Good morning. My name is Rob and I will be your conference Operator today. At this time, I would like to welcome everyone to the Brag Gaming Group First-Quarter 2022 results conference call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. If you'd like to ask a question during this time, simply [Operator Instructions]. If you'd like to withdraw your question, again [Operator Instructions]. Thank you. Yaniv Spielberg, Chief Strategy Officer, you may begin your conference.

Good morning, everyone. And thank you for joining Bragg's first quarter of 2022 results presentation. You'll hear today that our first quarter was our best quarter to-date. We couldn't have done it without the hard work of every single member of our team, Slovenia, Malta, Las Vegas, Reno, and other places. So before we start I want to take a moment and thank everyone for their hard work and continued hard work. With that said, I'm going to ask everyone to turn to the second page and look at the Safe Harbor statement. Please familiarize yourself with the Safe Harbor statement on the second page as some of the comments that Ronen and I will make today will include forward-looking statements as defined in the Safe Harbor statement. With that, I'll begin the presentation and then I'll pass it to Ronen Kannor who will host with me this morning to discuss the financials. Today we'll discuss our quarterly highlights, we'll also discuss the strategic focus and focus on the content production that we ramped up. We'll talk about M&A licensing and new markets. Ronen will walk you guys through the financials and guidance and then we'll conclude with an outlook and conclusion, at which time we'll open the line for questions. Thank you very much, everyone for joining. I want to start with the quarterly highlights. The first quarter of 2022 was a strong quarter with a strong growth driven by ongoing content and platform expansion and new market strategy. You will see that the first quarter strong financial performance is the strongest, we've had to-date. First-quarter 2022 revenue came at €19.4 million, that's 36.4% growth on our first quarter of '21. The adjusted EBITDA for the first-quarter came in at €3 million, which is 26.2% growth on our first-quarter…

Thank you, Yaniv, and good morning, everyone. I'll begin my comment on Slide 15. The first-quarter revenue was up by 36.4% year-over-year to €19.4 million, an up by 22.9% from the previous quarter, representing the record quarter we ever had. This performance derived mainly from the organic growth from its existing customer base, the onboarding of new strategic customers in various jurisdiction, mainly the Netherlands, in the PAM, and managed service segment. In addition we had a strong revenue performance from Wild Streak gaming, a business we acquired in June 2021. From the KPI perspective, the total wagering generated via games and content [Indiscernible] (ph.) by Oryx and Wild Streak. In the period was up by 0.8% from previous year, to €3.8 billion and with 23.2% growth from the previous quarter. As you can see from the wagering chart on the right hand side, the new German market restrictions on gameplay had an effect during Q3, 2021. But ever since, we have seeing a positive trends and momentum. Also, we know the last quarter we have continued to retain 100% of our customers since 2018. And while our customer retention remains solid, our dependence on top 10 customers had slightly changed. Revenue for our top 10 customers was up by 12%, to 75% of the total revenue, compared to 62% in Q1 2021. The trend we expect to improve over the next few quarters. The gross profit increased by 60.7% of €10 million with margin increasing as well by 4.9 percentage points to 51.8%. This is primary attributed to higher proportion of revenue derived from our platform and managed services. Alongside with Wild Streak proprietary games revenue, which has no cost of sale. And this compared to license games and content, which have third party costs associated. The adjusted EBITDA…

Thank you, Ronen. As everyone heard on this call this morning from Ronen and I, the first quarter has proven to be our best quarter on record to-date. We continue our strong revenue growth, which is driven by underlying recurring business in new markets, we successfully launched new proprietary content studios and expanding our exclusive game roadmap, we continue to grow our total addressable markets, which we project to reach $21.5 billion by the end of the year, we're increasing our gross profit margin, our adjusted EBITDA margin, which are all driven by changing in our product mix, and of course, we showed solid financial flexibility with a debt-free balance sheet, and so the strong Q1 2022 performance sets the foundation for continued successful execution of our growth strategy. With that, I want to thank everyone for joining us today, and I want to thank the entire Bragg team for a very successful quarter. And we can turn into the question section now.

[Operator Instructions]. Your first question comes from the line of Neal Gilmer from Haywood Securities. Your line is open.

