Ladies and gentlemen, thank you for standing by and welcome to the Bragg Gaming Group Q2 2020 earnings call. At this time, all participants are on a listen only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, either press star one on your telephone. As a reminder, today's conference is being recorded. If you require any further assistance, please press star and zero. I would now like to introduce today's conference call, Yaniv Spielberg. Yaniv, again.
Good morning, everyone, and thank you for joining our second quarter 2020 earnings conference call. During today's call, we will review Bragg's financial and operating results for the second quarter of 2020. Following our prepared remarks, we will open the conference call to question and answer session. The call today will be led by myself, alongside Ronen Kannor, Bragg Chief Financial Officer, and Adam Arviv, Interim Chief Executive Officer. I would like to 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 affects the corporation, its subsidiaries, and their respective customers and industries. While we believe these assumptions to be reasonable, they are subject to a number of risks, uncertainties, and other factors, many of which are outside the corporation's control and which could cause the actual results, performance, or achievement of the corporation to be materially different. There can be no assurance 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 our other publicly available disclosure documents are available on SEDAR. The conference call will be a little bit different this time around. I'll lead the conference call. Good morning, everyone. Thank you for taking the time to join our earnings conference call. On today's call, I'll provide an update on our main asset, Oryx, as well as walking you through our recent operational developments. Following my comments, our Chief Financial Officer, Ronen Kannor, will run through our financial results for the second quarter. I'd like to address the corporate changes announced in our release on Thursday first. Our Chief Executive Officer, Dominic Mansour, has taken a paid leave for personal reasons. With that said, Mr. Adam Arviv, the Founder of the Bragg business, has taken the role of Interim Chief Executive Officer.
He's on the call this morning, and he'll be happy to answer any questions. With that, I'll dive in some operational highlights. We've had a strong quarter in experiencing record growth and making continuous progress diversifying our revenues, expanding into new geographies. As a reminder, our main asset, Oryx Gaming, offers a full turn-key retail, online, mobile, and iGaming platform, as well as an advanced content aggregator, sportsbook, lottery, and marketing and operational services. We continue to grow rapidly, building on the growth trajectory established in 2019. Revenues for the second quarter grew exponentially to EUR 12.1 million. This represents 107% increase from Q2 2019 and a 38% increase from Q1 2020. We also experienced EBITDA increase to EUR 1.8 million. In the first half of 2020, our revenues grew by 74%, with growth mainly seen within our games and content services offering.
We attribute this growth to a number of initiatives we've undertaken, all falling under three key pillars of growth. The three key pillars of growth within Oryx that we've been focusing on are to enhance our technology and product offering, diversify our revenues, and expand into new geographies, and collaborating with key players in this space through strategic collaborations and content deals. I'll provide an update on our activities within each of these areas. We'll start by talking about the enhancement to technology and product offering. Our casino product, Oryx's primary growth comes from the casino product and aggregator platform. Over 8,000 casino games are now seamlessly integrated and can be accessed through a single player account. Dedicated resources to continuous improvement of our platform, especially now with the uptick in traffic due to the increase in virtual gaming and activities.
The new features that we've rolled out in the first half of 2020 includes real-time tournaments and leaderboard tools. These tools enable operators to set up slot tournaments across multiple game providers with real-time data feed, which allows players to track and compare their results with others, taking player engagement to the next level and increasing retention for operators, which of course, in turn results in higher revenues for Oryx. The data analytics platform allows for real-time collection and analysis of data from internal as well as third-party systems, enabling operators to gain a better understanding of their customers and more effectively target and engage them. Again, going down to retention of customers with our operators and resulting in better results for the Oryx business. All these new features are available through simplistic single integration. We close contracts and integrate at a significantly faster pace than the industry standard.
The average for us is about two to four weeks compared to the industry standard of about three to six months. The second pillar is diversifying our revenues and expanding to new geographies. Our global customer base and footprint is growing with new customers coming on board each quarter. As you guys have seen from the release, we onboarded new clients in the second quarter, which continues the growth from the first quarter. We also continue to focus on customer diversification, both by geographic expansion and by decreasing our dependence on our top customers. We signed agreements with 11 industry leading companies in the quarter, including MaxEnt and Superbet. We're in discussion with additional 25 customers to be onboarded through the rest of the year.
Some of them have already been signed, are waiting to be integrated, and some of them we have heads of terms agreed on and will be signed and integrated. In terms of the diversification, we're pleased to say that our customer concentration is improving with only about 45% of our revenues coming from our top five customers, and that's down from 66% in Q2 of last year. In terms of geographies, entering key geographies such as Croatia, Latin America, and Romania, we continue to build out our presence in the U.K. and the U.S. for eventual rollout into the U.K. and the U.S. We decreased our dependence on the German-facing operators, where German-facing operators now represent roughly 28% of our revenues. That's down from 47% in Q2 of 2019. We focus on diversifying new geographies in order to reduce exposure to any single country.
