Raketech Divests Non-Core US Advisory Business for $2.3 Million
In a strategic move aimed at streamlining its operations and focusing on its core strengths, affiliate business Raketech Group has sold its non-core US advisory business for $2.3 million. The transaction, which is to be settled partially on closing and through an ongoing revenue share agreement, is set to conclude by August 31.
This divestiture marks a significant step for Raketech as it aims to enhance its focus on digitalized subscription and affiliate marketing revenues. Johan Svensson, CEO of Raketech, emphasized the importance of this strategic direction. "This strategic sale is an important step in streamlining our operations and focusing on our core strengths," he said.
Despite the transaction resulting in a non-cash impairment charge of approximately €10 million, Svensson remains optimistic. "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," Svensson added. The divestiture will allow Raketech to concentrate on maximizing the growth potential in digitalized subscription and affiliate marketing revenues and expanding their sub-affiliate marketing and partnership revenue streams.
Raketech had acquired the US-facing tipster ATS Consultants in December 2021 for $15.5 million, including valuable sites such as Winnersandwhiners.com, Statsalt.com, and Picksandparlays.com. This acquisition was initially seen as a significant addition to Raketech's portfolio, but the recent decision to divest suggests a refocusing of its business strategy.
Financials Reflect Strategy Shift
Raketech's recent Q2 results provide context for this strategic sale. The company reported an adjusted EBITDA drop of 17.2% to €5.1 million, despite a 20.1% rise in revenue to €19 million. Total operating expenses increased substantially by 47.5% to €17.7 million, and net profit saw a dramatic decline of 93.8% to €174,000. These figures underscore the need for strategic adjustments to drive better financial performance.
In a bid to bolster its operations, Raketech also signed an exclusive lead generation agreement guaranteeing a minimum fee of $250,000 over the next 12 months. This move aligns with their strategy of focusing on high-quality US operations to maximize growth in digitalized subscriptions 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," stated Svensson.
The sale of the non-core US advisory business and the subsequent strategic refocus is a clear indicator of Raketech's commitment to long-term sustainable growth. By realigning their business operations and revenue strategies, Raketech is positioning itself to navigate the competitive landscape more effectively and deliver tangible value to its stakeholders.