Raketech Group, an affiliate, has decided to sell its US non-core advisory business including its Tipster advisory Sales arm for $2.3m ($1.8m/EUR2.1m) (and PS1.8m/Euro2.1m).
This sale is the result of a thorough review and analysis of US assets and operations. Raketech stated that the sale to management was in line with their strategy of focusing on digital core strengths and maximising growth opportunities.
Raketech described these operations as increasingly non-core, subscale and “underperforming. Raketech has therefore reached a deal to sell its tipster advisory business to management.
Raketech 2023’s Q1 financial year saw a revenue of EUR4m from the assets, but with minimal EBITDA contributions.
It is anticipated that the transaction will close on 31 August. Sale proceeds will be split between a partial settlement at closing and recurring revenue sharing agreements.
The sale of the company will also result in an impairment charge, which is a non-cash one-off amounting to approximately EUR10m.
In December 2021, the group purchased US-facing tipper ATS Consultants for $15.55m. This deal included lead-generating tipster sites such as Winnersandwhiners.com, Statsalt.com and Picksandparlays.com.
Traffic in the US is increasing
Raketech has also reported that it increased the traffic on its US tipper sites in the last year, and changed the business model to one that converts digital leads for the multi-capper predictions and picks (MCP) from a manually operated process.
This review highlights the opportunity to grow affiliate revenues through the use of tipster websites and digital subscriptions in the US.
Raketech will continue to leverage its flagship US assets including Winnersandwhiners.com, Statsalt.com and Picksandparlays.com. These sites are visited by approximately 50,000,000 people per year.
The company has signed an exclusive agreement for lead generation that guarantees a fee minimum of $250,000.
Raketech CEO welcomes an “important” move
Johan Svensson welcomed the transaction when he commented on it. He joined Raketech in May as the new CEO. The deal, he said, helps streamline Raketech’s business.
Svensson stated that “this strategic sale represents an important step towards streamlining and strengthening our business operations, while concentrating on our strengths.”
By leveraging the high quality US operations we have, our goal is to maximize growth in digitalised marketing revenue and subscription revenues. We also want to expand sub-affiliate and partnership revenue streams.
We are confident this will improve our performance, deliver sustainable long-term growth, and create value.
Raketech looks to improve Q1 performance
Svensson succeeded Oskar muhlbach as CEO, after he stepped down in January following four years.
Svensson, incidentally, was the former CEO of Raketech until 2017. He then became the chief commercial officer, responsible for business integration, partnerships, mergers, and acquisitions. In this role, he was responsible for overseeing the ATS acquisition.
Svensson was appointed CEO of Raketech a few days after Raketech released its first quarter results. The results revealed that affiliates had not met their targets.
The adjusted EBITDA fell and the net profit decreased despite a revenue increase of 20.1% to EUR19m. The increase in operating costs of 47.5% to EUR17.7m did not help matters.
If you include finance costs, tax and other expenses in the bottom line net profit, it drops 93.8%. The adjusted EBITDA also dropped by 17.2%, to EUR5.1m.
Raketech will publish Q2 Results on August 14.
