Bragg Gaming Group Inc. (BRAG)

Executive Summary / Key Takeaways

• Strategic Pivot to High-Margin Offerings: Bragg Gaming Group is undergoing a significant transformation, shifting its focus from lower-margin content aggregation and reliance on mature European markets like the Netherlands towards high-margin proprietary content and advanced technology solutions, particularly in the rapidly expanding U.S. and Brazilian iGaming sectors.
• Robust Proprietary Content Growth: The company's proprietary content revenue surged by 44% year-over-year in Q2 2025, now contributing 14.8% of total revenue, with U.S. proprietary online casino content Gross Gaming Revenue (GGR) increasing by an impressive 270% year-over-year.
• AI-First Vision for Future Growth: Bragg is aggressively pursuing an "AI-first" strategy by 2027, embedding artificial intelligence into product development and operations to drive hyper-personalization, operational efficiency, and increased profitability, positioning itself for the next wave of industry innovation.
• Financial Resilience and Margin Focus: Despite top-line adjustments in its 2025 guidance due to market headwinds and higher taxes, Bragg maintains a "laser focus" on margin accretion and cash generation, implementing cost synergies and expecting adjusted EBITDA margins to improve in the second half of 2025.
• Expanding Global Footprint: Strategic market entries and expansions in regulated markets, notably Brazil and new U.S. states like Ohio, coupled with established partnerships with Tier 1 operators, are critical drivers for future revenue diversification and sustainable growth.

The Evolution of an iGaming Powerhouse

Bragg Gaming Group Inc. has evolved into a pivotal business-to-business (B2B) provider within the dynamic iGaming landscape, offering a comprehensive suite of content and technology solutions to online and land-based gaming operators globally. The company's journey, marked by its rebranding in 2018, has seen a strategic reorientation, particularly evident since 2022. This period initiated a deliberate reduction in reliance on the Netherlands market, which accounted for 49% of total revenue in 2022 and is projected to decrease to 32% by 2025. This strategic pivot, alongside a decreasing dependency on its largest customer, BetCity, from 42% of total revenue in 2022 to a projected 16% in 2025, underscores Bragg's commitment to revenue diversification and a focus on higher-margin opportunities.

Under the renewed leadership of CEO Matevž Mazij, who also serves as Chairman, Bragg has fortified its executive team and realigned its commercial strategy with dedicated regional teams for North America, Latin America, and Europe. This foundational shift aims to unlock the value of the company's investments in technology, talent, and strategic relationships, cementing its position as a comprehensive solution provider in expanding iGaming markets. The broader iGaming market itself is experiencing significant growth, with the U.S. online casino market, for instance, growing by 31% year-over-year and projected to expand from $10 billion in Gross Gaming Revenue (GGR) in 2025 to over $75 billion at maturity. This substantial market expansion provides a fertile ground for Bragg's focused growth strategy.

Technological Edge: The Core of Bragg's Competitive Moat

Bragg's competitive advantage is deeply rooted in its proprietary technology stack and its commitment to innovation. The company's core offerings include its proprietary Player Account Management (PAM) solution, the Bragg Hub content delivery platform, and the Fuze player engagement platform, all built on its in-house Remote Gaming Server (RGS) technology. This vertically integrated product suite provides Bragg with direct control over the entire supplier ecosystem, from IP ownership of content and technology to the development, deployment, and promotion of products. This integration offers unique data and insights, enabling rapid optimization, new feature development, and swift implementation of regulatory requirements, ensuring operator partners remain ahead.

The modular nature of Bragg's solutions allows PAM, Data Layer, Fuze player engagement, Hub, content, and managed services to operate independently or as a unified system, offering unparalleled flexibility. A key differentiator is its data warehouse, designed as an independent element, which provides a flexible and powerful tool for leveraging data across any product or channel. This capability unlocks a 360-degree player overview, consolidating player and game data across different verticals, and comes with advanced built-in reporting dashboards and custom regulatory reports. This technological prowess directly translates into tangible benefits for operators, such as streamlined operations, enhanced customer loyalty, and improved margins through reduced implementation costs and faster innovation cycles.

