Bragg Gaming Group Inc. ($BRAG)

Hello, everyone. Thank you for joining us, and welcome to the Bragg Gaming Group First Quarter 2026 Earnings Conference Call. [Operator Instructions] I will now hand the conference over to Stephen Kilmer, Investor Relations. Stephen, please go ahead.

Good morning, everyone, and thank you for joining us for Bragg Gaming Group's First Quarter 2026 Earnings Call. If you're connected to our online webcast today, you should see our first quarter earnings presentation on your screen, and you should not control to flip the slides yourself as you listen to this call. If you have joined by telephone, please note that you can find our earnings presentation as well as the financial results press release on our website at investors.bragg.group. Please note that certain statements on this call may constitute forward-looking information or future-oriented financial information. A full explanation of the risk factors is available on the second slide of our first quarter 2026 earnings presentation titled Forward-Looking Statements as well as in the recently filed press release and other public disclosures. Bragg disclaims any obligation, except as required by law, to update or revise any forward-looking statements, whether because of new information, future events or otherwise. Any forward-looking statements made on this call speak only as of the date of this call. On this call, Bragg Gaming Group's CEO, Matevz Mazij; and CFO, Robbie Bressler, will discuss the company's first quarter performance as well as this planned transaction with Drayton International. We will follow that up with a question-and-answer session. I'd now like to turn the call over to Matz.

Thank you, Stephen, and good morning, everyone. Thank you for joining us for Bragg Gaming Group's First Quarter 2026 Earnings Call. We are Bragg, though listed on NASDAQ and the Toronto Stock Exchange. On past calls, I have described Bragg's legacy model as supplying games and technology to the regulated iGaming market. But as you saw in our two press releases this morning, we are evolving from that to focus on a higher-margin, proprietary games-first AI-driven model, stepping into the role of ecosystem architect. This refocus is defined by several core shifts from volume to quality, shifting away from low-margin aggregation volume and third-party content dependency to proprietary first IP model and the creation of repeatable game franchises. From supplier to architect, changing the core identity from a B2B supplier to the ecosystem architect. This means managing the entire player funnel from awareness to intent to retention rather than just providing games with continuing focus on key geographies such as North America, Brazil and core European markets from traditional iGaming to cross-vertical integration. Moving beyond the constraints of regulated iGaming to aggressively leverage tailwinds like prediction markets and ADWs. Our goal is to use our existing PAM and HUB infrastructure to achieve cross-vertical synergies, integrating racing, lottery and sports betting outcomes into dynamic iGaming experiences. And of course, operational transformation, embedding proprietary technologies like the Bragg AI Brain to hyper-personalized content, predict player behavior and autonomously write code to crush delivery bottlenecks. I will come back on to discuss this more. But since this is all about what you should expect from Bragg as we move forward, I will turn the call over to Robbie now for a review of our first quarter financials. Robbie?

Thank you, Matz, and good morning, everyone. On behalf of the management team and everyone at Bragg, I would like to thank you and your ongoing interest in this company. And for those of you who are shareholders, we appreciate your continued interest and support. To streamline things, all of the numbers I will refer to have been rounded, so they are approximate. Also, since our reporting currency is euros, I will stick to those on this call. But for the benefit of North American investors, we have also provided a U.S. dollar equivalent conversion in our press release this morning. Finally, recognizing that the focus of our remarks today is primarily forward-looking due to the planned Drayton transaction, I will keep my summary of our Q1 results brief. In the first quarter of 2026, revenue was EUR 25.7 million, up 0.6% year-over-year. Q1 2026 operating loss was EUR 1.4 million, an 18% improvement from Q1 2025. Net loss for the first quarter was EUR 1.2 million or EUR 0.05 per common share, a 55% improvement from the same period of 2025. Q1 2026 adjusted EBITDA was EUR 4 million, representing an adjusted EBITDA margin of 15.7%, down marginally from EUR 4.1 million, representing an adjusted EBITDA margin of 16% in Q1 2025. As of March 31, 2026, Bragg had cash and cash equivalents of EUR 3.4 million. As we move through 2026, we remain very focused on continuing to optimize our product mix and optimize our internal processes and structures and believe there are significant opportunities to refine and improve our margins and cash flow. Finally, at this stage, we affirm our current guidance and continue to anticipate full year 2026 revenue between EUR 97 million and EUR 104.5 million and adjusted EBITDA of EUR 16 million to EUR 19 million, representing an adjusted EBITDA margin of between 16% and 18%. This does not include any impact from the planned Drayton transaction. And with that, I'll pass the line back to Matz.

