Bragg Gaming Group Inc. Q3 FY2023 Earnings Call

Welcome everyone to the Bragg Gaming Group Third Quarter 2023 Earnings Conference Call. I would now like to turn the call over to Yaniv Spielberg, Chief Strategy Officer for Bragg Gaming Group. Yaniv, please go ahead.

Thank you, operator. Good morning, everyone, and thank you for joining our third quarter 2023 earnings conference call. I am Yaniv Spielberg, Chief Strategy Officer for Bragg Gaming Group. I’ll be hosting today’s call alongside my colleague, CEO, Matevz Mazij, who will comment on our third quarter performance, and Ronen Kannor, our CFO, will review and discuss our third quarter financial results. If you have not already done so, you can follow our earnings call presentation from our website at investors.bragg.group, in the section called latest presentation. On this call, we will review Bragg’s financial and operating results for the third quarter of 2023. 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 may 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 can be no assurance that these assumptions or estimates are accurate or that any of these expectations will prove accurate. For a complete discussion of these factors, please refer to our recently filed press release and other publicly available disclosures. With that behind us, I’d like to turn the call to our CEO, Matevz.

Good morning, everyone. I’m Matevz Mazij, I’m Chairman and CEO of Bragg and I’m going to run through our operational highlights from the quarter, then I’ll hand over to our CFO, Ronen Kannor, who will take you through the financials. Afterwards, I’ll take a few of the points in a little more detail, wrapping up with our outlook and summary, and then Ronen and I will be happy to take your questions. Turning now to Slide 4, I want to run through some of the key points of the third quarter, the quarter in which I was appointed CEO. I have a long history at Bragg. I originally founded ORYX Gaming back in 2012, running the company until I sold ORYX to Bragg in 2018. As a part of that process, I also became Bragg’s largest shareholder. I continued as CEO of ORYX until 2021, when I stepped back from operations and joined Bragg’s Board of Directors. As a director, I have strongly supported our U.S. acquisitions, Wild Streak Gaming and Spin Games and was involved in developing our U.S. expansion strategy. I was subsequently appointed Chair of the Board earlier this year and then CEO at the end of August of this year. By appointing me as CEO, the Board was seeking to align and streamline the interests of Bragg shareholders with company operations and to unlock shareholder value, which is something I aim to do. So I’m delighted to be back in reporting on another quarter in which we continue to make good progress on our goals. After Ronen has presented the financials, I’m going to talk a little about our extended agreement with BetCity which will see us continue supplying our PAM content and content aggregation to BetCity into 2025. And I’m also going to reiterate and expand a little on the key pillars of Bragg strategy of how we aim to take the business to the next level and to become a premier content and technology supplier to the growing global iGaming industry. Our content roadmap is going very strong. We are on track to launch 68 exclusive game titles globally this year, putting our output among the top tier of online casino game developers on the market. Almost half of these titles are from our proprietary Bragg Studios brands, generating higher gross profit for the business and we intend to continue at this pace. During the third quarter, we were pleased to see two of our powered by Bragg titles into the top 25 new slot rankings published by industry sources. The success of Devil’s Lock by Blueberi and Ultra Rush Golden Steed from Incredible Technologies is a testament to our strategy in the U.S. of partnering with successful and familiar land-based slot brands and bringing them online exclusively available in the market via Bragg. Our U.S. rollout of our newest content and technology continues with recent launches with local market leaders, BetMGM in New Jersey and with Panduit in Michigan and Connecticut, and we’re pleased to be able to leverage our slot production capabilities to build and release a bespoke game for Caesars Digital with Lady Luck Casino Egyptian Magic, which is now available exclusively to players of Caesars Pilots online casino in Michigan and New Jersey. Our ability and capacity to build bespoke game titles is an additional differentiation point where we can deliver added value to our customers and build long-term growth. In other markets, we continue to roll out our content with new customers. In Italy, we have launched with the top two operators in the market, Latin Snaitech. In Ontario, we went live with Bet365. And in the UK, we launched games with Unibet, which is one of Kindred’s flagship brands. With that, I’m now going to hand over to Ronen to present our third quarter financials.

