The sale follows a comprehensive review of the group’s US operations and assets. Raketech said the agreement to sell to its management aligned with its strategy to focus on core digital strengths and maximise growth opportunities.
The review identified “underperforming” high-touch advisory operations, with Raketech describing these as “increasingly non-core and subscale”. As such, it has reached an agreement to sell the tipster advisory operations to its management.
The assets in question generated €4m in revenue during Q1 of Raketech’s 2023 financial year, with only minimal EBITDA contribution.
The transaction is expected to close by 31 August. The sale will be settled partially on closing and via an ongoing revenue share agreement.
In addition, the sale will result in a one-off non-cash impairment charge of approximately €10m.
The group acquired US-facing tipster ATS Consultants in December of 2021 for $15.5m. This deal included lead-generating tipster sites such as Winnersandwhiners.com, Statsalt.com and Picksandparlays.com.
Increased US traffic
Elsewhere, Raketech said it has increased traffic to its US tipster sites over the past year and transitioned the business model from a manual process to a digital lead conversion model for multi-capper picks and predictions (MCP).
The firm’s review highlighted the potential for US digital subscription revenues and opportunities to increase affiliation revenues from the tipster websites.
Raketech will continue to leverage its flagship US assets including Winnersandwhiners.com, Statsalt.com and Picksandparlays.com. It notes these sites together attract approximately 50 million sessions annually.
It has also signed an exclusive lead generation agreement guaranteeing a minimum fee of $250,000 over the next 12 months.
CEO welcomes “important” step for Raketech
Commenting on the sale, Johan Svensson, who joined Raketech as its new CEO in May, welcomed the deal. He said it helps to further streamline the group’s wider business.
“This strategic sale is an important step in streamlining our operations and focusing on our core strengths,” Svensson said.
“By leveraging our high-quality US operations, our strategy is to maximise the growth potential in digitalised subscription and affiliate marketing revenues and expand our sub-affiliate marketing and partnership revenue streams.
“Despite the one-off non-cash impairment charge, we are confident that this move will enhance our focus, drive improved performance and deliver long-term sustainable growth and value creation.”
Raketech looking to improve on Q1 performance
Svensson replaced Oskar Mühlbach, who stepped down as CEO in January after over four years in the role.
Incidentally, Svensson was previously CEO of Raketech before stepping aside in 2017. After this, he became chief commercial officer with responsibility for partnerships, mergers and acquisitions and business integrations. This role included overseeing the ATS purchase.
Svensson took the helm at Raketech just days after the group published its Q1 results. These revealed that the affiliate business had fallen short of its targets for the period.
Despite a 20.1% rise in revenue to €19m, adjusted EBITDA and net profit fell. Matters were not helped by an increase in costs, with total operating expenses up 47.5% at €17.7m.
When also including finance-related costs and tax, bottom-line net profit dropped 93.8% to €174,000. In addition, adjusted EBITDA dropped 17.2% to €5.1m.
Raketech is due to publish its Q2 results on 14 August.
Original article: https://igamingbusiness.com/strategy/ma/raketech-offloads-non-core-us-advisory-business/