Bragg is also at the forefront of integrating Artificial Intelligence (AI) into its operations, with a stated vision to become an "AI-first Bragg" by 2027. This strategy, led by newly appointed EVP of AI and Innovation Luka Pataky, aims to embed AI into product development, operations, and market engagement. The tangible business value from this initiative is expected to include significant cost reduction through automated data collection, enhanced operational efficiency by streamlining workflows, and increased profitability through products that substantially improve operator margins. This AI-first approach is designed to deliver unprecedented hyper-personalization and immersive player experiences, driving deeper engagement and loyalty, while simultaneously strengthening responsible gaming initiatives through advanced behavioral analytics. The company foresees continued advancements in predictive analytics for strategic foresight and the widespread adoption of generative AI for scalable content creation.

Financial Performance and Strategic Reorientation

Bragg's recent financial performance reflects its strategic pivot towards higher-margin offerings and growth markets. In the second quarter of 2025, revenue increased by 4.9% year-over-year to €26.1 million. Excluding the Netherlands, revenue growth was a robust 21%, demonstrating strong performance in diversified markets. Gross profit grew by 10.8% year-over-year to €13.7 million, with the gross profit margin expanding by 280 basis points to 52.7%. Adjusted EBITDA for Q2 2025 was €3.5 million, a slight decrease of 4.3% from the prior year, primarily due to increased compensation spending, which is being addressed through planned cost synergies.

The shift towards proprietary content is a key driver of margin expansion. Proprietary content revenue surged by 44% year-over-year, reaching €3.9 million in Q2 2025, and now accounts for 14.8% of total revenue, up from 10.8% a year ago. Notably, over 50% of this revenue comes from titles launched before 2024, highlighting the long-term value and stickiness of Bragg's content. The gross profit margin for proprietary content is approximately 100%, significantly higher than the 9% to 12% for aggregated content, underscoring the strategic importance of this shift. This focus on margin-accretive products is evident in the company's Q1 2025 results, where the gross profit margin rose by 612 basis points to 56% compared to Q1 2024, and adjusted EBITDA grew by 19.7% to €4.1 million.

The company's full-year 2024 results showcased total revenue of €102 million, up 9% from 2023, with gross profits growing 8% to €54 million. Adjusted EBITDA for 2024 increased by 4% to €15.8 million. The fourth quarter of 2024 was particularly strong, with record revenue of €27.2 million, a 16% increase year-over-year, and adjusted EBITDA growing 68% to €4.7 million, marking the fourth consecutive sequential quarter of growth. This performance was fueled by the continued expansion of proprietary content, which reached a record 13.3% of total revenue in Q4 2024, primarily driven by North American growth.

Expanding Horizons: U.S. and Brazil Market Penetration

Bragg's strategic focus on the U.S. and Brazilian markets is yielding substantial results. In the U.S., the company's proprietary online casino content saw a remarkable 270% GGR increase year-over-year in Q2 2025. Bragg has achieved 90% coverage in existing U.S. iCasino markets through integrations with Tier 1 operators like DraftKings (DKNG), FanDuel (FLUT), BetMGM (MGM), and Caesars (CZR). The scalable business model allows for expansion into new regulated states with minimal incremental cost. The potential legalization of iGaming in Ohio, for instance, could expand the total U.S. iCasino market by more than 20%, or approximately $2 billion, presenting a significant opportunity for Bragg.

In Brazil, Bragg launched on the first day of the regulated market opening (January 1, 2025), resulting in 56% year-on-year pro forma revenue growth in Q2 2025. The Brazilian iGaming market is projected to grow from $3.9 billion in 2025 to $6.1 billion by 2030, with Bragg projecting Brazil to account for up to 10% of its revenue in 2025. To further strengthen its localized content portfolio, Bragg made a strategic investment in RapidPlay, a Brazilian specialist online studio. These aggressive growth initiatives in key markets are central to Bragg's revenue diversification strategy, reducing its historical reliance on the Netherlands.

