Better Collective has reported a promising first quarter for 2023, marking an 8.1% increase in overall revenue, primarily driven by the core Publishing business. Despite the challenges posed by tough year-on-year comparisons, particularly in the US market, the company’s diversified strategy and key acquisitions have set a positive tone for the future.
A significant contributor to this growth was the Publishing business, which includes revenues from proprietary owned and operated sports media and media partnerships. Publishing revenue surged by 12.0% to €66.3 million during the first quarter. This boost occurred despite the daunting task of matching the performance from Q1 2023, which featured two state launches in the US that generated upfront revenues through cost-per-acquisition (CPA)-based contracts. In contrast, the North Carolina state launch this year employed a revenue mix of shared income and CPA, adding a layer of complexity but still delivering substantial returns.
In an analysis of regional performance, the North American market presented a mixed picture. Revenue in this region fell by 8.4% to €34.0 million. This drop was attributed to an ongoing transition in revenue share strategies and the previous year’s revenue spike from state launches. However, Better Collective remains optimistic about long-term growth prospects in North America. CEO Søgaard emphasized the company’s robust commercial position, citing successful partnerships with major players in the market and notable achievements during key events such as the North Carolina state launch and the Super Bowl.
In addition to the Publishing business, Better Collective’s Paid Media segment also performed admirably. Revenue in this segment remained steady at €28.7 million. Paid Media revenue is derived from paid advertising through search engines and third-party sports media. Given the high comparison benchmarks from the previous year, maintaining revenue levels is seen as a strong performance.
When assessing geographical performance, Europe and the Rest of the World (ROW) were standout regions. Revenue from these regions combined contributed 64.0% of the total and jumped by 20.1% to €61.0 million. This growth is notable, especially in light of fewer football matches and a lower sports win margin, which could have negatively impacted results.
Furthermore, Better Collective continues to focus on product diversification in North America. The company views this as a strategic move to support longer-term growth plans, despite the short-term decline in revenue. This strategy received a further boost from the acquisition of AceOdds, a sports betting media company, after the end of the first quarter. The AceOdds deal, alongside the promising results, has led Better Collective to enhance its guidance for the entire year.
“In Q1, we saw good performance across all markets. Europe and ROW showed outstanding performance with an impressive 20% growth, of which 5.0% was organic,” Søgaard noted. This impressive achievement was fueled by a comprehensive impact across various markets, facilitated by owned and operated channels and strategic media partnerships.
Focusing on new depositing customers (NDCs), Better Collective reported surpassing 450,000 NDCs in Q1, with more than three-quarters of these customers on revenue share contracts. Revenue share accounted for approximately 45.
.0% of the total Q1 revenue, while CPA made up 31.0%, subscription sales 4.0%, and other income 20.0%.
Despite the positive revenue figures, expenses across the board were higher in Q1. Staff costs were the primary expense, totaling €28.7 million, which represented a 35.4% increase year-on-year. Other significant costs included revenue expenses of €27.9 million and external costs amounting to €9.4 million. After accounting for depreciation, amortization, impairment, special items, and net finance costs, Better Collective’s pre-tax profit stood at €10.3 million, reflecting a significant 62.3% decrease.
After taxes of €2.7 million, the net profit for Q1 was €7.6 million, marking a decline of 62.0%. EBITDA also saw a reduction of 10.2%, coming in at €29.0 million.
The acquisition of AceOdds, valued at €42.0 million, has been a noteworthy development. Founded in 2008 and based in the UK, AceOdds provides betting tools, reviews, odds, and streaming programs. This acquisition has led Better Collective to raise its full-year revenue guidance, now expecting to fall between €395.0 million and €425.0 million, up from the initial range of €390.0 million to €420.0 million. EBITDA before special items is now projected to be between €130.0 million and €140.0 million, an increase from the previous forecast range of €125.0 million to €135.0 million.
In conclusion, Søgaard expressed his gratitude towards the Better Collective team and the newly included Playmaker Capital group, commending their dedication and unwavering ambition. The company looks forward to sustained growth and success in the future, anchored by its strategic acquisitions and diversified revenue streams.
