BRAG — Q2 2026 Financial Report Analysis

Revenue fell 12%, but job cuts and a bad-debt release kept Adjusted EBITDA flat, and guidance has been withdrawn

Bragg Gaming Group sells to online casino operators, not to gamblers. It is a "B2B" supplier: it builds casino games in its own studios, resells games from other studios through one connection (its "hub", known in the industry as aggregation), and rents out the software operators use to run player accounts (its player account management platform, or PAM). It reports in euros under IFRS, the international accounting rules, and files on EDGAR as a Canadian foreign private issuer, so its quarterly results arrive as a 6-K.

In the second quarter of 2026 (April to June), revenue fell 12% to EUR 22.9m from EUR 26.1m. Management put the decline mainly down to the expected loss of older platform contracts in the Netherlands after customers moved to other platforms, plus weaker revenue in other markets for "regulatory and customer-specific" reasons. Costs fell almost as fast as revenue, so the operating loss narrowed to EUR 1.9m from EUR 2.3m. The net loss still widened, to EUR 2.9m from EUR 1.8m, because of a tax charge. After the quarter ended, Bragg bought Drayton International for shares, cut about 19% of its workforce, and withdrew its 2026 guidance.

At a glance

• Revenue EUR 22.9m, down 12%: the lowest quarterly figure in the eight quarters the company lists, and down from EUR 25.7m in Q1 2026.
• Adjusted EBITDA EUR 3.5m, flat (margin 15.4% vs 13.3%): the margin rose only because costs fell. About EUR 1.7m of help came from a swing in bad-debt charges, which will not repeat every quarter.
• Cash EUR 3.3m, down from EUR 6.7m at the end of 2025: the business is spending about as much developing new games as it brings in from operations, so it has little cash cushion.

The numbers

Adjusted EBITDA is the company's own profit measure: earnings before interest, tax, depreciation and amortization, and before share-based pay and items the company calls exceptional. It is not an IFRS measure. Operating margin is the share of revenue left after running the business, before interest and tax. Here it is negative, meaning the business lost money at that level.

For the first half, revenue fell 6% to EUR 48.5m, the operating loss narrowed to EUR 3.4m from EUR 4.0m, the net loss narrowed to EUR 4.1m from EUR 4.5m, and Adjusted EBITDA was flat at EUR 7.5m.

Where revenue went

Bragg reports one business segment, but it gives three pointers on where revenue moved:

• Netherlands: the earnings release says Dutch revenue fell 14%, "reflecting the anticipated roll-off of legacy platform contracts following customer migrations." The financial statements also break revenue down by where the contracting customer is based (not where players are). On that basis, revenue from Netherlands-contracted customers fell to EUR 3.9m from EUR 6.4m, and revenue from Marshall Islands-contracted customers roughly halved to EUR 0.8m.
• Games and content, the core of the business, fell 18% to EUR 18.4m. The MD&A puts this down to "changes in market dynamics and a continued shift by operators toward direct supplier integrations in certain markets." In plain terms, some casinos now connect directly to the studios whose games Bragg used to resell, which takes Bragg's middleman cut. Brazil revenue was flat for the same reason.
• North America: revenue from Bragg's own proprietary games in Canada and the US rose 44% from a year earlier and 25% from Q1. That is the growth story management points to, but it is not yet large enough to offset the declines. By contracting jurisdiction, revenue from US-contracted customers fell to EUR 2.0m from EUR 3.0m, so the proprietary-content gain sits inside a shrinking overall US figure.

Where the costs came out

Selling, general and administrative expenses fell 14% to EUR 13.8m. The filing lists the main moves:

• Bad debt was a credit of EUR 1.0m against a EUR 0.7m charge a year ago. The company released old provisions for unpaid customer bills that it no longer needs and collected more cash from customers.
• Share-based pay fell to EUR 0.1m from EUR 0.7m because the value of executives' share appreciation rights was marked down with the lower share price.
• Salaries and subcontractors were flat at EUR 5.7m as reported. Underlying they fell 9%, but EUR 0.4m of severance from the January restructuring is in the reported figure. Headcount was 456 at June 30, against 540 a year earlier.
• Professional fees rose EUR 0.5m to EUR 1.7m, mainly from one-off deal costs for Drayton.

Takeaway: Bragg's margin improved because it cut costs, not because the business grew. Revenue is shrinking in the aggregated-content and legacy-platform work that still makes up most of the company. A EUR 1.7m year-on-year swing in bad-debt charges, driven by releasing old provisions, equals about half of this quarter's Adjusted EBITDA. The thing to watch is whether the EUR 10.5m of announced annual savings can outrun the revenue decline once that one-off is gone.

