Good morning. My name is Audra, and I will be your conference operator today. At this time, I would like to Welcome Everyone to the Bragg Gaming Group Q3 2022 Earnings Conference Call. Today's conference is being recorded. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press the star key followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. At this time, I would like to turn the conference over to Yaniv Spielberg, Chief Strategy Officer. Please go ahead.
Thank you, operator. Good morning, everyone, and thank you for joining our Q3 2022 earnings conference call. I'm Yaniv Spielberg, Chief Strategy Officer for Bragg Gaming Group. I'll be hosting today's call alongside my colleague, Chief Executive Officer, Yaniv Sherman, who will comment on our Q3 performance, and Ronen Kannor, our CFO, who will review and discuss our Q3 results. If you've not already done so, you can follow our Q3 earnings call presentation from our website at investors.bragg.games in the section called Events and Presentations under Media. On this call, we'll review Bragg's financial and operating results for the Q3 of 2022. Following our prepared remarks, we'll open the conference call to a question-and-answer session. I'll start the call with some brief cautionary remarks regarding certain statements that may be made on this call.
Certain statements made on this conference call and our responses to various questions may constitute forward-looking information or future-oriented financial information within the meaning of applicable securities law. Statements about expected growth, prospective results, strategic outlooks, and financial and operational expectations, opportunities, and projections rely on a number of assumptions concerning future events, including market and economic conditions, business prospects or opportunities, future plans and strategies, technological developments and anticipated events, trends, and regulatory changes that may affect the corporation and its subsidiaries and their respective customers and industries. While we believe these assumptions to be reasonable, they're subject to a number of risks, uncertainties, and other factors, many of which are outside the company's control and which could cause the actual results, performance, or achievement of the company to be materially different.
There can be no assurances that these assumptions or estimates are accurate or that any of these expectations will prove accurate. For a complete discussion of these factors, please refer to our recently filed press release and other publicly available disclosure. With that behind us, I'd like to turn the call to our CEO, Yaniv Sherman. Yaniv.
Thanks, Yaniv. Good morning, everyone, and welcome to our 2022 Q3 results presentation. I'm Yaniv Sherman, Bragg Gaming CEO. Thanks for joining us today. Moving straight into some notable highlights for the quarter. Bragg generated record quarterly revenues of EUR 20.9 million, gross profit of EUR 10.4 million, and Adjusted EBITDA of EUR 2.2 million, all up considerably in 2021. While these percentages are presented against a favorable comparable, when the business was exiting the German market and just ahead of launching into new ones, it demonstrates impressive growth over the previous year. These results also represent our continued investment into the business and specifically our proprietary tech and content to solidify our competitive edge. As for our various operational and commercial activities, we continue to diligently execute against our content-led game plan.
Exclusive content development deals were secured with leading gaming entertainment brands, which provide us with the much-needed differentiation in a growing yet highly competitive global iGaming market. We're pressing on with our North American new content rollout in various states, aiming to increase our share and footprint in the market. We've launched our turnkey solution in the new market, the Czech Republic, while enhancing our existing position in the Netherlands with two new partners, making Bragg the leading B2B platform in this recently regulated and growing market. I'll share more about our business and operational activities later in the presentation. Now I'd like to hand it off to Ronen for our financial review.
Thank you, Yaniv. Good morning, everyone. I'll begin my comments on Slide 7. Q3 revenue was up 62.3% year-over-year to EUR 20.9 million and up 0.5% from the previous quarter, representing an all-time record for Bragg. The group's year-over-year revenue growth was mainly organic to its existing customer base. The onboarding of new customers in various jurisdictions, particularly in the Netherlands, and a strong revenue performance from the Wild Streak Gaming and Spin Games existing U.S. customer base. From a KPI perspective, the total wagering generated via games and content offered by Bragg was up 42.4% from the prior quarter to EUR 4.6 billion and up by 8.9% from the previous quarter.
As you can see from the wagering chart on the right-hand side, we have seen a positive momentum since the onset of the German regulatory restrictions on gameplay in Q3 2021. The gross profit increased by 57.6% to EUR 10.4 million, with gross profit margin seeing a slight decrease to 50%. The margin reduction is primarily due to the change in the composition of revenue derived from our iGaming platform and managed services, partially offset by increase in revenue from proprietary game studios, which has no cost of sales compared to the third-party games and content which have associated third-party costs. Adjusted EBITDA for the quarter was up by 51.6% to EUR 2.2 million, with Adjusted EBITDA margins reaching 10.7%. A slight decline of 80 basis points from the same period in the previous year.
