Bragg Gaming Group Inc.

Good morning, everyone, and thank you for joining the Second Quarter 2025 Earnings Conference Call for Bragg Gaming Group. My name is Greg, and I will be your operator today. I will shortly hand the call over to Bragg Gaming Group CEO, Mateusz Mazzi, who will discuss Bragg's Second Quarter 2025 performance, and Bragg's CFO, Robbie Bresler, who will review the company's financial results. Please be reminded that you can review Bragg's results presentation on the company's investor website at investors.brag.group in the events and presentations section. Following these prepared remarks, the conference will be open to a question and answer period. Certain statements on this call may constitute forward-looking information or future-oriented financial information. A full explanation of these risk factors is available on the second slide of Brag's second quarter 2025 earnings presentation titled Forward-Looking Statements. as well as in the recently filed press release and other public disclosures. I'd now like to turn the call over to Mateusz Mazzi, Chief Executive Officer of BRAG. Mateusz.

Good morning, everyone. My name is Mateusz Mazzi, and I am the CEO of BRAG. On this call, I'll start with our second quarter highlights and operational updates. Then I'll pass the line to Robbie to discuss our financial results. After his commentary, I'll discuss more about our strategy and outlook for the rest of 2025. And then Robbie and I will answer your questions. For those investors that are not familiar with Bragg, who exactly is Bragg Gaming Group? We're a must-have partner in the iGaming world. First, user experience is at the core of our products. and we're creating and delivering cutting-edge casino games from our own studios and through a selection of third-party studios. Second, we're the silent engine behind some of the giants of iGaming, sports betting, and iLottery, empowering operators to launch into and dominate markets with our proprietary player account management solution and an in-house build delivery and engagement tech stack. We arm online casino, sports betting, and lottery operators with the tools to launch flawlessly, scale relentlessly, and optimize for maximum success, delivering power and control to our partners. Third, we're obsessed with the player. We don't just look at data, we decode it, leveraging information, advanced analytics, and cutting edge AI to supercharge player engagement, maximize revenue potential, and build smarter, more efficient iGaming operations. In short, we're building the future of user experience and our AI first strategy is key to achieving this by embedding AI into our products and operations for unprecedented hyper-personalization, operational efficiency, and maximized player lifetime value. This is BRAC Gaming Group, and we look forward to sharing our story with you. I'll start my presentation with our operational updates. In Q2, our revenue was $26.1 million, a 4.9% increase year over year. excluding the netherlands we grew 21 percent while regulatory changes in the netherlands have affected the market our business is becoming less dependent on it as we deliver strong growth elsewhere our gross profit grew by 10.8 percent year over year to 13.7 million euros with our gross profit margin increasing by 280 basis points to 52.7%. Our adjusted EBITDA for Q2 2025 was 3.5 million euros, a decrease of 4.3% from the same period in 2024. While our top line growth was less than expected at 4.9% growth in Q2 year-over-year, Our strategic focus is clear. With increasing gaming taxes in key markets like Brazil, the Netherlands, and Romania, we are prioritizing improved margin and cash flow performance over aggressive revenue expansion. We continuously reassess our strategy to maintain our bottom line performance. We will pursue those opportunities methodically, Always ensuring our approach optimizes both margins and cash flow. Subsequent to the quarter, we advanced a planned realization of cost synergies throughout the business, which should provide the company with €2 million in annualized cash savings, which right-sizes our cost base. We believe there are further opportunities to realize cost synergies in the second half of this year. Our strong emphasis and focus on our margin and cash flow performance serves to keep us agile as a business comparative to other peers. The revised guidance, which Robbie will discuss shortly, shows at the midpoint of our revised range that our adjusted EBITDA margin is within 0.5% of our previous guidance. This is consistent with our laser focus of creating a margin-accretive product mix and being focused on cash generation. In the Netherlands, we have a strong position. We're outperforming in a challenging regulatory environment where we are down by 17% versus a 25% industry decline. While our concentration in the Netherlands is challenging, the significance of the market becomes less and less as we experience high growth in the US market where our proprietary content revenue grew by 270% year-on-year. We have achieved a 44% year-over-year growth in proprietary content revenue, reaching €3.9 million in 2025. A significant 