Q4 2022: Continued good organic growth with record revenues – Board proposes dividend

QUOTE FROM OSKAR MÜHLBACH, CEO
“2022 ended with a strong quarter for Raketech, with revenues totalling EUR 15.7 million, corresponding to 32.5% growth, compared to the same quarter last year. For the full year, revenues grew by 36.7% to EUR 52.6 million, in line with our previous guidance. In summary I am very satisfied with our performance during Q4. Our core affiliation assets are performing according to plan or better, including those handed over to us after earn-out periods. With our diversified portfolio within Affiliation marketing, Sub-affiliation and Betting Tips & Subscriptions, we believe we are well-positioned to capture the many opportunities presented by the rapidly growing global digital gambling market.”

Q4 2022 FINANCIAL HIGHLIGHTS

• Revenues totalled EUR 15.7 million (EUR 11.8 million) as the core portfolio of affiliation marketing assets showed continued strong performance in addition to our expanding sub-affiliation offering.
• Organic growth amounted to 23.1% (12.5%), driven by an increase of revenues for affiliation marketing assets as well as sub-affiliation.
• US revenues increased to EUR 2.3 million (EUR 1.0 million), primarily through our US sport focused acquisition in late 2021.
• Sports revenues totalled EUR 4.2 million (EUR 2.6 million), corresponding to 26.7% (22.1%) of total revenues.
• Adjusted EBITDA amounted to EUR 6.3 million (EUR 5.4 million), as expected stronger than the comparative period but due to changes in market and product mix the adjusted EBITDA margin of 40.3% (46.0%) was lower than last year.
  

DIVIDEND PROPOSAL AND OUTLOOK

• The Board of Directors proposes to the Annual General Meeting 2023 that a dividend corresponding to EUR 0.094 per share, is to be distributed to shareholders.
• In order to reflect Raketech’s current business mix, the Board has decided to replace the existing financial targets with a near-term guidance for revenues, EBITDA and Free cash flow.
• Guidance for 2023:
  • Raketech expects revenues, excluding acquisitions, to reach EUR 60-65 million in 2023, driven by the strategic growth initiatives.
  • EBITDA is expected to come in between EUR 20-24 million. This includes operational costs of approximately EUR 2.0 million for the year as an effect of Raketech taking over Casinofeber and Infinileads, following the end of the earnout period.
  • Free cash flow is expected to increase substantially to around EUR 11-13 million, including approximately EUR 6 million following the integration of Casinofeber and Infinileads.

SUBSEQUENT EVENTS AFTER THE END OF THE PERIOD

• Revenues in January 2023 amounted to EUR 5.0 million (EUR 4.5 million).
• On 21 February 2023, the Group entered into an addendum to the Share Purchase Agreement executed on 30th August 2019 concerning the acquisition of Casumba Media Ltd. The timing of settlement was changed, so that part of the payment is no longer due on 15th October 2024, but it is payable in instalments of up to EUR 15.0 million during 2024 and any remaining amount can be deferred up until 16 September 2026.

CEO OSKAR MÜHLBACH COMMENTS ON THE QUARTER
2022 ended with a strong quarter for Raketech, with revenues totalling EUR 15.7 million, corresponding to 32.5% growth, compared to the same quarter last year. For the full year, revenues grew by 36.7% to EUR 52.6 million, in line with our previous guidance.

Organic growth for the fourth quarter amounted to 23.1% thanks to continuous strong performance from our core affiliation assets on multiple markets but also thanks to our expanding sub-affiliation business. For the full year organic growth was 10.8%.

During Q4, we were pleased to see that our US revenues more than doubled compared to last year and sports as a share of total increased from 22% to 27%, much thanks to the late 2021 US acquisitions and the FIFA World Cup respectively.

The share of non-Nordic revenues during Q4 was close to 60%, thanks to added US revenues and continuous strong performance from rest of the world.

EBITDA totalled EUR 6.3 million for the quarter, resulting in just over EUR 20 million of EBITDA for the full year, which also was in line with our previous guidance. The change in margin is a result of our strategic initiative to drive growth within betting tips and advice on the US market, and the growth within sub-affiliation, generating slightly lower margins, however at a generally lower risk and with larger potential to scale. Compared to last year this equals an EBITDA growth of 15.9% for the quarter and 23.9% for the full year.

In summary I am very satisfied with our performance during Q4. Our core affiliation assets are performing according to plan or better, including those handed over to us after earn-out periods.

OUTLOOK 2023 AND LONG-TERM GROWTH INITIATIVES
Going forward, we have identified three significant growth initiatives which we intend to focus our investments into. First and foremost, we believe that having fewer but better consumer products over time will be a critical success factor and a competitive advantage. We will therefore focus on our flagship products – popular, established brands with excellent track records, critical size and good margins. Secondly, we have identified a large and growing market for AffiliationCloud, leveraging on the increasing demand for smart infrastructure in affiliation services. And lastly, we believe that adding affiliation to our popular US pickster assets is an untapped growth opportunity.

These three growth initiatives, in combination with the ongoing global shift from offline to online gambling, puts us in a good position for continued expansion of our business.

We expect the core Affiliation Marketing segment to continue to deliver growth and EBITDA margins in line with, or above, the group’s previous financial targets. Further, in line with the strategic decision to expand the Saas product AffiliationCloud and the US Tipster services, the composition of the group’s revenue and profit streams has changed. In order to better reflect Raketech’s current business mix, the Board of Directors has decided to replace the current financial targets with a more detailed near-term guidance for revenues, EBITDA and free cash flow.

Guidance for 2023:

• Raketech expects revenues, excluding acquisitions, to reach EUR 60-65 million in 2023, driven by the strategic growth initiatives.
• EBITDA is expected to come in between EUR 20-24 million. This includes operational costs of approximately EUR 2 million for the year as an effect of Raketech taking over Casinofeber and Infinileads, following the end of the earnout period.
• Free cash flow is expected to increase substantially to around EUR 11-13 million, including approximately 6m EUR following the integration of Casinofeber and Infinileads

We expect our already strong cash flow generation to increase even further going forward, closing the gap to EBITDA as the last earnouts come to an end within the next years. This puts us in a situation where we can allow ourselves to continue to be active within the area of M&A, keep investing into organic growth while continuously also pay dividends to shareholders in line with current policy.

With our diversified portfolio within Affiliation marketing, Sub-affiliation and Betting Tips & Subscriptions, we believe we are well-positioned to capture the many opportunities presented by the rapidly growing global digital gambling market. And I look forward to leveraging on our position as the preferred iGaming performance marketing partner for our customers

Oskar Mühlbach, Group CEO

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, February 22, at 10:00 CET. The presentation will be held in English and can be followed via both a conference call and an online audio cast, including a Q&A session open to all listeners at the end of the presentation.

If you wish to participate via webcast, please use the link below. Via the webcast, you are able to ask written questions.

https://ir.financialhearings.com/raketech-q4-2022

If you wish to participate via teleconference, please register on the link below. After registration, you will be provided phone numbers and a conference ID to access the conference. You can ask questions verbally via the teleconference.

https://conference.financialhearings.com/teleconference/?id=5002200