Bragg Gaming Group Inc.

Everyone, my name is JL, and thank you for joining the second quarter of 2024 earnings conference call for Bragg Gaming Group. Shortly, I'll hand the call over to Bragg Gaming Group CEO, Mitesh Mazhi, who will comment on Bragg's second quarter performance, and Bragg's interim CFO, Robbie Bressler, who will review and discuss the company's second quarter financial results. If you have not already done so, you can follow this earnings call presentation from Bragg's investor website at investors.bragg.group. That's investors, plural with an S. Then go to the events and presentation section. On this call, there will be a review of Bragg's financial and operating results for the second quarter of 2024. Following these prepared remarks, the conference call will be opened to a question and answer period. Before we get started, I have some brief cautionary remarks regarding certain statements that may be made on this call. 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. Statements about expected growth, prospective results, strategic outlooks and financial and operational expectations, opportunities and projections rely on a number of assumptions concerning future events, including markets and economic conditions, business prospects or opportunities, future plans and strategies, technological developments and anticipated events, trends and regulatory changes that may affect the company and its subsidiaries and their respective customers and industries. While the company believes these assumptions to be reasonable, they are subject to a number of risks, uncertainties and other factors which may are outside of the company's control and which could cause the actual results, performance or achievements of the company to be materially different. There can be no assurance that these assumptions or estimates are accurate or that any of these expectations will prove to be correct. For a complete discussion of these risk factors, please refer to Bragg Gaming Group's recently filed press release and other publicly available disclosure.

Good morning, everyone. Good morning, everyone. My name is Mateusz Mazzi. I'm chairman and CEO of Bragg. On this call, I'm going to make some initial comments and I'll run through some key operational highlights from the second quarter of 2024. Then I'm going to pass the line over to Robbie Bressler, our interim CFO, who joined us during the second quarter and who will take you through the company financials. After our financial recap, I'll be talking more about some of our main strategic and operational focus area before wrapping up with our outlook and summary, and we'll then open up the call to your questions. Turning now to recent operational highlights. As you are no doubt aware, in the first quarter of 2024, we convened a board-run special committee to review possible strategic alternatives for BRAG, including a potential sale, merger, acquisition, or additional investment into the business. This process is still ongoing and comes against the backdrop of increased M&A activity in the iGaming sector, activity which has driven additional interest in BRAG. I want to reiterate that the board will not provide any further updates on the process until we have a material development to report on. In the meantime, management continues to focus on business growth, delivering on its strategic objectives, and maintaining our utmost commitment to clients and business partners alike. The company continues to be well-placed to capitalize on opportunities across iGaming content and technology globally. During the second quarter, we announced the appointment of Robbie Bressler, who joins us on the call today as Interim Chief Financial Officer. Robbie has a wealth of experience across the iGaming and financial services industries, including from his time at Bally's Corporation and Ernst & Young. In May, we announced that Neil White, formerly of Digital Gaming Corporation, or DGC, joined us in the capacity of Chief Commercial Officer in order to lead the next stage of growth at Bragg. Neil is joined by Garrick Morris, also previously of DGC, as Senior Vice President for Commercial for U.S. and Canada to drive the U.S. rollout forward, something I will talk more about in today's presentation. I can also announce that we have recently bolstered our legal team and completed our executive leadership team with the appointment of experienced iGaming industry lawyer, Tommaso Di Chio, as our chief legal and compliance officer. I welcome Robby, Neil, Garrick, and Tommaso to the team. And after Robby has taken you through our second quarter financial results, I will take a moment to give you a snapshot of the highly experienced executive leadership we have now in place ready to deliver the next stage of RAC growth and to support any outcome of the strategic review. Turning to our rollout across the United States, we've capitalized on our existing relationship with customers by expanding into new states, most notably Pennsylvania, where we recently announced that we launched our newest iGaming content and technology with BetMGM and Borgata. We are also pleased to announce at the end of the second quarter we've launched with FanDuel, the local market leader, as well as with international bookmaker Bet365, also in Pennsylvania. We're also pleased to announce that we've recently expanded our relationship with Golden Nugget into New Jersey. And after Robbie has presented the financials, I will show you what all this means for our distribution reach in North America. Over the quarter, we've seen excellent growth in adoption of our player account management technology, notably in Czech Republic where BRAC was able to conclude an agreement with Kingsbet for our full-service turnkey solution. Kingsbet becomes our second PAM customer in the country and is already seeing positive growth following its launch. In the Netherlands, our biggest market, we added our sixth PAM customer in HardRockCasino.nl in a deal which included content aggregation and managed services provision. Hard Rock is an internationally known and recognizable brand, and to be powering their Dutch expansion is something we are very proud to support. Returning to the Dutch market, over the quarter we powered the Sportbook launches of three of our existing PAM clients in the Netherlands. as they look to take advantage of the UEFA European Championship football tournament. The first of these launches was of the Metric Gaming Sportsbook with bestnation.nl, a deal achieved through the extension of our existing turnkey relationship with the Dutch licensed operator. Since this initial launch, we've concluded similar deals to launch the Metric Gaming Sportsbook with comeon.nl, following their sportsbook license award and have also launched the Camby sportsbook with 711.nl, a valued fan customer of Bragg. We're very excited about the potential of these new sportsbook partners and the way they allow us to enhance our existing relationships with Sternke and BAM clients by adding a new vertical. Drawing on this, Throughout the quarter, we've continued to develop and distribute our innovative and exclusive content globally, launching 17 new exclusive games during the period. We've expanded the global distribution of our online casino content with Light and Wonder, giving us crucial exposure across regulated markets. And in Italy, we've partnered with CESAO to launch in what is Europe's second largest iGaming market. Now, once Robbie has taken you through the financial results, I will come back to take some of these points in more detail before we open the line to your questions. Robbie?

