Bragg Gaming Group Inc. (BRAG) Q2 2022 Earnings Report, Transcript and Summary

Good morning. My name is Dennis and I will be your conference operator today. At this time, I would like to welcome everyone to the Bragg Gaming Group Second Quarter 2022 Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions] I would now like to turn the conference over to Yaniv Spielberg, Chief Strategy Officer. Please go ahead.

Thank you, operator. Good morning, everyone, and thank you for joining our second quarter 2022 earnings conference call. My name is Yaniv Spielberg. I'm the Chief Strategy Officer for Bragg Gaming Group. I'll be hosting today's call alongside my colleague, Chief Executive Officer, Yaniv Sherman, welcome Yaniv, who will comment on our second quarter performance; and our CFO, Ronen Kannor, who will review our second quarter results and our guidance for the remainder of 2022 calendar year. If you have not already done so, you can follow our Q2 earnings call presentation from our website at investors.bragg.games, that's investors.bragg.games in the section called Investor Presentation. On this call, we'll review Bragg's financial and operating results for the second quarter of 2022. 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 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 and economic conditions, business prospects and opportunities, future plans and strategies, technological developments and anticipated events, trends and regulatory changes that may affect the corporation and the 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 disclosure. With that behind us, I'd like to turn the call now to our CEO, Yaniv Sherman. Yaniv?

Good morning, everyone. My name is Yaniv Sherman, and I'm the CEO of Bragg. I'm very happy to be hosting our very first results presentation, having joined the company just over a month ago. As Yaniv mentioned, we'll be going over our second quarter highlights, financials and operational updates. Following the presentation, we'll be happy to answer any questions you may have. The second quarter of 2022 marked the eighth consecutive growth quarter for Bragg. Revenues came in at 34% higher to a record €20.8 million, while EBITDA rose 63% to €3.1 million. Our gross profit margin has expanded as well, and Ronen will dive deeper into the drivers of these growth indicators in a moment. During the passing quarter, we completed our acquisition of Spin Games, a key milestone in our U.S. growth strategy. The Spin deal closure follows Wild Streak Gaming's acquisition last year, and we're excited to welcome the Spin and Wild Streak teams to the Bragg's global family. Bragg went live with our proprietary content from the very first day of the newly regulated Ontario market, which was complemented by market entry and expansion in Europe. After the quarter ended, with me joining the Bragg executive team and Board, we've marked another U.S. market entry in Connecticut and rolled out our very first integrated Spin-Oryx proposition in North America. I'll share more details around these achievements after Ronen's financial review. Ronen?

