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Better Collective A/S has commenced a €50m cost reduction programme to “streamline operations and align its investment base with market dynamics”.
In October, the Stockholm- and Copenhagen-listed media group notified markets of a forthcoming streamline as year guidance for 2024 was downgraded to a revenue range of €355m to €375m, from its previous target of over €395m. Revised targets saw leadership lower the expected EBITDA to a range of €100m to €110m, down from the previous guidance of €130m to €140m.
Prior to publishing its Q3 accounts, CEO and Co-founder Jesper Søgaard published a letter titled: “Positioning Better Collective for the Next Chapter of Growth.” The letter outlined Better Collective’s forthcoming changes, strategic adjustments, and impact on staff (full text can be read below).
Q3 trading saw Better Collective achieve an 8% increase in corporate revenues to €81m; however, revenue results were stunted by a 6% decline in ‘organic growth’.
As explained: “The decline was due to lower-than-expected activity by partners in the US as well as an accelerated slowdown in Brazil heading into the expected regulation next year. The rest of the business is performing in line with expectations.”
Despite headwinds, Better Collective maintains growth in top-line metrics as recurring revenues in Q3 amounted to €53m (+14%), while EBITDA before special items stood at €22m (+14%).
Strategic changes saw period NDCs (‘new depositing customers’) reduced by 11% to 396,000, with the company noting that 84% of NDCs were activated on revenue share contracts.
In the US, outstanding challenges see Better Collective adjusting to decreased partner activity in performance marketing and the continued transition of its media network to a revenue share model, deemed beneficial for long-term commercial stability over upfront payments.
In Brazil, Better Collective faces challenges due to uncertainties ahead of the launch of a regulated online market under the Bets regime. Prior M&A investments have seen Brazil account for “approximately 20% of Group revenues”.
As previously disclosed: “Better Collective notes that several international sportsbooks have reduced activity in anticipation of the official regulation in early 2025. This dynamic has affected Better Collective in two ways: firstly, revenue share income has declined, and secondly, there has been a decrease in new depositing customers as partners have limited marketing activity in the period leading up to the regulation.”
Despite the current uncertainties, leadership remains optimistic that once regulations are settled, Brazil will become a dynamic market with up to 100 licensed sportsbooks seeking promotion to local audiences.
As such, Better Collective has entered a €50m cost reduction programme in response to the performance of recent acquisitions, with significant changes needed to recapture growth in the US and secure an early leadership position in Brazil.
“At the end of October, Better Collective made the difficult decision to lay off more than 300 employees, representing over 15% of the workforce, and certain other operating costs will be reduced to lower levels. With most measures already executed, Better Collective is well on track for the cost reductions and tactical adjustments to take full effect from the beginning of 2025.”
The firm continues to monitor the impacts of a new Google policy on third-party content, which has impacted the rankings of some media partnerships. However, Better Collective’s owned sports media assets have compensated for these negative impacts since Q2 trading.
Elsewhere, Better Collective proceeds with the M&A integrations of Playmaker HQ, Playmaker Capital, and AceOdds, progressing as planned, except for an earn-out settlement with Playmaker HQ in Q2. Further developments saw Better Collective acquire “a small North American social media asset for $7 million in Q3”.
Withstanding its transition, Better Collective maintains its long-term targets for 2023-2027, which include a revenue CAGR of +20%, an EBITDA margin before special items of 35-40%, and a net debt to EBITDA ratio below 3x.
As detailed to staff, CEO Jesper Søgaard emphasised Better Collective’s need for adaptability amid changing market dynamics.
