Bragg Gaming Group Inc. (BRAG) Q3 2021 Earnings Report, Transcript and Summary

00:06 Good morning. My name is Lisa and I'll be your conference operator today. At this time, I would like to welcome everyone to the Bragg Gaming Group Q3 twenty twenty one Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker’s remarks, there will be a question-and-answer session. [Operator Instructions] 00:36 Thank you. I would now like to turn the conference over to Mr. Richard Carter, CEO. Please go ahead, sir.

00:44 Thank you, operator. Good morning, everyone and thank you for joining our third quarter twenty twenty one earnings conference call. I’m Yaniv Spielberg, Chief Strategy Officer for Bragg Gaming Group. I'll be hosting today's call alongside my colleagues Chief Executive Officer, Richard Carter, who’ll comment on our third quarter performance and provide an update on the progress we're making with our growth initiatives and Ronen Kannor, our CFO, who will review our third quarter results and our guidance for the fourth quarter of twenty twenty one as well as the projections for twenty twenty two. 01:13 If you have not already done so, you can download our Q3 earnings call presentation from our website at www.bragg.games/investors in the section called Investor Presentation. The presentation we will review today is called twenty twenty one third quarter earnings presentation. On this call, we'll review Bragg’s financial and operating results for the third quarter of twenty twenty one. Following our prepared remarks, we will open the conference call to a question-and-answer period. 01:41 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 law, 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 economic condition, 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. 02:22 While we believe these assumptions to be reasonable, as subject to a number of risks uncertainties and other factors, many of which are outside the company's control in which could cause the actual results, performance or achievement of the company to be materially different. There could be no assurances that these assumptions or estimates are accurate or any of these expectations will prove accurate. For complete discussion of these factors, please refer to our recently filed press release and other publicly available disclosure. 02:49 With that said, I'd like to turn the call now to our CEO, Richard Carter. Richard?