Yeah. Good morning. Congrats on the strong quarter guys. Maybe I want to start off with -- you've maintained your guidance and obviously it was a great Q1. Can you give us a little bit of color on the mentality of sort of maintaining that? Obviously it's a conservative approach. I get that it's early in the year, but is there some seasonality that we should be expecting that a little bit softer, Q2 and Q3 or is the pending Spin Games acquisition -- obviously this has taken longer to close than expected, sort of factoring in until you sort of get that closed and have more visibility to run through that revenue line.

Thanks, Neal, and good morning. I think that you kind of answered the question that you posed. The answer is we're taking a conservative approach, but the reality is there is some seasonality that is built into our forecast. It's been a very strong quarter and we can say that the momentum is continuing into the rest of the year, but it's really early on in the year and it's difficult to predict what the rest of the year would look like. On the revenue side, it's simple. We're doing better than we're expecting and we are very confident and comfortable that we're going to over-deliver this year again. On the EBITDA side, we know that there is a lot of expenses that are going to be built into our U.S. rollout expansion, so we've decided at this stage to keep the guidance as is for now, and then we'll monitor the situation once we finish the second quarter. If it continues to be as strong as we expect, then we will update the guidance. Ronen, have I missed anything?

I couldn't agree more, Yaniv.

Good.

Great. Thanks for that. Maybe just for my second question. Just to talk a little bit more about the strategy with respect to proprietary content versus partnerships. You had one on one of your slides there, what your target profile is. Can you give a little bit more color onto the -- how you think about why you have that mix versus going more proprietary, that obviously comes along with the higher margins. Is that just to diversify or just what you're thinking more long-term as you establish that proprietary content.

And so look, if you recall on the slide -- on Slide 7, we talked about the benefits of proprietary and exclusive content in an ideal world. Of course, we want all the content to be proprietary to us, but there's limitations what we can and can't do. And if you think about the global expansion of the business, we need to have tailored approach to different markets that we operate in. Wild Streak is doing exceptionally well in the markets that it is. Atomic Slot Lab is doing exceptionally well in the markets that it is, but there's other markets that are German speaking, therefore, Gamomat does really well. And then there's roll outs in the U.S. where land-based companies like Bluberi will resonate really well with players. And so to be versatile enough and to have a good approach to a growing market, you want to have a lot of content that comes from mostly proprietary and exclusive, but you have to have some sort of a growth strategy where you kind of capture the rest of the world as well.

Okay, great. Thanks very much. So I'll pass the line. Congrats again on a great quarter.

Thanks, Neal.

Your next question comes from a line of Matthew Lee from Canaccord Genuity. Your line is open.

Hey, morning, guys. Congrats on the quarter as well. So let's maybe talk about the growth drivers here. It seems like Germany is probably flat. North America really hasn't taken off the ground yet. So what's kind of pulling the light in here?

Ronen, do you want to take that?

Yes, thanks. Good morning. Good morning, Matthew, how you doing? So we had the -- again, was an exceptional quarter. As continued with the fourth-quarter, we think that the Dutch market is performing well, more than we expected. As you remind there, we have couple of operators. Among them we have 2 platform customers performing exceptionally well. As you rightly said, Germany is actually relatively flat as according to our expectations. License haven't been improved yet. Only one was approved a few days ago, waiting to see how the market is evolving. We still have a lot of lineup customers still operating on the German market, so I think it's going to be when the news will come into next few weeks, hopefully, we will be able to see probably more traction there. And as you rightly said, the U.S. market is still not operational from our perspective. Waiting for the Spin transaction to close and then we'll be full speed over there. So it's just a rick up, it's the Dutch customers which are performing well. Also, we have other jurisdictions that we are starting. In UK is performing well, according to our expectations. We have other markets that we're enhancing and we're rolling our continent in. So it's all a mixture, but with the highlight that the Dutch market is performing, better than we expected.

And Matt, I want to add one last thing. It's a pretty positive that Dutch -- sorry, the German government had issued a license so far, which I think is on track with what we were hoping to see. Some traction with licensing in Q2 and Q3 and for the rest of the year. And so, we're hoping that the relatively flat line that we forecasted for the Germany market will start picking up again once the licenses are issued and enforcement carried.

Right. That's great color. And then maybe on the North American front, can you just give us an update on the progress you're seeing, particularly in the Ontario market that just opened?

