We came across a bullish thesis on Bragg Gaming Group Inc. (BRAG) on Substack by Inflexio Research. In this article, we will summarize the bulls’ thesis on BRAG. Bragg Gaming Group Inc. (BRAG)’s share was trading at $4.44 as of March 25th. BRAG’s forward P/E was 212.77 according to Yahoo Finance.
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Bragg Gaming reported its Q4 2024 results on March 20th, reaffirming its strong positioning with high revenue visibility and insulation from macroeconomic uncertainty. While the company had pre-announced its results in January, it still managed to exceed its pre-announced EBITDA by 2.6%, setting up a solid foundation for an achievable 2025 guidance. A key highlight from the filings was the reduced reliance on Betcity, Bragg’s largest customer, which declined from 22% of total revenue in Q3 to 18% in Q4. This diversification should result in a higher valuation multiple, as overdependence on a single customer has historically been a concern. Despite a 15% quarter-over-quarter decline and a 29% year-over-year drop in revenue from Betcity, Bragg’s Netherlands revenue grew an astonishing 33% QoQ and 97% YoY, demonstrating the strength of its broader market presence. Excluding Betcity, revenue growth remained strong at 9% QoQ and 35% YoY, reinforcing Bragg’s ability to scale independently.
The company’s PAM and exclusive content segments continue to expand at an impressive rate, with 14% and 16% QoQ growth, respectively. The resilience of the PAM business was particularly notable, as it continued growing despite Betcity’s revenue decline. Encouragingly, pipeline momentum has carried over into Q1 2025, with Bragg’s latest game launch significantly outperforming expectations and multiple PAM opportunities emerging in Europe and the Americas. The company’s 2025 guidance does not factor in any additional deals, yet Bragg has several opportunities akin to its partnership with Caesars in the pipeline, which could serve as incremental catalysts.
The only notable downside in this quarter was a 39% QoQ rise in capex. However, this was anticipated, as Bragg is aggressively expanding its game development pipeline from around 50 annual releases to nearly 100 in North America. This increased investment is accompanied by one-time certification expenses, along with licensing fees related to expansion into new markets such as Brazil, Delaware, and Virginia. Management has reiterated that capex should stabilize in 2025, setting the stage for accelerated free cash flow generation.
Bragg now trades at 4.9x its projected 2025 EBITDA, 4.1x 2026’s, and 3.5x 2027’s, making it a compelling investment in a secularly growing industry. Additional industry tailwinds, including Arkansas’ newly introduced iGaming bill and Finland’s ongoing gambling reform, provide further growth opportunities, particularly for Bragg’s PAM segment. Looking ahead, investors should closely monitor the upcoming refinancing of Bragg’s debt and the renegotiation of its Betcity contract, both of which could act as additional catalysts for a rerating of the stock.
Bragg Gaming Group Inc. (BRAG) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 3 hedge fund portfolios held BRAG at the end of the fourth quarter which was 4 in the previous quarter. While we acknowledge the risk and potential of BRAG as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than BRAG but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.