02:54 Good morning, everyone. Throughout the third quarter, we achieved significant progress with our strategic growth initiatives, including expanding existing customer relationships, building out the pipeline of premium in-house iGaming content and providing our content and offering to new markets. As a result, we are transforming Bragg into a leading global content focused B2B iGaming provider, and our progress on this front is evident in the third quarter results. 03:24 Just a quick note, as Ronen and I review the third quarter performance, our comments will reference the results in euros. For the third quarter, we reported revenue of twelve point nine million EUR, which is up approximately ten percent year-over-year. In addition, unique players were up fourteen point four percent to two point one million EUR and wagering revenue was up four point eight percent to three point two billion EUR, given the strong third quarter performance, our performance to-date in the current quarter and our forward outlook. 03:56 We have raised our twenty twenty one full year revenue guidance to a range of fifty five million EUR to fifty six million EUR and our adjusted EBITDA outlook to between six point six million EUR and six point eight million EUR. While also raising our twenty twenty two revenue outlook to a range of fifty nine million EUR to sixty one million EUR on our twenty twenty two adjusted EBITDA outlook to between six million EUR and seven million EUR. These results and our forward expectations represent strong performance and underlying growth in our non-German market. 04:29 We expect our revenue mix to continue to reflect the decline in the percentage we derived from recurring revenue in the German market going forward, even as we continue performing in line with our expectations and following the implementation of the new regulatory regime on July one this year. Beyond the strong Q3 financial performance, recent progress on our growth initiatives include continued market expansion. We entered twenty twenty one serving markets that accounted for TAM of approximately two point eight billion dollars and we believe that by the end of twenty twenty two, we can address markets with a TAM of over eighteen billion dollars. In particular, while obtaining our supplier license in Greece and entering the newly regulated markets in the Netherlands, we're delivering on our strategy of expansion and regulated markets. 05:19 With an initial batch of games certified and offered via ORYX Hub distribution platform, our performance to date in the Netherlands is roughly five times above our initial expectations, and we've already achieved an approximate twenty five percent share of that market. We are making consistent progress with our goal of entering additional new markets to fuel our growth. Our progress on this front continues in Q4. 05:43 In October, we entered into an integration agreement with Playtech that will result in the full range of our ORYX Hub games being available for European and global operators that utilize the Playtech games marketplace platform. This includes leading operators in Spain, Italy, Switzerland, the Netherlands, the UK, Mexico and Latin America. Our partnership with Playtech is another milestone in our market to expansion, as it furthers our ability to get more of our content to leading iGaming operators, who can then offer that content to more players globally. 06:18 Last week, we announced a new platform deal with Gauselmann, MERKUR Brand and the Czech Republic, a zero point five billion dollars ton market. This deal with a major brand in the industry further grows our iGaming platform business, as well as extending our regulated market reach. We expect this operator to be live in the second quarter of twenty twenty two. 06:39 We are also on track to generate initial contributions from the UK and Italian markets in the first half of twenty twenty two and we expect to see initial revenue from the Ontario market by the first half of twenty twenty two. We also continue to achieve significant progress with our content development strategy and showcased our newest titles iGB Live! in Amsterdam and at G2E in Las Vegas to a very favorable reception. 07:05 On the licensing side, we have submitted applications in key European markets such as the UK and North America, including New Jersey, Pennsylvania and Michigan and are in the process of submitting an application in Ontario to be ready, but when that market opens to iGaming, which is now expected in Q1 twenty twenty two. Finally on this slide, we announced a new content partnership the growing land-based slots studio Bluberi, which I'll come back to and review in more detail shortly. 07:36 Turning now to slide seven. I noted earlier that our performance beyond the non-recurring revenue we generate from Germany, its helping to both offset the impact of the regulatory changes in Germany, where more importantly helping to drive year-on-year improvement. In fact, our newer markets are performing above our expectations. 07:56 For example, our revenue growth compared to our expectations heading into Q3 was driven by two point five million EUR from non-recurring German operations, zero point five million EUR from a stronger than expected start from new launches and from several core existing customers and zero point two million EUR from better than expected underlying online content royalties. This will help drive the higher than expected revenue in Q3 compared to our expectations heading into the quarter as our recurring revenue from Germany was in line with our forecast for the period. 