first question . Your first question comes from the line of Jordan Bender of Citizens . Please go ahead everyone .
And how you're thinking about these markets as we enter a new year.
Thanks for the question so in terms of Brazil, we.
Speaker #5: Thanks for taking the question . Good morning . You know , nice flow through in the quarter . for the Guidance Also fourth quarter .
We continually get more and more market share from an aggregation point of view. So we're quite happy with the level of coverage, we've been able to achieve in Brazil. Our strategy has always been.
Speaker #5: implies nice flow through margin expansion . I do want to touch on some of the cost here . You know , without kind of getting into buckets guidance for next year .
Speaker #5: It sounds like proprietary content . You know , we can see it here . Is is trending pretty nicely , growing strongly . You know , how should we think about that progressing .
The aggregation as a lead into pushing our proprietary and exclusive content and benefiting from our relationships. We have such as the partnership with rapid play. So we see our opportunity into the future is to increase our concentration of revenue coming from more margin.
Speaker #5: And the impact that it has on margins into next year . And then kind of the bucket question second cost here are your Cigna .
Speaker #5: Looks like it has picked up pretty substantially year to date . Anything to call out there . Thank you .
Creative products in Brazil.
Speaker #3: Thanks for the question I'll start with the second question . In terms of our run rate compared to 2024 , as you're seeing , we do think there is opportunity for structure and process optimization .
So we're very we're quite happy with the growth, we've seen well into the 80% range year over year, our focus will be now getting a better share of that revenue coming from more margin accretive products and again, I think where we're well placed for that we have good relationships with with operators.
Speaker #3: We started that process in Q2 , continued at through this quarter . And we're going to continue it into 2024 . do think So we there's opportunities to as Matt's mentioned , realize operational leverage next year through optimizations of structures and processes .
We're feeding a good distribution network and we have a good.
A good relationship or partnership with a studio that's based in that region and can deliver titles that should be quite well received into that market.
Speaker #3: Second question , in terms of proprietary content , we do we do believe that there is lots of opportunity for growth , especially in the US .
Okay, Thanks, Robbie and perhaps one one.
One follow up Q from from US here, Congrats on the BMO facility and getting that over the finish line.
Speaker #3: We in terms of cadence of of titles that are going out and investment that should continue through 2026 . be coming We will out with comments on 2026 performance and guidance , probably in , early in in the new year .
On the balance sheet are you comfortable how it stands today and then or are there more things coming in from a balance sheet optimization.
I guess perspective Ravi.
Thank you and yes, we are happy to have gotten that facility over the line. It provides us with a much less lower cost of borrowing and gives us.
Speaker #3: But we we do think proprietary content and we're very confident that proprietary content is going to a key be accelerator in driving better margin performance .
Good liquidity for our needs I do think there is opportunity as we mentioned to optimize.
Speaker #3: And cash generation . And as a reminder , only 12% of the US population is under regulated . I casino and also casino is growing substantially in the jurisdictions where it is legalized .
And become more efficient with our cost structure, which we are actively.
Looking at and believe there is much more to come on that so in terms of strengthening our liquidity I think.
Speaker #3: And I noted just anecdotally , DraftKings mentioned they were up that 25% on their casino performance for Q3 . So I casino in the US is is really humming and we're well positioned to to capitalize on that .
That's going to come from improved margins and better cash flow off of our operations.
Okay. Thanks, guys. Thank you thank.
Thank you.
Your next question comes from the line of Michael Shelton FRC. Please go ahead.
Speaker #3: .
Speaker #5: Great . Thank you . And I do just want to follow up on Bet city here for a second . going to be a Is that complete off roll all at once , or is it going to happen over time .
Good morning, I was wondering if you guys could tell me, what's keeping drag from earning a regular and consistent operating income excuse me.
Speaker #5: And then the earnings impact being minimal . Is that a impact or gross is that net of any mitigation that you might do throughout the year ?
And then secondly.
What do you expect the stock price to be in three years, and what type of systems and strategies and structures are you going to put in place in order to achieve that number.
Speaker #3: Definitely . Would would of be net mitigation like the opportunity for us to either redeploy resources or optimize resources will present with be a customer like that rolling off of in terms them actually migrating off .
Thanks for the question I'll start with the operating income portion.
I assume you mean from an IRS perspective, we do have.
Fairly significant development costs that get get to amortize. There also is some purchase price amortization, that's occurring from our acquisitions that we've done.
Speaker #3: We're still working with Nchain to solidify that plan . And as mentioned , this will be something that most likely will occur in the first half of the year .
Things like brand and other businesses.
Speaker #3: We're exploring opportunities and ways to make sure that the process happens extremely smoothly and is beneficial for both sides.
So we do have a lot of.
Amortization and depreciation that puts us in a loss position I think we're getting better and better.
Speaker #5: Great. Thank you very much.
Speaker #3: Thank you
I think.
I think what we look at from our performance and how we gave you our performance is looking at our adjusted EBITDA less capex.
