Better Collective has encountered a financial slowdown for the first time in its history, its CEO informed investors ahead of its latest earnings call.
Publishing its Q3 financial results, the company revealed that although revenue rose 8% to €81m (€74.5m), organic growth was down 6%. EBITDA, meanwhile, stood at €52m (€45m), up 14%, but the company’s net debt remains 2x above its EBITDA.
Addressing investors, Better Collective CEO, Jesper Søgaard, cited factors in the US and Brazil as impacting the Danish digital sports media company’s Q3 performance. In the US, ‘changing market dynamics’ have affected its outlook, the CEO asserted.
“Although the first state in the US has been operational for six years, it is effectively only three years mature for most states,” he said.
“Meanwhile, the Brazilian market is expectedly on the brink of regulation. Young markets bring challenges and opportunities, and we are committed to navigating this, like done historically in more mature regulations.”
Brazil’s big impact
Brazil is set to launch a regulated betting market in January 2025 after legislation introduced by the country’s President was approved by its Congress earlier this year. This has ended a nearly two-year waiting period for various sports stakeholders, including bookmakers, sports clubs and associations, and media outlets.
However, with the regulated market launch approaching, Brazil has seen ‘an increasing slowdown all year heading into the expected regulation,’ Søgaard remarked. With Brazil accounting for 20% of group revenue, this slowdown has understandably affected Better Collective’s metrics.
As a result of Q3 challenges, Better Collective has opted to revise its guidance for the end of the year. The firm has lowered its revenue expectations from €395-423m to €355-375m, and EBITDA from €130-140m to €100m-€110m, with net debt expected to be 3x below EBITDA.
As a result of its impacted performance, Better Collective has opted to introduce a €50m cost reduction programme. The company has set itself the goal to ‘recapture growth in the US and secure an early leadership position in Brazil’.
This cost reduction effort saw more than 300 employees, around 15% of its workforce, laid off at the end of October. Søgaard stressed that this was a ‘difficult decision’ but that the company is now ‘well on track for cost reductions and tactical adjustments to take full effect from the beginning of 2025’.
Søgaard concluded: “The recent changes leave Better Collective a leaner organisation, poised to attack future opportunities and challenges head-on. By ensuring our operations reflect current demand, we retain the flexibility to scale up as opportunities arise.
“I am optimistic that this strategic recalibration will lead to a stronger foundation for future growth, allowing us to continue delivering exceptional value to our partners and stakeholders.
“Related to returning to growth, our long-term financial guidance remains intact, implying strong growth ahead, including M&A when the timing is right.”
