The Prague Gaming Collective has established a special panel to examine strategic choices for the company, as the provider reported a net deficit of €5 million (£4.3 million/$5.4 million) for 2023, in spite of a rise in income.
The collective is contemplating a sale and has formed a strategic panel, led by autonomous board member Don Robertson. The panel will assess all strategic possibilities, including a sale of the collective or its assets, a merger, funding and further acquisitions, or other strategic possibilities.
Prague stated that there is no set schedule for the completion of the strategic review and no decisions have been made. They added that there is no assurance that any transaction will be finalized.
The collective stated that they will provide further updates in due time, while their management team will continue to focus on executing their plan and business strategy.
Income increased in 2023
The announcement came alongside Prague’s release of its 12-month results for the year ending December 31, 2023. During this period, income reached €93.5 million, an increase of 10.4% year-on-year, which Prague attributed to the effect of new partnerships and market launches.
Prague has secured content agreements with several major operators, including Betsson, 888/William Hill and PokerStars.
The organization also entered fresh markets through partnerships, including a joint venture with Caliente to enter the Mexican market and with Microgame to enter the Italian market.
Furthermore, Bragg stated that it continues to broaden its presence in existing markets with numerous new games. The group highlighted the United States, the United Kingdom, Spain, and Switzerland as key growth areas for 2023.
In response, Chief Executive Officer Matthew Mazur, who joined last August, applauded the effect of Bragg’s ongoing strategic endeavors. He said it is focused on becoming a content-driven iGaming B2B supplier and has “meticulous” control over spending.
“By continuing to expand our higher-margin proprietary and exclusive third-party game portfolio to a wider range of new partners at an accelerated pace, we are well-positioned for long-term growth, including top-line revenue, gross profit, and adjusted EBITDA, as well as improved operating margins,” Mazur said.
The Netherlands is a key market for Bragg, despite new challenges
From an annual data perspective, the Netherlands is a central market for Bragg, and by a large margin. Revenue in 2023 was €33.6 million, down 8.9% from €36.9 million in the previous year.
Bragg said it maintains a “dominant” position in the country with five player account management (PAM) system clients. However, the revenue decline reflects some concerning causes.
Bragg said that since July 2023, there have been difficulties due to increased competition and the introduction of new regulations.
Bragg has inked a fresh deal with BetCity, a subsidiary of Entain, but certain stipulations require renegotiation.
Bragg also declared sustained expansion in the Czech market and is actively pursuing expansion into other global territories utilizing its PAM platform, content integration, player engagement tools, and managed services. The Czech Republic is classified under the “Other” segment, which witnessed a 27.3% surge in revenue, reaching €8.4 million.
In Europe, Malta experienced a 22.6% rise in revenue, hitting €17.9 million, while Croatia saw revenue climb by 43.3% to €4.3 million, Belgium by a whopping 340.6% to €3.7 million, and Serbia by 12.5% to €1.8 million.
How did markets beyond Europe fare?
On a global scale, Bragg also reported some progress. Curaçao stands as Bragg’s second largest market after the Netherlands, with revenue rising by 11.6% to €19.2 million in 2023.
In the United States, revenue also climbed by 17.5%, from €4 million to €4.7 million. Bragg again emphasized that this was attributed to partnerships with new operators, which broadened its overall reach.
“The worldwide distribution of our proprietary and exclusive third-party content is rapidly expanding, particularly among a growing number of top-tier operators,” Mazij stated. “We anticipate further adoption of these games globally in 2024.”
Throughout the previous twelve months, we successfully introduced twenty-nine new digital games, encompassing twenty-six new digital casino games for the European market and fifteen for the North American market. We anticipate sustaining or surpassing this game launch pace in the current year.
We experienced a net deficit of €5 million due to escalating expenses.
However, expenditures rose across nearly all categories. The cost of revenue was the largest expense item, reaching €43.6 million, an increase of 9.8% compared to the previous year.
Other significant expenses include €50.8 million in sales, general, and administrative costs, an increase of 8.6%. This resulted in an operating deficit of €777,000, an improvement over the €828,000 loss in the preceding year.
However, interest and other financing costs totaled €2.1 million, leading to a pre-tax deficit of €2.9 million, compared to €1.9 million in 2022.
Bragg paid €910,000 in income tax and noted a €1.2 million negative cumulative foreign exchange adjustment. Consequently, the net loss for the year reached €5 million, an increase from €1.9 million in the preceding year, with higher costs offsetting revenue growth.
However, there was some positive news on the adjusted EBITDA front, which expanded by 25.6% to €15.2 million.
Revenue for the final quarter declined
Bragg’s full-year results were influenced by a decrease in revenue for the final quarter. Revenue in the fourth quarter decreased by 1.3% to €23.4 million.
The group has not yet disclosed complete results for the quarter.
In spite of this, the firm recorded an operating deficit of €431,000 in the third quarter of 2023, as opposed to a gain of €162,000 in the same period in 2022. Modified EBITDA also decreased by 23.7% to €2.8 million.
Bragg highlighted that its income and modified EBITDA were both greater than in the third quarter, while its operating deficit was smaller.
Looking ahead, Bragg anticipates its income and modified EBITDA to increase in 2024. Income is projected to be between €102 million and €109 million, representing growth of between 9.1% and 16.6%, with a midpoint of 12.8%.
In terms of modified EBITDA, Bragg stated it anticipates it to be between €15.2 million and €18.5 million. This would translate into growth of up to 21.7%, while the midpoint of this range would indicate growth of 10.9%.
“Our strategic plans have positioned Bragg as a key content provider for leading international online gaming operators, laying the groundwork for our sustained profitable expansion,” Maciejewski stated.
“We are confident that we have the right plan in place, with robust financial strength and infrastructure to maintain the momentum of our business, while implementing initiatives to drive cash flow growth and generate additional value for investors.”