Bragg Gaming Group (BRAG) Q3 2026 earnings review
Bragg's gross profit share rises, but its revenue drops 23%
Bragg Gaming Group, a supplier of online casino games and software, is losing revenue faster than it can cut costs. Sales excluding departed customer BetCity and newly acquired Drayton fell 12% from a year ago, dragging profit excluding one-offs down 32% to EUR 3 million. Interim chief executive Morten Tonnesen, who replaced Matevž Mazij in November, said staff cuts have not caught up with lost revenue.
| Sales excluding BetCity and Drayton | EUR 20.0M -12% from a year ago, +4% from Q2 |
|---|---|
| Total revenue | EUR 20.6M -23% from a year ago |
| EBITDA, excluding one-offs | EUR 3.0M -32% from a year ago |
| Full-year outlook | None withdrawn in August and not restored |
⚖️ Verdict: 🔴 Bearish
The story got worse because the company's main growth engine slowed just as a key market shut down. North American sales from Bragg's own games grew 7% from a year ago, down from 44% last quarter, and Brazil suspended licensed online betting in October while cash dropped to EUR 2.5 million. One bright spot: selling fewer third-party games lifted the gross margin to 56%, and like-for-like sales rose 4% from the second quarter.
The question now is whether cost cuts and new games from Drayton can stop the cash drain now that Brazilian sales are gone. Either the July layoffs and in-house games lift cash flow in the fourth quarter, or falling revenue eats up the savings and forces another share sale. Fourth-quarter cash balances and overhead expenses will settle it.
🐂 Bull Case
Sales from the Remaining Business Rose Since Spring
Bragg Gaming Group supplies casino games and operating software to online betting websites. It lost its largest software customer in the Netherlands earlier this year when BetCity moved to its own system, and it bought game studio group Drayton International in July. To show how the rest of the business performed, the company now reports revenue without BetCity or Drayton.
On that like-for-like basis, revenue still fell 11.9% from a year ago to EUR 20.0 million, because game suppliers in Brazil bypassed Bragg to work directly with betting sites. However, those underlying sales rose 3.7% from the second quarter's EUR 19.3 million. Meanwhile, Drayton added EUR 0.7 million of revenue and EUR 0.3 million of pre-tax profit in its first ten weeks.
What to watch: like-for-like revenue in the fourth quarter after the October shutdown of licensed betting in Brazil. A second consecutive quarterly rise would show that growth in Europe and North America can offset the lost Brazilian sales.
Selling Fewer Third-Party Games Lifted the Gross Margin
The Toronto-based supplier earns a much higher profit margin when players bet on games built by its own studios than when it resells games from outside developers. Interim chief executive Morten Tonnesen said a shift toward its own games and lower resold volumes lifted the gross margin to 56.2%.
That margin rose 1.6 percentage points from a year ago and 4.5 percentage points from the second quarter. Cost of revenue—primarily the royalties Bragg pays to outside game creators—dropped from 45.3% of sales a year ago to 43.8% this quarter. In October, after the company stopped supplying low-margin resold games in Brazil, the gross margin improved again.
What to watch: the share of total revenue coming from Bragg's own games in the full quarterly filing. The press release omitted that figure for a third straight quarter, and the filing will show whether in-house games are growing in euro terms or merely taking a larger slice of a shrinking pie.
🐻 Bear Case
Falling Sales Outran Two Rounds of Job Cuts
"Our cost reductions have not yet caught up with the revenue we have lost, and closing that gap is the immediate priority," interim chief executive Morten Tonnesen said. Bragg cut its global workforce by about 27% across January and July, aiming to save EUR 10.5 million a year and turn the business profitable.
Underlying salaries and subcontractor costs dropped 30% from a year ago, saving about EUR 1.6 million in the quarter. Yet gross profit fell by EUR 3.1 million over the same period, nearly twice the cost savings. Selling, general and administrative expenses—the overhead cost of running the business—jumped by 13.7 percentage points of revenue to 72.8%.
- Operating loss: widened to EUR 3.2 million from EUR 1.2 million a year ago
- EBITDA excluding one-offs: fell 32.5% to EUR 3.0 million, with the margin down 2.0 percentage points to 14.5%
- Exceptional restructuring and deal costs: EUR 2.4 million in the quarter, including EUR 1.1 million for staff terminations
- Last quarter's comparison: Q2 EBITDA had only stayed flat because of a EUR 1.0 million bad-debt recovery
What to watch: selling, general and administrative expenses in the fourth quarter, when the July layoffs are meant to deliver their full savings. If overhead does not fall faster than gross profit, operating losses will continue into next year.