The change in margins was mainly the result of the scale and change of our product mix of iGaming and managed services, along with high investment in salaries and subcontractor costs as part of the group's strategy to expand its software development and product portfolio, all with a focus of margin control. Other highlights. During the quarter, we completed an $8.7 million convertible debt facility to strengthen our working capital and our investment and development needs. We ended the quarter with EUR 17.2 million of cash and positive cash flow from operations. Our current trading is strong. From a guidance perspective, we are reiterating guidance for full year 2022 revenue and Adjusted EBITDA. Our initial 2023 expectation is for full year revenue growth in the low double-digit % range and Adjusted EBITDA growth of at least 20%. Now turning to Slide 8.
As I mentioned earlier, our entry into new markets, particularly in the Netherlands, has been exceptionally strong. This, coupled with new clients wins and the ramping up with operators launched earlier this year, has given us significant momentum in the current financial year. During the quarter, revenue from legacy customers grew consistently, rising 2.3% from previous quarter and 9.2% from the Q1 of 2022. Revenue from new customers launched in 2021 and 2022 has also grown consistently, driven by the Dutch market. Total Wild Streak and Spin revenue was up by 27.8% from the previous quarter as a result of a strong performance of our proprietary games.
It is important to note that underpinning our financial 2022 and financial year 2023 revenue targets are Bragg's new business pipeline, our new market entry, and more focused sales efforts. Slide 9. As you can see from Slide 9, gross profit margins have been in a growing trajectory since Q3 2020 due to an ongoing shift in product mix. We're targeting gross profit margin of 60% by financial year 2024. We are scaling up our business in line with both of our revenue growth and the continued movement in product mix, as indicated on the right-hand side of the slide. Product mix has changed noticeably since last year's Q3. It is trending towards PAM, turnkey solutions, and proprietary content, leading to improving gross profit margins and profitability.
As we indicated in the past, PAM, turnkey solution, and proprietary content product have no third-party costs, resulting in a material increase in gross profit margins. Please note that Q3 2022 margins benefited from our PAM and turnkey solutions, which delivered some strong performance for my new Dutch customers. On Slide 10, we're highlighting our efforts to maintain margins while growing revenues. Total operational costs, excluding cost of goods associated to third-party content providers, have declined since Q3 2021 and amounted to 39.2% as a proportion of total revenue. At the same time, the group continues to invest in developing its technology, products, and games in a measured way. Total salaries and subcontractors costs as a proportion of revenue have declined since Q3 2021 to 21.7%, and it's targeted to scale in line with future growth.
Professional fees amounted to 3.8% of total revenue and were mainly related to entering new jurisdictions, licensing, legal, and audit costs. IT and hosting costs were 4.9% of the total revenue as a result of the US expansion and organic revenue growth. All other costs are targeted to scale in line with future growth. Ultimately, we expect Bragg's operating leverage to increase over time, given limited growth in employees, IT, and hosting, and professional services, and other costs. Moving to Slide 11. Adjusted EBITDA amounted to EUR 2.2 million against an operating loss of EUR 1.6 million. The gap was driven by the following non-cash and exceptional items. Depreciation and amortization, an increase in intangible amortization as part of the Wild Streak and Spin acquisitions in June 2021 and June 2022, respectively. Share-based payments.
New awards were granted to senior management in the Q1 and the Q3, composed of DSUs and RSUs. Transaction acquisition costs in the Q3. Costs mainly associated with the convertible debt financing. For the nine months ended September 2022 were attributed to the Wild Streak and Spin acquisitions. As you'll see on Slide 12, we ended the quarter with a cash balance of EUR 17.2 million compared to EUR 16 million as of 31 December 2021, with a EUR 10 million convertible debt facility. Net working capital was EUR 4.5 million compared to EUR 11.6 million at the beginning of the year.
The main difference between the periods was the EUR 9.1 million consideration paid upon the Spin Games acquisitions and the EUR 8.3 million net proceeds from the convertible debt offering completed in September 2022. We continue to project positive free cash flow from operations, and as a reminder, our business strategy requires a little CapEx related to technology. From a cash flow perspective, in the nine months ended September 2022, we generated EUR 7.7 million from operating activity while investing EUR 14.4 million in acquisition of Spin Games and software development as part of the investment in our technology. We're also receiving proceeds of EUR 8.3 million post the completion of the new convertible facility. With that, I'll turn the call back to Yaniv.