Yeah. So the Ontario market has been open for a month now. We have one agreement that we discussed in the public market day-to-date agreement. We have a lot of other agreements in the background that we're working on and finalizing. And so the agreements with the operators is one thing and the second side of this equation is licensing and certifying our proprietary and exclusive content for the Ontario market and certifying our platform for the Ontario market. We're in the final stages of doing so. And we internally believe that next month in June, we will roll out a lot of big operators that everyone would know and some of our proprietary content that has been doing really well in the rest of the world.

All right, that's great guys. That's it for me.

Thanks, Matt.

Your next question comes from the line of Adhir Kadve from Eight Capital. Your line is open.

Perfect. Thanks, guys, and congrats on the quarter here. I wanted to touch on your iGaming, the platform strategy. I know you obviously pointed out that you're seeing a lot of interest in the platform strategy in the Netherlands. But maybe what about some of your other jurisdictions that you've entered into? Do you think that the platform strategy could become maybe more important to the overall strategy as we move forward?

That's a great question. I think that it's important to note that the iGaming platform strategy is important for the business overall, because when you own the iGaming platform, when you do the full turn key solution, you're getting a percentage of rev share for all the services that come around as well. You're talking about the content, you're talking about the managed services, you're talking about the player engagement, you're talking about the player account management and so it presents an immense opportunity to, on the one hand, increase your revenue, but also increase your profitability as most of it is tech. You mentioned correctly that in the Dutch market that it worked really well, and I think it's a function of how the Dutch market transitioned from gray, black to white. We see a similar effect in other European markets. We have a platform customer in the Czech Republic that is going to go live, and of course we have a lot of platform customers in Germany waiting to go live once the regulation takes place. For the North American market, it's slightly different because I think capital markets, for the most part, dictate for big operators to own their on platforms, and therefore, you see the big guys dropped king spend to that MGM owning or having exclusive ownership of the platform. It does give us an opportunity with land-based operators going online for the first time, and we're in various discussions with some of these. And it also gives us an opportunity for some of the operators that are transitioning from a gray slash black market to a white market where their platform is not certified for the white market and they'll be looking for a platform that can carry them through the white market -- or at least the licensed markets. And so it gives us an opportunity to actually own a bigger value of the chain.

Great. Thank you. Appreciate that. For my second question, I wanted to ask just about the Italian market entry. You had mentioned, I think on one of the slides that you intend on going live in the Italian market later on this year. Given that's the second largest gaming market in Europe, what are your expectations for that market? Would you have like a similar strategy to maybe the UK market given the similar levels of maturity in that market? But I'm just thinking that could be a pretty big part of your strategy as well going forward. Maybe your thoughts on that.

So you're right. I mean, the Italian market is a mature market. From a licensing and certification standpoint, it's slightly different than other markets that we operate in because most of the regulatory burden is on the operators and therefore, it takes a lot longer for the operators to certify B2B providers. We've signed a deal with Microgaming to deliver our content to them. It's really on them to get all the paperwork and certification ready for launch. We're expecting to launch to come as we said in the third quarter. But the approach in the entire market is similar to the UK market as you mentioned, is to sell content, and therefore, going back to Neal's question, localized content becomes really important because we don't typically produce content or we don't produce proprietary content for every market that we're in and therefore, partner exclusive studios become important in these markets where we can get tailored content for these markets that will resonate well with the players in that market.

Perfect. Appreciate all the color. Congrats on the quarter guys. I'll pass the line.

Thanks Adhir.

Thanks Adhir.

Your next question comes from a line of Sid Dilawari from Cormark Securities. Your line is open.

Hey guys, thanks for taking my question. Maybe if you can talk about some of the specifics regarding the regulatory hurdles you're facing while closing the Spin acquisition. I know you guys are working towards adding -- hopefully you should be closed by Q3 based on your guidance during the call. But maybe if you can give us some specifics as to why it's taking so long because having a mission, we already announced this acquisition was supposed to be closing in Q4?