Speaker #4: Your next
Speaker #4: question . comes from the line of Gianluca Tucci of Edward Securities . Please go ahead .
Speaker #6: morning guys Hi . Good . First question , could you perhaps walk us through a couple of the growth drivers in the US and Brazilian markets ?
<unk>.
Just to make sure that we are actually generating cash from our operations.
We're focused on that.
Speaker #6: you thinking about these markets And how as we enter a new year ?
Our positive on that this quarter, we think that ratio continue to improve and we think.
Oh.
Speaker #3: for the Thanks question . So in terms of Brazil , we we continually get more and market share from an aggregation point of view .
Hello.
<unk> would be.
30% to 50%.
In terms of carbon that cash conversion ratio occur in terms of Easter lurking stock price might comment on that.
Speaker #3: So we're quite happy with the level of coverage we've been able to achieve in in Brazil . Our our strategy is always been the aggregation is a lead into pushing our proprietary and exclusive content and benefiting relationships .
Speaker #3: So we're quite happy with the level of coverage we've been able to achieve in in Brazil . Our our strategy is always been the aggregation is a lead into pushing our proprietary and exclusive content and benefiting from We have , such as partnership with the Rapidplay .
We're focused on operating our strongest return provided with us.
So I would plan optimizing our structure producing solid couch.
ROE and margin improvement.
We are confident that with the.
Speaker #3: So we see our into the future is opportunity to increase our coming revenue concentration from products . So of very we're we're quite more Brazil accretive happy with margin seen .
The path that we're on we're going to increase value for shareholders.
Thank you.
There are no further questions at this time and with that I will turn the call back over to Ravi Bressler CFO for closing remarks. Please go ahead.
Speaker #3: Well the we've 80% range year over into . Our focus will be now getting better a share of that revenue coming from more margin accretive products .
Thank you and thank you everyone for joining our call today.
Speaker #3: And again , I think we're we're well placed for that . We have good relationships with with operators . We're we're feeding a good distribution network .
We look forward to updating you on our progress as it continues appreciate everyone's support and have a great day.
Speaker #3: And we have good a good relationship or partnership with studio . That's in that based region and can can deliver titles that that should be quite well received into that market .
Ladies and gentlemen, this concludes today's call. We thank you for participating you may now disconnect your lines.
Speaker #6: Okay . Thanks , Rob . And perhaps one , one one final Q from , from us here . Congrats on the BMO facility and getting that over the finish line on the balance sheet .
Speaker #6: Are you comfortable how it stands today ? And and or are there more things coming from a balance sheet optimization ? I guess perspective .
Speaker #6: Ravi .
Speaker #3: Yeah . Thank you . And yeah , we are happy to have facility over gotten that the line . It provides us with much less lower cost borrowing of and gives us good liquidity for our needs .
Speaker #3: I do think there's opportunity , as we mentioned , to optimize and become more efficient with with our cost structure , which we're actively looking at and believe there .
Speaker #3: There's much more to come on that . So in terms of strengthening our liquidity , I think that's going to come from improved margins better cash flow and of our off operations .
Speaker #6: Okay . Thanks guys .
Speaker #7: Thank you. Thank you.
Speaker #4: Your next question comes from the line of Michael Shelton of FRC . Please go ahead .
Speaker #8: Good morning. I was wondering if you could tell me what's keeping Bragg from earning a regular and consistent operating income? Excuse me?
Speaker #8: And then secondly , what do you expect the stock price to be in three years ? And what type of systems and strategies and structures are you going to put in place in order to achieve that number ?
Speaker #8: Thank you .
Speaker #3: Thanks for the question . I'll start with the operating income portion . I assume you mean from an IFRS perspective . We do have fairly significant development costs that get gets amortized .
Speaker #3: There also is some purchase price amortization that's occurring from our acquisitions that we've done things like brand and other have a bit of a tail .
Speaker #3: we do have a lot of amortization in depreciation that puts us in a position I think we're getting better and better . And I think , you know what we look at from our performance and how we gauge our performance is looking at our adjusted EBITDA .
Speaker #3: That's our CapEx . And that's very key for us to make sure that we are . Actually generating cash from our operations . So we're focused on that we are , and positive on that this quarter .
Speaker #3: We think that ratio can continue to improve , and we think at full , full efficiency , we could be 30 to 50% in terms of having that cash conversion ratio occur in terms of future looking stock price .
Speaker #3: Can't comment on that . You know , we are focused on operating as strong as we can best , providing the result that we can , optimizing our structure , producing solid cash , cash flow and margin improvement .
Speaker #3: And we we are confident that with the path that we're on , we're going to increase value for for shareholders .
Speaker #8: Thank you .
Speaker #4: There are no further questions at this time. And with that, I will turn the call back over to Robert Bressler, CFO, for closing remarks.
Speaker #4: Please go ahead .
Speaker #3: you . And Thank thank you , everyone , for joining the call today . We forward to look you on updating our progress as it continues .
Speaker #3: Appreciate everyone's support and have a great day .