Release Date: August 14, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Raketech Group Holding PLC (OSTO:RAKE, Financial) reported EUR17 million in revenues for Q2 2024, showing resilience despite a slight decline.
- Sub-affiliation revenues increased by 29.7% year-on-year, indicating strong growth in this segment.
- The company successfully divested its non-core manual high-touch tipster advisory operations for USD2.25 million, aligning with its strategic vision.
- US flagship assets like Winners and Whiners, Statsalt, and Pick and Parlays continue to rank strongly, generating over 50 million sessions annually.
- Raketech Group Holding PLC (OSTO:RAKE) has financial flexibility to settle the current Casumba earnout, ensuring long-term growth and value creation.
Negative Points
- Organic revenues decreased by 3.7% in Q2 2024, reflecting challenges in the market.
- EBITDA decreased by 20.3% year-on-year, indicating a decline in profitability.
- Affiliation marketing revenues dropped by 25.9% compared to Q2 last year, mainly due to weak performance from Casumba assets and softer Sweden casino performance.
- Operational challenges faced by some larger publishers impacted revenues in July, leading to a weaker performance in the lower margin sub-affiliation business.
- The company had to take a one-time non-cash impairment charge of EUR10 million related to the divestment of the tipster advisory business.
Q & A Highlights
Q: Traffic for Casumba is stabilizing at the end of the quarter. Are you confident about returning to growth?
A: We are confident in our strategies to return to growth, but we cannot specify when this will happen. - Johan Svensson, CEO
Q: How quickly can you ramp up revenue from the sub-affiliation launch in the US, and what is the market potential?
A: We expect growth during the US football season starting in late August. We already have more states ready to launch beyond North Carolina. - Johan Svensson, CEO
Q: Did Euro 2024 have a significant positive impact in June, and was there less impact in July?
A: Yes, we saw a good traffic increase during the games in June, which positively impacted sales efforts. - Johan Svensson, CEO
Q: Can you comment on the operational challenges faced by some operators in sub-affiliation and if you expect improvement?
A: Our publishers have faced operational challenges before and have recovered. We expect similar recovery this time. - Johan Svensson, CEO
Q: Can you provide more details on the guidance and revenue expectations for the rest of the year?
A: We expect to land between EUR17 million and EUR19 million in adjusted EBITDA for the rest of the year, with Q4 historically being a strong quarter. - Johan Svensson, CEO
Q: Have you achieved a higher gross margin on sub-affiliation this quarter compared to usual?
A: Yes, the gross margin levels this quarter were similar to Q1 and are at the higher end compared to historical numbers. - Mans Svalborn, CFO
Q: Is it possible to repurchase own stocks over the market and use them as payments for the Casumba earnout?
A: Yes, this is possible, but the decision is at the Board's discretion. - Mans Svalborn, CFO
Q: What basis do you have for expecting recovery in sub-affiliation?
A: We have strong relationships with publishers who have faced operational challenges and have historically seen them recover. - Johan Svensson, CEO
Q: Why did you issue new shares to pay part of the Casumba earnout in July?
A: Given the current share price development, it made financial sense to issue new shares at this point. - Mans Svalborn, CFO
Q: Can you comment on the development of gross margin in Q2?
A: The gross margin in Q2 was similar to Q1 and is at the higher end compared to historical numbers. We focus on growing profitability rather than maintaining a fixed gross margin. - Mans Svalborn, CFO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
