The online marketing firm Raketech has released its financial report for the first quarter of the year, revealing a revenue surge to €19.0 million, marking a significant increase of 20.1% compared to the same period last year. This notable uptick is primarily attributable to the company’s flourishing sub-affiliation sector, where revenue soared by an impressive 149.8%.
Despite this robust growth in one division, the company encountered declines in its core offerings, including affiliation marketing and betting tips and subscription services. The downturn in affiliation marketing, which saw an 18.5% drop to €8.8 million, was largely attributed to an “unexpected magnitude” of a Google update completed in April.
Additionally, Raketech reported a decline within its acclaimed betting tips and subscription income by as much as 14.9%, culminating in €1.2 million. The company has alluded to the downturn in the U.S. sports season as a contributing factor to these diminishing figures.
Acting CEO Johan Svensson has maintained an optimistic outlook amidst these challenges, with confidence rooted in the company’s market-leading products and plans for strategic growth initiatives. Svensson’s renewed leadership comes after an executive turnover that saw former CEO Oskar Mühlbach leaving the company over differing strategic perspectives. Svensson, who previously helmed Raketech before stepping down in 2017, highlights the importance of the recent operational review. This review has sparked key strategies aimed at reducing the company’s dependency on search engine optimization (SEO), expanding sports offerings, enhancing customized partnerships, and widening the overall reach.
Implementing the review’s strategies effectively, Raketech is poised to shift and strengthen its business model, focusing on long-term organic growth drivers. Cost-cutting and efficiency measures are also expected to improve profitability and refine execution, maintaining a focus on the prioritized products and markets.
With the results indicating a significant increase in the sub-affiliation sector, various initiatives are underway to further enhance this growth. These plans encompass platform improvements, market expansions, and new publisher onboarding – moves that demonstrate the company’s commitment to its partners and future development.
Raketech’s sports wagering offerings registered a decline in the face of these improvements, with revenue slipping by 7.5% year-on-year. Nevertheless, the casino vertical saw a healthy 28.8% increase in revenue, which accounted for a substantial proportion of the total revenue.
An intriguing aspect of the company’s revenue breakdown revealed that nearly half of their revenue stemmed from upfront payments, a trend that continues to ascend. Revenue shares constituted one-third of the total, with the rest spread across flat fees and betting fees with subscription income.
Geographically, Raketech exhibited a particularly strong performance in the Nordics, with revenue in this market catapulting by 42.0%. Revenue in the rest of Europe also grew substantially, by 50.1%. In contrast, the U.S revenue saw a small dip, reinforcing the impact of regional dynamics on Raketech’s business.
The report also highlighted an increase in new depositing customers—a vital indicator of the company’s market influence and potential for further growth.
However, the company’s success story was not without its setbacks. An uptick in operating expenses—totaling a 47.5% increase year-on-year—impacted the bottom line, resulting in a notable decrease in net profit to €174,000, which signifies a drastic 93.8% drop. This decline in profitability also reflected in the adjusted EBITDA figures, exhibiting a reduction of 17.2%.
In conclusion, despite encountering several hurdles in the first quarter, Raketech’s financial report conveys a narrative of resilience and strategic adaptability. With a mixture of revenue growth in certain sectors and setbacks in others, the company is paving its path by recalibrating its operational focus and developing initiatives poised to foster sustainable growth for the forthcoming quarters.
