Raketech Divests Non-Core US Advisory Business in Strategic Shift
In a decisive move to streamline its operations, affiliate business Raketech Group has sold its non-core US advisory business for $2.3 million. The transaction is expected to be finalized by August 31 and will be settled partially at the time of closing, with the remainder through an ongoing revenue share agreement.
The sale, however, comes with financial implications for Raketech, including a non-cash impairment charge estimated at approximately €10 million. This charge is significant, especially considering the company had previously acquired the US-facing tipster ATS Consultants in December 2021 for a more substantial sum of $15.5 million. The acquisition at that time included popular sports betting sites like Winnersandwhiners.com, Statsalt.com, and Picksandparlays.com.
These recent developments were announced alongside Raketech's Q2 results, painting a complex financial picture for the company. Despite a 20.1% increase in revenue to €19 million, the company's adjusted EBITDA saw a downturn of 17.2% to €5.1 million. Additionally, total operating expenses surged by 47.5% to €17.7 million, impacting the bottom line. Consequently, the net profit plummeted by 93.8%, dropping to a mere €174,000.
The divestiture aligns with Raketech's strategic decision to refocus its efforts on maximizing growth potential in digitalized subscription and affiliate marketing revenues. CEO Johan Svensson emphasized the importance of this strategic pivot. "This strategic sale is an important step in streamlining our operations and focusing on our core strengths," Svensson stated. Despite the considerable non-cash impairment, he remains optimistic about the long-term benefits of the move. "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," he added.
Raketech's strategy is to leverage its high-quality US operations to capitalize on growth opportunities within the digital and affiliate marketing sectors. Svensson further elaborated on this strategy: "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."
In alignment with this focus, Raketech has signed an exclusive lead generation agreement which guarantees a minimum fee of $250,000 over the next 12 months. This agreement is a significant step in securing steady revenue streams as the company shifts its operational focus.
As Raketech proceeds with this divestiture, the company is intent on enhancing its core strengths and streamlining its business model to ensure sustainable growth. With Q2 results already indicating a complex financial landscape, the move is seen as a calculated effort to stabilize and potentially invigorate the company's future performance.
Raketech is expected to continue identifying and executing strategic initiatives that align with its refined focus, aiming to deliver value to shareholders and stakeholders alike. The industry will closely watch how these changes impact Raketech's market positioning and financial health in the upcoming quarters.