Better Collective A/S remains confident in achieving its financial targets for 2024 after an extensive M&A strategy defined Q2 and H1 activity.
The Stockholm-&-Copenhagen igaming media group, reported revenue growth of 27% in Q2 2024 and 17% for the first half of the year, ending each respective time period with revenue of €99m (€78.1m) and €194m respectively (€166m).
However, EBITDA remained flat at the close of Q2, standing at €29m, and fell by 9% at the end of H1 from €60.1m to €54.5m. Operating profit also took a hit in both the three month and six month periods, however, falling by 10% in Q2 to €18.6m (€20.7m) and by 26% in H1 to €35.3m (€47.8m).
Results account for Better Collective’s aggressive M&A strategy in recent years, as leadership underlines that the integration of new assets has temporarily impacted % operating margin of its global media network.
Back in November, the company secured terms to acquire Playmaker Capital and Playmaker HQ, concluded in February of this year. The firm asserted that the EBITDA contribution made by these businesses to Q2 and H1 performance ‘has been unexpectedly low’, citing the backend loaded seasonality these holdings experience.
The acquisitions also came with overhead costs in Canada, which Better Collective incorporated into its wider North American costs. The firm stressed that if the acquisitions are excluded, costs in North America would be lower than last year – revealing the significant increase on cost base these takeovers made to Better Collective in H1 balance sheet, standing at €137m at the end of June 2024.
Overall, US revenue in Q2 rose by 12% from €22.9m to €25.8m, and remained largely flat for the first half of the year, declining marginally from €60m to €59.8m. Operating profit, meanwhile, fell 75% in Q2 to €1.9m (Q2 2023: €7.6m) and by 50% in H1 to €11m (H1 2023: €22.1m).
However, in a post-results earnings call, company Chief Financial Officer, Fleming Pedresen, stated that the two assets are now performing better and expects both to make a greater contribution towards the end of the year. Pedresen also noted that the firm has been investing in technology, which will have also impacted profits.
“The integration process is going according to plan, with some developments ahead of schedule,” said Jesper Søgaard, Co-founder and CEO of Better Collective.
Søgaard added that Better Collective expects strong growth in South America over the remainder of the year, remarking later in the call: “I am pleased to see that the commercial pipeline for the rest of the year continues to look promising.”
The issue faced by Playmaker HQ during Q2 and H1 related to commercial sales, Søgaard informed investors this morning, which meant that the outlet did not meet its early income expectations mapped out following the February acquisition.
However, by making changes to the Playmaker sales team and oversight, including appointing a Director from within the Better Collective organisation, Søgaard is confident that the company will achieve its plan for Playmaker, but a year later than originally expected.
“It is of course unfortunate that it has not met expectations, but we are truly excited about the content that is being produced, the podcast shows, the short-form documentaries that they produce,” he continued.
“They have a huge following and we’ve seen interest from a lot of great talent that wants to work with Playmaker HQ.”
Looking back to Better Collective’s founding continent, Europe, the company made another acquisition closer to home in the form of UK sports betting media group AceOdds. The asset was acquired for €42m, after which Better Collective upgraded its 2024 full-year financial targets.
Total revenue for the Europe and Rest of World (RoW) segment rose 33% in Q2 to €73.3m (€55.1m) and 27% for the whole of H1 to €134.3m (€106m). Operating profit, meanwhile, rose 26% in Q2 to €26.6m (€21.1m) and 17% in H1 to €46.5m (39.9m).
Addressing investors in the post-results call this morning, Søgaard exclaimed that it is ‘full steam ahead’ for Better Collective following the acquisition of AceOdds.
One investor, however, did request an overview of trends going forward after remarking that Europe and RoW results appeared, in his words, ‘soft under the hood’, with new depositing customers standing at 501,000 at the close of H1, 100,000 of which were attributed to the UEFA European Championship 2024.
“We are happy with the development of NDCs, we did flag some uncertainty on the back of Q1s, so we are pleased to see the development,” Pedresen responded to the investors query.
“We delivered 100,000 during the year, which I think is a great delivery during a championship. We have seen a 20% decrease in the games in major leagues in Europe, which has also affected this.”
The financial targets unveiled following the AceOdds takeover earlier this year remain unchanged. Better Collective continues to project revenue of between €395-€425m, amounting to growth of between 21% and 30%. EBITDA, meanwhile, is expected to grow by between 17%-26% to reach between €130m-€140m, with net debt expected to remain 3x below EBITDA.
“Thanks to a great team effort, we managed to deliver a strong Q2 in a time of changing market conditions,” Søgaard commented in the Q2/H1 earnings report. “Our existing business is back to organic growth, and I am pleased to see that our diversified strategy has performed as envisioned.”