08:29 Now turning to slide eight. As I mentioned earlier, our entry into new markets in particular the Netherlands, which has been exceptionally strong out-of-the-gate, coupled with new client wins, on our ramp up with operators launched earlier in the year, give us significant momentum of the current quarter continues to progress. We now anticipate that our new clients secured in twenty twenty one will deliver one hundred and seventy percent revenue growth quarter-over-quarter, which translates into incremental revenue of approximately two point eight million EUR quarter-on-quarter based on our upgraded FY twenty twenty one revenue guidance. 09:06 Existing client revenue has also seen a mark step up in growth in October by more than thirty percent over September, which also underpins our current revenue momentum in the quarter. Combined with new client launches, this is anticipated to drive underlying quarterly sequential revenue growth over Q3 of over sixty percent excluding Germany based on our new FY twenty one guidance. 09:31 Now moving on to the content slide. Since our New Group Director of Content Doug Fallon joins following our acquisition of Wild Streak Gaming in June. We announced a shift towards development of more proprietary content, which we believe will generate higher gross profit margins and higher EBITDA. In addition, we are working to secure more exclusive content with select third-party partner studios, which allows us to provide an enriched, unique and localized offering to our customers in markets around the world. 10:02 We've been showcasing our new strategy including product strategy, analytics, game segmentation, technology tools, and content partners at industry trade shows. We are on iGB Live! in Amsterdam at the end of September, the Global Gaming Expo in Las Vegas at the beginning of October and next week will be at SiGMA in Malta. At G2E, we presented for the first time to U.S operators our product plan, including taking a number of highly successful and well known Wild Streak land-based titles online, but by our FUZE player engagement tools, which allow bonusing, tournament with other players and the creation of missions and quests in an engagement layer that fits over the top of the game. These features are proven to boost player activity with a result of increased wagering were well received at the show. 10:51 As we obtain licenses to enter more markets in Europe, North America and globally will further diversify our products offering through our internal studio development with select content partners. This brings me to my next slide. 11:02 Today, we announced Bluberi as our latest exclusive content partner. Bluberi is a Las Vegas based slot studio serving the U.S. and Canadian markets with a portfolio of over one hundred game titles that are already popular with players in the land-based casinos. This new partnership will allow Bragg to take Bluberi slot portfolio online with exclusive global online distribution rights via our network. The deal further underpins our commitment to bringing the right content to our customers in our local market while leveraging our global distribution network to introduce new gaming content to players wherever they may be ultimately bringing new reach to our partners. Additionally, this partnership allows the omni-channel distribution, whereby the same games will be offered to land-based and online operators, a trend that in our view is only going to increase and become more ubiquitous in the industry as players demand to be able to consume content on their terms in a multi-channel seamless experience. 12:02 Doug Fallon has a track record of success we are taking well up land-based titles of adapting them to the online market and our new partnership with Bluberi should add to his success on our performance. 12:13 Moving on to the next slide. Wild Streak was also a key driver of our third quarter upside with a contribution of zero point nine million EUR. Our acquisition of Wild Streak has been and will remain a key catalyst in our go forward transformation, as we continue to shift from primarily providing third-party online content towards providing in-house online content that carries significantly higher gross profit margins. 12:40 As of September thirty, Wild Streak had nine online casino games live in key iGaming markets, including New Jersey, where they're games have been live since twenty eighteen and more recently in Michigan as well as in the UK and other regulated jurisdictions in Europe. We currently expect Wild Streak to release a minimum of twelve games next year, with that ramping up in the following years and ultimately driving material long term growth. 13:06 Finally, as I noted on the second quarter call, Wild Streak’s offering will benefit from the large distribution network available through the ORYX RGS and from full integration with our FUZE player engagement tools, which are proven to help drive improved game performance. 