In a move aiming to sharpen its strategic focus, Raketech Group has decided to sell its US advisory business for $2.3 million. The deal is expected to finalize by August 31, and it will be settled partially at the point of closure with an ongoing revenue share agreement, allowing Raketech to still benefit from the divested assets.
Streamlining Operations
The divestiture comes with a significant financial impact, including a non-cash impairment charge of approximately €10 million. This charge underscores the cost Raketech is willing to bear to streamline its operations and concentrate on areas with more growth potential. The company's CEO, Johan Svensson, stated, "This strategic sale is an important step in streamlining our operations and focusing on our core strengths."
Acquisition History
Raketech only recently acquired ATS Consultants, a US-facing tipster, in December 2021 for a considerable $15.5 million. This acquisition included noteworthy sites such as Winnersandwhiners.com, Statsalt.com, and Picksandparlays.com, which were intended to bolster Raketech's presence in the US market. However, the current sale indicates a pivot in strategy towards optimizing core business operations.
Financial Overview
Raketech's latest financial results present a complex picture. The company reported a 17.2% drop in adjusted EBITDA for Q2, reducing it to €5.1 million, yet its revenue rose by 20.1% to reach €19 million. The paradox of rising revenue alongside falling profit highlights the challenges faced by the business in managing its costs. Total operating expenses increased sharply by 47.5% to €17.7 million, significantly impacting net profit, which dropped by a staggering 93.8% to €174,000. Despite these challenges, Raketech is moving forward with strategic initiatives designed to foster long-term growth.
Strategic Refocus
One such initiative is the recent exclusive lead generation agreement, guaranteeing a minimum fee of $250,000 over the next 12 months. This strategic refocus is part of the company's broader effort to enhance its digitalized subscription and affiliate marketing revenues. Svensson emphasized, "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."
Despite the financial hit from the non-cash impairment charge, Svensson remains optimistic about the future. "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," he added.
Looking Forward
As Raketech adjusts its sails to better navigate the competitive waters of affiliate marketing, all eyes will be on its future financial disclosures. The company's Q2 results, set for publication on August 14, will undoubtedly offer deeper insights into its evolving strategy and financial health.
This move to divest non-core assets reflects a broader trend among companies looking to sharpen their focus and achieve sustainable growth. For Raketech, the next few months will be crucial in determining whether these strategic decisions will pay off in the long run.