Bragg Gaming Group (NASDAQ:BRAG) reported a 23% drop in third-quarter revenue as legacy contracts in the Netherlands rolled off and sales weakened in other markets, while its newly appointed interim chief executive outlined a plan to focus on cash flow, proprietary content and a simpler business.
Revenue fell to EUR 20.6 million from a year earlier, and adjusted EBITDA declined to EUR 3 million from EUR 4.4 million. Gross margin improved to 56% from 55%, reflecting a shift away from lower-margin third-party content, executives said.
Interim CEO Morten Tonnesen, who previously served as chief operating officer, said most of the revenue decline resulted from the anticipated roll-off of legacy Dutch platform contracts. The remainder reflected regulatory and customer-specific factors in other markets.
Chair Matt Davey said the board made a leadership change the previous week and had full confidence in Tonnesen. Davey said the board’s priorities include disciplined execution, operating cash flow and a more focused business.
Margin improves as revenue falls
Gross profit declined 21% to EUR 11.6 million from EUR 14.7 million a year earlier. CFO Robbie Bressler said the EUR 3.1 million decline outweighed approximately EUR 1.6 million in operating cost savings.
Lower-margin third-party content accounted for 39% of revenue, down from 52% a year earlier. Proprietary content rose to 19% from 16%, while exclusive content increased to 23% from 14%. Bressler said third-party content carries most of the company’s content costs.
Excluding BetCity, which completed its migration off Bragg’s platform in May, and the contribution from recently acquired Drayton, normalized revenue was EUR 20 million, down 12% year over year, Bressler said.
Restructuring programs announced in January and July have reduced the company’s global workforce by approximately 27% since the start of the year. Bressler said more of the savings from the July program should appear in the fourth quarter and into 2027.
Brazil suspension and Drayton acquisition
Tonnesen said Bragg stopped supplying customers in Brazil in early October after a provisional measure suspended licensed online and casino gaming. Brazil generated EUR 2 million in third-quarter revenue, down 37% year over year even before the suspension, as third-party providers moved to direct integration with operators.
Because Brazilian revenue was predominantly lower-margin aggregated content, its contribution to gross profit and cash flow was materially smaller than its contribution to revenue, Tonnesen said. He added that Bragg’s gross profit margin improved in the first month after it stopped supplying the market, partly offsetting the lost revenue.
Bragg completed its all-share acquisition of Drayton on July 22. Tonnesen said the acquired studios contributed EUR 0.7 million in revenue and EUR 0.3 million in profit before tax during the 71 days Bragg owned them in the quarter. The business also brought EUR 1.5 million in cash, he said.
Revenue from proprietary titles deployed in Canada and the United States grew 7% year over year in the third quarter and 21% over the first nine months, Bressler said. Executives pointed to Drayton’s studios and Bragg’s North American distribution network as opportunities to expand content sales in 2027 and beyond.
Cash flow and funding in focus
Bragg had EUR 2.5 million in cash at September 30. Bressler said its $6 million revolving credit facility with Bank of Montreal remained in place, with CAD 5.2 million drawn.
“Capitalized development spend has been running ahead of our operational cash generation, and that is the gap we have to close,” Bressler said. He called it a central priority for the coming quarters.
Davey said the board and key shareholders were prepared to provide sufficient flexibility for the company to execute its plan, alongside operational and financial options under consideration. Asked about potential capital sources, Bressler did not specify a maximum shareholder commitment. He said Bragg would assess the most advantageous options, including potential additional liquidity under its bank facility and financing similar to a recent private placement.
On guidance, Bressler said the company would provide updates and its thinking in the new year. He said management wanted to set realistic expectations and needed more time to develop its 2027 execution plan following Tonnesen’s appointment.
Tonnesen also said Bragg was using artificial intelligence across several teams to increase output or reduce resources, and was examining how it could accelerate game development and quality assurance.
About Bragg Gaming Group (NASDAQ:BRAG)
Bragg Gaming Group Inc. is a business-to-business technology and content provider for the regulated online gaming industry. The company supplies iGaming operators with software, casino games, player-account management technology, sportsbook solutions and related services designed to support online casino and sports betting operations. Bragg’s offerings include its proprietary online gaming platform, which can provide player management, payments, compliance tools, customer engagement features and operator back-office functionality.