Thank you, Matevz, and good morning, everyone. I’ll begin my comments on Slide 6. As Matevz indicated earlier, the third quarter of 2023 was another positive step in our digital journey. We continue to execute against our mission and strategic plan, and we can see it in our financial and operational results. In the third quarter, total revenues were up by 8% year-over-year to €22.6 million, continuing our growth momentum since the fourth quarter of 2021. The growth was mainly derived organically from our existing customer base, launched in financial year '21 and '22, particularly the PAM and turnkey solution customers in the Netherlands, together with content offering and a solid revenue performance from Wild Streak gaming to our customers. The third quarter, however, showed a slight sequential drop of 8.5% as a result of renegotiated extended commercial terms. From an operational KPI perspective, cultural wagering generated by gains and content offered by the group during the quarter was up by 24.6% from the same period in the previous year to €5.7 billion versus €4.6 billion in the same period last year. As you can see from the wagering chart on the right-hand side, Bragg’s ongoing positive momentum since the fourth quarter of 2021 demonstrates our ability to transform and diversify our operations. Gross profit for the quarter increased by 13.5% to €11.9 million, with gross profit margin slightly increasing to 52.5% from 50% in the same period last year. The gross profit is primarily the result of increased revenue performance in all content products while recording slightly lower managed services revenue, which is also a result of renegotiated commercial terms. Adjusted EBITDA for the quarter was up by 70.5% to €3.8 million, with an adjusted EBITDA margin reaching 16.9%, an improvement of 620 basis points from the same period in the previous year. The change in margins was mainly a result of scale in revenue while maintaining control over investment in salaries, subcontractors, and other operational costs, part of the company’s strategy to expand software development, product, and senior management functions. Operating loss increased by €0.5 million to €2.1 million, mainly due to a one-off termination of an employment contract and a loss from deferred consideration. We are pleased with the current trading, and we’re reiterating our 2023 revenue guidance range of €95 million to €97 million and adjusted EBITDA range of €15.5 million to €16.5 million. As you can see on Slide 7, the gross profit margin continued to show growing momentum during the fourth quarter of 2021 due to changes in Bragg’s product mix. We continue to execute against our mission and strategic plan, scaling up our business in line with both our revenue growth and the continued movement in product mix as indicated on the right-hand side of the slide. Gross profit increased by 13.5% to €11.9 million, with margin increasing from the previous year by 250 basis points to 52.5%. The third quarter revenue growth year-over-year was driven mainly by the Dutch PAM and Turnkey customers’ outperformance, along with the improvement of our content offering. In the third quarter, content revenue segment offering, which includes aggregated third-party exclusive third-party and proprietary content, increased to €17.9 million and represented 79.4% of total revenue as opposed to 69.9% the previous year, highlighting Bragg’s execution of the content strategy. Proprietary content development is positively progressing in both the U.S. and EU markets by increasing both distribution and game performance. And as Matevz indicated, we have recently marked another key milestone with the launch of our newest tech stack in New Jersey with BetMGM. As indicated in previous quarters, we are targeting gross profit margin improvements to exceed 60% by the full year 2025, mainly by increasing the proportion of revenue that comes from proprietary content, PAM, and turnkey solutions. Moving to Slide 8, adjusted EBITDA amounted to €3.8 million against an operating loss of €2.1 million. This was driven by the following non-cash and exceptional items: depreciation and amortization, with increased intangible amortization due to the Spin Games acquisition in June 2022, an increased level of investment in software development, and a change in the useful life of customer relationships; share-based payments, a charge for awards granted to senior management during the period, which were composed of DSOs, RECs, and options; during the period, a one-off charge of €0.5 million was incurred relating to a discounted contractual relationship of an employee; and exceptional costs, mainly associated with the discounted contractor relationship of an employee with a total value of €0.6 million. Gains on remeasurement of the first consideration are mainly associated with the acquisition of Spin Games in June 2022 on the total outstanding deferred liability that was adjusted to reflect our current fair value. Moving to Slide 9, as you can see on the slide, we ended the third quarter with a cash balance of €7.9 million compared to €11.3 million as of December 31, 2022, with an outstanding liability of $5.5 million in convertible securities. During the third quarter and post-quarter end, the company made cash repayment of $2.5 million, leaving an outstanding balance of $4.5 million as of today’s date. We expect to continue exercising our rights to pay down the existing convertible securities, subject to ongoing management assessments. Our net working capital at the end of September 2023 is €6.3 million, excluding the first consideration and convertible debt. This compares to €6.6 million at the beginning of the year. From a cash flow perspective, for the nine months ended September 30, 2023, a total of €6.2 million was generated from operating activities with underlying performance reaching €10.2 million, offset by negative movements in working capital and income tax of €4 million. A total of €6.6 million was invested in intangible assets, mainly related to the capitalization of software development costs in the period, and a total of €2.6 million was used in finance activities, which predominantly related to the repayment of loans regarding the convertible security totaling €2.3 million. Looking forward, management is projecting a positive free cash flow from operations, with no CapEx or technology debt required in the business. In addition, management is confident that there are no current financing or debt requirement needs for the business. With that, I will hand over back to Matevz to continue with our business and operational activities.

