Better Collective said recent acquisitions had a significant impact on its performance during the 12 months to 31 December 2021, singling out its purchases of Action Network in May 2021 and pay-per-click specialist Atemi in October of the previous year in particular.
The group’s publishing business, comprising online platforms and media partnerships where online traffic comes directly or organic search results, generated €120.2m of all revenue, up 62.0% year-on-year. This, Better Collective said, was driven by the addition of Action Network to the business, as well as its other investments in the US.
Paid media revenue – covering lead generation through paid media and social media advertising – also rocketed 234.7% to €56.9m, mainly due to the Atemi acquisition, though the group said the performance was not in line with expectations.
This, it said, was a result of the loss of a major customer, challenges from an iOS update and its decision to switch more new depositing customers (NDCs) from cost-per-acquisition to revenue share contracts or hybrid revenue models.
Better Collective added to its portfolio with a number of other acquisitions in 2021 including Swedish online sports betting media platform Rekatochklart.com and RotoGrinders Network in the US.
The group also acquired Dutch online sports media brands Soccernews.nl and Voetbalwedden.net as part of an effort to build its presence in the Netherlands, while it increased its stake in responsible gambling solutions provider Mindway AI by 70%.
In addition, shortly after the end of the year, Better Collective announced further expansion within its US operations by going live in New York, supported by a new partnership with the New York Post, while it named Adam Rosenberg as head of marketing and communications in the US.
This ongoing commitment to US growth was reflected in its full-year figures, with revenue in the US rocketing 370.0% year-on-year to €47.0m. Rest-of-world revenue also increased by 60.1% to €130.0m.
“The US market is already the single biggest market for Better Collective and is approaching the same profitability as our European publishing business,” Better Collective co-founder and chief executive Jesper Søgaard said. “We have established ourselves with strong American sports betting brands, including the recently acquired Action Network.”
Turning to costs, expenses were up in all areas, with revenue costs jumping 216.6% to €64.9m, staff costs 67.4% to €40.5m and other external expenses 85.7% to €15.6m.
Earnings before interest, tax, depreciation and amortisation (EBITDA) before special items was up 46.1% to €55.8m, and even after including €1.8m in depreciation costs and €8.5m in amortisation and impairment, operating profit before special items was 49.7% higher at €45.5m.
However, Better Collective also noted €16.7m in special item costs, related to its acquisition activity. This included an €11.5m adjustment of its contingent liabilities related to the 2019 acquisition of Rical, as well as income related to an adjustment of the variable payment recorded in connection with the acquisition of Dutch assets.
Special costs also included €6.0m in expenses related to M&A activities, primarily Action Network, and €2.5m for a management incentive program related to Action Network.
After including these expenses, as well as €2.5m in net financial costs, pre-tax profit was €26.2m, down 8.7% year-on-year. Better Collective paid €8.9m in income tax during 2021, leaving a net profit for the year of €17.3m, a drop of 21.0% from €21.9m in 2020.
Focusing on the final quarter of the year, revenue for the three months to 31 December was 43.9% higher at €52.8m. Publishing revenue jumped 70.6% to €38.9m, while paid media revenue remained level at €13.9m.
Revenue costs were up by 47.8% to €19.8m, staff expenses 72.1% to €11.7m and other external costs 104.2% to €4.9m. This meant EBITDA before special items was €16.3m, an increase of 15.6% on the previous year.
Depreciation costs reached €473,000 and amortisation and impairment €3.5m, which left €12.3m in operating profit before special items, marginally higher than €12.0m in Q4 of 2020.
After accounting for €260,000 in special items profit and €339,000 in finance expenses, pre-tax profit was €12.3m, up 11.8% year-on-year. The group paid €1.5m in income tax, which left a net profit of €10.8m for Q4, an increase of 27.1%.
“During 2021 we have experienced continued competition for talent in many countries, and therefore we continue focusing on being an attractive workplace,” Søgaard said. “We continue to benefit from being a truly international company, and in the second half of 2021 we initiated two academies in specialised areas of our business to educate candidates and potentially offer them employment after completing the training.
“For 2022, we will continue our efforts to seek market growth through M&A-activities while we also have more media partnerships in our pipeline.”
Original article: https://igamingbusiness.com/acquisitions-drive-better-collective-revenue-to-record-e177-1m-in-2021/