Thank you, Yaniv, and good morning, everyone. I'll begin my comments on Slide 7. The Group executed very well in Q2. The second quarter revenue was up by 34.2% year-over-year to €20.8 million and up by 7.6% from the previous quarter, representing the record quarter we ever had. This performance drives mainly from organic growth from its existing customer base, the onboarding of new strategic customers in various jurisdictions, mainly the Netherlands, in the PAM and turnkey solutions segment. In addition, we had a strong revenue performance from Wild Streak Gaming, the business acquired in June 2021. From a KPI perspective, the total wagering generated via games and content offered by Oryx and Wild Streak and Spin Games in the period was up by 9.2% from the prior quarter to €4.2 billion, and 9% up from the previous year. As you can see from the wagering chart on the right-hand side, the new German market restrictions on gameplay had an effect during Q3 2021, but ever since we are seeing a positive trend and momentum. Gross profit increased by 65.5% to €11.6 million with margin increasing as well by over 1,000 basis points to 55.9%. This is primarily attributed to a higher proportion of revenue derived from the growth in the proportion of the platform and Turnkey revenue, alongside with Wild Streak proprietary games revenue, which have not cost of sale compared to the license game and content, which have third-party costs associated. Adjusted EBITDA for the quarter was up by 62.9% to €3.1 million, with adjusted EBITDA margin reaching 14.9%, increasing by 260 basis points from the same period in the previous year. The increase in margin is mainly as a result of scale and improvement in the product mix of PAM and turnkey solutions, offset by the increased salaries and subcontractors cost as part of the corporation strategy of investment in the expansion of its software development, product and senior management function with focus on margin control. Other highlights. During the quarter, we closed the acquisition of Spin Games and its trading was including from the 1st of June 2022. We finished the quarter with a reported positive net income of over €100,000 as compared to last period of net loss of €2.3 million loss. With respect of the guidance, as a result of the positive momentum in trading, we're updating the financial year 2022 both revenue and adjusted EBITDA guidance. The new revenue guidance is expected to be in a range of €76 million to €80 million, representing a 11% increase from the previous consensus guidance. The adjusted EBITDA is expected to be in the range of €10 million to €11 million, represents a 5% increase from the previous consensus guidance as the guidance includes the impact of continued investments in the business focused on driving further top line growth. I'll now move to Slide #8. As I mentioned earlier, our entry into new markets, in particular the Netherlands, has been exceptionally strong, coupled with new client wins and the ramping up of operators launched early in the year gives us significant momentum in this financial year. During the quarter, the new customers revenue, which related to customers joined in 2021 and 2022, was up by 3.9% quarter-over-quarter, driven by new market performance. Legacy customers, including German-facing customers, has also seen a growth quarter-over-quarter by 6.8%, with a limited drop from the previous quarters due to the new German market regulations introduced in July 2021. Wild Streak and Spin Games revenue was up by 50% quarter-over-quarter as a result of strong performance of the in-house built games. Overall, the underlying recurring group revenue, including licensed Germany increased by 7.6% quarter-over-quarter. As you can see on the right-hand side, we have presented the Q2 underlying business revenue mix that is moving into the next quarter and for the whole year after offsetting the headwinds for the German markets since the new regulatory changes took place in July 2021. Overall, the new business pipeline, new markets entry, and more focused sales underpin 2022 financial year revenue guidance. In Slide 9, the gross profit expansion. As you can see from the margin slide, the gross profit margins are in the growth momentum since Q2 2020. We are scaling up in line with the revenue growth and momentum in the product mix as presented in the right-hand side of the slide. The product mix changed since third quarter of last year and now trading towards PAM, turnkey solutions and proprietary content, while improving gross profit margins and profitability. As we indicated in the past, platform and proprietary content products are carrying non-third party costs, which is giving us the ability to scale up gross profit margins. The PAM and turnkey solution improved the Q2 gross profit margin as a result of strong performance of our Dutch customers. In Slide 10, we would like to demonstrate that our continued revenue growth is monitored with margins control. Total operational costs, excluding cost of goods associated with third-party content providers, continued to scale down since Q3 2021 and amounted to 40.6% as a proportion of the total revenue. While the corporation continued to invest in expanding its technology, product and games development, the total cost of salary and subcontractors as a proportion of the revenue scaled to 23.9% and targeted to scale further with further growth. Professional fees amounted to 4.1% of the total revenue and were mainly related to entering new jurisdictions, licensing, legal and audit fees. IT and hosting costs scaled to 2.9% of the total revenue, mainly as a result of the Group U.S. expansion and organic revenue growth. In addition, all other costs are targeted to scale in line with the future growth. In Slide 11, I'll detail how we reconcile our operating income to positive adjusted EBITDA in this quarter. Adjusted EBITDA amounted to €3.1 million at 14.9% margins against an operating income of €0.8 million. The gap can be explained by the following noncash and exceptional items. Depreciation, amortization and increase in intangible amortization is part of the Wild Streak acquisition in June 2021. The share-based payment awards granted to senior management in Q1 2022 composed of DSUs and RSUs and share options. Transaction and acquisition costs, costs associated with the corporation M&A strategy and the gain on re-measurement of contingent consideration, which is mainly related to the share consideration element of the Spin Games acquisition. Moving on to Slide 12, as of the end of June 2022, cash balance was €11 million compared to €16 million at December 31, 2021, with no debt facility in place. Net working capital was €1 million compared to €11.6 million at the beginning of the year, with the main difference between the period was the €9.1 million investment in the consideration paid upon the Spin acquisition. We continue to project positive free cash flow from operation. As a reminder, our business strategy requires a little CapEx related to technology debt requirements. From a cash flow perspective, in the 6 months ended in June 2022, we generated €7.5 million from operating activities, while investing €12 million in the acquisition of Spin Games and software development costs as part of the investment in our technology. With that, I will turn the call back to Yaniv. Following that, back to the operator for any questions. Back to you, Yaniv.

