Bragg Gaming Group — Rebranded with Oryx at the core

Bragg Gaming Group (CN: BRAG)

Last close As at 25/04/2024

18.30

0.00 (0.00%)

Market capitalisation

363m

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Research: Consumer

Bragg Gaming Group — Rebranded with Oryx at the core

Bragg Gaming Group (Bragg) has reported its first half year, having acquired Oryx Gaming (a European online B2B platform) in December 2018. H119 continuing revenues grew 48% to C$18.0m, achieving EBITDA break-even. Bragg’s strategy is to expand its B2B presence, both organically and through complementary acquisitions. Key milestones will be the development of EBITDA, as well as the successful payment of the remaining c C$30m of deferred and contingent consideration for Oryx Gaming. In order to focus on the e-gaming opportunity, Bragg has announced a strategic review of its online media division (GiveMeSport) and UK sportsbook (GiveMeBet).

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Consumer

Bragg Gaming Group

Rebranded with Oryx at the core

Technology

QuickView

28 August 2019

Price

C$0.22

Market cap

C$17m

Share price graph

Share details

Code

BRAG

Listing

TSX-V

Shares in issue

77.9m

Business description

Bragg Gaming Group (formerly Breaking Data Corp) is a Toronto-based B2B online gaming holding company. The core asset is Oryx Gaming, a predominately European B2B online gaming platform. Bragg’s online sports media outlet (GiveMeSport) and UK sportsbook (GiveMeBet) are under strategic review, including possible sale.

Bull

Leading online B2B gaming company with very high growth prospects, trading at c 7.5x EV/EBITDA for FY20e.

Highly experienced management team.

Potential cash inflow from GiveMeSport and GiveMeBet, which are available for sale.

Bear

Bragg has a limited trading history and is still loss-making, having acquired Oryx in December 2018.

Bragg will need to raise further capital to satisfy the c C$30m of deferred and contingent consideration associated with Oryx.

Gaming regulation in key markets is uncertain, specifically including e-gaming in Germany.

Analysts

Victoria Pease

+44 (0)20 3077 5740

Richard Williamson

+44 (0)20 3077 5700

Bragg Gaming Group is a research client of Edison Investment Research Limited

Bragg Gaming Group (Bragg) has reported its first half year, having acquired Oryx Gaming (a European online B2B platform) in December 2018. H119 continuing revenues grew 48% to C$18.0m, achieving EBITDA break-even. Bragg’s strategy is to expand its B2B presence, both organically and through complementary acquisitions. Key milestones will be the development of EBITDA, as well as the successful payment of the remaining c C$30m of deferred and contingent consideration for Oryx Gaming. In order to focus on the e-gaming opportunity, Bragg has announced a strategic review of its online media division (GiveMeSport) and UK sportsbook (GiveMeBet).

Bragg Gaming – rebranded in December 2018

Bragg Gaming is an online gaming technology holding company, formerly known as Breaking Data Corp. The business was fully rebranded with new management in December 2018, after the acquisition of Oryx Gaming, a predominately European online B2B gaming solution provider. The total cost of the Oryx deal was c C$51m, comprising C$15.1m equity, C$6.4m cash and c C$30m in deferred and contingent consideration. At the H119 results, Bragg announced a strategic review and possible sale of its online sports media outlet (GiveMeSport) and UK sportsbook (GiveMeBet).

Oryx delivers 48% revenue growth

Bragg’s continuing operations are now fully derived from Oryx and the company reported Q219 continuing revenues of C$8.8m, an EBITDA loss of C$0.3m and a net loss of C$6.4m. For the first half, this amounted to 48% revenue growth to C$18.0m vs the prior year, positive EBITDA of C$0.4m and a net loss of C$9.4m. Operating cash outflow for H119 was C$4.2m and net cash was C$1.4m (excluding earnout obligations). Bragg launched 22 new operators in H119, providing a strong pipeline into the second half, and management has stated that trading in Q319 is ahead of internal expectations.

Limited operating history; EBITDA break-even

Bragg Gaming has a limited reporting history and has yet to generate net profit or positive net cash. A key catalyst will be continued high growth from the core Oryx business, combined with expanding EBITDA margins. The implied EBITDA from the deferred consideration suggests a c 7.5x EV/EBITDA for FY20, in line with peers but with much higher growth rates. We note that the company will likely need to raise further capital to satisfy the c C$30m of deferred and contingent consideration from the Oryx deal (due in H120 and H121).

Summary financials (continuing operations)

Year
end Dec

Revenue
(C$m)

EBITDA
(C$m)

EPS
(C$)

DPS
(C$)

P/E
(x)

Yield
(%)

Q119

9.2

0.7

(0.03)

0.0

N/A

N/A

Q219

8.8

(0.3)

(0.08)

0.0

N/A

N/A

Source: Bragg Gaming Group

General disclaimer and copyright

This report has been prepared and issued by Bragg Gaming Group and prepared and issued by Edison, in consideration of a fee payable by Bragg Gaming Group. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

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New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

The Investment Research is a publication distributed in the United States by Edison Investment Research, Inc. Edison Investment Research, Inc. is registered as an investment adviser with the Securities and Exchange Commission. Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

General disclaimer and copyright

This report has been prepared and issued by Bragg Gaming Group and prepared and issued by Edison, in consideration of a fee payable by Bragg Gaming Group. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2019 Edison Investment Research Limited (Edison). All rights reserved FTSE International Limited (“FTSE”) © FTSE 2019. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

The Investment Research is a publication distributed in the United States by Edison Investment Research, Inc. Edison Investment Research, Inc. is registered as an investment adviser with the Securities and Exchange Commission. Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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