Raketech posts weak Q1 earnings impacted by Google headwinds

Raketech Plc cites that it has encountered ‘unexpected challenges’ at the start of 2024 trading, impacting the firm’s earnings and profit performance.

A tough opening to 2024 trading saw Raketech post ‘weaker earnings’, as the media group countered softer performance in Sweden and Casumba assets following the Google Core update during the quarter.

Compounding Q1 headwinds saw Raketech register a Q1 adjusted EBITDA to €5m down 17% on 2023 comparatives of €6.1m.

Investors were informed that Raketech has initiated a “thorough operational review, reaffirming our strategic priorities and aligning resources with our long-term growth objectives.”

Q1 trading saw Raketech maintain revenue growth of €18.9m, up 20% on corresponding Q1 2023 results of €15.7m – driven by strong growth of its sub-affiliation network offsetting “weaker-than-expected” media results.

The media group’s affiliate marketing segment registered an 18% decline in revenues to €8m, directly attributed to “Google’s core update, particularly on our Casumba assets.”

Withstanding headwinds, Raketech’s sub-affiliation network generated a revenue income of €8.9m (Q12023: €3.5m), representing 47% of corporate revenues.

The impact on earnings saw Raketech register a 67% drop in Q1 operating profits to €2m (Q12023: €3.8m).

Raketech revised its full-year guidance as “current trading, including April, implies an adjusted EBITDA of around €20m for the full year. Free cash flow before earnouts for the full year is estimated to come in just below adjusted EBITDA.”

Acting CEO Johan Svensson noted: “April revenues were €5.9m, reflecting the impact of the Google update and normal seasonal trends. Current trading, including April, implies an adjusted EBITDA of around EUR 20 million for the full year. Free cash flow before earnouts is estimated to be just below adjusted EBITDA.”

Furthermore, the Raketech board has withdrawn its previously announced proposal to distribute dividends in 2024.

The media group’s operational review will focus on the strategic initiatives of lowering its SEO dependency, growing Raketech’s sports vertical for Euro 2024, optimising client partnerships, and expanding reach into new markets.

Svensson concluded: “Although these results are below expectations, they were largely influenced by the softer performance within affiliation marketing due to the unexpected magnitude of the Google update completed at the end of April.”

We remain confident in our market-leading product offerings and see promising growth opportunities through our strategic initiatives in sports offerings, exclusive partnerships, and media deals. These efforts will position us well for continued growth in the coming years, and we remain committed to maximising shareholder value.