Better Collective cautious on quick recovery as COVID drags growth momentum
Better Collective has highlighted the strength of its digital business model in mitigating the impacts of COVID-19, as widespread sporting cancellations hindered performance during Q2.
Publishing its interim results for the period 1 April – 30 June, Better Collective noted a 4% decline in revenues from €15.8 million in 2019 to €15.3 million, while organic revenue dropped by 24%.
The Stockholm-listed affiliate marketing network attributed this drop to ‘the complete halt of all major sports events from mid-March through April and May’, with activity beginning to pick up from June.
Adjusting to circumstances, Better Collective revised its period strategy channeling activity for its betting assets towards sports still taking place, supported by a ‘momentary’ increase in casino-games and a significant growth in esports.
EBITA before special items also declined during the period, falling by 7% to €6.3 million from €6.8 million in 2019, while profits after tax amounted to €3.9 million, down from €3.7 million in the corresponding period last year.
The number of new depositing customers (NDCs) was approximately 71,000, corresponding to a decline of 36% compared to last year – attributed as a result of the low sports activity and lower performance of some of the digital platforms both affected by lower traffic volumes and lower performance in searches’
Commenting on the results, Better Collective CEO Jesper Søgaard said: “As expected, Q2 was a challenging quarter for online sports betting as the COVID-19 pandemic set a halt on major sports events. April was the low point, May still significantly affected, and in June some of the major sports in Europe resumed with accelerated play-offs.
“Sports markets in large countries like the US and LATAM are still affected and will expectedly start again in the second half of the year. However, our digital business model has proven strong under these difficult circumstances and Better Collective has demonstrated the flexibility to withstand a period of low sports activity.”
For the first six months of the year, revenue amounted to €36.2 million, up from last year’s YTD figures of €30.1 million, marking an 18% increase.
A breakdown of marketing inventory saw revenue share account for 67% of corporate revenues (75% of player-related revenue) with 16% coming from CPA, 6% from subscription sales, and 11% from other income
NDCs dropped by 18% to 186,000, a 90,000 drop during H1 2020 when compared to a ‘pre-COVID-19 estimate’, largely driven by the cancellation and postponements of major sports events.
Søgaard added: “In general, the market development has so far been in line with the assumptions we made mid-March, when we decided to provide an extraordinary business update based on this unprecedented situation. I am very proud that we could maintain our financial earning target (EBITA > 40%) both for Q2 isolated and for the first half of this year.
“With the underlying European business getting back up at Q1 average in June, we enter the second half of 2020 with cautious optimism, however still with some uncertainty mainly regarding US sports and the lost momentum when it comes to NDC-growth. We expect the remainder of 2020 to be somewhat affected by the lost momentum. Therefore, we see greater uncertainty than usual regarding our revenue growth targets.”
Looking forward, Better Collective predicted that the new tax on GGR in Denmark could have a ‘minor impact’ on its business from 2021. The affiliate addressed its infringement of the country’s Gambling Act in 2018, with a legal case ongoing.
In its results, Better collective ‘believes that there are good arguments supporting that no infringement has been made’, however a potential fine is expected to be up to DKK 146000.
Source: SBC News