Thanks, Ronen. Moving into our operational update on Slide 14. One of our key focuses over the past quarter has been the continued integration of the Spin and Wild Streak US businesses with Bragg's existing operation. We have complemented the technical integration, which has been completed earlier in the year, connecting our tech stack with Spin's distribution and Wild Streak's premium content with a unified brand identity. We are Bragg. This unified brand helps us create a joint mission and identity across our various sites from Slovenia through Malta, London, US, and India. While this is an ever-evolving process and only part of our overall strategy, it marks an important milestone in our journey. I'd like to take this opportunity and thank our Braggers around the world for supporting this effort and powering our growth.
On Slide 15, we put some focus on the Netherlands, where Bragg continues to be an online partner of choice for both full turnkey and content solutions. Based on recent data, we believe we are now the leading B2B platform in the market. This is a great case study and another testimony of our team's ability to offer a scalable and customizable solution to a wide range of brands in a highly regulated and competitive environment. Our Fuze innovative player engagement tool has taken another step in its evolution and now supports both sport and casino, offering players a variety of events and incentives across the entire product suite, helping our partners improve retention, lifetime value, and return on investment, key elements in their online success. This was also deployed in perfect timing as we are heading into the 2022 World Cup tournament in Qatar.
It has been an overwhelming vote of confidence by our partners so far. Some are local and some global brands as we help them build digital value and monetize their assets, powered by the Bragg tech stack, products, and supporting operations. Moving into the heart of our proposition on Slide 16, we've been extremely busy growing our content ecosystem. Alongside our ongoing development of market-focused proprietary titles led by our U.S. and Slovenia in-house game studios, we have also struck exclusive deals with Bally's Interactive, which include the King Show Games and Gaming Arts titles, Incredible Technologies, and Sega Sammy Creation. These partners join our existing stable of studios like Gamomat and Bluberi, and will allow us to complement our fully owned titles with highly recognizable gaming brands, some catering to specific markets and some with a global footprint.
The games are powered by Bragg's modern tech stack and developed through an analytical-based process, leveraging our growing data set derived from hundreds of partners and operators. We aim to offer our customers a unique content suite in addition to our successful aggregation platform, which includes thousands of games from all leading providers. Content is indeed king, and it is a central pillar in our growth strategy. It will create differentiation for the Bragg proposition in a crowded marketplace. Our clear goal is to become the content partner of choice for leading iGaming operators in North America, Europe, and future markets like Latin America and Africa. In this slide, we're focusing on North America, specifically the U.S. The U.S. remains a highly concentrated iGaming market, both from a state and operator perspective.
We are seeing a clear shift from top-line sports betting-led growth to the proverbial path to profitability, which is best represented by an iGaming agenda. There is a clear and consistent demand for high-quality casino content, with differentiation and positioning becoming the key success factors, especially on mobile devices. We continue to religiously develop our games and products with our partners' needs in mind as we aim to support them in engaging their players. We continue rolling out our new games and making good progress. Once an initial batch of new Bragg-developed games is rolled out, we then focus on further expanding our proprietary and exclusive portfolio with these operators, leveraging the game's performance to extend our distribution into additional partners stateside.
These efforts require persistence as they yield results over time, but once successful, they will serve us as an effective moat, creating sustainable value for the business in the long term. We're also encouraged by the latest discussions in several sports betting states, like Illinois and Indiana, around the potential regulation of iGaming. We firmly believe it will serve both the states and the players to develop and enact iGaming legislation to ensure a safe and regulated experience to its constituencies. The recently regulated Ontario market has demonstrated healthy early indicators as it continues its licensing rollout. We're looking to further enhance our presence in this market during 2023. Lastly, I'd like to summarize and leave you with a few key points on Slide 19 before we open the floor for questions. We're marking another growth quarter in a volatile microenvironment and a competitive landscape.
Now one company, Bragg Gaming, is executing against our content-led strategy, which focused on our North American rollout effort while we leverage our recent successes in Europe. We're on track to meet our 2022 revenue and Adjusted EBITDA guidance. Looking into 2023, given strong performance in 2022, our initial expectation is to deliver low double-digit revenue and at least 20% Adjusted EBITDA growth respectively. We're taking into account our ongoing investment into Bragg's content and tech development, aiming to meet our long-term revenue and margin goals. I wanted to thank our shareholders, board, and Bragg team members for their ongoing support and to you for your time. We'll be happy to take questions now.
