Thank you for standing by. My name is Joe, and I will be your conference operator today. At this time, I would like to welcome everyone to the Bragg Gaming Group First Quarter '24 Earnings Conference Call. [Operator Instructions]. I would now like to turn the conference over to Yaniv Spielberg, Chief Strategy Officer. You may begin.

Thank you, operator. Good morning, everyone, and thank you for joining our first quarter of 2024 earnings conference call. I'm Yaniv Spielberg, Chief Strategy Officer for Bragg Gaming Group. I'll be hosting today's call alongside my colleagues, our CEO, Matt, who will comment on our first quarter performance, and our CFO, Ronen who will review and discuss our first quarter financial results. If you have not already done so, you can follow our earnings call presentation from our website at investorssdn.bragg.group in the section called latest presentation. On this call, we will review Bragg's financial and operating results for the first quarter of 2024. Following our prepared remarks, we'll open the conference call to a question-and-answer period. I'll start the call with some brief cautionary remarks regarding certain statements that may be made on this call. Certain statements made on this conference call and our responses to various questions they constitute forward-looking information or future-oriented financial information within the meaning of applicable securities laws. Statements about expected growth, prospective results, strategic outlooks and financial and operational expectations, opportunities and projections rely on a number of assumptions concerning future events, including market and economic conditions, business prospects or opportunities, future plans and strategies, technological developments and anticipated events, trends and regulatory changes that may affect the corporation and its subsidiaries and their respective customers and industries. While we believe these assumptions to be reasonable, they are subject to a number of risks, uncertainties and other factors, many of which are outside the company's control and which could cause the actual results, performance or achievement of the company to be materially different. There could be no assurance that these assumptions or estimates are accurate or that any of these expectations will prove out here. For a complete discussion of these risk factors, please refer to our recently filed press release and other publicly available disclosure. I'd like to turn the call now to our CEO, Matt. Matt, go ahead.

Good morning, everyone. My name is Matevz Mazij. I'm Chairman and CEO of Bragg. On this call, I'm going to make some initial comments, and I'll run through some key operational highlights from the first quarter of 2024. Then I'm going to pass the line over to Ronen Kannor, our CFO, who will take you through the company financials. After our financial recap, I'll be talking more about some of our main strategic and operational focus areas before wrapping up with our outlook and summary, and we'll then open up the call to your questions. To start, let me recap and comment briefly on the special committee, which we announced last quarter, which has been set up to review possible strategic alternatives for Bragg. This is a Board-run process, chaired by Independent Director, Don Robertson. The special committee was set up against the backdrop of recent market activity, which included plenty of iGaming M&A and the recently prided games global IPO, and we have seen corresponding increased interest in Bragg. Possible strategic alternatives may include a sell, merger, acquisition or additional investment. While no assurances can be made that any transaction will be completed as a result of this process, management has been informed by the special committee that the process is going well. I am pleased to report that the special committee confirms it has retained bankers and counsel, London-based Oakley Capital and Toronto-based Blake, respectively, to assist with the process and that it is encouraged by the progress made to date. As we've previously indicated, the Board does not plan to provide any further updates on the process until it has material development to report on. But in the meantime, management continues to focus on business growth and delivering on its strategic initiatives. Turning now to operational highlights…

Thank you, Matt, and good morning, everyone. I'll begin my comments on Slide 7. In the first quarter, total revenue were up by 4.2% quarter-over-quarter to EUR 23.8 million. The growth was mainly derived organically to our existing customer base, in particular, the PAM and Turnkey solution customers in the Netherlands, together with the content offering and solid revenue performance from the Wild Streak Gaming studio customers. Gross profit for the quarter decreased by 2.8% to EUR 11.9 million, with gross profit margin decreased to 49.9%. The quarter-over-quarter gross profit decline, both in gross profit and margins is primarily due to the revised commercial terms agreed with key strategic partners derived from the managed services and aggregation products. Adjusted EBITDA for the quarter was down 12.4% to EUR 3.4 million, with adjusted EBITDA margin decreasing by 270 basis points to 14.3%. The change in margin is mainly the result of change in the revenue product mix, resulting in reduced gross profit while increased level of selling, general and administrative expenses. As of March 2020, cash balance ended at EUR 7.7 million with a positive net working capital position. On April 2024, the company obtained a secured promissory note in the principal amount of $7 million to certain entities controlled by the company's related party and bears interest at an annual rate of 14%, payable quarterly. The purpose of featuring the note is to provide the company with maximum financial flexibility as we continue to progress our strategic alternatives review process. And finally, the company reiterated its full year revenue and adjusted EBITDA guidance for 2024 at 102 million, 109 million revenue and 15.2 million to 18.5 million of adjusted EBITDA. We continue to execute against our mission and strategic plan. We are scaling up our business in line with both…