Thank you, Ronen. As a recently appointed CEO, this is my first time leading our earnings call, and I want to remind everyone of the great business that we’ve built and the exciting future we have ahead of us. Bragg is an award-winning supplier in a growing multibillion-dollar iGaming market. We have over 450 employees in seven offices across North America, Europe, and India. We are licensed or certified to offer iGaming products in over 25 regulated jurisdictions globally, including the largest markets in the U.S. and Europe such as New Jersey, Pennsylvania, Michigan, the UK, and Italy. Our customers number over 200 and include names such as BetMGM, DraftKings, Fanduel in the U.S. and Penn SuperBet and Flutter in Europe. In view of recent M&A activity in the iGaming space, I believe that at Bragg, we have built something very unique in the market. There are very few companies in the space that are able to offer what we can, which includes our full product suite of content, content aggregation, sportsbook delivery, PAM, promotional tools, and managed services. With this product suite, we’re uniquely positioned to deliver a full turnkey iGaming solution in regulated markets, and in a landscape where more and more markets are on the cusp of regulation. With that in mind, I want to take a few minutes to refine and reflect on Bragg's strategy, which I haven’t fundamentally changed since coming in as CEO, but which we have refined and expanded, and we now plan to accelerate. Firstly, our proprietary and exclusive games roadmap has been a renewed focus for us since we integrated in ‘21. Bragg Studios or in-house studios, which now include Wild Streak Gaming, Spin Games, and ORYX Gaming, as well as two new studios we launched last year, Atomic Slot Lab and Indigo Magic. Games from Bragg Studios, which are also built on our own technology and distributed through our own network, generate close to 100% gross profit margin for us. So these are an important part of how we will deliver the overall gross profit and adjusted EBITDA margin targets we have set for ourselves that Ronen mentioned earlier. In a moment, on the next slide, I’ll show you how we are doing in terms of roadmap delivery for our Bragg studio content. The rest of our exclusive casino games portfolio is made up of games from our powered by Bragg partners, such as Blueberi, Incredible Technologies, Gamut, King Show Games, and many others. These games differentiate our games portfolio and include big names from both the land-based and online spaces, games that are in demand and which are available online only to customers of Bragg. So we are leveraging our increasing portfolio of exclusive games to build brand recognition in North America, Europe, and Latin America. And the size of our portfolio and our production capabilities mean we can offer locally adapted game titles in each of these markets. As you saw from the recent game we built for Caesars Digital, Lady Luck Casino Egyptian Magic, we are also in a position of strength regarding our ability to deliver in-demand custom and exclusive content for our partners. We will also continue to grow our content distribution network in regulated markets. This means focusing on our relationship with Tier 1 and Tier 2 operators who offer scale in multiple markets, and we have content for multiple markets to match. We want to continue to grow in large regulated markets where Bragg online casino content is still underrepresented. These markets offer plenty of scope for growth. Clearly, we are focused on content rollouts in the United States, but markets such as the UK, Switzerland, Italy, Poland, and Ontario are also important to our content delivery growth plans. We are closely watching regulatory developments as many markets that currently have no legal framework for online casino or those that currently have restrictive frameworks are reviewing their laws with a trend towards more jurisdictions opening up to regulation in the near future, as well as watching for the next states to adopt online casino in the United States. We are well positioned to enter or expand in Latin American markets and newly regulated European markets. As these new markets regulate, we will explore all opportunities not just for our content, but also for our full product suite, including PAM and content aggregation, which I’ll talk more about in a moment. A key differentiated product we developed is FUZE. This is our multi-award-winning promotions platform that allows operators to run promotions such as pre-rounds, tournaments, missions, and quests to gamify and reward players across both casino, lottery, and sports betting products. All Bragg content customers, whether for Bragg Studios, powered by Bragg aggregated content, or sports betting product that we deliver already have access to FUSE. FUSE-driven campaigns resulted in significantly more traffic, better conversion