Thank you. At this time, I would like to remind everyone, in order to ask a question, press star, then the number one on your telephone keypad. We'll go first to Gianluca Tucci at Haywood Securities.
Good morning, guys, and congrats on a good Q3. I was just wondering if you can speak to organic growth witnessed in the quarter. Is there a jurisdiction that is outperforming others? Secondly, in your early days in the US market, how are things shaking out there for you guys?
Hi, Gianluca, it's Yaniv. Thanks. Yeah, I'll comment on both. First of all, in terms of organic growth, we're seeing good, healthy growth across the board. As we are a dominant player in the Dutch market, then that market over-indexes naturally for us. It's also a relatively new one, so growth there is more apparent. We are seeing good growth in our other markets as well. As far as the North American market and the U.S. market, we've recently deployed in three out of the top five operators in Michigan, our new content suite. Early signs demonstrate the games are doing well.
We deploy the same games, by the way, in Europe, and they're also showing some initial signs of good performance that we're looking to leverage on. So far, we've been very focused on the initial rollout of the new content, and that is undergoing. We're looking to ramp this up considerably into next year. The initial signs are games are performing well against their competition, in some cases over-indexing existing incumbents.
Okay, that's great. Thanks. Just lastly from our end here. In terms of the World Cup happening in a Q4 this year and casino being a higher margin product when compared to sportsbook, how are you guys positioned for that in your operator relationships that you have overseas and on our side of the Atlantic?
Well, it's a good question. This is the first time we've seen the World Cup in Q4 that's typically a summer event that coincides with seasonality. So it'll be interesting. It's also typically more an acquisition-prone event that then is monetized over cross-sale into next year, which in this case is good 'cause it's leading into the Q1, which is traditionally strong. As far as the operators are concerned, our PAM relationships, some of them have very successful sports books. We offer some of the leading products in the market overseas in Europe, and we're geared up. We've deployed our player engagement tool.
Fuze is now connected over sportsbook with great timing so some of the operators can offer player engagement tournaments and live events through sports and casino. We hope that will create a long-lasting effect on the proposition. In short, we're well prepared. The tech stack is ready, and our partners are very excited by it. They've already started their marketing push, and I hope everyone will have a great tournament, mostly overseas. In the U.S. market, soccer is less apparent in the betting pattern, typically a number five or six event, but we're focusing on our content deployment through the quarter and into the holiday season there. I think it will have a lesser effect across the Atlantic.
Okay, thanks for the color, guys.
Thank you.
We'll move next to Sid Dilawari at Cormark Securities.
All right, guys. Thanks for taking my question and congrats on a great quarter. You know, during the quarter, you know, you went live in Connecticut and Ontario. Just wanted to get your thoughts on so far, how was your performance in these markets versus your expectations? You know, just in general, how do these two markets sort of stack up against some of the other European markets you currently serve?
Hi. Thanks. These are two very different markets. First of all, the Spin acquisition and the Wild Streak acquisition really put us front and center. The Spin content's already available in all key gaming states. It's predominantly introducing new content into the states that serves as a growth driver. As far as Connecticut and Ontario is a re-regulated market, behaves very differently. It's a lot more competitive. Connecticut is a duopoly, but it's fair to say that both sort of demonstrate growth in their own way. Connecticut has a very high GDP per capita, and you can actually see it from some of the initial signs of performance and the operators there, the total addressable market.
Ontario, we believe it's still early days because the market's not just rolling out. It's new licensing regime, but it's also stepping into or leaning into enforcement. These two forces will probably see accelerated growth into next year. Again, the games, a small batch or a small group of games was deployed into Ontario, and so far we're pleased with their performance, but it's also a game of numbers, so we'll be looking to ramp up the pace. As far as content in Europe versus the U.S., some of the games translate well across the pond and some to a lesser extent. That's the main reason or the logic behind creating separate in-house studios. Part of them, like Indigo Magic and Oryx, are more focused on the European market precisely for that reason.
It's all managed by a central content production and development organization. The games are developed. I believe we're one of the only, if not the only, studios that actually has different math models and an analytic approach that separates European players from North American ones. We're looking to start leveraging that this year and into next. These are very different crowds, different markets that we'll be developing content towards. Some of the games over-index in some of the European markets, but overall, the focus is develop bespoke North American content and then focus on European territories. Even inside Europe, there's a clear distinction between different markets, Central Europe, Western Europe, Northern Europe. We have a great deal of data that we're now looking to leverage and translate into game development.
