The Prague Gaming Group has established a special panel to assess strategic choices for its operations, as the provider reports that net losses for 2023 rose to €5 million (£4.3 million/$5.4 million) despite a rise in income.
The panel, led by independent board member Don Robertson, will examine all strategic choices, including a potential sale, merger, funding, and further acquisitions, or other strategic alternatives. Prague is considering a possible sale and has formed a strategic panel.
Prague stated there is no schedule for finishing the strategic review and no decisions have been made. It added that there is no assurance that any transaction will be finalized.
The group stated it would provide further updates in due time, while its management team remains dedicated to carrying out its strategy and business plan.
Income increased in 2023
The announcement comes as Prague released its 12-month results for the year concluding December 31, 2023. Revenue for the period reached €93.5 million, a 10.4% increase from the previous year, which Prague attributed to the effect of new partnerships and market launches.
Prague has secured content agreements with several major operators, such as Betsson, 888/William Hill, and PokerStars.
The organization also entered fresh markets through partnerships, including a joint venture with Caliente to enter the Mexican market and with Microgame to enter the Italian market.
Furthermore, Bragg stated that the company continues to expand its reach in existing markets with numerous new games. The group highlighted the United States, the United Kingdom, Spain, and Switzerland as key expansion areas for 2023.
Commenting on this, Chief Executive Officer Matthew Mazur, who joined last August, commended the impact of Bragg’s ongoing strategic endeavors. He noted that this focuses on becoming a content-driven iGaming B2B provider and “carefully” managing expenditures.
“By expanding our higher-margin proprietary and exclusive third-party game portfolio at a faster rate to a broader range of new partners, we are well-positioned for long-term growth, including revenue, gross profit, and adjusted EBITDA growth, as well as enhanced operating margins,” Mazur said.
The Netherlands is critical for Bragg, despite new obstacles
From the annual data, it is clear that the Netherlands is a significant market for Bragg. Revenue in 2023 was €33.6 million, down 8.9% from €36.9 million in the previous year.
Bragg said it maintains a “leading” position in the country with five clients using its Player Account Management (PAM) system. However, the revenue decline has raised some concerns.
Bragg stated that since July 2023, there have been challenges due to increased competition and the introduction of new regulations.
Bragg has inked a fresh agreement with BetCity, which is under the ownership of Entain, however, certain provisions of the accord require renegotiation. This transpired in the final quarter.
Bragg also disclosed that its operations in the Czech Republic are experiencing continued growth, and they are actively exploring fresh avenues to broaden their reach into other international territories leveraging their PAM platform, content aggregation capabilities, player engagement tools, and managed services. The Czech Republic is encompassed within the “Other” segment, which witnessed a 27.3% surge in revenue, reaching €8.4 million.
In other European regions, Malta observed a 22.6% increase in revenue, reaching €17.9 million, Croatia experienced a 43.3% rise to €4.3 million, Belgium saw a substantial 340.6% increase to €3.7 million, and Serbia recorded a 12.5% growth to €1.8 million.
What about regions beyond Europe?
On a global scale, Bragg also reported some growth. Curaçao stands as Bragg’s second-largest core market following the Netherlands, and revenue there climbed by 11.6% to €19.2 million in 2023.
In the United States, revenue also saw an increase of 17.5%, rising from €4 million to €4.7 million. Bragg once again attributed this growth to partnerships with new operators, which expanded their overall reach.
“The worldwide dissemination of our proprietary and exclusive third-party content is rapidly expanding, particularly with a growing number of top-tier operators,” Mazij stated. “We anticipate these games to be further rolled out globally in 2024.”
During the previous twelve months, our company successfully introduced twenty-nine new digital games worldwide, encompassing twenty-six new European online gambling games and fifteen new North American online gambling games. We anticipate maintaining or surpassing this game launch rate in the current year.
However, we experienced a net deficit of five million dollars due to escalating expenses.
Despite this, expenditures rose in nearly all categories. The cost of revenue was the primary expense, reaching forty-three point six million euros, a nine point eight percent year-on-year increase.
Other significant expenses include fifty point eight million euros in sales, general, and administrative expenses, an eight point six percent rise. This resulted in an operating deficit of seven hundred seventy-seven thousand euros, an improvement from the eight hundred twenty-eight thousand euro loss in the preceding year.
However, interest and other financial expenses totaled two point one million euros, leading to a pre-tax loss of two point nine million euros, compared to one point nine million euros in two thousand twenty-two.
Bragg paid nine hundred ten thousand euros in income tax and recorded a negative cumulative foreign exchange adjustment of one point two million euros. Consequently, the net loss for the year reached five million euros, exceeding the one point nine million euro loss last year, with higher costs offsetting revenue growth.
However, there was some positive news on the adjusted EBITDA front, which increased by twenty-five point six percent to fifteen point two million euros.
Bragg’s full-year outcomes were affected by a decrease in revenue in the final quarter. Fourth-quarter revenue declined by one point three percent to twenty-three point four million euros.
The organization has not yet unveiled complete results for the quarter.
In spite of this, the firm did report a functional deficit of €431,000, in contrast to a gain of €162,000 in 2022. Modified EBITDA also declined by 23.7% to €2.8 million.
Prague did highlight that both income and modified EBITDA were greater than in the third quarter, while its operating loss was smaller.
Prague’s Perspective
Looking ahead to 2024, Prague anticipates income and modified EBITDA to increase. Income is projected to be between €102 million and €109 million, which translates to an expansion of 9.1% to 16.6%, with the middle point being a growth of 12.8%.
In terms of modified EBITDA, Prague stated it could be between €15.2 million and €18.5 million. This would translate to an expansion of up to 21.7%, while the middle point of the range would suggest a growth of 10.9%.
“Our strategic plans have positioned Prague as a primary content source for leading global iGaming operators, establishing the groundwork for our sustained profitable growth,” stated Macigi.
“We are confident that we are well-situated with the appropriate strategy, financial strength, and infrastructure to maintain our business momentum while implementing initiatives that drive cash flow growth and create extra value for stakeholders.”
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