Executive Summary

Q2 revenue declined 11.5% year over year to $10.35M as FX headwinds (USD +9.2% vs EUR) and prior-year CTD closures offset strong Multigioco B2C performance; operating loss widened to $3.50M and net loss to $3.82M; diluted EPS was $(0.16) vs $(0.13) a year ago .
Cost actions showed traction: selling expenses fell to $7.87M (4.2% of turnover) vs $9.62M (4.4%) a year ago; G&A held flat at ~$4.77M; however $1.21M restructuring/severance lifted Opex in the quarter .
KPIs mixed: sportsbook hold improved to 16.6% (from 14.8%), blended GGR margin held at 6.8%, and European operations posted $0.19M profit in 1H22; U.S. Bookmaking (USB) lost $1.16M on ~$0.56M revenue in 1H22 .
Strategic catalysts: Ocean Casino “The Gallery” retail launch (July 1) and migration (Aug 3), DC small-venue pipeline (Cloakroom), Lottomatica multi-year SBP/virtual content agreements, and reopening ~100 ADM land-based locations in Italy (mgmt targets ~$20M incremental annual revenue) .

What Went Well and What Went Wrong

What Went Well
- Sportsbook quality improved: “disaggregated sportsbook hold” 16.6% vs 14.8% YoY; blended GGR stable at 6.8% despite product mix shift .
- Cost discipline: selling expenses down to 4.2% of turnover (vs 4.4% YoY), G&A flat QoQ excluding one-time items; European ops net profitable $0.19M in 1H22 .
- Strategic execution: Ocean Casino retail sportsbook live and migrated with no interruptions; DC Class-B JV model to accelerate small-venue onboarding; Lottomatica SBP/virtual content agreements broaden B2B revenue lanes .
- Quote: “The first half of 2022 finished strong… our Multigioco subsidiary carried outstanding results for the second consecutive profitable quarter in line with the corporate pathway-to-profitability mandate” — Michele Ciavarella, Executive Chairman .
What Went Wrong
- Top-line pressure: revenue fell 11.5% YoY to $10.35M on USD strength (+9.2% vs EUR) and prior-year CTD closures in Italy; turnover declined 14.5% YoY .
- U.S. drag: USB produced a $1.16M net loss on ~$0.56M revenue in 1H22; mgmt cited “higher than expected losses due to excessive administrative costs” .
- One-time costs: $1.21M restructuring/severance (incl. ~$0.75M accelerated stock comp) increased operating loss; net loss widened to $3.82M .

Financial Results

Revenue, profitability, and expenses (oldest → newest)

Metric	Q2 2021	Q1 2022	Q2 2022
Revenue ($M)	$11.69	$12.20 (per press release)	$10.35
Operating Income (Loss) ($M)	$(2.68)	$(2.06) (1H22 $(5.56) − Q2 $(3.50))	$(3.50)
Net Income (Loss) ($M)	$(2.77)	$(2.55)	$(3.82)
Diluted EPS ($)	$(0.13)	N/A (not separately disclosed)	$(0.16)
Selling Expenses ($M)	$9.62	$9.29 (1H22 $17.15 − Q2 $7.87)	$7.87
G&A ($M)	$4.75	$5.01 (1H22 $9.78 − Q2 $4.77)	$4.77
Restructuring & Severance ($M)	$0.00	$0.00	$1.21
Weighted Avg Shares (M)	22.01	21.76 (6M basis)	24.12

Segment and revenue composition

Revenue Detail	Q2 2021	Q2 2022
Net Gaming Revenues ($M)	$11.59	$9.66
Betting Platform & Services ($M)	$0.10	$0.69
Total Revenue ($M)	$11.69	$10.35

Key KPIs and margins

KPI	Q2 2021	Q2 2022
Turnover (Handle) – Web-based ($M)	$219.87	$186.44
Turnover – Land-based ($M)	$0.22	$1.82
Total Turnover ($M)	$220.09	$188.26
Gross Gaming Revenue (GGR) ($M)	$14.88	$12.78
Gaming Taxes ($M)	$3.29	$3.12
Net Gaming Revenues ($M)	$11.59	$9.66
Sportsbook Hold (%)	14.8%	16.6%
Blended GGR % (Hold)	6.8%	6.8%
Selling Expense / Turnover (%)	4.4%	4.2%

Prior-quarter reference points (trend context)

Q1 2022 revenue: $12.2M; up $0.57M (+5%) vs Q4 2021, per company press release .
Q4 2021 revenue implied at ~$11.63M (Q1’22 $12.2M less +$0.57M sequential increase) derived from the same press release .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Italian land-based locations (ADM rights)	2H 2022–2023	Not specified	Reopen ~100 locations; expect ~$20M additional annual revenue when fully deployed	New qualitative; revenue potential articulated
U.S. retail/small venues	2H 2022–2023	Not specified	Ocean Casino retail live July 1; DC Cloakroom JV model to expand footprint; launches targeted by start of 2022–23 NFL season	New qualitative milestones
European ops profitability	1H 2022	Not applicable	European operations net profitable by ~$0.19M for 1H22	Positive update
Cost structure	2022	Not specified	Restructuring done; targeting reduced corporate overhead and USB cost normalization	Qualitative improvement plan

No formal numeric revenue/EPS/EBITDA guidance ranges were provided in Q2 materials. Management commentary emphasized operational milestones and cost actions .