A lot of investment is going into games, and the initial signs for the new content suite is, we're very pleased with it.
Okay. That's great. That's very helpful. You know, just a quick follow-up on Netherlands here. You guys continue to put up good market share gains on a sequential and an annual basis. You know, initially we expected personally for that to slow down a little bit as some of the operators that initially exited the market were expected to sort of enter the market back. You know, just now that it's been some time since the market went live, are you seeing any competitive pressures in the market where you see your sort of market share gain growth to slow down in the next few quarters, maybe?
That's a great question. I think that what we're seeing is, you know, a typical re-regulation of a market that sort of reopened and the catalog was very much stretched to its limits. There was a lot of pent-up demand in the market. I think what you're seeing is there are competitive pressures like incumbents that have relaunched in the market on the back of local brands that were there first. When other dominant brands launch, they also grow the market. The market continues to grow, the total pie continues to grow. Having said that, I have to say that the operators, our partners in the market, have been very effective in customizing the technology and product to create separate brand identities.
Each one of the brands that we power has a very different angle, marketing philosophy, player base, and I think that helps for them to grow and compete with other brands, but also defend their market share. Overall, we've seen growth on our platform, and our existing partners have grown very nicely. The brands that we've recently launched into the market are showing good initial momentum. That's the reason why we believe we are taking share from competitors. I think, again, it's a testimony of the tech's ability to scale and also differentiate, because it's very important for the different operators and partners to be able to offer something different, each one of it with his own assets.
Overall, the market, at some point, it will naturally, the growth would subside, but you wanna get to that point when you have the biggest market share. Naturally, as we can see, scale matters also from a B2B perspective.
Right. Okay. Sorry, just one last one from me. You know, just on the general macroeconomic trends, are you seeing some of your iGaming operators starting to feel the pullback in discretionary spending and the impact of that on your customers' wagering activity at all? Or it's still too early to say anything about that?
I would say it's a bit early from our end and also because we are very much focused, we're very much B2B focused or solely B2B, but also on the iGaming side. I think what we're actually seeing is even operators that are opting to scale back on either marketing spend or their players. The shift is, as we mentioned on the presentation, the initial shift is towards casino or iGaming as the higher margin products. Right now we actually see in the near midterm that shift should service us. We're well positioned in that regard. Naturally, if discretionary income subsides worldwide, it will have an effect, but we're sort of twice removed from it in the sense that we're focused on the more lucrative addressable markets. I would say that we're less susceptible to it at this point.
Okay, thanks. I'll pass the line now.
Thank you.
We'll go next to Jack Vander Aarde at Maxim Group.
Okay, great. Good morning, guys. Congrats on the solid results and strong initial 2023 outlook. Maybe Yaniv, as for your initial outlook for 2023, low double-digit revenue growth and Adjusted EBITDA margins of at least 20%, that's good to see, very positive. Can you maybe just walk us through the key plus and takes here? What are the potential drivers of even further upside relative to what's baked into your plan?
Sure. Yeah, thanks. Again, as we mentioned, it's via our initial guidance as we get closer to 2023, we'll be able to hone in our guidance. Still a few moving parts there, but the rationale behind it is quite simple. I mean, we're looking to leverage a strong year. Naturally, as I mentioned, 2022 had strong performance. The business has repositioned itself through that period over 12 months period from a mostly pre-regulated-facing business into a regulated one. We've done so with, again, a testament to the team and the tech, but we've done so while continuing growth and also margin expansion, and so we're forecasting that trend to continue. Again, it's not a trivial task.
The idea is to expand through more proprietary and exclusive content that has the proprietary one at no cost of goods, so it's 100% upside. That does take time in growing a stable of titles and content that starts performing. As I said, we're seeing some good initial signs, but the devil's in the details there, and we need more of those games, and that's what we're very much focused on. That's our sort of thought process to ramp up and accelerate, lean into this strategy and accelerate the content production so we can expand those margins even faster. The main message is we are conscious that that is something we're expected to do. We also wanna make sure that we're consistent in that approach. We'd rather see a long-term consistent trend than a pretty erratic one. I think everyone would prefer that.