13:22 On the next slide, we're showing the strong performance of the four Wild Streak titles launched year outside of North America with our partner Pragmatic Play. These games combine to generate record GGR numbers during Q3. The games also showed very strong player loyalty. For example, Congo Cash, which we launched in early January, generated GGR in Q3 that were at seventy percent of the levels seen in Q1, which is very encouraging. We rolled out a fifth Wild Streak title with Pragmatic Play, Wigwam last week, and we expect to launch a further five Wild Streak titles under this partnership in twenty twenty two. 14:01 On this next slide, you can see the continued strength and stability of Wild Streak’s Dragon Power game in New Jersey over the last year. Dragon Power first launched in New Jersey in May twenty twenty and remained among the top grossing online slots in that market since its launch, about seventeen months ago, which is exceedingly long time for a game to maintain top performance. In fact, the games performance in August this year was a record month for Dragon Power, when it generated almost one million dollars in gross gaming revenue in New Jersey alone. We are currently planning to roll out Dragon Power in Michigan and West Virginia later this quarter and expect to release additional Wild Streak titles across the U.S. market in twenty twenty two. 14:43 Turning now to the ongoing expansion of medium term TAM. Our focus is on the online casino segment as this represents the largest opportunity in our key North American and European markets. Online casino is also much more profitable for operator in online sports betting. After our entry into the Dutch market, which followed activations in markets such as Greece, to supply the regulated market there and before that Spain and Denmark, we now address an increasing proportion of the fourteen billion estimated European online casino market. 15:16 We're making consistent progress with our UK market plans, where we have applied for license and expect to be live in the first half of twenty twenty two. The UK market is estimated at five point five billion dollars. We are also in the process of certifying games for the Italian market and expect to generate initial revenue from this market also in the first half of next year. Italy is an estimated two billion dollars online casino market. We continued to grow in the U.S. first with Wild Streak and then with Spin Games and we expect to complete that acquisition later this quarter. 15:49 During the third quarter, Spin Games announced, which is obtained its licensed in Connecticut adding to its existing U.S. distribution in New Jersey, Pennsylvania and Michigan. Following the completion of this transaction, we will gain access to more than thirty key strategic relationships in the U.S. including with DraftKings, Golden Nugget and Penn National. We plan to initially cross sell our popular European casino content at which will introduce our new proprietary online casino games, which under development specifically address the U.S. and Canadian online casino players. The U.S. market is currently estimated to have a TAM run rate of more than three billion EUR and that number will grow considerably. 16:30 While the Canadian online casino market inclusive of offshore operators as today estimates at just a little above zero point five billion dollars. The total online casino market is expected to grow materially to an estimated TAM of between two billion EUR and three billion EUR over the next several years. With Ontario alone representing about two billion EUR of that current estimated TAM. If you extrapolate the New Jersey online casino spend per adult to the Ontario addressable adult population. 16:59 In conclusion, our twenty twenty one third quarter performance highlights progress across an array of initiatives that underpin the strength of our business and creates a foundation for long term growth. Momentum for Bragg’s expanding library of infinitive iGaming content continued to build across our growing base of regulated markets. As highlighted by our recent entry into the new Dutch market, we are performing well ahead of our internal expectations and seeing strong traction for our content and third-party content we distribute. 17:30 Our content led strategy coupled with a growing penetration of the markets with our player account management platform have seen strong success and as positioned with a significant adjusted EBITDA growth and related margin expansion opportunities going forward. In particular, we have laid the foundation to bring our proven success to the U.S. and Canadian iGaming market through our Wild Streak acquisition and through the addition of new content partners such as Bluberi. 17:59 We continue to build our global footprint of licenses and market. We have obtained a license to supply the regulated market in Greece. We've successfully launched our games platform and RGS in the Netherlands and our RNG has been certified as fully compliance in the newly regulated German market. We have applied for U.K. license, which we expect will go live in the first half of twenty twenty two. We are in the process of certifying our first games for the Italian market, and we have applied for license in Belgium. 18:28 We've also applied for licenses in New Jersey, Pennsylvania, and Michigan are in the process of applying for license in Ontario and have applied for license in The Bahamas. Our business model is unique in the industry as we have very minimal capital expenditure requirements to further build out platform. Alongside a growing base of proprietary in house developed content that is positioned to generate high margins and significant profitability. 18:53 Finally, we have a strong balance sheet with no debt and generate positive adjusted EBITDA, providing us with the financial flexibility to pursue investments in content and technology where needed to augment our portfolio and build out a library that makes us an ideal partner for iGaming operators in the U.S. Canada, Europe, and other key worldwide markets. 19:18 With that, I will now turn the call over to Ronen, who will take you through the financials and our updated expectations for the balance of twenty twenty one and to twenty twenty two.