rates, better retention rates, and higher lifetime values, which is beneficial both to our customers and to us. We are now focused on working together with our customers to roll out more FUSE-driven promotions, and we’re now also able to offer FUSE as a stand-alone promotion platform for both casino and sportsbook. We have already integrated our first customers under this model. As we continue to develop FUSE with more in-demand features coming soon, we’re excited to be developing this proprietary functionality to create differentiated and unique casino content categories, aiming to create a niche for Bragg content in a crowded marketplace. We at Bragg are extremely proud of our full product suite, which includes our proprietary and exclusive content, aggregated content, sportsbook delivery, PAM, managed services, FUSE promotional tools, and data and reporting products. We have over 200 customers, including some of the biggest names in the United States, Europe, and globally. Upselling our promotional tools, aggregation services, and turnkey services to existing content customers is a key growth channel for us. Likewise, we are working with our integrated sportsbook partners to create compelling new PAM and full turnkey propositions with the aim of expanding our platform business to new brands and new markets. As always, we continue to invest in our product to refine, improve, and explore opportunities in new jurisdictions. Our strategy is focused on expanding recurring profitability through our culture of continuous improvement with an eye on opportunities for increased automation and lower costs to serve. This way, we will continue to expand our profit pools and gross profit and adjusted EBITDA margins. To conclude, Bragg’s long-term ambition is to maximize shareholder value by becoming a premier iGaming content and technology provider. Moving to Slide 13, we extended the agreement with Betent BV, where we have agreed to continue supplying our PAM, that’s player account management platform, and our content and content aggregation to its flagship brand in the Netherlands, BetCity, into 2025. We partnered with BetCity to launch the brand back in October 2021, when the newly regulated Dutch market opened. We’re proud of our part in helping BetCity become one of the leading online sports betting and casino brands in the Netherlands today, and we’re extremely delighted to continue to build on this success with them. As part of the extension deal, we will integrate several new third-party content suppliers for the Dutch market, further strengthening our localized content portfolio, and we will also continue to deliver content from our proprietary Bragg Studios, from our Powered by Bragg partners, and we will continue to be the exclusive content aggregator for BetCity via our product delivery technology for the duration of the agreement. Moving to Slide 14. On Slide 14, I want to give you an update on how we’re doing as a developer and distributor of exclusive online casino games. We are on track to release 68 game titles globally for the full year of 2023, putting our output up there with the biggest game studios on the market. Proprietary and exclusive game production has been a renewed focus for us in the past two years. I’m very proud of the development capacity we have built and the quality of the games that we are releasing. As we ramp up our online casino games production, we are maintaining a strategic balance with approximately half of the titles coming from our own Bragg Studios, which generate high margins for us, and half coming from our Powered by Bragg partners, bringing diversity, richness, and in-demand studio brand store portfolio. As you can see, in the second half of 2023, our content releases significantly increased, and we plan to continue at this cadence into 2024 and beyond. So in summary, our third quarter revenue rose 8% year-over-year to €22.6 million. Gross profit was €11.9 million, and adjusted EBITDA was up 7.5% year-over-year to €3.8 million. We have extended our agreement with BetCity to continue as their exclusive PAM content and content aggregation partner into 2025. We have our strategic pillars in place that will underpin our growth going forward and which will drive shareholder value. Our exclusive content production roadmap is firing on all cylinders with 68 online casino titles on track to be launched in the full year of 2023, including 30 from our proprietary Bragg Studios. Current trading is in line with our expectations, so we reiterate our guidance for 2023 of €95 million to €97 million in revenues and €15.5 million to €16.5 million in adjusted EBITDA. The midpoint of these ranges represents 13.3% revenue growth and 32% adjusted EBITDA growth compared to our 2022 performance. I want to thank you all very much for attending this presentation today. Now Ronen and I will be happy to take any questions you might have.

