Affiliate business Raketech Group has announced the divestiture of its non-core US advisory business for $2.3 million. This strategic move, which is slated for completion by August 31, marks a significant step for the company as it refocuses on its core strengths. The transaction will be partially settled upon closing and will include an ongoing revenue share agreement, ensuring continued financial engagement between the parties involved.
The sale comes at a substantial cost to Raketech, resulting in a non-cash impairment charge of approximately €10 million. This development traces back to December 2021, when Raketech acquired the US-facing tipster ATS Consultants for $15.5 million. The acquisition had brought prominent sports betting sites like Winnersandwhiners.com, Statsalt.com, and Picksandparlays.com under Raketech’s umbrella.
Johan Svensson, CEO of Raketech, expressed optimism about the divestiture, despite the associated financial write-down. "This strategic sale is an important step in streamlining our operations and focusing on our core strengths," he stated. "Despite the one-off non-cash impairment charge, we are confident that this move will enhance our focus, drive improved performance, and deliver long-term sustainable growth and value creation."
Financial Performance and Strategic Focus
Raketech's Q2 financial results, published on August 14, paint a mixed picture. The company's adjusted EBITDA saw a 17.2% decline, dropping to €5.1 million. Nonetheless, revenue surged by 20.1%, reaching €19 million. The increased revenue was juxtaposed with a significant rise in operating expenses, which ballooned by 47.5% to €17.7 million. Consequently, net profit plummeted by a striking 93.8%, dwindling to €174,000.
Asserting the company's strategic direction, Svensson highlighted the potential benefits of honing in on specific revenue streams: "By leveraging our high-quality US operations, our strategy is to maximize the growth potential in digitalized subscription and affiliate marketing revenues and expand our sub-affiliate marketing and partnership revenue streams."
Commitment to Future Growth
Despite the financial turbulence, Raketech remains committed to bolstering its market position. The company recently signed an exclusive lead generation agreement guaranteeing a minimum fee of $250,000 over the next 12 months. This deal underscores Raketech's intent to solidify its revenue base while continuing to innovate in the affiliate marketing sphere.
The divestiture of the non-core US advisory business is a critical component of this broader strategy. It allows Raketech to channel its resources toward digitalized subscription and affiliate marketing, areas identified as pivotal for driving future growth. This refined focus is expected to not only streamline operations but also enhance the company's overall performance.
By divesting non-core assets and reinforcing its commitment to lucrative digital avenues, Raketech aims to navigate the competitive landscape with agility and precision. The company’s strategic moves are designed to foster a more focused and efficient operation, ultimately paving the way for sustainable growth and value creation in the long term.
Raketech’s ongoing efforts to adapt and evolve in the ever-changing affiliate marketing industry exemplify its dedication to maintaining a leading edge. As the company continues to implement its strategic vision, stakeholders will be keenly observing how these changes impact Raketech’s trajectory moving forward.