Thanks, Ronen. I'd like to share a bit more details about the progress we've been making in our strategic journey. While the Spin acquisition was only completed on June 1 of this year, since the deal was announced, we've been making great progress in laying the groundwork to allow for fast and streamlined integration into the Bragg business. The technical integration between Spin and Oryx platform has been completed in record time, allowing us to start leveraging on Spin's wide distribution network in the U.S. shortly after deal completion. This was coupled with an extensive licensing effort to allow us to go live in Connecticut and Ontario shortly after closing, and this should help expedite our content rollout during the second half of the year and beyond. Our recently acquired Wild Streak team headed by Doug Fallon out of Las Vegas is already producing and developing proprietary content under our Atomic Slot Lab studio, which is now 1 of 4 in-house Bragg studios targeting the global iGaming market. This growing content portfolio is powered by Oryx's remote gaming server and player account management, equipping Bragg with a full stack product offering and using state-of-the-art technology. We believe these synergistic assets will give us a competitive edge in the markets we aim to grow in across North America, Europe and Latin America. Focusing on the U.S., with access to a material part of the addressable iGaming market through existing relationships and integration, you see on Slide 15 that we aim to enhance our footprint in the American market and help our operating partners grow revenues and profitability using Bragg's proprietary, exclusive and aggregated games portfolio. Our rollout is underway, and we aim to make meaningful progress through the second half of 2022 and early 2023. In the next slide, as for our longer-term business goals, Bragg has embarked on a mission to diversify its revenue sources from both the market and product perspective. As you can see, we've made good progress, driven by organic and inorganic growth in those directions. We are equally focused now on complementary revenue growth with higher margins, our aim to further diversify our product revenue mix through more proprietary gains and turnkey customers, all while maintaining operational discipline and cost control. To summarize on Slide 18, Bragg has enjoyed a strong quarter and a record first half. We see this momentum continuing into the second half of 2022, as Ronen has outlined. We will be using this momentum to further integrate our recently acquired U.S. subsidiary into the Bragg business, becoming a truly global iGaming solution provider. Launching new products into new markets will be complemented by enhancing existing relationships, helping our customers compete and grow their businesses. I'd also like to take this opportunity and thank the Bragg's executive team and our employees across Slovenia, Malta, London, Nevada and India, for their hard work over the past few months, which resulted in these impressive achievements. So thank you all. We'll be happy to take your questions now, and thanks for listening.

[Operator Instructions] The first question is from the line of Neal Gilmer with Haywood Securities. Q - Neal Gilmer Yes, good morning. Congrats on the good quarter. Maybe just -- you talked recently in your MD&A about organic growth excluding Wild Streak and Spin Games in the quarter up 25%. You touched on Netherlands in the prepared remarks on the call here, but just wondering if there's any other markets you'd call out that helps sort of drive some of that organic growth?

Yes, all right, good afternoon and good morning. Ronen, do you want to take that?

Yes, sure. Good morning Yaniv, how are you doing? So yes, we presented 25% growth from the legacy business, I mean excluding the acquisitions. The majority of the growth, as we know, from a nominal perspective, is in Dutch market as we're doing, I would say, quite strongly from 4, 5 customers that we have there on managed services -- turnkey solutions, sorry, and iGaming platform and content aggregating. We're also seeing growth of 10% growth from the legacy business, which is in various markets, some from the European market. In particular, I would say, we have the attractive [ph] market, which is Serbia, Croatia. We can see some growth coming also from -- picking up from the U.K., although in small scale, and we're seeing some kind of Portugal, which just entered, and some other markets that we're operating in general in other European markets. So, I can't say in particular there's one particular market that is as significant as a Dutch market per se at this moment, but we're growing organically from all other markets simultaneously.

