Raketech warns of missed Q4 earnings targets
Online affiliate and content marketing provider Raketech has warned it is likely to fall short of its forecasted reported earnings before interest, tax, depreciation and amortisation (EBITDA) in the fourth quarter, while operating profit it also set to come in below expectations.
Total revenue for the three months through to 31 December, 2019 is expected to amount to €5.8m (£4.9m/$6.4m), which would be represent a slight decline from the third quarter.
Reported EBITDA is likely to come in at €1.6m, below expectations as a result of extraordinary cost items amounting to €400,000 and loss allowance for trade receivables totalling €300,000 during the quarter.
According to Raketech, the extraordinary items affecting EBITDA relate to the total amount of the severance pay to former chief executive Michael Holmberg, who was replaced by Oskar Mühlbach last month. Raketech also said expenses related to relocating its Danish office impacted EBITDA in Q4.
Meanwhile, operating profit for the final three months of 2019 is expected to be below initial forecasts, due to extraordinary items related to the revaluation of goodwill of €300,000, as a consequence of the ongoing pay-per-click ad ban in Sweden.
Raketech said this revaluation of goodwill relates to its June 2018 acquisition of Shogun Media, in relation to paid media in Sweden. According to Raketech, uncertainty as to when Google’s paid media channel will open up to advertisers in the country led to the board writing down the goodwill value of €300,000.
“Despite the continuously challenging Swedish market I am pleased to conclude that we are able to deliver revenues with only a minor drop compared to the third quarter, which is within expectations,” Raketech chief executive Oskar Mühlbach said.
“This minor drop in combination with the extraordinary cost items including the loss allowance, however, results in an EBITDA which is less pleasing. The fourth quarter had a particularly slow start but finished off confidently with a generally good performance from our entire product portfolio.”