Raketech Group has strategically decided to divest its non-core US advisory business, a movement set to reshape its operational focus. The affiliate marketing business announced the sale for $2.3 million, with the transaction anticipated to close by August 31. The payment structure will see the transaction settled partly at closing and through an ongoing revenue share agreement.
The divestiture follows Raketech's acquisition of the US-facing tipster ATS Consultants in December 2021 for a staggering $15.5 million. The ATS portfolio includes the prominent betting advice sites Winnersandwhiners.com, Statsalt.com, and Picksandparlays.com. However, the sale will result in a significant non-cash impairment charge of approximately €10 million for the company.
Financial Adjustments and Strategic Direction
The divestment places Raketech in a robust position to streamline its operations and focus on its core strengths. Raketech's CEO, Johan Svensson, emphasized the strategic importance of the sale, stating, "This strategic sale is an important step in streamlining our operations and focusing on our core strengths." He further commented on the financial implications, "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."
Q2 Financial Performance
The announcement comes as Raketech prepares to publish its Q2 results on August 14. The preliminary figures paint a mixed financial picture. While the company's revenue in Q2 rose by an impressive 20.1% to €19 million, its adjusted EBITDA dropped by 17.2% to €5.1 million. Additionally, total operating expenses surged by 47.5% to €17.7 million, resulting in a net profit drop of a substantial 93.8% to €174,000.
These figures underline the necessity for Raketech to reevaluate and realign its business strategy. The high operational expenses and reduced net profit clearly indicate that focusing on high-margin, scalable segments could foster better financial health for the company.
Long-Term Focus on Digital Growth
As Raketech recalibrates its strategy, the focus remains on maximising growth potential in digital subscription and affiliate marketing revenues. The company recently signed an exclusive lead generation agreement that guarantees a minimum fee of $250,000 over the next 12 months, further solidifying its commitment to its core digital marketing operations.
Johan Svensson elaborates on Raketech’s future plans, saying, "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." This aligns with Raketech's broader vision of becoming a leader in the digital affiliate marketing space, a sector increasingly driven by data analytics and personalized marketing strategies.
The divestiture of the non-core US advisory business, although resulting in an impairment charge, positions Raketech to better navigate the competitive landscape of digital affiliate marketing. It enables the company to allocate resources more effectively towards growth areas that promise higher returns and sustainable value creation.
With the financial metrics showing both challenges and opportunities, Raketech's strategic decisions in the coming months will be crucial. Investors and industry observers will keenly watch how these moves translate into market performance, particularly as the company aims to align its operational model with high-potential revenue streams.
In the dynamically evolving world of affiliate marketing, Raketech's approach signals a tactical shift towards strengthening its core capabilities and exploring new growth avenues. As the company moves forward, it will be interesting to see how these strategic alignments impact its market positioning and financial health in the long term.