Thank you, Ronen. Last quarter, we showed you that we have seen encouraging growth in North America with exclusive content on our new Bragg. Notably, in the fourth quarter, which is the sharp growth you can see in the chart on the right of this slide. As you can see, this level of wagering activity on our exclusive games has continued through the first quarter to the extent that we have seen an 8x increase in wagering on these games, which come both from our proprietary Bragg Studios as well as from our power by Bragg partners between April 2023 and March 2024. Our localized portfolio for North America includes many online titles, which already have a following in the land-based sector, and we believe this represents a key strength in our portfolio for this market. We are encouraged that we will still see significant potential upside to come, including by continuing our rollout in Pennsylvania and Ontario and through opportunities in other Canadian provinces where we see considerable interest in our portfolio of exclusive content, aggregated content and player engagement. Our content is all supported by our fuse engagement tools. And in the coming months, we are looking forward to rolling out our first progressive jackpot on the Bragg Studios in the U.S. as well as in Europe and other markets. Our growth as a content provider in North America is being driven by both in-house and partner Studios delivered and boosted by our newest RGS technology and promotional functionality. As we continue to consistently develop and deploy our exclusive online casino games, we are building a critical mass of revenue-generating content. The gains that we released last year and the year before continue to generate revenues for us even as we roll out new games on a weekly…

[Operator Instructions]. Our first question comes from the line of Gianluca Tucci of Haywood Securities.

Just to start off, I'm wondering if you can give us a bit of an update on how the recently signed content, global distribution deals are rolling out. And if there are others of these types of distribution with big players in the works.

Gianluca we're rolling out proprietary content and third-party exclusive content across our network of clients in various jurisdictions in the United States, Europe and Latin America, and we're pleased with the performance of the content so far.

And for contextual purposes, are these like staged rollouts through these new partners? Or is it just they just turn on a light switch and it's available to all of their brands globally? Can you get into that level of like nuance, if you can Matt?

So these rollouts are largely dependent on the licensing procedures and approvals and certification procedures. And as soon as these procedures are completed, we tend to roll out all of our content, obviously, according to a certain placements and promotions plan across all the brands that certain operators operate in a certain jurisdiction. Like I said, it largely depends on the licensing certification approval process in certain jurisdiction and marketing plan of these individual operators. But it's our desire to roll out simultaneously across all these brands in all the jurisdictions that B2C operators operate in as that provides maximum effect.

And I guess, to the extent that you can and are able to Doug, you did mention that the process on the strategic front is going well, but hasn't met your expectations thus far in terms of activity or in terms of level of interest?

As I previously indicated, we don't plan to provide any updates on the process until we have a material development to report on.

Perhaps maybe a question for Ronen. Can you remind us when the convert is expected to be paid off completely, Ronen?

End of August.

Your next question comes from the line of Jordan Bender of Citizen JMP.

For my question, as you look at entering new markets, what's the bar that you're looking for to enter these? And maybe can you help us walk through us the revenue opportunities brought on by some of these incremental opportunities you talked about France, Delaware, et cetera?

So the bar is very different in different jurisdictions, like I said again, you have to go through the process of licensing in most of these jurisdictions. You have to go through approvals and certification processes for our tech and for our content. You then have to go through the integration process with the operators tech stack and make sure that your road map is well adapted to the needs of certain operators. This is a process that is pretty standard when launching any content on any of the operators in the new regulated markets. As far as opportunity is concerned, we feel that a market like Delaware is going to grow significantly, and we are going to be one of the leading content providers in this market.

Let me rephrase that. When you're looking at new markets, you look at your product road map and if you see the return -- I guess, ultimately, what I'm trying to get at here is you kind of named off several opening or newer markets. Should we think about that Bragg will be in those at some point down the line? Or is there some kind of bar you need to get over to say, "This is kind of worth it for us to enter these new markets?"

So Bragg is going to be in those markets when and if those markets are fully regulated. We don't have an exact time line, but we believe that further regulation is going to happen in Europe and that we are going to be a supplier of tech to operators in those markets and supplier of content as well.

And then just based on what you know for the upcoming launches or I guess, let's just say, 12 to 24 months, should the gross margin structure or your revenue mix look pretty consistent within those new markets, what your total portfolio looks like today?

Yes, but we do expect a change in the product mix, and we expect to aggressively monetize our content portfolio in existing markets and in newly regulated markets, which should increase our margin in the future.

