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Raketech boosted by Lead Republik and US expansion in Q3

| By Richard Mulligan
Raketech was boosted by income from recent acquisition Lead Republik and US growth as it posted a double-digit increase in revenue during the third quarter.

In a trading update for the three months to 30 September, the Stockholm-listed online affiliate and content marketing provider said revenues were up 23.9% year-on-year to €7.4m.

Casino remained the operator’s strongest segment, contributing 85.5% of total revenue compared to 67.3% in Q3 2019.

Raketech said that while sport has not yet returned to pre-Covid 19 levels, there was a significant upswing towards the end of the reporting period, most notably in relation to flagship assets TVsportsguide and Denmark’s BetXpert. Sport contributed 11.1% of revenues, compared to 27.5% in Q3 2019.

In terms of geographical footprint, revenue from the Nordics reduced from 90.4% to 80.4%, as Raketech welcomed greater input from other markets, including the US, where TVsportsguide went live ahead of schedule. It now has licences in seven US states, with Pennsylvania, Michigan and West Virginia added during Q3.

The operator said the rest of the world is expected to contribute as much as 25% of revenue by the end of this year following the €5m acquisition of AmericanGambler earlier this month.

Revenue share agreements made up 42.5% of income, which was down on 56.4% in Q3 2019. Upfront payment grew to 39.7% while flat fee increased to 17.8%.

The impact of Lead Republik – the Canada and Germany-facing performance marketing company which was acquired in March 2020 – on the results was highlighted by Raketech’s sizeable leap in overall revenue compared to organic growth of just 3.2%.

New depositing customers almost doubled from 26,782 in Q3 2019 compared to 52,344 this year, in part due to turbulence in the Swedish market in the early part of the reporting period.

EBITDA grew by 8.3% to €2.9m, although margin was down from 45.5% to 39.8%, which was primarily due to Lead Republik being a lower margin product offering.

Direct expenses increased to €1.9m in the main because of an uptick in paid media through the new product offering following the acquisition of Lead Republik.

Other major outgoings included product development costs and an increase in employee benefit expenses due to the onboarding of senior management and a slight increase in headcount.

The operator posted an overall operating profit of €1.5m, which was down 2% on 2019.

“The third quarter of 2020 was yet another operationally productive and stable quarter where we managed to deliver strong results despite tough and volatile macro conditions,” said chief executive Oskar Mühlbach.

“We also delivered on strategically important milestones such as a footprint in the US.

“As previously announced our M&A efforts have during the quarter been intensive and I am happy to be able to conclude that we, only a few days prior to this report, managed to close the acquisition of AmericanGambler.com, which is a sports asset targeting the US.

“With this acquisition in place our global footprint is significantly widened, and the US has shifted from a strategic target to a strategic market.”

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