Acquisitons fuel Better Collective growth in first half

Stockholm-listed Better Collective has reported a significant year-on-year rise in both revenue and operating profit for the first half of the year, with the affiliate marketing giant benefitting from the impact of acquisitions in the period.

Total revenue for the six months through to June 30, 2019 amounted to €30.7m (£28.5m/$34.3m), up 79% on €17.2m last year. This was largely driven by newly-acquired assets, with organic growth accounting for 28% of the increase. In particular the €30m acquisition of Ribacka Group, agreed in December 2018, helped Better Collective buck the downward trend reported by operators and suppliers in the Swedish market. 

Since the country's regulated igaming market opened from 1 January, Sweden has grown to become one of the affiliate's top three markets. This was predominantly seen in Q1, whereas growth in Q2 was slower, which Better Collective attributed to seasonality.

New depositing customers stood at 228,000, representing an implied growth of 95% on the corresponding period last year, while sports betting volume – aided by US market openings – was up significantly. However, gross win margins for the half remained on average levels.

The affiliate marketing specialist also reported an increase in expenses for the first half, which rose from €11.3m in the first six months of 2018 to €17.4m.

Earnings before interest, tax, depreciation and amortisation more than doubled to €13.3m in H1.

Costs were up across the business, with direct spending related to revenue rising from €1.8m to €2.9, while staff costs jumped from €6.3m to €8.9m. Depreciation costs climbed from €63,000 to €337,000, while other external expenses grew from €3.1m to €5.2m.

However, such was the level of revenue growth during the first half that Better Collective was able to report an operating profit of €10.6m, up from €1.2m in the corresponding period last year.

Operating profit before amortisations and special items was also up from €5.9m to €13.3m, while operating profit before special items increased from €5.1m to €10.8m.

After finance income and expenses, profit before tax hiked from €996,000 to €9.8m, with H1 2018's net loss swinging to a profit of €7.4m after income taxes.

Better Collective was helped by a positive performance in the second quarter of the half, during which revenue climbed 64% year-on-year to €15.8m. EBITDA, before special items, was also up 77% to €6.8m.

Revenue growth again offset increased costs, with operating profit for the quarter rising to €5.4m, and profit for the period up at €3.7m, compared to a loss of €1.3m in the prior year.

During Q2, Better Collective also secured an ancillary casino service industry enterprise licence in New Jersey and struck up a content and technology deal with NJ Advance Media, owner of the NJ.com news portal.

Other key highlights for the business in the quarter included acquiring 60% of the shares in daily fantasy and sports betting affilaite Rotogrinders, with an agreement in place to purchase the remaining 40%. Shortly after the end of the quarter, Better Collective acquired the assets of Florida based Vegasinsider.com and Scoresandodds.com for $20m in cash.

Reflecting on the results, chief executive Jesper Søgaard (pictured) praised the performance of Better Collective, particularly for the second quarter, when it faced tough comparatives from the prior year as a result of the Fifa World Cup.

Søgaard also spoke about how the business has established a strong position in the US, as a result of various acquisitions.

“Better Collective has had US-focused products up and running for some time, leading to revenue streams from online sports betting since last year,” he said. “Building a presence and taking part in this new big market opportunity was boosted by the acquisition of the RotoGrinders Network in Q2, adding strong products and dedicated people with insight into the US market.

“I am confident that we, by way of these acquisitions, have put Better Collective in pole position for a market leading position in the US states where online sports betting will be regulated and available.”

Søgaard also talked up the new partnership with NJ Advance Media and how this will further boost its business, as well as its role in co-founding the Responsible Affiliates in Gambling initiatives with Oddschecker and Racing Post, something a body he said would prove a “game-changer in terms of compliance standards for affiliates”.

“I am very proud of the growth and development of Better Collective during the past year, and not least our ability to acquire and integrate new companies with fast pace,” he said in conclusion. “The idea behind the IPO last year was to establish the foundation for growth as we consider this pivotal for becoming a successful market leader; I believe we have demonstrated that this was the right strategy.”