Okay, thanks for that. Maybe for my second question would be, obviously last year was -- you had a couple of acquisitions with Wild Streak and Spin Gaming. What's your outlook at this point in time on the M&A landscape? Are you seeing some interesting potential opportunities out there or are your focus for the short term is just done on growing the existing platform?

Well, you're right in the sense that we've completed two meaningful acquisitions. And I think the landscape over the last few months has changed considerably, and there are definitely a few interesting opportunities out there. Having said that, management's current focus is integrating or further integrating Bragg into a new global business across three continents and I think that strengthening the skeleton that can house additional deals in due course is our #1 priority. Again, having said that, we -- meaning, most of the people on this call are constantly evaluating opportunities. We have our ear to the ground at all given moments. And if it makes financial and operational sense, then we'll definitely engage. But at this point, as you correctly outlined, default would be in the next few quarters is to further enhance and drive organic growth through the newly acquired assets.

Okay, that's great. Thank you for taking my questions.

Thank you.

Your next question is from the line of Harman Bassi with Canaccord. Please go ahead.

Hey guys, good morning and great second quarter. I'm Matt Lee's associate. I was just following up on one of the previous questions. Are you able to give us any insights on how the North American market is unfolding and what type of markets that you feel -- what type of market share you feel that Bragg can attain?

Sure. North America -- the North American market, predominantly U.S. and Canada, has been -- we've been making great progress in basically distributing or establishing a new distribution network on top of the one that's been already established in the market and the idea would be to utilize that network. We're seeing some good initial signs, but at this point, we've only deployed limited amount of proprietary content into it. I think that the integration is definitely -- the acquisition definitely created an effective shortcut for us. So that will be our focus for the second half of the year, getting as many of the integrations live in most of the iGaming markets in North America, and then building up our content portfolio with each operator. I think, there are some big targets -- the target concentration in the U.S. is very much pushed upwards. The top three or four operators control a meaningful part of that market. So it will definitely see us trying to bolster our business with those operators. And I think it was mentioned on the call itself, the first half of the year was demonstrating some healthy growth based on both the acquisition and the existing Bragg business and I think we'll be looking to accelerate those. In terms of market share, it's a trickier point. I know that total addressable market was a topic of the conversation, but I think that we're coming off from a relatively low base in North America. So even taking a few points or single-digit percentage will be a material upscale additive to our existing results. There are various ways of measuring, especially on the B2B level, but I think that we don't need to take double-digit market share in those areas to make a meaningful impact on the business. So, we'll be starting and focusing on that level.

Perfect, thank you so much.

Your next question is from the line of David McFadgen with Cormark Securities.

Hi guys. Thanks for taking my questions. So, I was looking at some of the results of some of the other B2C operators operating in Europe and so some of them exited the Netherlands markets to get a license, they received their license. Now they've entered back into the Netherlands market and then reporting pretty strong growth and I was wondering if you're seeing any impact from that? And then, secondly, on Germany, is the regulator doing anything to clamp down on the grey market activity there and to help the white market operators? Thanks.

Sure. I'll take the first question about the Dutch market. So far, we've seen material growth from our clients in the Dutch market. I think the B2C operators, all the regional or the global operators have only ventured back in lately, April and May, concluded the blackout period so they've ventured back in. We haven't seen -- actually during the first half, we haven't seen or felt through our clientele the negative impact from the increased competition, but I think it's a bit soon. I think it's definitely not to become more competitive. I think we have the sort of the privilege of partnering with some of the market leaders. So, there will be the incumbents at this point and others would need to carve out market share and chase. But definitely, I think, the Netherlands, the Dutch market will continue to grow on the back of increased competition, but the pieces of the ply would inherently have to go smaller. Our focus is to onboard and launch additional clients and grow with the existing ones to sort of defend our position, but I think the other point is also diversifying our revenue sources just so it becomes well balanced. As far as Germany, we haven't seen any specific actions by local authorities up until now. It doesn't mean that they're not happening, but again, our exposure to the market at this point after having exited it is limited. So, I don't know any particular enforcement or any other measures. I do know that this is still very much a moving target. We're monitoring it very carefully. If it becomes relevant again, we definitely have the product set to be able to participate. But at this point, we are monitoring it from the sidelines.