The third pillar is the collaboration with key players in the space through strategic collaborations and content deals. The new partnership deal with New York-based Seneca Gaming Corporation and Kambi Group that was signed in late 2019 represented our entry into the lucrative U.S. market. As you guys may recall, we're providing Seneca with casino services and player account management to the three New York casinos. We're advancing the technical integration and hoping to be live with the Seneca Gaming Corporation in their three casinos in Q1 of 2021. We continue to sign content deals with key providers in the space in order to enhance and supplement our unique content offering. I'll turn to looking ahead. We anticipate very strong growth throughout the rest of 2020. We've already experienced great trending momentum in Q3.
While the global outbreak of the COVID-19 has had and continues to have a significant impact on the global economy, the online gambling industry has experienced a positive momentum like other online industries. As a result, Bragg has benefited from this positive momentum. We've actually experienced a significant increase in traffic as people explore entertainment alternatives they can enjoy in their own homes, and we hope to build on this momentum throughout the rest of the year. Looking ahead, our strategy is focused on growing our B2B gaming solutions through Oryx. We continue to invest in our platform and integration capabilities in order to provide the best products and services to our customers. We're focused on growing our international reach in regulated markets and strengthening our client base in addition to entering new geographies, including the lucrative North American ones.
We have financial plans and capital restructuring and strategic initiatives that we will discuss further in today's call or on today's call. We're confident that we're well positioned in the fast-growing markets, and we have the tools that we need to continue on this amazing growth trajectory that we've experienced in the first half of 2020. With that said, I'd like to turn the call over to Ronen Kannor, our Chief Financial Officer, who will run you through the second quarter and the first half financials. Ronen, on to you.
Thanks, Yaniv and Adam. Good morning, all. I will run through the highlights of the second quarter and the first half financials. Just to clarify, all figures are presented in EUR, according to how we're reporting our financials in MD&A. With regard to the second quarter, the group revenue for the quarter and the 30th of June increased for the same period in the previous year by 107% to EUR 12.1 million as opposed to previous year, which is EUR 5.9 million, and by 38% from the prior quarter, while maintaining its solid quarterly growth momentum since Q1 2019. The gross profit increased compared to the same period in the previous year by 100% to EUR 5.1 million as opposed to EUR 2.6 million previous year, with subsequent margins decreasing by only 1% - 42%, mainly as a result of revenue classification and growth towards content and aggregator.
The adjusted EBITDA increased from the same period in the previous year by EUR 2.1 million, reaching EUR 1.8 million in the end of this quarter, as opposed to a loss of EUR 0.3 million last year, with subsequent adjusted margins, EBITDA margins, increasing by 19 basis points, reaching 14.4% in the end of this quarter. Just a reminder, the -5% in the previous year. This is achieved as a result of reaching higher scale and tight cost control. The total net loss for the period decreased by EUR 5.3 million from the same period in the previous year to EUR 0.4 million positive, as opposed to net loss of EUR 5.7 million negative last quarter. This has achieved the result of increased revenue and scale, share-based payment credits from the sale of the GiveMeSport unit.
Also, we didn't have any losses on the remeasurement of the contingent consideration in this particular period. With regards to the first half highlights, the group revenue increased from the same period in the previous year by 74% to EUR 20.9 million, as opposed to last year was EUR 12 million. The group revenue growth was mainly in games and content services, as Yaniv mentioned, demand for the unique games and content proposition continued to grow. It's important to highlight, the company's growth in the period has been underpinned by continued investment and innovation in technology and product offerings, which includes the launch of Oryx Hub, the launch of new data analytics platform, and customer engagement platforms, which demonstrating again and again, the potential of the group to further leverage its technology to accelerate growth.
The adjusted EBITDA for H1 amounted to EUR 2.5 million as opposed to only EUR 100,000 the previous year, an increase of EUR 2.4 million for the period with margin increasing by 11 base points to 12%. Cash flow from operating activities amounted to EUR 3.1 million during the H1 period as opposed to negative EUR 2.3 million last year, mainly the result of working capital movement. The cash flow gives investment activities predominantly is attributable to capitalized software development costs. Cash and cash equivalents as of 30th of June 2020 amounted to EUR 2.5 million as compared to December 31st, 2019 of only EUR 0.7 million. I will finish with the working capital position. The total current assets as of June 30, 2020, amounted to EUR 11.7 million as opposed to December 31st, which was EUR 8.3 million.