Thank you, Robbie. Simply put, we believe that completion of the transaction with Drayton we announced today, will mark a critical inflection point in our growth trajectory. Especially, we believe that the transaction will increase our already growing exposure to high-margin proprietary content. Indeed, the Drayton transaction will immediately provide Bragg with over 100 additional titles with more being created by our respective content teams every month as we move forward. This transaction will also power our expansion into emerging and adjacent gaming markets, including ADW. This alone will potentially translate into a greater than fivefold expansion of our U.S. market reach. While traditional iGaming is currently limited to 7 U.S. states, ADW is available in over 30 states. This transaction will further enhance our already formidable technology and AI capabilities. Our Bragg AI Brain initiative has already delivered the cutting-edge technology stack needed for horizontal scaling and help deliver efficiencies that have started to improve our overall cost structures. This transaction will bring proprietary mechanics, including hybrid slot engines linked to live racing data. We will further strengthen our long-term revenue growth and margin profile by reinforcing our brand strategy as a games-first industry leader. And last, but certainly not least, it will bring gaming and sports betting market luminary, Matt Davey, to Bragg as both a significant investor and our Nonexecutive Chairman. In a way, this is what excites me the most. Currently, the Founder and Chairman of Tekkorp Capital, which invests in private and public companies in the global gambling sector, Matt has been active for over 25 years with the digital media, sports, entertainment, leisure and gaming ecosystems with additional specialist experience in government and regulatory roles. Matt has recent experience of manifesting positive momentum with a leading betting and gaming company. He was appointed as President and Executive Chairman of BetMakers Technology Group in January 2023, a period which has delivered a significant turnaround in market performance. As of May 2026, BetMakers stock is up over 65% in the past 12 months. Matt is an experienced public company executive officer who has overseen more than 10 mergers and acquisitions and helped raise over $2 billion in debt and equity capital to support the companies he has led. Earlier in his career, Matt acquired a small gaming company, NYX Interactive, which as CEO, he rebranded as NYX Gaming Group, turning it into one of the most influential firms in modern iGaming history as it managed to redefine games aggregation and the distribution of content in the iGaming space. The business was sold to NASDAQ-listed Scientific Games in 2018 for approximately $631 million. As the CEO of NYX Gaming, he developed a successful corporate strategy that generated significant revenue growth and acquired 10 companies, including OpenBet, which is now one of the largest aggregators in the sports betting industry, powering over 200 of the world's largest operators, including top-tier sportsbooks, lotteries and tribal operators processing billions of bets annually. To sum it up, Matt has experience and expertise that is uniquely fitting for our evolution into a games-first powerhouse. And after knowing him for several years, I completely share the sentiment expressed by our current Chair, Holly Gagnon, in our press release this morning. Matt has earned my deep personal admiration and great professional respect. In summary, before the planned Drayton transaction, Bragg was well placed to become a global B2B leader in content, content delivery, engagement and player management infrastructure. But this acquisition represents a bolder step beyond that as we strengthen our commitment to crafting captivating proprietary gaming worlds, which deliver proven revenue engines for operators and unforgettable experience for players with a particular focus on expansion across the U.S. and Canada. This will be complemented by a refreshed brand presence, featuring a vibrant new aesthetic that reflects Bragg's games-first commitment. We look forward to providing more details on that in the near future. Bragg already combines battle-tested content and player management expertise with smart technology. But this evolution sharpens the focus on what makes Bragg a unique value proposition in the iGaming sector. That is a data-rich user-experience-obsessed games-first engineering leader. Bragg not only supplies the games that today's players demand, but also streamlines everything. This optimizes players' end-to-end journey, redefining Bragg's core products into one coherent ecosystem. Now with the right team, the right technology and clearer games-first focus, Bragg is positioned to lead the future of the global gaming industry. We look forward to updating investors as we progress. Thank you. Robbie and I are now available to take any questions you may have.

[Operator Instructions] Your first question comes from the line of Jack Vander Aarde with Maxim Group.

Congrats on all the positive announcements. And also welcome to Matt Davey, assuming the acquisition closes. A lot of transformational positive announcements here to cover. So I'll try to touch on a few things. I guess just for the quarter itself, maybe for Robbie, was this -- I guess, this acquisition planning, I'm sure you were heavily involved with. How did this kind of impact, if at all, the results for the quarter and just sort of the strategy and momentum of the existing business?