Competitive Landscape and Differentiated Positioning

Bragg operates in a highly competitive iGaming B2B sector, contending with established players such as Evolution Gaming (EVVTY), Playtech (PYTCY), and Scientific Games (LNW). While Evolution Gaming dominates the live dealer segment with strong profitability, and Playtech offers a broad suite of gaming software and omni-channel solutions, Bragg differentiates itself through its integrated platform, content distribution partnerships, and managed services. Bragg's comprehensive turnkey solutions, coupled with its focus on third-party content partnerships, offer operators a streamlined and varied game selection, potentially providing greater operational efficiency compared to more specialized or standardized offerings from rivals.

Bragg's emphasis on a seamless, operator-centric ecosystem, particularly appealing to clients seeking simplicity, allows it to effectively compete. Its ability to adapt to niche markets through content distribution rights and its strong focus on regulated markets globally further distinguish it. While larger competitors may possess greater scale and R&D budgets, Bragg's agility, customer-focused approach, and vertical integration enable it to move swiftly in optimizing products, developing new features, and implementing regulatory changes. The company's outperformance in the challenging Netherlands market, where it is down 17% versus a 25% industry decline, highlights its resilience and competitive strength.

Outlook, Guidance, and Risks

Bragg Gaming Group has revised its full-year 2025 guidance, projecting revenue between €106 million and €108.5 million and adjusted EBITDA between €16.5 million and €18.5 million. This adjustment reflects higher gaming taxes, softer market conditions in the Netherlands and other regions, and headwinds in Brazil. Despite these factors, the revised guidance at the midpoint shows adjusted EBITDA margin within 0.5% of previous guidance, underscoring the company's "laser focus on creating a margin-accretive product mix and being focused on cash generation." Management anticipates adjusted EBITDA margins to be a few points higher in the second half of 2025 compared to the first half, driven by realized cost synergies and a shift towards higher-quality earnings.

The company's outlook for 2025 remains positive, with expectations of sustained double-digit top-line growth, expanding bottom-line margins, and increased operational leverage. Underlying assumptions include continued aggressive growth in the U.S. and Brazil, leveraging existing partnerships and minimal incremental costs for new state entries. Bragg also expects to achieve operational leverage through cost synergies, with €2 million in annualized cash savings realized post-Q2 2025, and a scaling of proprietary content development while maintaining relatively consistent capitalized development costs.

Key risks include ongoing regulatory changes and increased gaming taxes in various markets, which can impact profitability. The company also faced a cybersecurity incident in August 2025, though immediate mitigation steps were taken. While the Netherlands market is expected to contract, Bragg's strong market position and the potential exit of smaller competitors could lead to increased market share over time. The company's ability to execute its AI-first strategy and continue its rapid expansion in new regulated markets will be critical to achieving its long-term growth objectives.

Conclusion

Bragg Gaming Group is executing a compelling strategic reorientation, pivoting towards a future defined by high-margin proprietary content and advanced AI-driven technology. This deliberate shift, away from a concentrated reliance on mature European markets, positions the company for sustainable growth in the burgeoning U.S. and Brazilian iGaming sectors. With its vertically integrated technology stack, including the flexible PAM, Hub, and Fuze platforms, and a clear "AI-first" vision for 2027, Bragg is building a robust competitive moat. The company's financial performance, characterized by strong proprietary content growth and a disciplined focus on margin accretion and cash flow, reflects the early successes of this strategy. While regulatory shifts and market headwinds present ongoing challenges, Bragg's agile business model, established Tier 1 partnerships, and commitment to technological leadership underscore its potential for significant value creation in the dynamic global iGaming industry.