Bragg Gaming Group is a profitable and highly cash-generative gaming solution provider

Fast-growing online B2B turnkey gaming solution provider Profitable and highly cash-generative Solid growth strategy and proven model What Bragg Gaming does: Bragg Gaming Group Inc (TSE:BRAG) (OTCMKTS:BRGGF), formerly Breaking Data, is an innovative B2B online gaming solution provider, offering a turnkey solution for retail, online and mobile gaming via its proprietary iGaming platform, which includes an advanced casino content aggregator, sportsbook, lottery, marketing and operational services. Its core business 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 third-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. The majority of Bragg Gaming’s revenue is generated on a revenue share basis, with Bragg earning a percentage of the gross gaming revenue (GGR) from operators using its platform. Bragg Gaming does not take any bets or wagers and is removed from operating the actual sites. The company has grown its customers by about 300% during the past two years and hasn’t lost a customer in more than five years. Bragg Gaming is also expanding into new markets, with a focus on the US, Canada, and Latin America, through technology and partnerships. How is it doing: In March 2021, the company appointed Richard Carter as CEO. Before joining the B2B gaming technology group, Carter served as CEO of interactive sports betting solutions and services provider SB Tech for five years prior to its merger with DraftKings Inc (NASDAQ:DKNG) (FRA:8DE). He will take over from interim CEO Adam Arviv on May 1.  Carter's appointment comes as Canada is poised to legalize betting on individual sporting events. The company expects that the new law will keep gambling profits and jobs within Canadian communities and create a safer gaming environment. Bragg had argued that current restrictions make it harder for Canadians to compete with their US and international counterparts. Bragg Gaming also recently 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 Gaming 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 Gaming 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. The company also strengthened its foothold in the Spanish market by launching its portfolio of ORYX Gaming content with Casumo, a European online casino and sportsbook operator. ORYX also signed a licensing and revenue sharing agreement with Grand Casino Baden, Switzerland’s first licensed online casino operator and one of the county’s leading online gambling sites. The company noted the addition of this second Swiss operator is expected to contribute to its fast-expanding European footprint. On the financial side, Bragg Gaming released its fourth-quarter and full-year financial results in March, including revenue that increased by nearly 75%. Revenue for the three months ended December 31 was €13.8 million (C$20.4 million), compared to €7.8 million (C$11.6 million) in the fourth quarter of 2019. For the full year, revenue was €46.4 million (C$68.7 million), compared to €26.6 million (C$39.3 million) in 2019.  Wagering revenue generated by customers rose by 50% year-over-year to €3.2 billion (C$4.7 billion) in the fourth quarter compared to €2.1 billion (C$3.2 billion) in the same period of 2019. Full-year wagering revenue increased by 74% to €11.8 billion (C$17.5 billion), compared to €6.8 billion (C$10.1 billion) in 2019.  Cash and cash equivalents as of December 31 were €26.1 million (C$38.6 million). Inflection points: Further additions to the ORYX Hub gaming platform Geographical expansion into North America Possible acquisition of an established sportsbook What the broker says: Haywood Capital Markets on April 26 announced it was initiating coverage of Bragg Gaming with a Buy rating and a $3 price target.  “We believe Bragg has a highly scalable B2B iGaming platform that should enable the company to drive revenue in the near-to-medium term,” the analyst firm wrote. “An improving regulatory environment in various jurisdictions provides a drastically increased addressable market for Bragg to capture market share.” In its note, Haywood cited three key catalysts helping the company -- a potential uplisting to the Nasdaq, a strong board and management with recent insider buying, and the company’s 2021 forecast for $73.5 million in revenue and EBITDA (earnings before interest, taxes, depreciation, and amortization) of $6.4 million.  “As we look forward into 2021, the company’s vision and growth strategy spans three areas: Core Business Growth, Diversity Product Offering and New Markets,” the firm wrote. “The company continues to evaluate its product offering and looks to enhance as well as augment its current portfolio. Lastly, we expect the company to be active in entering new markets such as the US, Canada and Latin America. For 2021, we forecast modest revenue growth of 6%, slightly above company guidance.” Bragg’s stock currently trades around $1.59 a share in New York and $1.98 a share in Toronto. What the boss says: “We’ve made extraordinary progress in 2020 and are very pleased with the substantial revenue and EBITDA growth that we’ve delivered,” interim CEO Adam Arviv said. “We continue to expand globally, enhancing our content portfolio and technology offering, and securing new customers across key geographies.”   Contact the author: patrick@proactiveinvestors.com Follow him on Twitter @PatrickMGraham