North American Game Growth Slowed to 7%
Expanding its own casino games in the United States and Canada is the centerpiece of Bragg's growth strategy. "Where we are investing, the direction is the right one," Tonnesen said, pointing to a 21% rise in North American proprietary content revenue over the first nine months of the year.
In the third quarter alone, however, North American proprietary content revenue grew just 7% from a year ago. That is a sharp slowdown from the 44% growth the company reported in the second quarter, even though Bragg launched more than 80 games in the newly regulated Alberta market in July. A 7% gain on a small regional base cannot replace double-digit declines in Europe.
What to watch: United States and Canadian revenue in the quarterly filing's geographic table. It will show whether total North American sales kept shrinking—as they did in the first half—despite the 7% rise in in-house games.
Brazil Suspended Online Betting as Cash Dropped Further
On September 25, the President of Brazil signed a provisional measure suspending licensed online betting and casino gaming. Bragg stopped supplying its licensed Brazilian customers on October 6. The company said the products it sells there are "predominantly lower margin aggregated content" and added that "The cash impact on the Company is limited."
Even a small hit to cash matters because the balance sheet has very little cushion. Cash and cash equivalents fell 25.1% during the quarter, from EUR 3.3 million in June to EUR 2.5 million in September, as the group paid EUR 1.1 million in severance costs. Meanwhile, current liabilities of EUR 27.6 million exceed current assets of EUR 24.1 million.
What to watch: operating cash flow and software development spending in the third-quarter cash flow statement once the full report is filed. If cash after development spending stayed negative, Bragg may need to draw further on its credit line or issue more shares.
A New Chief Executive Stepped In Without an Outlook
Leadership and financial visibility remain unsettled after a year of board turnover and withdrawn targets. On November 6, chief operating officer Morten Tonnesen took over as interim chief executive from Matevž Mazij, who became a strategic advisor. Management said it is "refining the Company's direction" and again gave no numerical revenue or profit outlook for the year.
- Full-year outlook: withdrawn in August when standalone sales tracked below the old EUR 97.0–104.5 million target, and still absent
- Total headcount: not in the release; the quarterly filing will show whether the July layoffs and Drayton acquisition reduced total staff below June's 456
- Bad-debt provisions: not in the release; the filing will show whether credit recoveries helped profit again as they did in Q2
What to watch: whether the board names a permanent chief executive and restores a full-year financial outlook when fourth-quarter results arrive. Until management sets verifiable targets, investors have no yardstick to test the turnaround.
💲 Other KPIs
Weighted average diluted shares rose 17.3% from a year ago and 16.4% from the second quarter. After holding steady near 25.4 million for four quarters, the share count jumped when Bragg issued 4.5 million shares to buy Drayton International and sold 0.75 million units in a July private placement.
Money owed by customers fell 16.3% from EUR 21.1 million at the end of 2025 and 30.7% from EUR 25.5 million a year ago. The drop tracks the 23.0% decline in quarterly revenue after Dutch platform customer BetCity left, freeing up working capital and helping cushion the cash balance.
By our math, total debt plus lease obligations minus cash rose from EUR 3.0 million in June to EUR 3.9 million in September. Loans payable edged up to EUR 3.3 million alongside EUR 3.1 million of lease liabilities, while cash fell by EUR 0.8 million to EUR 2.5 million.
❓ Key Questions
How much monthly revenue did the Brazil suspension remove?
Brazil generated EUR 2.5 million of revenue in the second quarter and EUR 4.3 million in last year's third quarter. Even at low margins, investors need the exact euro revenue and gross profit lost per month after the October 6 shutdown.
Why did North American proprietary content growth slow to 7%?
North American in-house game sales grew 44% in the second quarter and Bragg entered Alberta with over 80 titles in July. Management did not explain why year-over-year growth dropped to 7% in the third quarter.
What was free cash flow after software development costs?
The press release omitted the cash flow statement. With cash down to EUR 2.5 million and EUR 1.1 million spent on severance, investors need to see operating cash flow minus capitalized software development costs.
Why did Matevž Mazij step down as chief executive?
Mazij moved to a strategic advisor role on November 6, Less than four months after the Drayton acquisition closed and audit chair Donald Robertson resigned. The company gave no reason for the change or timeline for a permanent appointment.