In a strategic move to refine its operations and focus on core strengths, Raketech Group has divested its non-core US advisory business for $2.3 million. This transaction, expected to close by August 31, marks a pivotal step in enhancing the company's growth trajectory and optimizing its business portfolio.
Raketech, a notable name in the affiliate business industry, had previously acquired the US-based tipster ATS Consultants in December 2021 for $15.5 million. This acquisition brought onboard prominent websites such as Winnersandwhiners.com, Statsalt.com, and Picksandparlays.com. However, the recent sale indicates a shift in strategy, aiming to streamline operations and harness the potential of key business areas.
Details of the Transaction
The transaction will be partially settled at the time of closing, complemented by an ongoing revenue share agreement. While this sale results in a non-cash impairment charge of approximately €10 million for Raketech, CEO Johan Svensson remains optimistic about the long-term benefits. Svensson emphasized, "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."
Financial Performance
Raketech's financial results for Q2 further reflect its transformative journey. The company's revenue rose by an impressive 20.1% to €19 million. However, this positive development was met with increased operating expenses, which surged by 47.5% to €17.7 million, affecting overall profitability. Adjusted EBITDA dropped by 17.2% to €5.1 million, and net profit saw a substantial decline of 93.8% to €174,000.
The earnings reveal the challenges Raketech faces amidst its growth phase. Increased expenses, possibly due to investments in new growth areas, have impacted short-term profitability. Nonetheless, the revenue growth indicates an underlying strength and potential for future expansion.
Strategic Focus
Raketech's decision to divest its US advisory business aligns with its broader strategy to focus on digitalized subscription and affiliate marketing revenues. Svensson elaborated on this vision, stating, "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."
The company recently signed an exclusive lead generation agreement guaranteeing a minimum fee of $250,000 over the next 12 months. This agreement underscores Raketech's commitment to leveraging its strengths in lead generation and affiliate marketing to drive growth.
Outlook
The divestiture is poised to help Raketech zero in on its most promising business segments, streamlining its operations and maximizing efficiency. Johan Svensson noted, "This strategic sale is an important step in streamlining our operations and focusing on our core strengths." By shedding non-core assets, Raketech aims to bolster its resources in areas that promise higher returns and sustainable growth.
As the company navigates this transformation, stakeholders will be watching closely to see how these strategic decisions impact long-term performance. The upcoming months will be crucial in determining whether the divestiture and refined focus yield the anticipated benefits.
Raketech's Q2 results announcement on August 14 will provide further insights into the company's performance and progress in executing its strategic initiatives. The industry will keenly observe how Raketech balances growth with operational efficiency in the ever-evolving landscape of affiliate marketing.