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01/10 16:14
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call reflects a positive sentiment with strong growth in proprietary content, particularly in the U.S. and Brazil, leading to improved margins and profitability. Despite challenges in the Netherlands, the company's successful diversification strategy is evident with significant revenue growth outside this market. The Q&A session reinforced the positive outlook with expectations of continued margin improvement and operational efficiencies. However, potential risks in new markets and the upcoming BetCity migration pose challenges. Overall, the positive elements outweigh the negatives, suggesting a positive stock price movement.
Revenue EUR 26.8 million, up 2% year-over-year. Excluding the Netherlands, revenue grew 20% year-over-year due to diversification strategy and growth in high-growth markets like North America and Brazil. Netherlands revenue declined 22% year-over-year due to regulatory changes.
Proprietary Content Revenue Increased 35% year-over-year, driven by strong performance in the U.S. and Brazil. This shift towards proprietary content is a key driver of profitability.
Gross Profit EUR 14.7 million, up 5% year-over-year. Gross margin improved by 115 basis points to 54.7%, supported by the growing contribution from proprietary content.
Adjusted EBITDA EUR 4.4 million, up 9% year-over-year. Adjusted EBITDA margin rose 100 basis points to 16.6%, benefiting from process optimizations and efficiencies initiated in the prior quarter.
Revenue from U.S.A. Increased 86% year-over-year, driven by proprietary content and market expansion.
Revenue from Brazil Increased 80% year-over-year, attributed to successful entry into the regulated market.
Proprietary Content Revenue: Increased by 35% year-over-year in Q3 2025, with 50% of this revenue coming from the U.S. market. Proprietary content now makes up 16% of total revenue.
New Game Launches: 35 new proprietary casino games launched in 2025, with 70% of proprietary content revenue in Q3 2025 coming from games released before 2025.
Bespoke Games: Rolled out 2 new bespoke online casino games for Hard Rock in the U.S.
U.S. Market Growth: Revenue grew 86% year-over-year in Q3 2025. The U.S. market is projected to grow from $10 billion in 2025 to over $30 billion by 2030.
Brazil Market Growth: Revenue grew 80% year-over-year in Q3 2025, with Brazil expected to contribute 10% of total revenue for 2025.
Geographic Diversification: Non-Netherlands revenue projected to rise to 68% of total revenue in 2025, up from 51% in 2022.
Cost Optimization: Actions to optimize processes and realize efficiencies led to a 9% growth in adjusted EBITDA and a 100 basis point increase in adjusted EBITDA margins in Q3 2025.
Credit Facility: Secured a Tier 1 credit line with the Bank of Montreal, enhancing liquidity and lowering borrowing costs.
Focus on High-Margin Products: Shifted revenue mix towards proprietary content, which is the best-performing margin contributor.
Regulated Market Entry: Successful entry into Brazil's regulated market, contributing to significant revenue growth.
Netherlands Market Strategy: Despite regulatory challenges, maintained 30% market share in the Netherlands while focusing on growth in other markets.
Regulatory Changes in the Netherlands: Revenue in the Netherlands decreased by 22% year-over-year due to regulatory changes, which have created headwinds for regulated operators, including Bragg's customers. This has reduced the Netherlands' contribution to overall revenue.
Customer Migration in the Netherlands: One of Bragg's customers in the Netherlands, BetCity, is expected to migrate off the Bragg PAM in the first half of next year. While the financial impact is expected to be minimal, it represents a potential operational challenge.
Dependence on Proprietary Content: The company is heavily reliant on proprietary content for high-margin revenue growth. Any disruption in the development or performance of proprietary games could impact profitability.
Geographic Diversification Challenges: While Bragg is diversifying its revenue streams, the Netherlands still represents a significant portion of revenue. The company is working to reduce this dependency, but challenges in new markets could slow diversification efforts.
Economic and Market Conditions in New Jurisdictions: The company is expanding into new markets like Brazil and the U.S., but economic uncertainties or regulatory hurdles in these regions could impact growth projections.
Revenue Projections: The company maintains its full-year 2025 revenue guidance of EUR 106 million to EUR 108.5 million.
Adjusted EBITDA Projections: The company projects full-year 2025 adjusted EBITDA of EUR 16.5 million to EUR 18.5 million.
Market Growth Expectations: The U.S. online casino market is expected to grow from USD 10 billion in 2025 to over USD 30 billion by 2030, with a compound annual growth rate of 26% over the next five years.
Geographic Revenue Diversification: Non-Netherlands revenue is projected to account for 68% of total revenue in 2025, up from 51% in 2022.
Brazil Market Contribution: Brazil is expected to contribute 10% of total revenues for the full year 2025.
Operational Focus for 2026: The company plans to continue optimizing product mix, internal processes, and structures to improve margins and cash flow in 2026.
New Market Opportunities: The company sees potential in newly regulating jurisdictions, such as Finland, which plans to launch its regulated iGaming market in January 2027.
The selected topic was not discussed during the call.
The earnings call reflects a positive sentiment with strong growth in proprietary content, particularly in the U.S. and Brazil, leading to improved margins and profitability. Despite challenges in the Netherlands, the company's successful diversification strategy is evident with significant revenue growth outside this market. The Q&A session reinforced the positive outlook with expectations of continued margin improvement and operational efficiencies. However, potential risks in new markets and the upcoming BetCity migration pose challenges. Overall, the positive elements outweigh the negatives, suggesting a positive stock price movement.
The earnings call presents a mixed picture. Strong revenue growth, especially in the U.S. and Brazil, and strategic partnerships are positives. However, regulatory challenges in the Netherlands, increased gaming taxes, and a decline in adjusted EBITDA pose risks. The Q&A session confirmed management's optimism but did not alleviate concerns about execution risks and financial uncertainties. Overall, the sentiment is neutral, as positives are balanced by significant challenges.
The earnings call reveals a mixed yet overall positive outlook. Strong financial metrics, including a 7% revenue growth and a 19.7% increase in adjusted EBITDA, are complemented by optimistic future guidance. Despite regulatory and competitive pressures in the Netherlands, the company's strategic expansion in North America and Brazil, along with growth in proprietary content, are promising. The lack of a share repurchase program is a neutral factor. Overall, the positive financial performance and strategic initiatives outweigh the risks, suggesting a likely stock price increase of 2% to 8%.
The earnings call summary reveals strong financial performance with revenue and EBITDA growth, alongside optimistic guidance for 2025. The company is expanding in new markets like Brazil and the U.S., which are expected to contribute significantly to future revenue. Management's focus on proprietary content with higher margins is positive. Despite some operational challenges and economic concerns, there are strategic partnerships and growth opportunities. The Q&A section supports these insights, with analysts showing interest in strategic investments and market expansion. Overall, the sentiment is positive, likely leading to a stock price increase.
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