19:29 Thanks, Richard. Good morning, everyone. I'll begin my comments on slide twenty. Third quarter revenue was up nine point nine percent year-over-year to twelve point nine million EUR. The increase in revenue was driven by organic growth from existing global customers as well as from the full quarter of revenue contribution from our Wild Streak acquisition. 19:52 Gross profit increased by thirty point one percent to six point six million EUR and with margin increasing as well by eight point eight basis points to fifty one point four percent, which primarily attributed to a higher proportion of revenue derived from our platform and managed services, alongside with Wild Streak games revenue, which has no cost of sale compared to games and content, which have third-party process associated, more by the gross profit will be explained in the next line. 20:20 Adjusted EBITDA for the quarter ended one point four million EUR, down only by zero point four million EUR. Adjusted EBITDA margins ended eleven percent which is four point seven basis points down when compared to the previous year, and this is due mainly to increase salary and sub-contractors costs, given our ongoing investment in expanding our software development, product and management functions across the enterprise. 20:43 Net loss was two point five million EUR compared to three point two million EUR in the prior year period. The year-over-year increase was primarily driven by the incremental increase in employee costs as well as professional services fees, which were incurred due to the NASDAQ listing. This increased cost were offset in part by the expanding gross profit margin and the reduction in deferred and contingent consideration payable. 21:11 From KPIs perspective, wagering revenue generated by customers increased by four point eight percent year-over-year to three point two billion EUR and the number of unique players using Bragg games via ORYX Hub distribution platform increased by fourteen point four percent to two point one million EUR. Also, as we noted last quarter, we have continued to retain one hundred percent of our customers since twenty nineteen and while our customer retention remains solid our dependent on our top ten customers has improved. Revenue from our top customers declined to fifty four point three percent of total revenue, compared to fifty five point six percent in Q3 twenty twenty, a trend we expect to continue. 21:51 As you can see from the revenue and gross profit margin slide, the gross profit margins are in a growth trajectory since Q2 twenty twenty and we are scaling up in line with the revenue growth and movement in the product mix. As presented in the chart in the bottom of this slide. As we indicated in the past, platform and proprietary content products are carrying limited third-party costs, which giving us ability to scale up gross profit margins. 22:16 The contribution of full three months of revenue from Wild Streak gaming, an internal content revenue adding approximately three point eight basis points to the margins in Q3 and will continue going forward. Finally, Bragg is targeting gross profit margin to increase by twenty twenty four up to sixty percent of the total revenue. 22:38 On this slide, I dictate how we reconcile our operating loss to a positive adjusted EBITDA in the twenty twenty one third quarter. Adjusted EBITDA was one point four million EUR at eleven percent margin against an operating loss of two point two million EUR. The gap can be defined by the following non-cash and exceptional items. The first share-based payment an award to the new directors, management and employees in Q1 and in Q3. Transaction and acquisition costs expenses related to the acquisition of Wild Streak Games and Spin Games and deployment of the corporation M&A strategy and exceptional costs, which include legal and professional fees on the NASDAQ listing and other non-recurring regulatory and legal matters. 23:24 Moving on to slide twenty three, as of the end of September twenty twenty one, Bragg has a solid balance sheet and continues to deliver strong cash flow performance. Cash balances as of September thirty was twenty million EUR compared to twenty six million EUR as of December thirty one, twenty twenty with no debt facility. Net working capital was eleven point four million EUR compared to six point seven million EUR at the beginning of the year. 23:50 We continue to project positive free cash flow generation, as a reminder, our business strategy requires little CapEx related to technology debt requirements. From the cash flow perspective, in the nine months ended September thirty, twenty twenty one, we set up eleven point five million EUR for the acquisition of ORYX. We paid eight two million EUR for the acquisition of Wild Streak Games and continued capitalized software development costs as part of the investment in our technology. 24:18 With the quarterly results out of the way, we raised outlook for the twenty twenty one fourth quarter and full year, driven by performance in our U.S. markets, our growing number of customers worldwide and our expanding portfolio of in-house games offered via Wild Streak and our ORYX RGA. We now expect twenty twenty one full year revenue of fifty five million EUR to fifty six million EUR compared to the forty nine million EUR previously announced. We also expect twenty twenty one full year adjusted EBITDA of six point six million EUR to six point eight million EUR compared to five point four million EUR discussed previously. 24:56 We are also increasing our outlook for twenty twenty two given the building momentum across our entire enterprise, which has us establishing a foundation for sustainable long term growth. We now expect full year twenty twenty two revenue of fifty nine million EUR to sixty one million EUR compared to our initial guidance of fifty four million EUR to fifty six million EUR, which we provided on our second quarter call on eleventh of August. We also expect full year of adjusted EBITDA of six million EUR to seven million EUR. 25:26 With that, I will turn the call back to the operator so that Richard and I can take your question. Thank you.

