In the announcement of Better Collective's Q3 results, Chief Financial Officer Fleming Pedersen noted that it has been difficult to observe any negative effects from macroeconomic conditions on the affiliate’s operations. He stated, "The general business cycle still has had no noticeable impact on our business; even so, estimating whether we could have grown even faster is near impossible." He highlighted that sports wagering remains at all-time high levels, attributing part of this performance to the company's proactive strategies and timely business insights.
Despite the current resilience, Pedersen indicated that Better Collective plans to reduce its investments in the US in pursuit of a "prudent" and "pragmatic" approach to cost management. The company has previously made significant investments in the US, including acquisitions such as The Action Network and RotoGrinders. Pedersen expressed, "With the current macroeconomic instabilities, we expect to stay resilient but not immune and therefore we will use this chance to take a more prudent look at our total cost base."
He added, "Consequently, we expect the cost base growth to slow down going forward, especially in the US. The past few years, our US investments have intensified. Going forward, focus will be on scalability to be progressed by a pragmatic cost focus and from our operational leverage as we continue our growth."
Looking at the financial figures, Better Collective reported a 31.4% increase in revenue, amounting to €59.7 million. The majority of this growth came from the Europe and rest-of-world segment, which generated €42.9 million, up from €31.0 million the previous year. Meanwhile, revenue from the US also showed an increase, rising 16.7% to reach €16.8 million.
Revenue-share agreements emerged as the largest contributor to Better Collective’s overall revenue, generating €25.0 million, reflecting a 73.6% year-over-year increase. In contrast, cost-per-acquisition deals remained static, generating €23.4 million, nearly the same as the prior year. Subscription revenue increased to €4.0 million, while other revenue surged by 72.1% to €7.4 million.
Chief Executive Jesper Søgaard commented on the success of US revenue-share arrangements, asserting that the shift has surprised many skeptics. "The ongoing move from CPA to revenue share in the US is looking highly promising," he stated. He likened this transition to the evolution of technology companies from license-based models to Software-as-a-Service (SaaS) models. He reiterated Better Collective's preference for revenue share agreements, emphasizing a long-term investment approach and the company's readiness for such arrangements.
Søgaard further noted that the transition to revenue share has implications for the company’s financial performance. "Last quarter, the move to revenue share was estimated to have a full-year impact on US profitability of more than €5 million. Now we estimate for the full-year impact to be more than €10 million," he stated. He anticipated that these agreements would provide more stable future revenue while enhancing relationships with sportsbooks.
On the cost side, Better Collective experienced swift increases, with direct revenue costs rising by 39.1% to €21.7 million and staff costs increasing by 46.6% to €17.3 million. Depreciation accounted for €623,000, while other external expenses rose by 44.7% to €6.1 million. The rise in costs was attributed to the integration of the FIFA Ultimate Team brand Futbin, increased spending on paid media to boost traffic, and a higher number of media partnerships.
Consequently, Better Collective reported an operating profit before amortisation and special items of €13.9 million, rising by 6.1%. After accounting for €3.7 million in amortisation and impairment costs, the operating profit before special items was recorded at €10.3 million, reflecting an 8.0% decrease year-on-year.
Special costs incurred totaled €621,000, significantly lower than the €11.6 million in Q3 2021, primarily due to earn-out costs from the Action Network acquisition. This resulted in an operating profit of €9.6 million, contrasting with an operating loss of €362,000 a year earlier. After accounting for financial items and taxes, Better Collective reported a profit of €6.9 million, compared to a loss of €3.5 million in Q3 2021.
