In a significant move to streamline its operations and focus on its core strengths, affiliate business Raketech Group has divested its non-core US advisory business for $2.3 million. This transaction, expected to close by August 31, marks a strategic shift for Raketech as it aims to maximize growth potential in digitalized subscription and affiliate marketing revenues.
Financial Implications
The transaction will be settled partially upon closing and through an ongoing revenue share agreement. Despite the immediate financial gain, the sale will result in a non-cash impairment charge of approximately €10 million for Raketech. This charge stems from the acquisition of the US-facing tipster ATS Consultants in December 2021 for $15.5 million. That acquisition included prominent sites like Winnersandwhiners.com, Statsalt.com, and Picksandparlays.com.
Focus on Core Strengths
Raketech's CEO, Johan Svensson, commented on the divestiture, "This strategic sale is an important step in streamlining our operations and focusing on our core strengths." He emphasized the long-term benefits of this decision, "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."
The decision aligns with Raketech's strategy to leverage its high-quality US operations to maximize growth potential in digitalized subscription and affiliate marketing revenues. Svensson added, "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."
Q2 Financial Performance
Raketech's recent Q2 financial results provide a mixed picture. The company's adjusted EBITDA dropped by 17.2% to €5.1 million. Despite this decline in EBITDA, Raketech saw a revenue increase of 20.1%, reaching €19 million. However, total operating expenses surged by 47.5% to €17.7 million, leading to a significant drop in net profit by 93.8%, amounting to just €174,000.
Lead Generation Agreement
In addition to the divestiture, Raketech signed an exclusive lead generation agreement that guarantees a minimum fee of $250,000 over the next 12 months. This new agreement is another strategic effort by the company to bolster its financial performance and secure steady revenue streams.
Future Outlook
The divestiture and the signing of the new lead generation agreement signify Raketech's commitment to focusing on areas with higher growth potential and profitability. By shedding non-core assets and entering into strategic agreements, Raketech aims to refine its operations and enhance its financial metrics over the long term. This approach, despite short-term setbacks, positions the company for sustainable success in the evolving landscape of digital subscriptions and affiliate marketing.