Q2 2022: Solid performance from the core portfolio of affiliation marketing and Affiliation Cloud launched

QUOTE FROM OSKAR MÜHLBACH, CEO
“Q2 of 2022 was yet another stable quarter for Raketech Group. Our core portfolio of affiliation marketing assets delivered results in line with Q1, despite challenging market conditions and low seasonality. Again, proving the strength of Raketech’s well diversified asset portfolio, as well as our well balanced vertical and geographical split. Total revenues for the quarter amounted to EUR 11.3m, equivalent to a growth of 29%.”

Q2 2022 FINANCIAL HIGHLIGHTS

• The core portfolio of affiliation marketing assets delivered solid results, despite challenging market conditions. Revenues totalled EUR 11.3 million (EUR 8.8 million).
• Organic growth amounted to -4.0% (25.7%), an effect of changed regulations on the Finnish market as well as Network sales no longer being offered on the German and Dutch markets due to re-regulations.
• US revenues amounted to EUR 1.3 million (EUR 0.3 million), as US sports entered its low season of the year.
• Sports revenues totalled EUR 3.5 million (EUR 1.3 million), corresponding to 31.0% (15.2%) of total revenues.
• Revenues from the recently launched Affiliation Cloud amounted to EUR 0.2 million (EUR 0 million).
• Adjusted EBITDA amounted to EUR 4.0 million (EUR 3.4 million), corresponding to a margin of 35.0% (38.7%). Expected seasonality effects from primarily the US market affecting the margin.

Q2 2022 OPERATIONAL HIGHLIGHTS

• Strong performance from most assets following the recent Google core update.
• Continuous investments in the US organisation and tech development such as the Affiliation Cloud to further consolidate the platform for growth.
• The company announced it has extended its revolving credit facility of EUR 15 million with Avida Finans AB up until September 2023. When utilized, the interest on the facility is EURIBOR plus 4.25% with an additional upfront extension fee. The credit facility includes an extension option and can thus be renewed annually subject to certain conditions.

SUBSEQUENT EVENTS AFTER THE END OF THE PERIOD

• Revenues in July 2022 amounted to EUR 3.9 million (EUR 2.9 million).

CEO OSKAR MÜHLBACH COMMENTS ON THE QUARTER
Q2 of 2022 was yet another stable quarter for Raketech Group. Our core portfolio of affiliation marketing assets delivered results in line with Q1, despite challenging market conditions and low seasonality. Again, proving the strength of Raketech’s well diversified asset portfolio, as well as our well balanced vertical and geographical split. Total revenues for the quarter amounted to EUR 11.3m, equivalent to a growth of 29%.

Year over year we declined organically with 4%, entirely relating to the Finnish market as expected, stabilizing on lower levels due to changes in legislation, and our Network no longer being offered on the German and Dutch markets due to re-regulations.

Considering these factors and that Q2 of last year included both a digitalization boost due to Covid and the UEFA EURO I am therefore very happy with our Q2 performance of this year. It gives me confidence to see that our assets are holding up strong despite such tough comparison numbers and a generally negative reported Q2 iGaming sentiment.

Furthermore, as Q2 is a seasonally weaker period for sports in the US, revenues from this market were as expected lower than those in Q1, representing 12% of the Group’s total. At the same time, revenues from the Nordics were 47% of group total thanks to the strong performance from our core portfolio.

Adjusted EBITDA for the quarter came in at EUR 4m, representing a margin of 35% relating primarily to the low sports season in the US where our fixed cost base is stable, in combination with the continuously high investments pace with regards to product development, US organization and the Affiliation Cloud.

During the quarter Google rolled out one of their “core updates” that affected us in a positive direction, which is an additional testament that we are doing things right. Worth mentioning in this context is that several of our flagship assets on the, for us so important Swedish market, experienced increased organic visibility. And with regards to our latest product innovation, the Affiliation Cloud, we experienced more interest in the product than expected, which is exciting considering it is currently only in beta phase. We have therefore increased investments into this area to ensure we maximize our capacity to onboard new clients while ensuring a great user experience for both affiliates and operators. Affiliation Cloud revenues for Q2 was approximately EUR 200k.

And with regards to other investments, one of the more interesting and exciting current projects is relating to our Flagship asset Casinofeber. As of February 2023, Casinofeber will be completely operated by the central Raketech team as it is handed over from the original team. I am very excited about this, not only from a product development perspective but also very much from a cash flow perspective as the full operating cash flow from this asset will be made available for Raketech in its whole once the final earn out is settled at the end Q1 2023.

As a final quarterly highlight, I am happy to be able to mention that we have extended our revolving credit facility of EUR 15 million for yet another year on attractive commercial conditions, with the possibility of further extension based on certain criteria. The credit facility ensures we can continue to invest into organic growth while also keeping the door open for additional M&A.

OUTLOOK

July revenues came in at EUR 3.9m, relating to continuous strong performance from core assets as well promising results from Affiliation Cloud.

The second half of the year is typically stronger than the first half. And with our core products portfolio performing well, the American football season coming to a start and the FIFA World Cup to look forward to in November and December, we reiterate our full-year aim of being within the interval of EUR 50-55m in revenues with an EBITDA margin within 40-44%. I am very happy to see that our diversification strategy and strong operational delivery focus is paying off. Raketech is in a position where we are, not immune perhaps, but very resilient against sudden changes in the world around us. And not only are we resilient but also well positioned for growth with regards to products, markets, and different revenue stream on the ever changing and growing global iGaming industry. With that said I am very much looking forward to the last part of this year.

LINK TO REPORT
The full Interim Report is available on https://raketech.com/investors/

REPORT PRESENTATION
CEO Oskar Mühlbach and CFO Måns Svalborn will present the report in a conference call and webcast today August 17 at 09:00 CEST. The presentation will be held in English and will be concluded with a Q&A session.

Link to the presentation: https://tv.streamfabriken.com/raketech-q2-2022

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