Actually, I'm really happy that you posed the question because I want to set the record straight, and I think that when we did the transaction back in the day, there was some indication from past management that the transaction will close in Q4. But for those of you who are well versed in U.S. regulatory framework, especially as it relates to iGaming and sport betting, you will know that in the U.S. licensing regime is very, very complex and it's on a state-by-state level, so every state where we're applying for has its own regulator, whether it's DG in New Jersey or the Michigan Gaming Control Board or the Pennsylvania Gaming Control Board, or Connecticut. It is well known that Pennsylvania is strict, it's very strict. And licensing in Pennsylvania takes anywhere between 12 to 18 months. In Pennsylvania, unlike other jurisdictions, say New Jersey or Michigan, there's no such thing as a transactional waiver. And so in Pennsylvania, you actually have to get fully licensed. And when I say fully licensed, it's all personnel senior management, so CEO, CFO, COO, myself, and others, and then every entity in the organization from the TopCo Broad Gaming Group, all the way to the R&D development company in Malta. With that said, you can imagine that it's taken a long time to get all the paperwork sorted. Someone sent me a screenshot from the Pennsylvania Gaming Control Board yesterday. We've submitted our applications to the Pennsylvania Gaming Control Board in August of last year and we've gone through the process of interviews, discoveries, whatever else they need to do. The process hasn't taken longer than what typically takes for Pennsylvania. I think it's about the expectations that we're set to the market. And so Sid, thank you for doing it. We're of the view that we're almost done. We've done all the interviews. We've submitted all the documents that have been sitting on the Pennsylvania Gaming Control personnel for approval and to be sent to the board. We're hoping to hear back from them and to be put on the agenda for the May 18th meeting. And if we are on the May 18th meeting and we get the license, then we'll be fully ready to close the Spin transaction. So I appreciate the question. I think it's good to set the record straight on that.

Okay. Great. Thanks. Thanks for the color there, that's really helpful. And then just in terms of your TAM slide here, I guess back half of the year is more weighted towards like the growth through largely driven by North America, Italy, has already new market launch when you talked about during the third remarks, but just talking about the first half year, is there -- can you maybe talk about that sort of [Indiscernible] driven largely by the UK, and maybe if you have some initiatives going on there to have some new launches in the UK market. Maybe just talk about Netherlands on how's the model performing? I know the last few quarters has been really strong. So if you can give some color on that that would be great.

So I think that the answer is -- well, the Dutch market has been performing really well for two quarters. And then it's pretty much have gone live in Q4 of '21, and it continues to perform really well in Q1 of '22. As the Dutch market expands, and when I say expands, as the regulators issue more and more B2C licenses, we're actually on-boarding more and more customers. And so proportionally, we feel that we're still a very big chunk of the market and I think about 20% of the gaming markets in terms of the GGR. It has been a very good launch and we've taken what we learned from that market and we're applying it to other markets. So we've launched in the Czech Republic and it's been going quite well. The U.K. market is different as we discussed earlier from someone else's question. It's a mature market, so the opportunity for PAM and iGaming platform are more rare. And so we're doing a content first approach in that market, and it's very similar to the Italian market. And so I think the growth that you've seen so far comes from the new markets that we've entered in 2021; the Dutch market, the Czech market, some U.K. market, and the growth that will continue in '22 and onto '23, you will see growth in the North American market, Ontario market, BC market, and of course the U.S. once we close the Spin transaction and get the licenses and the certifications to go live.

Okay. Great. Thanks. And just one last one from me. How is the search going for a CEO here, any updates or progress to share on that front?

Based on the latest information that I have from our Chairman, the search is almost done. I think that they zoomed in on the top candidates and it's just a matter of agreeing or negotiating on terms. Based on what Paul Godfrey had said to me, it will be done this month.

Okay, great. Thanks, Yaniv. Thanks for your comment. That's it, I'll pass the line.

Thanks.

Thank you.

Your next question comes from the line of Lisa Thompson from Zacks Investment Research. Your line is open.

Good morning.

Good morning.

Hi, Lisa.

Hi, there. I have a few questions about first off Spin. From the date of May 18th to -- how long is it going to take for you to start booking revenues from Spin?

Ronen? In terms of -- Lisa, do you refer to the closing of the transaction or in terms of the accounting?

Well, you said you were trying to get on the agenda for May 18th. If that happens, how long does will take from that day to start showing Spin revenues?

I understand. So Ronen will correct me if I'm wrong. There is revenue in Spin already. And so assuming that we close -- assuming that we're on the agenda for the May 18th, and we closed this month, we'll start generating revenue as Bragg from Spin on day one because that revenue will become Bragg revenue.

Okay. And then what happens after that, as far as rolling it out?