Thanks for the question. I'd say not at all. A lot of the directional flow and the strategic thoughts that where we want to keep taking this business to, which is North American focus, content focused, that's been in the works for -- and in our DNA for quite a long period of time. So this deal is really complementing the direction that this company is on. And I'd say it was a complete nonfactor. And in fact, it's really enhancing how we want to strategically make sure our business is aligned so we can execute once we become one company with Drayton on this content-focused North American strategy.

Excellent. Excellent. And then maybe for Matt, too, just with this acquisition, I know you haven't closed yet. So whatever you can provide is helpful. It sounds like this really kickstarts even more. I mean U.S. is already ramping. It looks like it was a little slower growth pace this quarter. But with this acquisition coming in, I think I heard over 100 new titles are being added, proprietary titles. And then you also expand, I guess, 35 states versus the 7 you're in. Without providing too much, it just -- it sounds like that's very meaningful on the top line, I'm assuming. Is that a fair directional comment? And how -- what are kind of the overlap or synergies? How do these games compare to the success that Bragg games top titles have had?

Yes. Yes. Thank you. So this acquisition obviously accelerates our transition into higher-margin proprietary content-led business focused on becoming a games-first global iGaming ecosystem. Drayton adds game studios, adds aggregation technology and distribution, adds AI capabilities and adds new distribution opportunities, particularly in the United States, what we call alternative gaming markets through advanced deposit wagering technology and distribution. We expect this transaction to further increase the exposure to proprietary content and IP, strengthen our AI and personalization capabilities and improve our long-term margin profile and revenue mix. And like I said, further accelerate growth in North America, especially in the United States. You asked a question about the expansion into 30-plus states. So the ADW market is sort of like a sleeping giant that is now waking up. That's how we see it. The legal framework has existed for decades, but it was technically impossible to deliver a high fidelity slot style experience over it until very recently. And it's legally operational in 30-plus U.S. states, including markets like California, Florida and Texas, where traditional online slots remain unregulated. We believe there's a massive growing demand for fast-cycle entertainment in a number of these states and players in non-iGaming states have obviously been waiting for online casino or iGaming legislation for a while, and this ADW model gives it to them legally. Drayton adds, like you said, yourself game titles, more than 100 of those and proprietary slot mechanics, but also AI-driven slot development tools, distribution infrastructure and performance marketing capabilities. These are deployable in current markets that Bragg is in as well. Some of the titles and some of the studios are already distributed -- deployed and distributed via Bragg, and we expect a much closer cooperation with these studios to deploy their portfolio of games globally as well.

Excellent. And then maybe just one more last question, and then I'll hop back in the queue. As far as the pro forma financials and just kind of what we can expect as we get closer to the closing date, what do we have access to as analysts and investors at the moment in terms of financials? And then would we be expecting a pro forma sort of financial statement issued?

Thanks for the question. So just to give some color in terms of financial performance and makeup of the assets that we've acquired. Currently, we see these assets delivering about mid-single-digit million in terms of revenue, and that's without synergies. So we do think there's lots of potential on these assets and the power that Bragg brings to increase that performance on a revenue basis. This is -- these assets are EBITDA positive. And when we looked at valuation from a revenue perspective and from a comparison to precedent transactions, the valuation is quite appealing. What also comes with these assets is $1 million of excess cash. So that's -- that package of being able to get more assets focused in the part of our business that really we believe is driving the most value, which is U.S.-focused proprietary content, this is extremely attractive. Having much more talent and assets to execute on strategy is extremely appealing. And Matz talked a lot about Matt Davey's pedigree and experience and the team that comes along just really enhances the part of our business, which we believe drives the most value. So we do see lots of potential to move these assets beyond current performance. But even at a current performance level, the attraction from a revenue multiple point of view was there. And again, just to make it clear, there is $1 million of excess cash that comes with the transaction.

Congrats again on all these announcements. Look forward to watching it play out.

There are no further questions at this time. I will now turn the call back to Matz Mazij for closing remarks.

Thank you very much for joining our call today. As you can see, we executed well across our business in the first quarter and looking forward, represents a highly strategic step forward for Bragg as we evolve into proprietary games first AI-driven ecosystem architect. We are also energized by the pending appointment of Matt Davey as Non-Executive Chairman, which will significantly strengthen our leadership team as we move forward with this bold new vision for Bragg. And we believe that Matt's experience building and scaling global gaming platforms, combined with his deep industry relationships will be invaluable as we execute on this next phase of growth. We are in very exciting times here at Bragg, and we thank you for your interest and support. And again, thanks, everyone, for joining our call today.

This concludes today's call. Thank you for attending. You may now disconnect.