Thank you. It looks like our first caller is Gianluca Tucci with Haywood Securities. Gianluca, please go ahead.

Hi, good morning, guys. And congrats on another good quarter. I’m just wondering if we can start off on the news from earlier this week. I think you did a good job of providing color, Matevz. But the extension, does it take you through ‘25 or at the start of ‘25? And I’m curious if you can speak to how the company expects the revenue mix to shift from this one customer over the duration of this extension agreement.

So the exact details of the commercial terms remain obviously subject to the parties' eyes only as they are sensitive commercial terms. By negotiating this deal, we focused on keeping the PAM and aggregation deal in place until September 2025. We have reduced managed services resources that we already have in-house. Moving forward, we are going to work very aggressively on decreasing the exposure to one of our top clients, and we are going to work very aggressively in the direction of growing our proprietary content portfolio of clients, the Tier 1s that we have signed recently, and the increasing number of aggregation and PAM clients where we believe we have a very good opportunity to leverage that position and grow our proprietary and Powered by Bragg content revenue with them.

Great color. Thanks, Matz. And so on your commercial efforts, with all the recent Tier 1s that have been signed over the last quarter or so, I’m just wondering how you’re thinking about 2024 at this point from a growth perspective. Combined with your cadence of games, it appears that 2024 could be even more robust than ‘23 at this point? Just curious for your comment on that.

Sure. We now have agreements with most of the Tier 1 operators, but they don’t represent top customers for Bragg. Our plan in 2024 and ‘25 is to grow our wallet share with all of these existing content-only operators as well as existing PAM and aggregation operators, as they present a great revenue growth opportunity for our proprietary Powered by Bragg content. We are also looking to establish ourselves in markets where we are underrepresented. Finally, newly regulated markets in Latin America and Europe are a great opportunity for our PAM aggregation engagement and content products with these Tier 1 operators that we have already signed with new operators that are coming out of these newly regulated landscapes.

Okay. That’s great. And my last question here. As it pertains to the American markets in the U.S. particularly, are you doing anything differently? Or is it pretty much the same kind of execution plans from a growth perspective in the U.S.?

Well, as discussed in the presentation, in 2023, we will eventually roll out 69 titles, both in the U.S. and Europe. Preliminary data suggests that the content performs well. Bragg is now live in the four largest U.S. gaming markets, being Pennsylvania, New Jersey, Michigan, and Connecticut with our proprietary content. We continue to roll out with more operator brands in these states, further expanding our reach. To answer your question, we launched our content portfolio in Pennsylvania with Rush Street Interactive and have also launched content with Fanduel in Michigan and Connecticut and Winbet in New Jersey, and we expect this trend to continue into 2024 and 2025. I would like to also say that we’re very excited about the U.S., and I want to remind everyone that our business is extremely successful in Europe and that we’re one of the largest content aggregators and leading PAM providers in Europe. We expect to leverage our expertise coming into the U.S. to become a leading content provider in iGaming for global operators and U.S.-only operators such as Bet365 and others.

Okay. Thank you for the color, and congrats again on the quarter. Good work.

Thank you.

Thank you, Gianluca. Our next question comes from the line of Jordan Bender with JMP Securities. Jordan, please go ahead.

Great. Thanks for taking my questions. You actually just mentioned Rush Street in your prior comments. They are the new operator starting here soon in the State of Delaware to run the online platforms. I was wondering what does that kind of mean? And can you frame the revenue or potential revenue opportunity for the company over the course of ‘24 and ‘25. Thank you.

So it’s probably too early to discuss the revenue opportunities for ‘25. We believe that Rush Street is obviously a great operator that has an extremely good team and product. We believe they are going to use all of that to significantly grow the GGR in the state of Delaware, and we plan to be very high on their list of content providers for that state. Exactly what the revenues are going to be, it’s probably too early to discuss.

Understood. And then in terms of your player and wager growth, nice growth in the quarter, but from a wager per player perspective, you’re seeing a little bit of a deceleration year-to-date and especially here in the third quarter. Is that just a function of mix? Or is there something in the underlying consumer just spending less? Thank you.