Okay, all right, thank you.

Your next question is from the line of Jack Vander Aarde with Maxim Group. Please go ahead.

Okay, great. Good morning guys. Congrats on the solid results. Good to see the guidance raise. I'll start with a question on the Spin acquisition and just comments regarding Wild Streak plus Spin revenue, up 50% sequentially, it's great to hear. Just a couple of follow-ups there. Does this mean pro forma Spin revenue or just only including one quarter spend, just given the timing of that acquisition? And then I have a follow-up.

Ronen, do you want to take that?

Sure. Hi Jack, how are you doing? So we presented quarter-over-quarter, 50%. To be honest with you, it's not really presentable to present on a pro forma until last year. Spin was not acquired back then and Wild Streak was just one month of trading. So the best way to present it is to show it compared to the previous quarter. And in the quarter-by-quarter, there's a 50% increase. The part of Spin was just 1 month during the consolidation of this quarter, so it's not significantly impacted the growth. So it's all about our proprietary content with Wild Streak with the existing legacy customers and with the content that actually we're rolling out into the U.S. land-based casino, so it's online and land-based casino, which is impressive on its own from our perspective.

Got it. That's helpful color, I appreciate that. And then, just looking at the MD&A comment, it's nice to see you added 30 customers, it looks like sequentially 26 of those came from Spin, I believe. So maybe -- and that's a good sign, just given the Tier 1 operator relationship. Can you maybe provide some color on what you're hearing some Tier 1 operator customers? And just how receptive they've been to the change in ownership and a newly integrated RGS platform? Just how are things going there and what you're hearing from those customers?

They've been incredibly receptive so far. I think, the existing partners, sort of most of them, if not all of them, are very profit-centric at this point. They welcome new content. They welcome streamlined deployment process. They've been nothing but cooperative and also eager to see the new content portfolio. We've actually been undergoing some road shows and demonstrating those portfolios. And I think right now, it's mostly around 2 or 3 elements, which is time to market, certification and positioning. Naturally it's a very competitive landscape from a content perspective. But all in all, the Spin team headed by Kent Young and his team in Reno and Vegas has been extremely effective and sort of relaying the new solutions and the new story, and we've been operating ever since the deal closing in tandem with them. So all in all, it's been a very well receptive -- the operators have been very receptive. Personally, I also have pretty good relationships from my previous position. So leveraging on all of that, I think it's up to us to now complemented with some sound content delivery that will make an impact. But overall, we're very happy with the way everything going so far.

Okay, great. And then just maybe one last question, just given your debut in the newly regulated Ontario market, which just went live in April, so very timely. Just wondering, are you seeing any parallels to other markets you've recently entered and had success in, of course the Dutch market was kind of a unique opportunity, but nonetheless they have a home run opportunity as well. Just where would you rank Ontario in terms of your initial ramp up there and how you see things playing out?

Well, I think generally speaking, Ontario resembles more of a, what I call, a transitional regulation rather than a market restart. Market restart, just like the Dutch or most of the American markets by the way that have basically shut down at a given moment and then restarted the Dutch market. The regulator was very effective in sort of restarting and leveling out the playing field. The American markets, was the same. The Canadian, the Ontario regulators took a more transitional approach in sort of bringing existing dotcom operators under the tent, which means it's a more gradual process. So initial numbers suggest it's a growing market, and it's going to be a healthy one. But I think it will take us a bit longer to hit or to sort of get to the same levels as it was all dotcom revenues to come under that tent and then continue to grow. I think that's what we've seen in other markets, both for Bragg and generally speaking. And I do think it's also a much more competitive marketplace than the Dutch, meaning as far as I know, well over 100 applications in the marketplace and that is only growing, which means, of course, for someone like us, it's a much bigger playing field, but it also means it's quite fragmented initially. And we're also waiting for a set of the formal numbers to come out of the regulator desk, like we have in North America, to get a bit more intelligent around it. But I would -- from the numbers that we've seen so far, and generally, I think it will be more gradual and would demonstrate consistent growth, but it won't be as dramatic as the Dutch market, which was basically sort of a day one launch this will take a bit more time when the [indiscernible] have a lot on their plate to go through, as I mentioned. They need to work through quite a bit of applications and certifications, and that's sometimes that is a bottleneck.

