Better Collective revenue grows 66.6% in 2019

Affiliate marketing giant Better Collective has reported a 66.6% year-on-year increase in revenue for 2019, aided by a record-breaking fourth quarter performance.

Revenue for the year amounted to €67.5m (£56.2m/$72.9m), with organic growth – existing assets’ revenue – accounting for 24% of the full-year increase. Revenue share agreements accounted for 68% of the year’s taking, with 16% coming from cost per acquisitions (CPAs), 6% from subscriptions, and 10% form other sources.

Over the year, Better Collective signed up more than 431,000 new depositing customers (NDCs), a 66% year-on-year advance.

Better Collective also completed a number of deals, the highest-profile being the acquisition of a 60% stake in Rical, parent company of the Rotogrinders Network, for €18m.

It also acquired the assets of Florida-based sites Vegasinsider.com and ScoresandOdds.com, again for €18m, and the UK-facing MyBettingSites.co.uk for €2.4m. Better Collective also acquired a 19.99% stake in responsible gambling technology provider Mindway AI.

Aided by the new acquisitions, the US business has grown strongly, which looks set to be boosted further by the introduction of new affiliate models to a number of assets in the market. The US assets are likely to see revenue grow and operating margins improve going forward, albeit at a lower rate than the larger business, Better Collective noted.

Media partnerships are expected to grow in importance in 2020, following the launch of sites developed in partnership with UK newspaper The Daily Telegraph and New Jersey’s NJ.com.

“This provides Better Collective with additional channels to market, operate, and manage customer contacts to the betting and casino operators,” chief executive Jesper Søgaard said. “I am very proud of Better Collective being the chosen partner of such prominent media brands. The ambition is to enter more of this type of agreements going forward.”

The business’ growth came alongside increased costs, namely in personnel expenses, which grew to €21.1m, while revenue-related costs were up at €6.6m, and other external expenses to €11.7m.

However, this still left an operating profit before amortisation and special items of €27.2m, up 69.4% year-on-year. Amortisation charges amounted to €5.4m, while €615,000 in special items (M&A related expenses) were recorded, leaving an operating profit of €21.2m.

After finance related expenses pre-tax profit soared 122.0% to €18.8m, leaving a net profit of €13.9m, after income taxes of €4.8m was paid.

This came after a strong finish to the year, with Better Collective breaking revenue and earnings records in the fourth quarter. For the three months to 31 December 2019, revenue amounted to €19.6m, up 61% year-on-year, with the business seeing a positive impacts from US and Swedish acquisitions.

Player activity in terms of gross wagering and deposit values hit new heights, though the business noted that this was accompanied by particularly low sports win margins, which reduced revenue by around €2m.

Revenue share accounted for 60% of revenue, followed by 18% from CPA. Subscription sales made up 11% of revenue, with the same figure coming from other sources.

NDCs exceeded 118,000 in the quarter – a 55% year-on-year increase – though this could grow further. Better Collective noted that its newly-acquired US assets were centred around the sales of picks and tips, and a subscription model, meaning they do not generate significant numbers of NDCs.

Costs for the quarter climbed to €12.5m, largely as a result of increased staffing costs (of €6.6m) and external expenses (of €3.6m), leaving an operating profit of €7.1m. This declined to €5.5m after amortisation charges of €1.6m and €11,000 in special (M&A-related) times were factored in.

After financial expenses, pre-tax profit was up 9.3% at €4.4m. Income tax for the quarter came in at €1.1m, leaving a net profit of €3.3m, up 6.8%.

“In Q4 Better Collective delivered the highest revenue and operational earnings in company history despite very low sports win margins during the quarter,” chief executive Søgaard commented. “On the other hand, Q4 was a seasonally strong quarter with high player activity including big events like the European football tournaments, the NFL and the Euro 2020 qualifications.

“I am very satisfied to see the company deliver well in line with our financial targets for the full year.”

Following the end of the reporting period, Better Collective revealed that revenue for January had grown 48% to €7.2m, boosted by a significantly higher than average sports win margin. The business is also in negations to move into the esports betting market, through a deal to acquire an affiliate business. This could cost up to €34m, it noted.