Yes. So this is mainly connected to the seasonality. The third quarter is usually slower than the first and second quarters.

I guess from a growth perspective, first half down roughly 5% in the third quarter, it’s down about 24%. Is there anything kind of in that?

I wouldn’t say there’s anything underlying that we would be able to identify.

Understood. Thank you very much.

And our next question comes from the line of Adhir Kadve with Eight Capital. Adhir, please go ahead.

Thanks, guys. Thanks for taking my question. Matz, congrats on the role. Looking forward to working with you. I just wanted to talk about some of the European markets, specifically the UK and Italian markets. You’ve been in these markets for some time, with some meaningful wins. How are you thinking about those two markets, just given how large they are and how meaningful they could be for your revenues moving forward.

Yes. We started in these markets anywhere between 24 and 12 months ago. We were using this time to integrate with clients. These are obviously very heavily regulated markets. We believe that they are a great opportunity for our content-only proposition, and we believe that we are largely underrepresented in those markets. We feel that these markets represent a great growth opportunity for our content in ‘24 and ‘25.

Okay. Excellent. And then just the content in different European markets, you’ve obviously had success. How easily transferable are those markets from, say, the Netherlands into the UK and then into Germany? And how does that all work? Do you find that there’s minimal heavy lifting or investment that needs to go into launching this content in different markets?

We are integrated with most of the clients that are operating across these markets. So the heavy lifting has been done in the past. What we need to do now is to use our data and build local custom content that is going to fit the requirements of these markets and promote the content with these operators, using our engagement tools that will allow us to create certain unique and specific categories within the content portfolio to compete with existing content providers in these markets. I’m very positive about the progress that we have made over the last 12 months, and I believe that we have a great future ahead of us with the two proprietary studios and roadmaps that have been put in place with these two proprietary studios and Powered by Bragg Studios that are developing content for these local markets in Europe.

Excellent. Thanks, guys.

Thank you.

Thanks, Adhir.

Our next question comes from Daniel Rosenberg. Daniel, please go ahead.

Hi, Matevz, Ronen. My first question revolves around cost controls and automation. So we’re seeing some of the benefits take place here in the quarter, but just wondering how much more leverage do you have in terms of implementing other automations into your operations that could keep yielding strong results.

Ronen, why don’t you take this?

Sure. Dan, good morning. Good morning, everyone. We implemented a lot of cost controls at the beginning of last year and at the beginning of this year. We focused on growth and what we actually need to grow and diversify in different markets to different products, as well as the new content we’re producing. There’s a lot of room for optimization across every single department. But I would say that from our business perspective today, the majority of the work is automated. We’re becoming more efficient in the way we operate, the way we build games, and we’re investing in our technology. I would say we’re very well positioned for further growth with the same team and the same operations we have today. Yes, there’s a lot of growth and opportunities for optimization, but I think we’re already there. What we’re seeing right now and what we will see is more commercial and revenue growth from the same team, functionality, and infrastructure we have right now.

Thanks for that context. My second question is around the BetCity contract. I was just wondering it’s nice to see the risk contained here. Is the final outcome in line with what you were expecting as you started negotiations? And are there any other opportunities to work with BetCity that emerged from those negotiations?

Yes. Our original agreement had a five-year term with a 12-month termination notice. We’re happy that we managed to secure the extension of the deal, and it’s in line with our expectations. BetCity and Entain as a group are a key partner of ours, and we’re proud of what we have achieved together. We’ve been having constructive dialogue over the recent past, and we hope to be able to power the BetCity brand and Entain Group as a global powerhouse going forward. We are now very focused on ensuring that BetCity continues to effectively utilize our products and continues to grow. It’s positive that we have secured the longevity of the deal, and we have a clear path where we have continued support of Entain’s strategic initiatives in the market. Entain, as a global operator, presents a large opportunity for us as a content provider, aggregation solution provider, and engagement solution provider. We will work together with Entain and BetCity to implement these solutions into their B2C network across all jurisdictions in 2024 and 2025, and hopefully achieve similar success as with BetCity.