Great. That's helpful color. Maybe just a follow-up to your content strategy. I'm not sure if things have changed. Can you remind us how many new games you plan to roll out, and how many of those games are still under development? Then just a follow-up to that, do you expect any of these new upcoming games to be as popular or successful as your Dragon Power or Egyptian Magic, some of your other successful titles?
Yeah, first of all, those titles are again a testimony of our content team's ability to create a quality content. I mean, Doug Fallon and his team in Nevada have done an amazing job in creating deep and sticky content that resonates with players over a long period of time. That's exactly what we're looking to bolster and accelerate. Right now we're still developing, in final stages of developing next year's content strategy. The main reason is we wanted to ramp it up. The recent deals that we've signed are being worked into those roadmaps over the past couple of few weeks. You know, the Sega Sammy Creation, the Bally's Interactive and Incredible Technologies, just to name a couple. They're all being worked into the roadmap.
I can say that we're looking to, you know, at least, a few dozens of games from a proprietary level and, a larger number, from an exclusive and proprietary, state of mind. We're also looking to focus on top-tier operators and deploy the content through them. We don't just dump, you know, 20 or 30 games at a time into the market. There's also, a very well thought of release plan and rollout plan behind it to create, the effect, the continuous effect. That's the level. We're not gonna produce hundreds of games over next year. We believe in the quality there and the depth rather than quantity. Those are sort of. We will share more accurate numbers as that roadmap, takes shape over the next few weeks. Just these are the sort of scale of development that we're looking to produce over the next 12-18 months.
If I could just ask one more question. In terms of your U.S. growth ramp and expansion strategy, Slide 17 provides a great illustration of this. Where else do you see opportunity in the U.S. outside of these markets? Maybe just get your thoughts on Ohio specifically, 'cause that's, you know, supposed to be a pretty near-term big market launch as well.
Right now, these are sports-only states. So we do, if any of these states are relevant, it's probably through a full turnkey solution, which right now we're sort of considering on a case-by-case basis. Right now we're very focused on the content element, which are the iGaming states. I've mentioned that we see some progressive and good discussions in some states to add iGaming to its existing legislation. That hasn't happened to date. The states that you see today are states that enacted or legalized all the iGaming suite and not one by one. We're sort of looking for the first and second one to do that.
I think any state that adds casino, whether it's a smaller state like Iowa or a big state like Illinois or Ohio, for that matter, is about to launch sports betting will have a net positive effect and basically double or even more of that addressable market. I mean, that's the apparent upside between 31 sports betting states versus six gaming states. You can see the potential runway there. We're being very cautious in that 'cause it has been a while. We're just addressing these top three or four states. Any additional state there, just as any other Canadian province is, pure upside from our perspective, because distributing those games into additional states mainly requires certification. The partners will already be there, technology is gonna be there, so it's mostly that gearing effect that kicks in once the new market opens.
Makes sense. Fantastic. I appreciate the color. Thank you.
Thank you.
As a reminder, press star one, if you would like to ask a question. We'll go next to Edward Engel at Roth Capital Partners.
Hi, thanks for taking my question, and congrats on a nice set of results. If I recall during the quarter, you had an offsite where everyone from the combined business got together and for the first time and kind of reviewed the strategy. Could you give any color on what some of the takeaways were from that review process?
Sure. Hi, Ed. Yeah, we had naturally the team got together for the first time physically earlier in the quarter in Slovenia. Ran through a very intensive two-day workshop, sort of re-honing or recalibrating the business' strategy. I think we came out with a very clear understanding of what the task in hand is. As I mentioned, you now see it translated into a streamlined cohesive structure and strategy and also a unified company behind it. The strategy again is a content-led one. We have the prerogative or the ability to deliver content through a variety of channels, whether our proprietary content directly or using powering a proposition through our PAM player account management system or through our aggregation capabilities.
We have a variety of channels or means to deliver content, but it's all a matter of, at the end of the day, it's how much proprietary content can we deploy with our partners. I think that will bolster or accelerate our success in the various markets. It serves as a key differentiator. That was the main result behind it. Then naturally, a variety of other both decisions and action items. That's that in a gist. I mean, the team today is very much, as I mentioned, team building in such a rapid growth environment is always a challenge, but I think the team today is very much united in getting behind this strategy and excited to execute on it. It was a great exercise. It's always great to also meet in person after a long time.
