In a pivotal move signaling a sharpened focus on core operations, Raketech Group has announced the divestiture of its non-core US advisory business for $2.3 million. The affiliate business, renowned for its role in digitalized subscription and affiliate marketing, expects the transaction to close by August 31. The deal will be settled partially at the time of closing and through an ongoing revenue share agreement.
This strategic decision comes with financial implications, notably a non-cash impairment charge of approximately €10 million for Raketech. The company had initially acquired ATS Consultants, a US-facing tipster, in December 2021 for an impressive $15.5 million. The acquisition expanded Raketech's portfolio to include prominent sites like Winnersandwhiners.com, Statsalt.com, and Picksandparlays.com.
CEO Johan Svensson emphasized the importance of this transaction in realigning Raketech’s strategic objectives. "This strategic sale is an important step in streamlining our operations and focusing on our core strengths," Svensson stated. He further underscored the long-term vision behind the move, suggesting that despite the one-off non-cash impairment charge, the divestiture would ultimately enhance Raketech’s focus and drive improved performance. "We are confident that this move will enhance our focus, drive improved performance, and deliver long-term sustainable growth and value creation," he added.
Svensson also highlighted that leveraging their high-quality US operations aligns with the company's broader strategy to maximize growth potential in digitalized subscription and affiliate marketing revenues. "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," he said.
Q2 Financial Results
Raketech’s financial disclosures for Q2 2023 reveal a mixed bag of results. On one hand, the company saw a noteworthy 20.1% increase in revenue, rising to €19 million compared to the same period last year. However, the adjusted EBITDA dropped by 17.2%, amounting to €5.1 million. This decline reflects the rising total operating expenses, which surged by 47.5% to €17.7 million.
The bottom line was also impacted, with net profit plummeting by 93.8% to a modest €174,000. These figures paint a complex picture of a company grappling with increased costs even as it seeks new avenues for revenue growth.
Strategic Agreements
Amid these financial developments, Raketech continues to forge strategic partnerships. The company recently signed an exclusive lead generation agreement guaranteeing a minimum fee of $250,000 over the next 12 months. This agreement is yet another step in Raketech’s ongoing effort to bolster its revenue streams and reinforce its market position in the face of financial headwinds.
While the divestiture of the non-core US advisory business marks a significant transition, it aligns with Raketech’s overarching goal of focusing on areas with the highest growth potential. By shedding non-essential operations, Raketech aims to concentrate resources on digitalized subscription and affiliate marketing—sectors deemed crucial for long-term sustainable growth.
As the August 31 transaction closure date approaches, industry observers will be keen to see how this strategic shift impacts Raketech’s future performance. With Q2 results already reflecting significant shifts in the company’s financial landscape, all eyes will be on how these tactical moves translate into long-term gains.