Bragg Gaming Group identifying online gaming opportunities in B2B and B2C arenas

Established to identify online gaming opportunities Focus on both B2B and B2C gaming companies Owns online casino technology group ORYX Gaming What Bragg Gaming does: Bragg Gaming Group Inc (CVE:BRAG) (OTCMKTS:BRGGF) was established in December 2018 to identify online gaming opportunities with a focus on both B2B and B2C gaming companies. It was the reincarnation of a gambling company called Breaking Data. The company is an innovative B2B online gaming solution provider offering a turnkey solution for retail, online and mobile iGaming platform, as well as advanced casino content aggregator, sportsbook, lottery, marketing and operational services. It's core businesses is ORYX Gaming, an online casino technology group founded in 2010 and acquired by Bragg in 2018. ORYX is an international i-Gaming turnkey solution provider that offers an online, retail and mobile platform and access to diverse portfolio of proprietary and 3rd party Sportsbook, Lottery and Casino products with over 5,000 content titles included. With clients ranging from JackpotJoy to GVC Holdings, ORYX is certified, approved and licensed to provide services in Malta, Schleswig Holstein, Spain, Romania, Colombia, Croatia, Serbia, Gibraltar, UK and Slovenia. Bragg launched a strategic review of its online media division, including GiveMeSport, In August 2019, an eight-month process that was completed in May 2020 with the sale of the division to SN&CK Media Limited (SML) Under the sale agreement, Bragg will receive a total consideration of up to £400,000 (C$699,801), consisting of an upfront cash payment of £50,000 (C$87,465), in addition to 10% of the gross revenues from the media division for a period of 21 months following completion. How is it doing: In March 2021, Bragg Gaming announced that its wholly-owned ORYX Gaming subsidiary is taking Croatian land-based operator Senator online with a complete turnkey solution. The ORYX solution includes the ORYX iGaming Platform, ORYX Hub and a wide selection of ORYX RGS and third-party aggregated content. Senator, which operates 17 casinos in Croatia, will leverage ORYX’s proprietary set of tools including player and payments management, CRM and promotions, bonuses and rewards, fraud, rules engine, compliance, analytics and reporting, and CMS. Following a recently-signed deal to move into the Netherlands, the company said ORYX’s Croatian partnership heralds its latest expansion in Europe, where it is licensed by the Malta Gaming Authority (MGA) and the Romanian National Gambling Office (ONJN). Earlier in the year, Bragg reported that ORYX Gaming was teaming up with online casino affiliate site Mr Gamble to showcase ORYX’s gaming offering through its slots channel on the popular streaming platform Twitch. The company said ORYX’s more than 10,000 games will be promoted on Mr Gamble’s site and streamed directly to millions of players. As well, ORYX became the exclusive content aggregation partner to MerkurXtip, expanding its footprint in Serbia and extending the reach of ORYX’s premium products. Bragg said MerkurXtip will also use ORYX’s Data Platform to analyze product performance, perform targeted marketing campaigns and offer player engagement tools, such as free rounds, leaderboards, tournaments and achievements, which have proven to significantly increase player retention and player values. And, ORYX recently entered the Czech and Slovakian markets through a partnership with omni-channel platform provider SYNOT INTERACTIVE. SYNOT, which is part of the SYNOT Group and EASIT, will now be able to offer ORYX’s content to a number of major operators in the Czech Republic and Slovakia, as well as other key regulated territories.  On the financial side, Bragg Gaming saw its revenue grow by 72% year-over-year to C$18.1 million (€11.7 million) in 3Q 2020 after expanding its online gaming business through Europe and Latin America. In the third-quarter results, posted on November 23, 2020, Bragg reported adjusted EBITDA of C$2.8 million for the period compared to $0.3 million in the comparable period a year ago, with significantly higher margins of 15.7% as a result of improved cost control and higher scale. The group onboarded 14 new customers in the quarter, which also saw it advancing discussions with new clients in Europe and Latin America and entering Denmark and Latvia for the first time. Oryx, Bragg’s gaming subsidiary, launched 11 new games to strengthen its portfolio in the quarter. Total bets were up 95% to C$5.1 billion compared to the same period in 2019, when C$2.6 billion in bets were placed. The number of unique players also rose 89 % to 1.8 million, an increase Bragg attributed to additions to its content offering and platform improvements. Bragg is forecasting 4Q revenue to be circa C$67 million with adjusted EBITDA for 2020 in the range of C$8.1 million to C$8.7 million. The company also strengthened its leadership team during the three-month period to end September 30, 2020, by bringing onboard Richard Carter, who led SBTech to its merger with online gaming behemoth DraftKings. What the broker says: In a recent note to clients, Canaccord Genuity analysts wrote that they are more optimistic on the outlook for Bragg Gaming on both the near-term customer growth pipeline and the longer-term North American opportunity, after the broker hosted a virtual investor marketing event with key company executives including CEO Adam Arviv.   “Bragg has driven significant client additions in FY2020 with the firm adding 34 customers year-to-date and management expecting to reach 50 additions by the end of the year, which would represent an approximately 80% increase in its subscriber base versus 4Q 2019,” the analysts said. “In our view, this highlights the potency of Bragg’s high-quality platform and content against a backdrop of growing demand for iGaming B2B services,” they added. The Canaccord Genuity analysts said they were also told by management that the company has an additional 50 customers in backlog, which they noted implies that its customer base growth should be at least 40% in FY2021 and shows “no signs of slowing down.” Notably, Bragg continues its streak of 0% churn, having yet to lose a customer despite the rapid growth in its base, they added.   Other potential catalysts the analysts believe could lift Bragg’s valuation include a Nasdaq listing in the near-to-medium term, which they consider to be prudent given the dual benefits of providing capital for a Mergers & Acquisitions (M&A) transaction in addition to allowing the company to reach a US investor base that has strong demand for iGaming names. As well, the Canaccord analysts noted that the acquisition of an established sportsbook would provide significant synergies for Bragg as iGaming B2B clients often require online sports betting (OSB) platform services in tandem, and would help the company capture up to 30% of its clients’ net gaming revenue (NGR), which would essentially double its current market share. Finally, they said, Bragg’s geographical expansion into North America, which is slated for FY2022, is expected be a key growth driver for company and should provide upside to the analysts’ forecasts. These efforts will likely be aided by recent key appointments to Bragg’s board of directors, including PostMedia founder Paul Godfrey. The Canaccord Genuity analysts maintained a ‘Speculative Buy’ rating and $3 per share target price on Bragg Gaming stock, which they said reflects the company’s strong underlying growth, low capex requirements, and the North American opportunity.    Inflection points: Further additions to the ORYX Hub gaming platform Geographical expansion into North America Possible acquisition of an established sportsbook What the boss says: Commenting on Bragg's 3Q results, interim CEO Adam Arviv said in a statement: "We’ve made extraordinary progress in 2020 and are very pleased with the substantial revenue and EBITDA growth that we’ve delivered. We continue to expand globally, enhancing our content portfolio and technology offering, and securing new customers across key geographies.” The CEO added: “We’re particularly pleased with the confidence that investors have demonstrated in our 2021 strategy and enhanced leadership team. Richard Carter and I have taken active leadership roles within Bragg to ensure the future success of the company. Our partnership represents alignment to move our global strategy forward and our extensive networks and personal reputations within the US gaming market will add tremendous value for Bragg shareholders.” Contact Sean at sean@proactiveinvestors.com