Great. Appreciate it. Just a quick question on the 2022 guidance. The full year guidance kind of implies that the Q4 does dip a bit sequentially. Just kinda curious, I mean, in terms of seasonality, is fourth Q typically the lightest quarter in terms of seasonality for your customers? I'm just kind of wondering what the kinda driver is.
Well, typically the summer months used to be the seasonal hiatus, but we've seen all sorts of funny or unusual events over the past two years. You know, seasonality giving way. It was COVID at first, and then we saw some seasonality, you know, some effect during the summer months this year, people were traveling. But again, the reason why it's a moving target is this year's World Cup for once, when there's a lot of sports focus behind it. And also we do see strong trading at this point. We've already updated our guidance, and we're sort of expecting to hit the upper range of that range. We didn't feel that the current trading warranted another update.
We may be slightly higher, but I don't think there'll be a material dip. It's just we couldn't accurately forecast with all these moving parts, another aggressive growth quarter. These are. I don't think they are material deviations.
Perfect, thanks. I could just kinda squeeze one more last on the cost side. Gross margins, quarter-over-quarter were down a bit, but if I kinda look at your revenue segments, everything was generally pretty flat. Just kinda wondering seasonally, is 3Q typically your? Are there kind of one-time events in 3Q every year that kinda happen that kinda dampen that? Or just kinda wondering what that kinda sequential dip is from.
Yeah, sure. Happy. I'll let Ronen take this one.
Hi, Ed. How are you doing? Good morning. I think the best way to look at the gross profit one is that, of course, we're trying to keep on a quarterly basis the growth from quarter to quarter. You're right. This particular quarter, the revenue was remained flat compared to the previous quarter. Having said that, gross profit was dipped by a couple of percentages to about 50%. I call it pure accounting and revenue recognition, IFRS. You know, we're dealing with aggregation, we're dealing with suppliers, and we deal with customers.
It's we are buying and selling, sometimes you have revenue recognition movement. I think the best way to look at that, I mean, of course, we probably gonna go back to our 52-ish%, 53%, the average and normalized rates we have from Q1 to Q2 and Q3. The best way to look at that is you look at the year to date. Last year, same period was 47%, now we're 52.6%. We are heading towards 2024 numbers, which is 60%. I don't think we're gonna see those, how to say, movement from one quarter to another. It might happen. It's always happened. When we true up, when we have to release our numbers.
I think it's just a particular accounting adjustments we have to do from particular suppliers that we charge them later and not earlier. That's it. It's not something. We analyze it, we realize there's gonna be questions around that, but we're confident that we're gonna go back to the 52-ish%, 53-ish% gross profit margins. The more proprietary content we're gonna roll out this quarter and the beginning of next quarter in the U.S. mostly, we will see the gross profits increasing. I'm less concerned about that.
Perfect, thanks. If I can just squeeze one last in here. The kind of core operating costs or fixed costs have been really stable the past one, two quarters. If I look at your guidance for 2023, it kind of implies a decent uptick in your core OpEx. I guess, is that kind of due to a hiring ramp sometime during the year in terms of content? Or I guess, how should we read some sort of uptick in OpEx or not?
I think the best way to look at our OpEx is that we keep investing. We keep as Yaniv mentioned before, we're moving from the pre-regulated markets to proper regulated markets. We have more compliance, product development, and of course, sales team, we're ramping up. I think what we're gonna see is that the more revenue we're gonna generate, of course, from our proprietary content, when we're gonna be fully operational with our content in the U.S., we will see this cost scaling up from percentage perspective. I think from all the overheads, we will see how to say, a scaling down or scaling up percentage wise. Not necessarily nominal value, but we definitely we're looking inside. We're very, very focused on our cost control.
We're trying to do any ROI analysis on every single investment we're doing in the business. Also, we just need to remember that we always have a gap between when revenue will be derived from particular content we're building and investment we're doing in our technology and the capitalization rate that the cost that it's starting at the first period, and then a couple of months later, you can see the return. I think in 2023, we will see even further decline in our margins. In other words, from cost margins. In other words, we will see that we're increasing revenue and the cost will, as a percentage wise, start scaling down. That's the trend. That's what we're seeing, and I think we're gonna deliver that.
Perfect. Thank you.
That does conclude our question and answer session. At this time, I'd like to turn the call back to management for any concluding remarks.
Thank you everyone for joining the call. It was great having you all, and we'll see you all on our next call. Enjoy the rest of your day.
That concludes today's conference call. Thank you for your participation. You may now disconnect.