Your next question comes from the line of Sid Dilawari of Cormac Securities.

Firstly, if I can just focus on margins there. We set out some compression, and I think it was nothing that us and the street didn't expect. Just given that the compression we got in Q4, should we expect similar level of margin compression through Q2 and Q3? And then just a follow-up to that, do you see any near-term opportunities related to your pad or managed services with the Netherlands to replace some of that lost revenue with BetCity.

So we have a very strong pipeline of clients in the segment of turnkey solutions, which includes managed services and TAM and aggregation, obviously, third-party and proprietary content in existing jurisdictions and in what is expected to be a newly regulated European market and Latin American market. And we believe that we are going to be able to report back on [Indiscernible] in the next 12 to 24 months that are going to include, like I said, both managed services and tech stack and content. And I will let Ronen respond to your questions about the compressed margins.

So as we're communicating in our trading update in several conversations, the margins relatively dropped because of the retreat of the deal with BetCity. But we're expecting during the next couple of quarters to increase our managed services to PAM with aggressive pipeline, as Matt indicated earlier, that will improve the margin. And while we will be more focused on our proprietary content that currently they're progressing very well. Will that hit a particular threshold? I think the margin will scale up to the right direction. We always said that our margins are going to improve by the end of 2025. We're heading towards that direction. The composition of revenue and continent is higher than the PAM services at this stage. But second quarter, third, fourth and the next year, we will see the positive impact on the effect of those PAM customers and proprietary content, which every dollar contribution has a material effect on your gross profit and adjusted EBITDA. So yes, there is going to be effect, but it's over time. I would look at the first quarter or second quarter 2025, and we'll see the margins are changing significantly words, improve margin, both on gross profit and adjusted EBITDA.

And I would just add to my answer pole. So we believe that we're perfectly placed to add clients in both existing markets and to win clients in what is going to be a newly regulated so jurisdictions, both in Europe and United States and Latin America. And we are technically ready to deploy this, meaning we have the product, we have the solutions, both on the tech side and we're perfectly placed to roll out content in all of these new jurisdictions, both from a proprietary portfolio and third-party portfolio. There are no significant changes that we would have to make to our portfolio in order to be leading the process of supplying these stacks to clients that are going to operate in those jurisdictions.

And just maybe Matt just if I can get your color on the regular market conditions and the level as we've been seeing a lot of announcements from the regulators. Are you seeing an impact in your customer base and the wagering activity just based on that just yet? Or do you think anything material comes out of those regulatory announcements and how do you sort of see that market evolving this year?

We believe that it's very difficult to expect that the regulator will go back to square one and will ban slots only 3 years after they have regulated the market. And we have seen a first set of restrictions being implemented last year, and we are seeing certain effect to wagering in our portfolio of B2C operators negative effect on us.

And then just one last one for me. You highlighted Peru. Can you just maybe touch on this market opportunity, maybe just in terms of TAM, the existing grey market there? And how that stacks up against the Dutch market like 3 years ago or any of the newly regulated markets that you entered in the past.

So we expect the market to grow. It is a decent market. And we obviously do not have the data after TAM improved because it was a gray market. And like I said, we expect to be going live with a number of clients in Peru as a content provider and as an aggregator.

Your next question comes from the line of Jack Vander Aarde of Maxim Group.

I'm calling in for Jack Vander Aarde. I wanted to touch on new title releases, so 19 new titles in 1Q. And then I think in the slides that say you're on track for 17 in 2Q. I was wondering can you provide any additional color on the kind of cadence of these releases for like the remainder of the year. And what gives you confidence in that?

I will let Doug answer your question.

Look, title releases are also impacted by regular approvals. And so we're actually adjusting our release schedule based on the strategic value we see on when to bring the right games to the market, some are seasonal by nature as low. So forward, we expect to refine that cadence, but we're launching quite a significant number of titles for the remainder of this year on both the partner side as well as the aggregation side or the proprietary content. So it really boils down to some timing issues when we report quarterly. Like there are some titles where they get released last days of the quarter, beginning of the next quarter. So the numbers, even though they're only a week away, can't skew slightly when you look at that big picture.

That concludes our Q&A session. I will now turn the conference back over to Yaniv Spielberg for closing remarks.

Thank you, everyone. I'd like to thank everybody who joined us this morning. I'd like to, as Matt already did, thank all the Bragg team for putting this all together into another great quarter. And of course, I'd like to thank Ronen for all these years of Bragg, and we wish him best of luck and success in his future endeavors. We will chat soon for our Q2 presentation, but until then, have a great day.

This concludes today's conference call. You may now disconnect.