SBC News Voice of the Sports Betting Industry
Transatlantic business is at the forefront of Better Collective’s post-Q2 agenda as it continues to target a standing as ‘the leading digital sports media group’, CEO Jesper Søgaard reiterated to investors.
Whilst Better Collective is seeking to maintain its standing in its found market of Europe, the growth opportunities of North and Latin American betting sectors are becoming too alluring to ignore.
Taking the BC Growth Formula to Brazil
With Brazil nearing regulation, a host of international and domestic operators prepare for what could be one of the world’s biggest betting markets. As Søgaard put it, Latin America in general poses ‘vast potential and opportunities’ for Better collective.
“Recently, I had the pleasure of visiting Rio de Janeiro as we opened our South American headquarters, and I was impressed to experience the region’s strong sports culture,” he said.
“I’m certain that Better Collective will have a long term trajectory in this region as we continue to expand our efforts. South America continues to be a very important growth pillar for us, and with the anticipated upcoming regulation of sports betting in Brazil. We expect a lot more from this region.”
Central to Better Collective’s Latin America plans is the ‘BC Growth Formula’, the group’s international growth strategy, which it believes can be applied from its home-base of Europe to the emerging sectors of the Americas.
Applying this strategy to Latin America has seen Better Collective focus on establishing a local presence and hiring a local team, best demonstrated by the opening of its Rio headquarters as referred to by Søgaard.
Responding to a question on the strategy from SBC, Better Collective’s CEO explained that the Growth Formula originates in its ‘legacy in Europe’ where it has been developing its business for ‘close to two decades’.
He continued: “It’s simply the expertise built up in the organisation, which we have utilised when we went to, in the first case, the US, by finding these strong brands, which we can grow and at the same time monetize in a great way.
“We do believe we’re very good at that, and that model is now being applied in South America and we have then sort of done business development with the media partnerships that we launched about four years ago, as I recall, and adding another leg to the business. It’s simply following the model that has proved itself for many years in Europe.”
Brazil may have been placed under the most intense spotlight by European and North American betting and gaming stakeholders, but Latin America is of course home to a number of other high profile markets – Mexico, Chile, Colombia and Peru, for example, some of which are also undergoing regulatory changes.
Assessing the continent, Søgaard reflected that Brazil accounts for nearly half of the South American market as a whole and so, ultimately, there is ‘nothing that is directly comparable’ to the region’s most populous country.
Despite this, he added that there are ‘definitely markets that are significant and worth pursuing’, and that shareholders and observers can expect the Better Collective ‘Growth Formula’ to be applied across all of South America, where available.
North America – ‘We believe in this market’
Better Collective’s Q2 earnings call showed growth across the board, as the Stockholm-listed group reported revenue growth of 39% to €78m ( €56m) and EBITDA growth of 135% to €29m (€12m).
Significantly for the group, it experienced a strong uptick in North America as EBITDA from the continent rose to a positive of 33% from a loss in Q2 last year – Søgaard explained to investors that ‘tougher market conditions’ had impacted Better Collective’s performance across the region in previous quarters.
When asked by SBC to elaborate further on this, the CEO explained that the major launch of New York early last year led to high-spending by operators, which created difficult comparatives against 2023 trading.
The group was able to overcome these challenges by keeping up long-term investment, particularly in podcasts and other forms of content, whilst continuing to benefit from sportsbooks looking to boost customer acquisition and retention.
He continued: “It was for us, sort of keeping the foot on the pedal even though there was maybe a slight pullback in spending, but fundamentally in the long term we believe in this market so we’ll continue to invest to secure our position.”
Summing up Better Collective’s perspective on North American market conditions when questioned by an investor, Søgaard explained: “I don’t think we have seen a big change to the landscape.
“It has always been very competitive and I definitely expect it to continue to be very competitive to operate in North America, but we also feel we have some very strong brands that are very relevant and therefore will have a position in this market, and also ideally a leadership position.”
Lastly, the €43m acquisition of Skycon was a major development for Better Collective in April, as the group sought to expand its advertising capabilities by integrating the firm into its Paid Media division.
Søgaard reiterated that the integration was already off to a ‘flying start’ – a viewpoint already expressed in the group’s Q2 report yesterday – and that the new addition to its portfolio has ‘unlocked new avenues for growth and expanded our offering to advertising partners’.
“The integration of Skycon was swift and seamless, and our teams work closely together to ensure a smooth transition,” he said. “Undoubtedly, Skycon will continue to deliver further growth opportunities and I’m very excited about the prospects that lie ahead.”
With the curtains now closed on H1, Better Collective reiterated its previously stated guidance – outlined in June of this year – to project revenue of between €315m-325m, which marked small growth of 3% on 2022 full year revenue.
Group Chief Financial Officer, Flemming Pedresen, observed that Better Collective cannot be certain how its partners and customers will ‘position themselves’ in Brazil ahead of regulation.
This, coupled with the ‘volatile’ nature of North American markets which are often impacted by seasonal factors, he explained to one investor, is the main reason Better Collective has chosen not to revise its financial targets despite substantial revenue growth in Q2.
