In a strategic move aimed at streamlining operations and focusing on core strengths, Raketech Group, a prominent affiliate business, has announced the divestiture of its non-core US advisory business for $2.3 million. The transaction, expected to close by August 31, will be partially settled at closing and through an ongoing revenue share agreement.
This significant step comes with its financial implications. The sale will incur a non-cash impairment charge of approximately €10 million for Raketech. Notably, Raketech had acquired this US-facing tipster, ATS Consultants, in December 2021 for $15.5 million. ATS Consultants brought with it notable sites like Winnersandwhiners.com, Statsalt.com, and Picksandparlays.com.
Financial Performance in Q2
The divestiture aligns closely with the recent financial updates from Raketech. The company, which is set to publish its Q2 results on August 14, has already highlighted key financial metrics for the quarter. Raketech reported a 17.2% drop in adjusted EBITDA to €5.1 million. Despite this decline, the company's revenue saw a healthy increase of 20.1%, reaching €19 million. Conversely, total operating expenses surged by 47.5% to €17.7 million, significantly impacting the bottom line, with net profit plummeting by a staggering 93.8% to just €174,000.
Strategic Focus and Growth
In light of these financial movements, Johan Svensson, Raketech's CEO, provided insights into the company’s strategic direction. "This strategic sale is an important step in streamlining our operations and focusing on our core strengths," Svensson expressed. He added, "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."
Raketech’s commitment to focusing on digitalized subscription and affiliate marketing revenues was further underscored by an exclusive lead generation agreement signed by the company. This agreement guarantees a minimum fee of $250,000 over the next 12 months, highlighting a strategic effort to bolster revenue streams.
Future Prospects
The divestiture serves as a pivotal moment for Raketech to concentrate on maximizing growth potential within its core operations. As Svensson elaborated, "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."
The recent financial figures and strategic movements affirm Raketech's dedication to optimizing operations and solidifying its market position. While the impact of the non-core US advisory business divestiture will initially reflect through a substantial impairment charge, the long-term view appears promising. Through focused efforts on core areas, Raketech aspires to drive sustained growth and create value for stakeholders.
As the company navigates this strategic shift, industry watchers and stakeholders will be keenly observing how these measures translate into future financial health and market performance. The upcoming Q2 results will undoubtedly provide more detailed insights into Raketech's financial trajectory and its evolving strategy in the ever-competitive affiliate marketing landscape.