What the headline numbers hide

• The flat Adjusted EBITDA depends on a one-off. The EUR 1.7m swing in bad-debt charges counts in Adjusted EBITDA, because the company does not strip it out. Without it, Adjusted EBITDA would have been about EUR 1.8m, roughly half the reported figure, for a margin near 8%. That is our arithmetic from the filing's own figures, not a number the company gives. Provision releases can happen again, but they are a result of past provisioning, not of how the business is running now.
• Adjusted EBITDA leaves out the cost of building games. Bragg capitalizes its software and game development: it records the spending as an asset instead of an expense and writes it off over several years. Capitalized development was EUR 3.5m in the quarter and EUR 6.9m in the half, about as much as the EUR 3.5m of Adjusted EBITDA in Q2. Most of the EUR 4.9m of depreciation and amortization that Adjusted EBITDA adds back is the write-off of that spending.
• Cash conversion is mixed. Operating cash flow was EUR 4.1m in Q2, against a net loss of EUR 2.9m. EUR 1.3m of that came from working capital, mostly customers paying their bills faster. Over the half, operating cash flow was EUR 5.7m, while investing used EUR 7.0m and financing used EUR 1.7m. Cash fell EUR 3.4m to EUR 3.3m. Net working capital (current assets minus current liabilities other than loans) slipped to EUR -0.4m from EUR +2.5m in December, and EUR 2.8m was drawn on the revolving credit facility. That facility was renewed for one year in July.
• Receivables are getting healthier. Trade receivables fell to EUR 16.7m from EUR 20.4m at year-end, faster than revenue fell. Balances more than three months overdue dropped to EUR 0.4m from EUR 1.4m. This is the same development that made the bad-debt release possible.
• The net loss widened because of tax, not operations. The pre-tax loss was essentially unchanged at EUR 2.4m in both years. A EUR 0.5m tax charge this year, against a EUR 0.5m tax recovery a year ago, accounts for the whole EUR 1.0m increase in the net loss. Higher net interest and financing charges (EUR 0.4m vs EUR 14k) used up the EUR 0.4m operating improvement.
• The exclusions are getting bigger. Exceptional costs left out of Adjusted EBITDA were EUR 0.9m in Q2 (EUR 2.0m in the half), up from EUR 0.3m (EUR 0.7m). They are mainly Drayton deal costs and severance. With a second restructuring announced in July, there will be more in the second half.
• The share count is up about 21%. Shares outstanding went from 25.6m at June 30 to 31.1m by August 13. The increase comes from the 4.5m shares issued for Drayton and the 0.75m private-placement shares, and 0.75m new warrants are exercisable at USD 2.16. Any future profit will be split across more shares.

Guidance withdrawn

Bragg had guided to 2026 revenue of EUR 97.0m to EUR 104.5m and Adjusted EBITDA of EUR 16.0m to EUR 19.0m, a 16% to 18% margin. It reaffirmed that range with Q1 results in May. With this report it withdrew the guidance, saying it has "no reasonable basis" to forecast the combined company after Drayton. It also disclosed that on a standalone basis it had been tracking below the low end of the revenue range and at the low end of the Adjusted EBITDA range, but at the upper end of the margin range. First-half revenue of EUR 48.5m would need a stronger second half just to reach EUR 97m. First-half Adjusted EBITDA of EUR 7.5m would need EUR 8.5m in the second half to reach EUR 16m.

Outlook

Several things change from Q3 onward:

• Drayton closed on July 22 for about EUR 7.7m (USD 9.0m), paid entirely in new shares. It brings stakes in five game studios and technology for US sports betting and horse racing. Because it closed so recently, the accounting for the deal is not yet complete, and the filing gives no revenue or profit figures for Drayton. Q3 will be the first quarter that includes it.
• A second round of job cuts (about 19% of the global workforce, announced July 9) is expected to save about EUR 6.0m a year once fully in place. Together with January's cuts, total expected savings are about EUR 10.5m a year. For scale, that equals about 63% of full-year 2025 Adjusted EBITDA of EUR 16.5m (the sum of the four 2025 quarters in the filing). Severance will land in exceptional costs first.
• New markets: Bragg went live in Alberta's newly regulated online casino market on July 13 with more than 80 titles. In Europe it signed Belgian operator 711 and entered Greece with Superbet.

Our view: the cost cuts are real and large next to the company's size, and proprietary content in North America is growing quickly. But the revenue base is shrinking in the businesses that make up most of the company. The Adjusted EBITDA margin was helped by a provision release that may not repeat, and cash of EUR 3.3m leaves little room for mistakes during an integration. The Q3 report is the first test of the new Bragg. Watch whether revenue excluding Drayton stops falling and whether Adjusted EBITDA holds up without a bad-debt credit. Also watch whether the new chairman's stated yardstick, "cash generation in the short term", shows up as a cash balance that rises instead of falls.