25:43 [Operator Instructions] Your first question comes from the line of Neal Gilmer with Haywood Securities.

25:49 Yeah. Good morning. Thanks very much. Congrats on a strong quarter and the increased guidance. I got a few questions here. I'll probably hit two of them and then pass the line here. I guess first of all of yesterday with some of your comments there was your success in the Netherlands. Wondering if you can provide a little bit more commentary on how do you think you've gained that kind of market share in a fairly short period of time? And is that something you can leverage as you enter the new markets and have similar success there?

26:18 Yeah. Hi, I'll take that. Good morning to you. In terms of -- I think it was quite a unique circumstance in the Dutch market. I mean, what happened there isn't necessarily going to be replicated in other markets, but effectively, you had a closing down of the market and then you had it reregulated. So, I'm sure as you've seen a lot of the key players left the market and that left a big opportunity the companies like Bragg with our market leading platform to go into that market also with our content and to take material market share on day one. So I think it's not something that we'd expect to replicate in other markets going forward just because of the uniqueness of what happened in Holland.

27:05 Okay. All right. Thank you. Then taking a look at your comments about your total addressable market that sort of you started into this year, I think you said two point eight billion EUR and I think you said by the end of next year, eighteen billion EUR you contrast that with what you have as far as revenue growth implied in your guidance and the revenue guidance sort of seems a little bit conservative given what you guys have been able to accomplish to date. So, is there a decent amount of decrease continued in the German market that you are factoring into that guidance. Just I’m trying to -- take a look at how much your addressable market increase?

27:44 So there are quite a moving parts in terms of Germany, no, we are actually, I think if you look and go through the detail whether that’s a slight increase in our expectations for the twenty twenty two there. But in terms of just how it works from a TAM perspective. So as we enter a new market give it Italy, give it UK, you're probably looking at ramp up in terms of rolling the content around getting all of the integrations, all of the legal contracts done, you're at a least probably twelve months. So although our time increases once we get access to the U.K. market, let's call it sort of five point five billion EUR to six billion EUR, actually it takes us several quarters to get embedded and to start generating revenue and the materiality of it will increase. So we've obviously tried to be prudent because it's a new market and new things take a little bit of time. We’ve assumed sort of ramp up over a sort of four to six quarter basis. So after sort of six quarters we'd be expecting to sort of hit about seventy five percent of the market.

28:59 Okay. That's helpful. So then obviously then that really drives the revenue growth into sort of twenty twenty three, right? That's where you hit sort of that for …

29:07 Yeah, absolutely. And, obviously, we are razor focused on trying to bring that ramp up forward, but as we said here right now, it is obviously quite difficult to predict the timings on that quarter-to-quarter. But we're obviously working very, very hard to bring that forward. So we don't obviously look to do better than that. But yeah, that's basically the background to that.

29:31 Okay. That's great, Richard. Thanks. Appreciate your answers.

29:35 No worries. Thank you.

29:37 Your next question comes from the line of Adhir Kadve with Eight Capital.

29:43 Good morning, guys. Thanks for taking my questions. I missed the part on Germany where you kind of broke down the Germany revenue, if you could just maybe go through that just quickly one more time for me. I appreciate.

29:56 What are you referring to in particular in Germany?

29:58 Just I think the offset I think you guys had mentioned, I just cut the tail end of it you mentioned that some of the recurring revenue from Germany it being offset by non-recurring revenue from Germany. It be offset by continuing recurring revenue, if you could just go through that pretty important point. Thanks.

30:17 Just to give a bit more color on sort of what shaped the performance in Q3, so basically, as we gave guidance and headed into the quarter, we were looking at sort of doing about nine point eight million EUR of revenue. We obviously ended up doing a lot more than that and sort of drivers of that is partly we did an additional just over two million EUR of revenue after Germany, which is non-recurring. And we did that additional revenue because of the continuing regulatory uncertainty and the continuing lack of clarity around licenses, which effectively extended the timeframe beyond our initial expectations. 31:04 There was a lot of back and forth going on with our clients, showing with evidence that going through the licensing process, and then they were failing to get information back. So we decided to make a decision in September where we just decided to just IP block. So if we hadn't got any clarity by them, we just IP blocked customers, and then once they find out the future then we will obviously allow them to come back into the market. So that's predominantly the sort of color behind what happens in Germany, underlying still trading in line with our expectations on a recurring basis.

31:44 Okay. Fantastic. And then I saw one thing, just on Dragon Power going into Michigan and West Virginia later on in the year. Do you find that game usually just translate into those markets similarly well if it's done in New Jersey over these past years that you kind of mentioned?

32:01 It's a very good question. I think given if we take other content that’s work very, very well in New Jersey and is replicating success in Michigan, then that's what we based on. So our games are performing extremely well in New Jersey have been rolled down into Michigan and has performed as well in Michigan. So, we think that should be the same as well in Michigan.

32:32 Okay. Good to hear. And then just lastly, just one more for me, in just terms of M&A obviously we've seen an uptick in M&A overall in the industry. Can you maybe talk about your thoughts on M&A and how you guys are thinking of obviously the Wild Streak and Spin acquisitions have been done, but are you thinking about anything else just given the uptick in M&A in the industry?