Current liabilities, including the deferred consideration, which is all now presented in a short-term liability, amounted to EUR 44 million as opposed to December, which was only EUR 20.8. Finally, as you know, you can find more detailed information on our financial performance in our June 30th, 2020, financial statement and MD&A on the SEDAR or on our investor relation page on our website. With that, I will turn the call to the operator for any Q&A session.
Ladies and gentlemen, if you have question or comments at this time please press star then one key on, your touchtone telephone, if your question have been answer and wish to remove yourself from the queue please press the pound key. Our first question comes from [uncertain] with Invictus.
Yeah. Good morning. Thanks for taking the question. Could you give a little more detail on how you're handling the contingent consideration?
Sorry. Thank you. Adam, do you want to answer the contingent consideration question?
Hi, how are you?
Hi.
Sorry about that. I assume you were referring to the earn-out that's outstanding.
Correct.
It's one of the reasons I've gotten involved. I'm one of the largest shareholders of the company, and I'm bringing on my group to provide both debt and equity to offset any negative effects on the stock by doing a raise at this point. Based on what's going on in the U.S. and the valuations that these companies are getting that are our competition, I feel that an up-listing is the most important thing for us. I'm stepping in with my own checkbook and my partner's checkbooks, and we're going to make sure that we settle all of the requirements to the Founder of Oryx.
You're issuing new equity at the current price level?
We're finalizing now, but it's going to be most likely right around here, yes.
Right. No outside investors have an opportunity to invest at this level.
There will be the opportunity for them, but it's going to be backstop by us.
Okay.
We won't be putting any pressure on the stock by going to the market. We're going to backstop it and then provide the outside market the opportunity to participate. If there's demand, then great. If there isn't, then we'll fund it ourselves.
Okay. The timing sounds like it's reasonably imminent. I believe the extension ran through September, was it?
Yeah. It ends September 30th, but we're in talks on that as well, which we can call you directly and update you.
Okay.
We expect to, by the end of this month, have everything settled and file an application for an up-listing with everything meeting all requirements.
Okay. All right. That sounds reasonable. Obviously.
Listen, our objective is to get on NASDAQ. When you look at our comps out there, I would say one of the easiest comps for us to look at would be GAN.
If you look at our revenues and EBITDA, we're bigger than them in revenue and EBITDA. The only difference between us and them is that they have revenue from the U.S., and we don't currently. Another reason why I stepped in is to focus on bringing my relationships in the U.S. to the company and the opportunities in the U.S., because obviously that's where people are getting the values of this perceived value that everybody is looking to obtain in a North American market.
Right. Just a question on the business, the Germany concentration, which you noted was down substantially. Did you back into that or the other stuff grew enough just to shrink it?
This is Yaniv Spielberg. I think the answer is both. Some of the German operators that we have had shrunken slightly, and of course, our other clients have grown, in addition to onboarding new clients, which resulted in the actual concentration of the German-facing business to be reduced.
That's still legally up in the air at this point in terms of iGaming?
Yeah. Depending on how much you know about the German market. There was supposed to be a transition period that was going to start around October of 2020, next month. The 16 states and the federal government have had some issues on agreeing on the timing and the terms of that transition period. We've spoken to our lawyers, both our gaming lawyers in England, Wiggin, and our German lawyers in Germany, Hambach & Hambach, and their view is that there's still no clear answer on whether or not that transition period is actually going to take place. Companies that are going to be in compliance within that transition period will be viewed favorably once that full-fledged regulation is approved in 2021. The Oryx platform as a B2B platform allows our customers to be compliant.
We're of the view that our clients, most of them will be compliant because they're in the Oryx licensing regime. In addition to that, we have the indications from them that their plan is to be compliant. Finally, the licensing or at least the transitionary period in Germany, from what we understand, is going to hurt mostly table games. Slots, which is most our clients in Germany, are somewhat immune and are doing better than their competitors in the table games.
Okay. Appreciate the color. Just lastly, any timeframe on Dominic coming back to take over?
Dominic is obviously stepping aside for personal reasons. I can't really get into details on this as it's a personal matter. I'll assure you that Dominic and the Chairman of Bragg, Paul Pathak, continue to have ongoing discussions. When there's something to update the markets, we'll absolutely do so.
Okay. Thanks for taking my questions.
No problem.
Again, ladies and gentlemen, if you have a question or comment at this time, please press the star then the one key on your touchtone telephone. I'm not showing any further questions at this time. I'd like to turn the call back over to our host.
Thank you everyone for joining the second quarter of 2020, our results, and we look forward to continuing providing good results in the quarters to come. Thanks a lot everyone for joining.
Ladies and gentlemen.
Thank you.
This concludes today's presentation. You may now disconnect, and have a wonderful day.