Raketech Group Announces Divestiture of US Advisory Business for $2.3 Million
In a strategic move to streamline its operations, Raketech Group has announced the divestiture of its non-core US advisory business for $2.3 million. This transaction, which is expected to be completed by August 31, reflects the group's commitment to concentrating on its core strengths and maximizing growth potential in digitalized subscription and affiliate marketing revenues.
Raketech Group, a prominent affiliate business, will settle the sale partially on closing and through an ongoing revenue share agreement. The divestiture includes the sale of tipster ATS Consultants, which Raketech acquired in December 2021 for $15.5 million. The acquisition had included notable sites like Winnersandwhiners.com, Statsalt.com, and Picksandparlays.com. However, this sale will result in a non-cash impairment charge of approximately €10 million for Raketech.
The divestiture is a significant move for Raketech, with CEO Johan Svensson emphasizing the importance of focusing on the company's core competencies. "This strategic sale is an important step in streamlining our operations and focusing on our core strengths," said Svensson. "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."
Financial Impact and Strategy
Raketech's Q2 results, set to be published on August 14, already shed light on an interesting contrast in the company's financials. While revenue in Q2 rose by 20.1% to €19 million, adjusted EBITDA dropped by 17.2% to €5.1 million. The group's total operating expenses saw a significant increase, going up by 47.5% to €17.7 million. Additionally, the net profit plummeted by 93.8% to €174,000.
This financial landscape elucidates why Raketech is making concerted efforts to refine its business model and focus on profitable ventures. Svensson reiterated the group's strategy, stating, "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."
Looking Forward
As part of this forward-thinking strategy, Raketech has signed an exclusive lead generation agreement that guarantees a minimum fee of $250,000 over the next 12 months. This move not only underscores the company's intent to bolster its revenue streams but also reflects its adaptability in a rapidly evolving market.
The sale of the US advisory business is more than just a financial maneuver; it's a strategic pivot aimed at optimizing the company's operational efficiency. The ongoing revenue share agreement tied to the sale ensures that Raketech continues to benefit from the disposed assets. This careful balancing act between divestiture and revenue sharing is indicative of a calculated approach towards sustained growth.
In conclusion, Raketech Group's divestiture of its US advisory business marks a pivotal moment in the company's journey towards strategic and financial optimization. Despite bearing a hefty impairment charge, the move is aligned with Raketech's broader objective of focusing on high-growth areas within its business portfolio. Svensson's confidence in enhanced focus and improved performance bodes well for the company's future, as it aims to deliver long-term sustainable growth and value creation.