Better Collective sees profits fall despite revenue rise in 2018

iGaming affiliate marketing specialist Better Collective has reported a year-on-year decline in net and operating profit for 2018, despite a sharp increase in revenue.

Revenue for the 12 months through to December 31, 2018, amounted to €40.5m (£35.4m/$45.8m), up from €26.3m in the previous year.

Better Collective put this increase down to a higher number of new depositing customers (NDCs) over the past year compared to 2017. In total, there were more than 260,000 NDCs in 2018, up 123% year-on-year.

The super-affiliate noted that this high number of NDCs compared to the year before lowers revenue short term on revenue-share contract, as sign-up bonuses for new NDCs is offset against revenue share on existing depositors.

Better Collective was also hit by an increase in costs for the year, which rose from €16m in 2017 to €27.3m in 2018.

Much of this was down to higher staff costs – up 72% to €13m – with employee numbers rising from 116 to 198, while direct costs related to revenue climbed 47% to €4.4m. Amortisation and depreciation also increased from €722,000 to €3.1m, mainly due to new acquisitions during the year.

These higher costs hit profits at Better Collective in 2018, with operating profit falling from €9.9m to €9.1m. Profit before tax also slipped from €9.8m to €8.5m, while net profit for the year was down from €7.4m to €5.4m.

However, EBITDA before special items for 2018 increased 47% year-on-year to €16.1m, while EBITDA including special items was up from €10.5m to €12m.

Jesper Søgaard, chief executive of Better Collective, said that he is highly satisfied with the performance in the past year, saying the company has laid the ground for an even more promising 2019 and the years to come.

“The strong growth in NDCs and other relevant KPIs, including player deposits and sports betting turnover, were significantly higher compared to revenue growth and continue the trend we have seen throughout the year,” he said.

“As most NDCs are on revenue-share based contracts, my expectation is that this will accelerate future growth.”

Søgaard picked up on opportunities in the US, saying Better Collective has been able to enjoy revenue streams from the country since late in the third quarter. With its products having been up and running in the market for some time now, Søgaard anticipates further growth in 2019.

“In Q4, further resources were allocated to the process of offering new products and adjusting current products to US needs,” he said. “While we do not expect organic growth to do it alone, we believe that Better Collective has a unique offering in terms of technology and know-how in order to find attractive business in this new and potentially very big market.”

Søgaard added that Better Collective is committed to an ongoing M&A strategy, with acquisitions of assets and business combinations now at a total value of €85m.

In addition, he paid tribute to a “much stronger organisational and technical foundation” at Better Collective, with the company growing its presence in Denmark, Austria, France, Greece, Sweden and Serbia.

“This plays an important role in securing the future success of the business as well as our ability to successfully integrate new acquisitions,” he said.

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