Raketech dire Q3 as performance tumbles on all media activities

Raketech Plc trades cautiously as challenging conditions continue to impact the performance of its affiliate network and media partnerships.

In its Q3 report, Raketech disclosed a 39% drop in corporate revenues to €12.9m, compared to €21.5m in Q3 2023.

Trading during the period showed performance declines across all core business segments, with affiliate revenues decreasing to €6.8m (Q3 2023: €9.5m).

The firm’s affiliate network continues to adjust to changes in Google’s core algorithm, which have affected the search rankings of its flagship asset, Casumba. Additionally, Raketech has observed reduced spending on affiliate marketing in Sweden due to increased taxes on online gambling activities.

Elsewhere, Raketech’s sub-affiliation platform saw its revenues halved to €5.5m, impacted by a downturn in publisher sales and challenges related to Google’s updates, with “income levels hitting a low point by the end of the quarter.”

During Q3, Raketech completed the sale of its US-based tipping service, resulting in a decline in subscription service revenues to €700,000 (Q3 2023: €900,000).

Q3 adjusted EBITDA decreased to €3.1m from €5.6m in Q3 2023, while free cash flow rose to €3.8m, supporting upcoming earnout commitments.

Leadership continues to evaluate Raketech’s operating model and business areas, resulting in an 18% cost reduction (excluding publisher costs) since Q1 2024. This year, Raketech has also reduced its corporate headcount by 25% (employees and contractors).

Visibility remains limited due to ongoing operational challenges for publishers within Raketech Network, as well as uncertainty around the typically stronger second half of Q4 for casino and US Sports.

Free cash flow before earnouts is expected to match or exceed EBITDA, enabling the company to fulfill the upcoming €9.9 million earnout commitment, payable by the first half of next year. The remaining €20.6m earnout obligation can be settled at any time, at Raketech’s discretion, up until September 2026.

CEO Johan Svensson commented: “Revenues in Q3 2024 totaled €12.9m, down 39.9% compared to a very strong Q3 2023 (€21.5m, including €0.4 million from the divested advisory business), with adjusted EBITDA at €3.1m (€5.6m) and EBITDA at €3.0m (€5.6m), reflecting lower sales across all business areas.

We have continued our evaluation of all products and business areas to better position ourselves for sustainable, long-term growth and operational efficiency. These initiatives have led to the successful sale of ATS Advisory on 31 July, the formation of two strategic partnerships within Affiliation Marketing, and cost savings following the review of our operating model.”