Raketech Group, a prominent Affiliate business, is taking strategic steps to optimize its operations with the divestment of its non-core US advisory business. The sale, valued at $2.3 million, marks a significant move for the company, known for its interests in digitalized subscription and affiliate marketing revenues.
Transaction Details
The transaction, expected to close by August 31, will be settled partially upon closing and through an ongoing revenue share agreement. This divestiture aligns with Raketech's vision to refocus its efforts on its core strengths. According to Johan Svensson, CEO of Raketech, "This strategic sale is an important step in streamlining our operations and focusing on our core strengths."
Financial Impact
The sale will result in a non-cash impairment charge of approximately €10 million for Raketech. This move comes after Raketech's acquisition of the US-facing tipster ATS Consultants in December 2021 for $15.5 million, a deal that included sites like Winnersandwhiners.com, Statsalt.com, and Picksandparlays.com. Despite the impairment charge, Svensson is optimistic, stating, "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."
Q2 Financial Performance
The divestiture announcement coincides with Raketech's recent release of its Q2 results, which show mixed performance indicators. The company's adjusted EBITDA dropped by 17.2% to €5.1 million, while revenue rose by 20.1% to €19 million. However, total operating expenses surged by 47.5% to €17.7 million, leading to a significant drop in net profit, which plunged by 93.8% to €174,000. Such stark contrasts in financial metrics highlight the need for Raketech to reassess its strategies, with Svensson advocating for a focused approach on high-potential areas.
Future Strategy
Besides the divestiture, Raketech has also signed an exclusive lead generation agreement guaranteeing a minimum fee of $250,000 over the next 12 months. This move further emphasizes the company's intention to leverage high-quality US operations to maximize growth in digital and affiliate marketing revenues. Svensson explains, "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."
Strategic Focus
The sale of the non-core US advisory business will enable Raketech to concentrate on expanding its digitalized subscriptions and affiliate marketing revenues. This strategic focus is expected to streamline operations, enhance overall performance, and foster long-term sustainable growth and value creation for the company.
As Raketech continues to refine its business strategy, the industry will be keenly observing the outcomes of these significant shifts. The next few months will be crucial in determining whether these changes translate into the improved performance and value creation that Raketech aims for, reinforcing its position in the digital marketing landscape.