Okay, great. Really great color there. I appreciate it.

Your next question is from the line of [indiscernible]. Please go ahead.

Hi gentlemen, thank you very much for taking my call. Just a great quarter, by the way, and I have been interested in the company for a while now. Just a few questions, if you don't mind. Just going through the financial statements a little closely here, well, the first one is more of an obvious one. Right now, it looks like the company is slight working capital deficiency right now. I was wondering if going forward, I know you expect to be cash flow positive. But I was wondering if you guys are considering maybe a raise for capital if you need additional capital in the near future, maybe go for some kind of like debt security, can you at least about the comment on that? That was my first question.

Yes, Ronen?

Sure. Dae [ph], good morning. You're spot on. Yes, we have a very narrow working capital. We knew that a few months ago, we knew the quarter's Spin acquisition and $10 million we have to pay the initial payment. We're going to have a very tight working capital. Rightly what you're saying as far as we're generating cash on a monthly basis. We don't have any debt. We need to beef up the balance sheet and to keep sufficient working cap to support our growth and continue with the momentum. So, we have numerous discussions with the Board members internally with management. There's several processes running at the moment. I believe in the next few weeks, we're going to conclude about the process we started and we will notify the market. But yes, it's one of our important and key points to achieve by end of September. And I think even earlier that we will come up with some kind of adjustments -- announcement, sorry.

Okay, thank you very much. The second question I have here, I noticed that the customer concentration risk definitely increased tremendously in this quarter. I see here, based on my calculation, over about 46% of Q2 revenues are from one customer. How would you feel about this customer concentration risk? And is this a concern to you or is that an opportunity? How would you view this?

So, it's definitely -- we assessed that we were fortunate enough to partner with market leaders and we think that we don't break out with specific customers due to naturally confidentiality reasons. But we are fortunate of partnering with market leaders, and that is one positive aspect of it. The other part of it, actually the other side of any customer that's fast growing takes us a growing part of your total revenue base. And the solution there is the need to further diversify our revenue streams and grow businesses in other parts of the world and markets, and that's exactly what we're doing. You're spot on. I mean, at the end of the day, company's growth was powered or driven by this early success, and we want to leverage that to sustain that growth trajectory and mitigate that risk, but that's a great reading of the current momentum drive.

Your next question is from the line of [indiscernible] with Eight Capital. Please go ahead.

Hi good morning guys, thanks for taking my questions. I wanted to ask a question on the platform strategy with the player account management, obviously seeing strong traction in the Dutch market. But any other markets outside of that where you're seeing that traction? I think last quarter, you guys had mentioned maybe in the Czech market, but how are those conversations and how are those rollouts going outside of the Dutch market with respect to the player account management and the platform strategy?

We have some interesting PAM opportunities. Definitely Czech [ph] market is just one of the opportunities. As Yaniv mentioned, we have opportunities in the Dutch market and someone that already have track record in it. Other European opportunity in that regard, we're evaluating those sort of in a case by case basis, naturally PAM deals are more comprehensive in their approach, and more intimate relationships because all the entire online proposition is powered by us. But -- and in regulated markets, as you can imagine, operators need to have certain assets and resources in order to push something through to meaningful scale. But there is definitely, I think, some of the climate around pluses, we also feel that has changed and sort of shifted towards profitability, which means that there are a lot more conversations around outsourcing technical competencies. I think operators realize that managing a full turnkey technical and product stack is material, which some things changed our pivot to their business. So they're looking to partner with someone that cannot just provide them with that, but also some ancillary services, managed services, and we have all that at hand. So we're just -- we want to make sure that we partner with like-minded operators that can achieve scale in local markets. So, the opportunity and the pipeline is definitely there, and it's definitely healthy. We just need to make sure that we bet on the right partners and they bet on us. It's been a very healthy last few months, I would say.