20% of our 2025 proprietary content revenue came from titles we released in 2024 alone. This shows that we are effectively monetizing our games over time. Even more impressively, over 50% of our proprietary content revenue is from titles that were launched before 2024. This really highlights the long-term stickiness and value of our content and our strong ability to generate long-term value. I am pleased with the way we're making significant strides in the proprietary space. Our strategy to diversify and expand in growth markets in a margin-accretive way is working, and we are confident in our ability to keep building momentum. Our bespoke content agreements with Caesars and Hard Rock Digital clearly illustrate and will continue to show that BRAG is the preferred bespoke content partner of Tier 1 operators, which serves as a strong validation of our talent and capabilities as a business. Our Dragon Power brand continues to grow its market share in the US, where our Triple Gold title was one of the best launches to date, and where our Super Orbs and the original Dragon Power continue to perform very well. Bragg will continue to expand the Dragon Power brand with three new titles in various stages of development, Indeed, our latest Dragon Power 10K Waze will launch in the third quarter. We're also expanding our connect and collect mechanic, which continues to be a star performer for us. We have also expanded our other key brands, launching Gold Party 2 in Q2, and will soon launch two new Fire Stampede titles. Our exclusive game partners have begun launching new portfolio of games, with the first boomerang game already live. Existing partners, particularly Incredible Technologies in North America, are experiencing increased success and will be rolling out more games later this year. Our game roadmap, encompassing both internal and partner studios, is set to significantly expand in the rest of 2025 and into 2026. Bragg is actively monitoring key market trends and analyzing its internal brands and mechanics to identify unique opportunities for market share growth. A significant area of focus is the expansion into traditional stepper market, particularly in Canada and North America. This expansion is supported by a newly customized interface in a traditional payer experience. Initial testing in non-U.S. markets has yielded positive results. During the quarter, we launched our online casino games in New Jersey, Pennsylvania, and Michigan with Fanatics Casino. The U.S. online casino market grew by 31% year-over-year. In this growing market, Bragg's proprietary online casino content saw a 270% GGR increase year-over-year. The US online casino market is projected to grow from 10 billion US dollars in GGR in 2025 to over 75 billion US dollars in GGR at maturity. In terms of potential iGaming expansion in the US, we are anticipating Ohio, Illinois, and New York to be key battleground states for iGaming legalization in the midterm. with Ohio in particular of interest given its extended legislative deadlines in 2026. Our scalable business model allows us to expand into new states as they open with minimal incremental costs and our existing established partnerships with top operators in the market open these opportunities up even further. Another trend we've seen is the increased stagnation of online lottery in states where both iGaming and iLottery are legal due to increased competition from iGaming operators. In Brazil, our other key market, we launched on the first day of the regulated market opening. This has resulted in 56% year-on-year performer revenue growth in the second quarter. We've also further strengthened our exclusive content portfolio with a strategic investment in the Brazilian specialist online studio, Rapid Play. According to projections, Brazil's iGaming market is set to grow from 3.9 billion US dollars in 2025 to 6.1 billion US dollars by 2030. And we project Brazil will account for up to 10% of our revenue in 2025. On the leadership front, we added two key hires. Scott Milford as EVP Group Content, who comes with more than 25 years of experience driving game innovation and studio success at major gaming brands, including Aristocrat, Konami, and Aruze. And Scott brings an unmatched insight and leadership to one of the industry's fastest growing content development companies. Our other transformational hire was Luca Pataki, our new EVP of AI and innovation. Luca comes with a strong pedigree in AI and technology with over a decade of experience at Sportsrata, a company at the forefront of sports data and content. Luca has been instrumental in revolutionizing sports content creation through AI, computer vision, and deep learning, successfully bringing real-time data collection solutions to production, being the driving force behind integrating acquired tech businesses, thereby turning advanced technology into significant business value through the optimization of operating cost and business efficiencies. On the back of LucasHire, we have launched a new AI-first initiative to make the company become an AI-first business by 2027. I will now turn the line over to Robbie to discuss our financial results.