32:55 No, I mean, I think we've spoken before, I think it's invertible and that going to be more M&A and it’s going to continue. We saw these cycles in Europe and I'm sure we're going to see the same in the North American market in terms of Bragg today, I think we have the building blocks in place, and we have very clear vision in terms of where we are heading. So as of right now, we're not really focused on M&A we're focused on execution and delivery.

33:31 Awesome. Thank you very much, Richard I'll pass the line.

33:34 Thank you.

33:35 Your next question comes from the line of Matthew Lee with Canaccord.

33:40 Hi. Great job on the quarter guys. Maybe just a housekeeping question to start. Can you give us a little bit of additional color into what prompted the twenty twenty two guidance increased maybe from a geographical perspective? Is maybe the European market being better than expected or is it more of a European expense sorry, North American expansion thing?

34:00 Good morning. I think in terms of -- we don't really want to get broken down into each individual market, but I think clearly, we've rolled out into some new markets recently. And we've signed some interesting deals with some major operators and that effectively is driving the increase and that's going to be spread across multiple markets, but yes, I think the majority of the increase is driven outside of North America.

34:35 Great. And then maybe can we have some color on the economics of the Bluberi deal. I assume that a revenue share, but given you're putting more accurate in reporting the content over to the online market, is that revenue split up maybe a bit more favorable than a traditional content deal?

34:51 I don't really want to get into the real ins and outs of the Bluberi deal apart from I think we're very excited to be partnering with Bluberi. We think it's a fantastic deal for both companies. I think it's a good deal to Bragg and sure they are also very a very good deal for Bluberi given the distribution that we can offer to a company like that. So and I think it be obviously very incremental to our business from a revenue and profitability perspective over the medium term?

35:36 Great. And then lastly in terms of margin expansion, I think I heard you say sixty percent gross margin by twenty twenty four. Can you help us understand where that comes from? Is it primarily from making more content proprietary or something else?

35:49 Yes. I mean, it comes from quite a few levers but as we pivot away from taking third-party content and owning our own content. And at the same time, we're obviously expanding other high margin areas of the business. So the platform business is beginning to ramp up very, very significantly. So you'll see that during the quarters of this year, you're starting to see a positive incremental contribution from that side of the business. And I think Ronen also highlighted the Wild Streak acquisition adds roughly I think, is it three percent to four percent Ronen to the gross profit margin?

36:31 Yes. Correct.

36:32 So that's also healthy in terms of the ramp up. And as we go through next year and the year after we're producing more in-house content and our platform is continuing to increase and that's how you get the expansion in the gross profit margin.

36:51 All right. Thanks so much.

36:52 No worries.

36:54 Your next question comes from the line of Lisa Thompson with Zacks Investment.

37:01 Good morning.

37:02 Good morning.

37:03 I just have a couple more questions. Could you talk a little bit about what your experience has been with Spin now that you've been around them in another three months, if you change any of your expectations on their performance or how you might be able to roll out differently than what you had been thinking before?

37:26 So, in terms of -- yes, I mean just remember that we still haven't closed this deal with Spin. So that's not expected to close until mid-December. But in terms of we've been obviously working very, very closely together in terms of preparation for our -- combination and obviously the entry into the North American market. So we were at June three, as I spoked about in our presentation and we had a some fantastic reception from operators there looking at both the ORYX, Wild Streak, and Spin products. 38:07 I think obviously, over the last three months, we've announced today this Bluberi deal and we wouldn't have been able to do that Bluberi deal without Spin and what they brought to the whole overall offering. So that was obviously very, very important and that's where it’s adding obviously a lot of value. We've also look -- they've also brought Connecticut, which is not our market that we had envisioned when we did this transaction. And we're also working on Ontario. So, I think they've added a lot over the last three months, and I'm sure we'll continue to do so as we move forward.

38:47 All right. And then one other thing I'm curious about. I mean, other than the countries you're pursuing and talking about already, where is the biggest opportunity for you that's still out there and how do you approach entering new countries? Like is there some sort of methodology deciding what you're going to do?