Okay, great. And then, just on the proprietary content, I think you guys mentioned in your press release this morning about 22 proprietary games to be released through the balance of the year. Maybe give us a sense of how the past releases have been -- have gone? Obviously you guys are seeing strong traction there. But how those -- the learnings from those games can be kind of translated to new markets? Because I think you guys have mentioned there's a level of customization that's required for every single title that's released. So maybe any learnings you've taken from your current portfolio that you can kind of apply to new markets and how that could potentially accelerate?

Yes, you're absolutely right. I think game development and content development is definitely an art form and it's very data-driven. So, our main focus is taking the initial deployment that we've had. And as I've mentioned, we've seen some initial success from the Atomic Slot Lab content deployed like Egyptian Magic and a few other key titles. And they're not just demonstrating early success, but they're also allowing us and enabling us to start building a data set that we can both share with partners, but also take back internally and see what works and what doesn't and if is more complicated than just the game itself. The math behind it, the RGS, the game server and the way it's designed, all sorts of features and functionalities and some complementing player engagement features. So I think one of the greatest assets that we have outside is very proven and creative game development team. Content development team has also our approach to data in the way that we've built it. This is definitely something sort of a flywheel we're looking to start implementing in North America on the success that we've had in Europe with it, distribution that we've had with it to enhance that distribution in North America and start collecting a data set that will enable us to develop proprietary customized or sometimes adapted content for those markets. And in some cases, it's even sort of a state-by-state tweak you can embark on. But that is definitely a major focus for us going forward. The proprietary part is not just the art or the math, it's also the data set that you're able to collect and then develop against that.

Okay, great. And then, last one from me, and I'll pass the line here, guys. Just on the Italian market, that seems like I think the U.S., we've got a good sense of where that's going. You said you're seeing some good traction in the U.K. I guess the next frontier would kind of be the Italian market. How do you see that market kind of playing out for you guys, just given its size and breadth?

The second is, if I remember correctly, it's the second biggest market. So it's definitely something that we need to tend to just -- we're also conscious of the research that we need to put in Italy, much like Central Europe. Actually Italy is also divided into two submarkets if you look at this, Southern Italy and Northern Italy that are somewhat different in terms of customer preferences. All-in-all, it's also very localized. The land-based market has sort of put a certain flavor to games, content that you see in different venues, very distributed and local incumbents are very effective there that we would look to partner with, but it requires different data sets. We've had some early success in other markets where we've taken Central European developed so focus our content, both develop internally and also aggregated or some of our exclusive content and we were able to adapt it to localize it to other markets. But it is, let's call it, more of a midterm to longer-term focus because, again, it is just like its size is, it's near size, it requires some specific attention. So I would assume that the games that we developed towards that market will have a local flavor, local payout, RTPs and so forth. And naturally, the technical integration involved in the market itself is something that we will need to focus on, but let's see that sort of mid to longer term, just to make sure that we have our resources focused on our key growth markets.

Great, thanks. And Yaniv, congrats on the role, and looking forward to working with you. Best of luck guys.

Thank you. Thank you very much. I appreciate that.

This concludes the Q&A portion of today's call. I will turn the call back to Mr. Spielberg for any closing remarks.

Yes. Thank you everyone for joining this morning, and we hope that you enjoyed the presentation. And I'd like to, like as [indiscernible] said, we welcome Yaniv Sherman to the team, so congratulations on that. We'll speak again in three months on our Q3 presentation. Thanks, everyone.

Thank you for joining the Bragg Gaming Group's second quarter 2022 conference call. You may now disconnect.