Thank you, Matt. Good morning, everyone. I will now cover our financial results for the second quarter of 2025. Q2 revenue was €26.1 million, up 4.9% year over year, and excluding the Netherlands, we grew 21%. While regulatory changes in the Netherlands, higher taxes and new deposit rules have cut the market by about a quarter, our business is becoming less dependent on that market as we deliver strong margin accretive growth elsewhere, as illustrated in North America leading the way with 64% year over year growth in Q2, which is mostly from proprietary content, our best performing marching product. Even in the Netherlands, we're outperforming the market. We are down 17% versus 25%, which the industry is down. Our strategy to diversify and expand in growth markets in a margin accretive way is working, and we're confident in our ability to keep building momentum. Our gross profits grew by 10.8% on a year-over-year basis compared to Q2 2024, rising to 13.7 million euros, with BRAG's gross profit margin increasing by 280 basis points to 52.7%. Company adjusted EBITDA amounted to 3.5 million euro in Q2 2025, dropping by 4.3% from the same period in 2024 and corresponding to an adjusted EBITDA margin of 13.3%. This decline is largely a result of an increase in compensation spending in Q2 2025 compared to Q2 2024. Through the realization of synergies as Matt discussed, Our compensation spending is in the right size to deliver operational leverage in future periods. Looking at our product mix for Q2 2025, our PAM and turnkey segments generated $3.8 million, which was 14.6% of our total revenue. This is down from $4.9 million for 19.9% of revenue in the same period last year due to the Netherlands market contracting. Aggregated content made up 49.4% of our revenue this quarter, a slight decrease from 49.6% last year. But the real story here is the sense of our proprietary content, which is climbing fast, now contributing 14.8% of our total revenue in Q2 10.8% a year ago. The growth is especially strong thanks to the ongoing momentum we're seeing in the US market. Turning to the balance sheet, as of June 30th, 2025, we held €4.2 million in cash and cash equivalents. During the quarter, we repaid €5 million of the €7 million USD secured promissory note outstanding. We are in the advanced stages of securing a new working capital revolving debt facility from a tier one Canadian bank, and believe we will close this early in Q3. While this process is taking much longer than expected, we are optimistic that we will have it closed soon. Turning to our outlook, earlier this year, we expected double digit revenue and adjusted EBITDA growth for 2025. driven by expansion in regulated markets, the growth of our proprietary and exclusive content, and continued momentum in the US and Latin America. While our strategy hasn't changed, we've adjusted our full-year guidance to reflect higher gaining taxes, softer market conditions in the Netherlands and other regions, headwinds in Brazil, and other broad market pressures. We now expect revenue of $106 million to 108.5 million euro and adjusted EBITDA of 16.5 million to 18.5 million euro. As Matt mentioned, our revised guidance at the midpoint adjusted EBITDA margin is within 0.5% of our previous guidance. This is consistent with our laser focus on creating a margin accretive product mix and being focused on cash generation. These changes reflect a conscious shift towards higher quality earnings. We're prioritizing margin and cash generation over lower margin revenue. And the efficiencies we've implemented post quarter are already making up the leaner business. We expect adjusted EBITDA margins to be a few points higher in the second half of 2025 versus the first half of 2025. and we remain confident in our ability to deliver sustainable, profitable growth for the long term. Our revised guidance is not a reflection of our products underperforming, quite the opposite. Gross gaming revenue, which reflects the level of play on our content and through our technology stack outside the Netherlands, is up 25% year over year. Finally, We firmly believe that the best driver to unlock value for BRAG is to improve our margins and cash flow, and we are in a strong position to achieve this. We still believe that we will deliver operational leverage and believe that there are still synergies we can realize to optimize our cost structure. I will now hand the call back to Max.