Thank you, Matt, and good morning to everybody. It's been great to be a part of the BRAG team for this short period and looking forward to engaging with our analysts and shareholders in my new role. Being part of a growing company that is active in over 30 regulated jurisdictions with a best-in-class product mix and growing coverage of the North American markets is extremely exciting, and I'm looking forward to being part of this success story. Jumping into Q2 results, total revenue for the second quarter was 24.9 million euros, a record high, up 0.5% compared to Q2 2023. As expected, gross profit and EBITDA were down compared to second quarter of last year. Q2 2024 gross profit decreased by 10% to €12.4 million, with gross profit margins decreasing to 49.9%. Adjusted EBITDA for the quarter was down 24% to €3.6 million, and our adjusted EBITDA margin decreased to 14.5%. While gross profit and adjusted EBITDA were down year over year as expected due to changes in our product mix, we are encouraged to see sequential growth in revenue gross profit and adjusted EBITDA compared to the first quarter of this year, a timeframe in which our product mix has been consistent. We expect to see this growth continue through the second half of 2024 and are reiterating our full year revenue and adjusted EBITDA guidance at 102 to 109 million euro and 15.2 to 18.5 million euro respectively, noting that we are currently tracking to the lower end of the guidance ranges provided. As noted on slide 7, in Q2 2024, revenue from content represented 80% of total revenue, while in Q2 2023, total content revenue represented 77%. PAM and turnkey revenue, however, declined as a percentage of total revenue, going from 23% in Q2 2023 to 20% of total revenue in Q2 2024. Proprietary content and exclusive third-party content total revenue increased by 12% since Q2 2023 with notable positive momentum in the U.S. Proprietary content deployment is progressing well in both the U.S. and EU markets through increased distribution and game performance. These changes in product mix have resulted in reduced gross profit and adjusted EBITDA. However, as mentioned, we are pleased to see consistent growth from Q1 to Q2 in 2024, where product mix was consistent. Revenue is up 4.4% from Q1 2024, and gross profit and adjusted EBITDA are up 4.4% and 6%, respectively. Turning to the balance sheet. As of June 30th, 2024, we held €10.8 million in cash and cash equivalents. During the quarter, we obtained a €7 million USD secured promissory note from a related party that bears interest at an annual rate of 14% payable quarterly. Funds are being used to provide us maximum financial flexibility as we continue to progress through the strategic review process. I can confirm that post quarter end the remaining outstanding LIN convertible debt of 1 million USD has now been settled in full in cash. Networking capital excluding deferred consideration convertible debt and promissory note as of June 30th, 2024 amounted to 10.5 million Euro compared to 5.1 million Euros at the beginning of the year. I will now hand over the call back to Matt to continue with commentary on strategy and operations.