So the plan for us, we've been working closely with Spin since we signed the deal. We've gotten our platform certified, but we're working on getting the platform certified by the regulators and the labs, whether it's the DGE or GLI, and then of course, getting our content on their RGS and their content on our RGS so we can upsell, cross-sell to their existing customers, which are the biggest U.S. operators: the DraftKings, the FanDuel, the BetMGM, the [Indiscernible]. And so once we close the transaction and we're one of the same, you will see cross-selling and up selling of our technology and our content to the Spin customers.

Okay, sounds good. So Ronen, so you say that Q2 is typically down 5% sequentially. Does Spin closing, or any other factors change that this year?

No, Lisa. We assume that we will win, Spin will close. We assume the benefits of May with the latest that [Indiscernible]. It doesn't affect the Spin one specifically this seasonality we applied for the main business. But yeah, we'd normally think Q2, Q3 slightly lower than the quarters of the first and the fourth. And Spin, there's no change in our assumptions for Spin revenue. Consolidated effective for the first of June.

Okay. Great. And I was -- didn't really get to read the whole MDNA yet, but I was shocked to see that Netherlands was almost half of revenues. Is there any differences in gross margin between the geographies, or is everyone pretty much the same?

No. First of all, it's a good question. So we are making better margins in territories or in states or in countries where we're rolling our PAM and managed services. This makes a lot of sense because when we distributing our content and also we're leveraging our technology enhanced services, we can increase our -- part of our wallet from a customer and actually increase our margin. As you know, PAM enhanced services have no cost of sale. Also our proprietary content doesn't have any cost of sales, so that's makes a lot of sense. In other countries, as Yaniv mentioned, we see UK and we're going to be in Italy in the next few months, and other markets, we're selling only aggregating forms and our third-party or our IGF content. Definitely there is difference in your margin perspective. So if we look at the 2022 focus where we actually -- what we budgeted internally, we have new rollout of PAM customers in Netherlands and other markets in Europe, and in Germany, we have as well, so I know Germany haven't been licensed yet, but the more platform we have out there, plus in Europe we are already familiar with certified platform, we're using one particular license and localized in everything license we're operating, which will increase the leverage signal. Having said that, coming with exclusive content, as we build in with our electronic flag and our Wild Streak studios, It's also game changer because it felt only we're getting better margin, the quality of the gains proven to be top of the scale as we're seeing. So it's a combination of the two, it's not one against the other, it's both. Of course, when we have [Indiscernible] how to manage the customers, there is some logic to push our content as well we have relationship with those customers, we're running the operation for them, and so it makes a lot of sense. So it's all adds on as one after another as one plus one plus one plus one, eventually they're more than 0.5 or six. That's a concept.

Sounds complicated. You stated what your gross margin goals were. Where do you think you can get to by fourth-quarter?

We indicated in 2024, we are going to be 60% gross profit margin and about 25% of adjusted EBITDA. If you look at this quarter, we finished around 52% and 50% of adjusted EBITDA. I don't think that -- I think that by the end of the year, we aiming towards the 55 - ish from percentage gross profit. Again, when we rolling mobile games will have more customer like the U.S. customer to roll-out games. We believe within push that currently it's quite low 3%, 4% of our revenue. Also, when we have roll-out of those player account management customers, which is the same question I answered before. We're going to see improving margins, it's going to be more towards the third quarter and fourth quarter and we might reach the 55. And then when we're going to have one of the slides getting presented about the game roll-out when we have 12 games proprietary in Europe and in U.S. for 24 together. Next year we're going to do even double. So what's going to happen, more proprietary content, we'll push even further up so we're going to get to the 57-58. That's how we actually building the building blocks of our gross profit margin. With gross profit margin, with increase of revenue projection, your adjusted EBITDA will automatically move from the 50% to the 25%. Because with leveraging, we already have enough -- everything is built in house. We have the content, we have the player account management, we have the managed services, and we have the entire management already and to the entire organization built in. The oppression costs will remain relatively flat, growing slightly higher but then the scalability of the business will be very well presented.

Great. Thank you so much for that. That's all my questions.

Thank you, Lisa.

And there are no further questions at this time. Mr. Yaniv Spielberg, I turn the call back over to you for some closing remarks.

Thank you, everyone. I would like to thank everyone that joined the call and we'll see you again in our second quarter.

This concludes today's conference call. Thank you for your participation. You may now disconnect.