Okay, thanks for that. Lastly, just a quick one for Ron. On the working capital and free cash flow, you guys are expecting to continue to improve and grow. Just wondering if there’s any color you could provide in terms of how working capital ebbs and flows in the coming quarters if you require capital to scale just from a working capital perspective.

Yes. As you’ve seen in the last nine months of operation, working capital remained relatively stable at €6.3 million compared to €6.6 million. We believe that in the next couple of months, we’ll be able to generate relatively the same type of profit. We are definitely funding our investment in our software development costs, which I think will remain relatively consistent. I don’t expect there to be a significant increase in that. We can manage our debt, which is what we’re doing. Excluding changes in working capital, we’re confident that will improve as we implement what we’re doing right now. I’m quite confident that it will be slightly higher than what we think right now compared to what we did so far. We will improve that to €3 million to €4 million in the next couple of months on time, based on securing the debt and regular repayments to avoid any dilution to the shareholders.

Thanks for taking my questions. I will pass it on.

And our final question today comes from the line of Sid Dilawari with Cormark Securities. Sid, please go ahead.

Hey, good morning, guys. Thanks for taking my questions. Firstly, just on the Ontario market, maybe if we can speak about the general landscape in Q3. You’re now live with Bet365, Rush Interactive, and a couple of others. It seems like there was minimal sequential growth in the number of live operators. Given that dynamic, do you see your future growth in Ontario coming from penetrating further with current operators or from new operators entering the market?

We are seeing future growth coming from existing operators. We are going to grow our wallet share with these existing content-only operators, and I believe they present a revenue growth opportunity, as well as new operators entering the market. Ontario has been a market that is growing slower than expected, but I believe we can increase our presence in the market through both existing and new operators.

Okay, thanks. And then just going back to the PAM extension agreement with Entain and BetCity. Nice to see. Your PAM market share in the Netherlands also remains resilient. Any commentary you can provide on the competitive landscape there? And if you have opportunities now with more localized content to penetrate further in that market with more operators other than BetCity?

Yes, we have established ourselves as a leading PAM solution provider in this market. We believe that we have more opportunities to grow as the PAM and aggregation solution provider in this market. We also believe we can leverage our position as a leading PAM solution provider and aggregation solution provider to grow our wallet share, as I said, in the market. The Netherlands has been a great market for us over the last two years, and we believe that we will maintain our position in the market moving forward.

Okay. And then just one last one for me. Just on the M&A landscape here. We’ve seen some industry consolidation over the last few weeks, as you also alluded to in your prepared remarks. Do you see any opportunities in the near term to be acquisitive at accretive multiples? And if so, would your focus be primarily on gaming studios or elsewhere?

Ronen, do you want to take this question?

Yes, sure. Thanks for the question. We can see from recent M&A activity in the market that capital markets are undervaluing companies, successful companies, and we've seen recent examples like the acquisition of Aristocrat and Aspire, and the recent acquisition announced yesterday between Sega Sammy and GaN, companies that are trading at much lower valuations than what companies are willing to pay for in terms of cash. In our opinion, that reflects the true value of these companies, which is not currently reflected in the capital markets. In terms of acquisitions, we have everything we need in-house regarding content studios, distribution agreements, and especially technology. We’re looking to continue to grow the business and expand within our customers, new customers, and new jurisdictions. If there’s an opportunity for us to be acquisitive, then of course, we will look into it. As a public company, there are a lot of other opportunities to be in the M&A space, and we are always on the lookout for that.

So in terms of potential targets, would they primarily focus on content producers, like gaming studios or somewhere else?

Mostly content. We have all the tools in-house that we need regarding technology, distribution, and licensing. If we were to be acquisitive, it would be about content and differentiated content that is localized to the jurisdictions where we operate and the jurisdictions that we want to operate in.

Okay. Thanks for the clarity. I’ll pass it on.

Thanks, Sid, and thanks to all our callers with questions today. With that, I will now turn the call back over to Yaniv Spielberg for closing remarks. Yaniv, the floor is yours.

Guys, thank you for joining our call. Thank you for being interested in Bragg. We’re closing another very successful quarter, and we look forward to hosting you on our next quarterly call. Have a great day, everyone.

And ladies and gentlemen, that does conclude today’s call. Thank you all for joining, and you may now disconnect.