Earnings Call Themes & Trends

No Q2 2022 earnings call transcript was available in our document set; we rely on the 10-Q and press releases for themes.

Topic	Previous Mentions (Q4 2021, Q1 2022)	Current Period (Q2 2022)	Trend
Technology platform & Lottomatica	Initiated expectation to convert technology investment into revenue; highlighted Lottomatica partnership potential	Executed Master Technology Development and Technical Services Agreements; 10-year SBP build; option for source code at €4.0M after 4 years; Virtual Generation content exclusivity window	Advancing from vision to contracted execution
U.S. retail rollout	Ocean partnership announced; target launch in 2022	Ocean “The Gallery” opened July 1; platform migration Aug 3 without interruptions	From pre-launch to live operations
Small-venue (DC) model	Grand Central launched in 2021; expansion contemplated	Cloakroom Class-B JV model completed; intended to accelerate DC onboarding	Scaling template for SMB venues
Italy land-based footprint	Rebuild plan post-CTD closures; ADM rights process underway	~100 ADM rights assigned; reopening to begin in Q3 2022; mgmt cites ~$20M/yr revenue potential	Re-entry with targeted economics
Macro/FX impact	2021 saw USD strengthening vs EUR begin to impact reported figures	USD +9.2% vs EUR YoY; material drag on reported revenue/turnover	FX headwind persists
Cost/Restructuring	U.S. cost build cited in 2021; ongoing optimization planned	$1.2M restructuring/severance; USB admin costs flagged for rapid remediation	Transition from build to optimize

Management Commentary

Strategic focus and profitability path: “Our mobile and online channels through our Multigioco subsidiary carried outstanding results for the second consecutive profitable quarter in line with the corporate pathway-to-profitability mandate that we set out in Q1 of 2022.” — Michele Ciavarella, Executive Chairman .
U.S. cost normalization: “Our US Bookmaking division experienced higher than expected losses due to excessive administrative costs, which we expect will be resolved quickly.” — Michele Ciavarella .
Italy growth plan: “Online betting revenue grew in Q2-2022 by approximately $1.0 million over Q2-2021… we acquired approximately 80 ADM land-based license rights… expect this investment could generate additional revenue of approximately $20 million per year…” — Carlo Reali, Interim CFO .

Q&A Highlights

No Q2 2022 earnings call transcript was available in our sources; therefore, Q&A themes and any guidance clarifications could not be verified from a transcript. We note the company filed its detailed 10-Q and an 8-K press release covering qualitative outlook and cost actions - -.

Estimates Context

Wall Street consensus (S&P Global) for Q2 2022 EPS and Revenue was unavailable due to missing SPGI mapping for ELYS; as a result, we cannot determine beat/miss versus consensus at this time (S&P Global data unavailable) [SpgiEstimatesError].
Coverage appears limited; we recommend revisiting once SPGI mapping is updated to assess estimate dispersion and any required estimate resets.

Key Takeaways for Investors

Near-term: Q3 should benefit from Ocean retail sportsbook going live and initial DC venue expansion; cost saves post-restructuring could improve operating leverage even if reported revenue remains FX-pressured .
Medium-term: Italian land-based reopening (~100 ADM rights) is a tangible growth vector; mgmt indicates ~$20M annual revenue potential at full ramp, supporting a return toward pre-pandemic levels without significant incremental costs .
Mix and margin: Improved sportsbook hold (16.6%) and stable blended GGR (6.8%) help offset casino-heavy mix; sustained discipline on commissions (4.2% of turnover) is key to incremental margin .
U.S. turnaround watch: USB losses ($1.16M in 1H22) and admin cost normalization are pivotal; evidence of cost reductions and new state wins would be stock catalysts .
Balance/cash: Cash and equivalents stood at $6.02M at quarter-end; recent $3.0M gross capital raise provides incremental flexibility, but execution on growth and cost control remains critical -.
Risks to monitor: FX headwinds, pace of Italian re-openings, DC/Ohio regulatory timelines, and the company’s NASDAQ minimum bid notice dated July 25, 2022 .

Sources:

Q2 2022 Form 10-Q (filed Aug 15, 2022): financial statements, KPIs, segment details, Lottomatica agreements, cost actions, and risks - - .
8-K (Aug 17, 2022) with Exhibit 99.1 press release: revenue/cost highlights, European ops profitability, Ocean/DC/Ohio updates, Italian ADM rights revenue potential -.
Q1 2022 press release (May 17, 2022) for sequential revenue context vs Q4 2021 .
Ocean Casino partnership and venue announcements (context) .

Elys BMG Group, Inc. (ELYS)·Q2 2022 Earnings Summary