39:11 Look, I think we've already laid out the big opportunities for us, the UK, Italy, Holland as a big opportunity. We've obviously talked about that today. And obviously, we've got off to a very good start there. But the UK the biggest regulated online casino market in the world and we're not there. So that's really the big opportunity for us. In terms of how do we execute in that market? Well, we need to have good content and doing deals like Bluberi today, given the Wild Streak acquisition we made earlier this year given how we're building out our own in-house studios that's how we're going to be able to execute and commercialize the business into new markets and that's really the focus over the next six to twelve months. And then there are obviously really new markets like Ontario and also probably focus a lot more as we go into twenty twenty two in LatAm. So we'll talk a bit more about that on future calls, but really for us sort of key focus near term is UK, Holland and then leveraging into North America market.

40:29 Okay, great. Look forward to it. Thank you. Those are my only questions.

40:33 Thank you very much.

40:34 Your next question comes from the line of David McFadgen with Cormark Securities.

40:40 Yes. Hi. A couple of questions. So, obviously, you guys have done quite well in the Netherlands with double-digit market share right in the gate, as some more operators enter the markets, do you think that you can sustain that level of market share?

40:55 Well, we're not assuming, we are going to sustain that number one. We're obviously hopeful we can. And we will continue to work very, very hard. I mean, part of that is going to be just looking at how and when other operators come back into the market is very difficult right now to predict, a lot of people are saying that some of the big operators have left the market. We will potentially get licensed in Q2. Some people are saying they won't get licensed at all next year. So and I think that's really going to be where we end up in terms the market shares. But I think the interesting thing is that the operators were supporting, obviously are able to go into the affiliate deals and basically create some moat around them. So I think they'll definitely have been a very strong position to defend themselves once other operators coming to the market. But in terms of our assumptions, in terms of twenty twenty two and twenty twenty three we're certainly not assuming that we're going to be staying at those market shares now. Hopefully, we'll do better than those assumptions.

42:08 Okay. And you highlighted Bluberi in your presentation, I was just wondering, can you give us an idea on how successful Bluberi games are and the land-based side. Just wondering how they would translate online?

42:24 I don't have that data to mind, to be honest with you. I think you can get that data quite easily. I think in terms of the buzz in the industry, these guys have been doing better and better over year. So I think they continue to take market share so and gains already resonate with the casino as we've spoken to, but I don't have the exact data in terms of whether it gets rank versus others, but we can definitely get hold of that.

42:54 Okay. And then just on Wild Streak, it appears us though maybe that the company is performing better than your expectations so far is that correct or is it online?

43:08 So far slightly ahead of our expectations. Yeah.

43:12 Okay. And then you mentioned Dragon Power, it did one million in GGR in New Jersey alone with that for to Q3 or is that for a bit longer period than that?

43:27 That was for the month.

43:27 Well, for a month. Okay. What month was that, do you mind me asking?

43:34 I think that was August. I'll come out, confirm and email account both the top. I think. Ronen, do you have the number?

43:46 No. I think it's as you said, Richard for month, but can you check this point?

43:50 I think it was August. So I'll come back to you if it wasn't. I mean, the idea of this slide is just clearly to show that this game has been established and it continues to perform month for month actually it has been increasing. So this is obviously unusual the majority of casino content. And I think that's we're try to make the point that because it's land based background, broad prices are going it's criteria games. It's a much longer process and that's well drives this type of performance.

44:34 Okay. That's fair. Thank you.

44:37 Thank you.

44:45 [Operator Instructions] Your next question comes from the line of Michael Shelton with FRC.

44:51 Good morning, guys. I was wondering if you can talk a little bit about the sports betting opportunity that you may be seeing in the U.S. and how you think about that from a long term vision standpoint?

45:02 Good morning to you. To be honest with you, we're not really focused on sports betting, especially from the North American perspective. There are lots of other people that have a product offering, which is obviously a lot better than us. So it's just not something that we've focused on. We think the bigger opportunities is on the online casino vertical and that's where we're focused on that.

45:30 Thank you.

45:33 At this time, there are no further questions. I would like to turn the call back over to Yaniv Spielberg for closing remarks.

45:40 Thank you much for joining our call, and we appreciate the questions and the insights. We'll see you all on our next call. Thanks a lot.

45:49 Thank you.

45:50 Thank you very much.

45:52 This concludes today's conference. You may now disconnect.