Interim report Q3 2020

QUOTE FROM OSKAR MÜHLBACH, CEO
”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. We also delivered on strategically important milestones such as a footprint in the US. Revenues for the third quarter amounted to EUR 7.4m which is equivalent to an annual growth of 23.9%. Organic growth amounted to 3.2% and the EBITDA margin, at 39.8%, was in line with previous quarter, even though we increased investments into geographical expansion and product development.”
 
THIRD QUARTER 2020

• Revenues totalled EUR 7.4 million (EUR 6.0 million) representing an increase of 23.9%
• Organic growth amounted to 3.2% (-17.9%)
• NDCs (New Depositing Customers) amounted to 52,344 (26,782), representing an increase of 95.4%
• EBITDA amounted to EUR 2.9 million (EUR 2.7 million), corresponding to a margin of 39.8% (45.5%)
• Operating profit amounted to EUR 1.5 million (EUR 1.5 million), corresponding to a margin of 19.8% (25.1%)
• Profit for the period amounted to EUR 1.2 million (EUR 1.2 million)
• Earnings per share amounted to EUR 0.03 (EUR 0.03)

FIRST NINE MONTHS 2020

• Revenues totalled EUR 20.9 million (EUR 18.1 million) representing an increase of 15.9%
• Organic growth amounted to -3.8% (-3.7%)
• NDCs (New Depositing Customers) amounted to 128,398 (80,364), representing an increase of 59.8%
• EBITDA amounted to EUR 8.4 million (EUR 9.0 million), corresponding to a margin of 40.1% (50.0%)
• Operating profit amounted to EUR 4.4 million (EUR 6.2 million), corresponding to a margin of 20.8% (34.4%)
• Profit for the period amounted to EUR 3.5 million (EUR 7.5 million, adjusted EUR 5.2 million)
• Earnings per share amounted to EUR 0.09 (EUR 0.20)

EVENTS DURING THIRD QUARTER 2020

• No significant events during the third quarter

SUBSEQUENT EVENTS AFTER THE END OF THE PERIOD

• Revenues of EUR 2.6 million in October 2020
• On November 6, 2020 Raketech acquired the US based organic affiliation marketing assets americangambler.com. The agreed purchase price for American Gambler amounts to EUR 5m and was settled using Raketech’s current cash and proceeds from the divestment of the consumer finance assets.
• On November 6, 2020 Raketech announced that the company has divested its consumer finance assets to ROI Media UK, for a total consideration of EUR 4.2m. with an upfront payment of EUR 3.4m and a deferred consideration of EUR 0.8m paid in three instalments over the upcoming 18 months.

CEO OSKAR MÜHLBACH COMMENTS ON THE QUARTER
While our casino focused assets and markets continued to deliver strong and stable results, our sports focused assets were still not back to pre-Covid levels. During the last part of the quarter it is however worth mentioning that we have been able to notice a significant upswing within the sports segment – in particular to our flagship assets TVsportsguide and BetXpert.

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.

In parallel to this we have furthermore divested our consumer finance assets to ensure that we keep sharp focus on what we do best and where we believe the growth potential is the highest.

In the beginning of the quarter we registered large movement of users shifting between casino operators due to the new Swedish legislation. This initially led to slightly increased NDCs volumes and related revenues. During August and September, the Swedish market however stabilized somewhat, at the same time as the total market most certainly lost share to unregulated alternatives.

We have also secured additional licenses in the US; this time in Pennsylvania, Michigan and West Virginia, which now leaves us with a total of seven US state licenses. During the quarter we furthermore sold the recently launched Extended Audience product to additional operators as well as successfully rolled out our first ever Game Producer campaign.

Activity on, and traffic to, our assets continued to be on high levels during October and revenues totaled EUR 2.6m. Sports traffic is continuously increasing, even though we have not yet been able to perfectly correlate this into revenues in the same proportion. We believe that the Covid-19 situation is the main reason for this but exactly how it will play out and how it will affect our industry in the short term is difficult to predict with certainty. Furthermore, with regards to the Covid-19 situation, the Swedish government, on the 10th of November, proposed that the temporary regulations are to be prolonged another half year. So far, we have managed to navigate through the volatility and uncertainty with good results but have yet to analyze potential consequences from the new proposal before making any definite conclusions.

What we can conclude already today is however that our operational performance is strong and stable, and that our geographical footprint is wider than ever with more than 25% of revenues expected to originate from outside the Nordics by the end of this year. Raketech now has a solid footprint in the US and our commercial offering has been broadened to include much more than what normally is regarded as traditional affiliation.