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Better Collective reports record-breaking Q4 and full year of 202222 February 2023(PRESS RELEASE) -- The digital sports media group released its financials yesterday for Q4 2022 as well as the entire 2022 year. Flash Highlights Q4 2022
The board of directors has decided on new financial targets for the Better Collective Group for 2023:
CEO Letter Q4 was a record-breaking quarter during which we benefited from our strong diversification, while we also cemented the synergies that can be achieved when combining efforts across the group. Record breaking performance During the year, it has been exciting to see how efforts to become the Leading Digital Sports Media Group are starting to materialize. Our sport communities have proved to be attractive “go-to-places” for millions of sports fans while also being strategically attractive for our business partners. Furthermore, I am humbled by the spirit of our employees, who delivered an amazing performance - a performance that resulted in an upgrade of our financial targets, which we set out in the beginning of 2022. The Group delivered strongly both in terms of revenue growth as well as operational earnings. This performance was accomplished on the back of moving several US contracts from upfront payments (CPA) to revenue share, why implicitly the Group could have delivered an EBITDA of 100 mEUR, implying 80% growth. Undeniably, the ability to drive high profitable growth remains very important for Better Collective's future ambitions. Outstanding performance during the men’s soccer World Cup The men's soccer World Cup was a strong driver for us, during which we saw extremely high activity that exceeded our expectations. We started preparing for the World Cup many months ahead, which we benefited from across geographies. In the previous CEO letter, I expressed my excitement about having delivered + 1.1 million NDCs from Q1 to Q3. Therefore, I am even more proud to announce that with Q4 we brought this close to 1,7 million NDCs for 2022. Of the approximately 1.7 m NDCs, 76% were sent on revenue share contracts and out of Q4’s 580,000 NDCs, around 300,000 were delivered during the men’s World Cup. To put it into perspective, the 300,000 is more than the last four men's World Cups and four men's European Championships combined. When comparing to the men's World Cup 2018, our key figures have increased tenfold; a true testament to how far we have come in just four years. During the past decade, we have worked closely with our main business partners – mostly on revenue share contracts, from which Better Collective solely benefits if we manage to create long-term value for our partners. Consequently, we have accumulated a large “snowball” of revenue share accounts, which really came into play during the men’s World Cup, as our revenue share income broke all records with 30 mEUR for the quarter. This record was also made possible as the sports win margin continued to normalize. It is worth noting that sending 300,000 NDCs during the men’s World Cup has had a short-term dampening effect on our performance because many NDCs were sent on revenue share contracts. However, as stated many times over, this move brings a long-term benefit and builds for the future. Given this effect, it is even more outstanding that we still managed to surpass our organic revenue target. 2022 US revenue exceeded 100 mUSD In connection with the 2021 acquisition of Action Network, the leading US sports betting media, we estimated that we could exceed 100 mUSD in US revenue by the end of 2022. At the time of acquisition, it was very ambitious as Action Network was a newer established business with many market uncertainties ahead – but as you may know Better Collective is built on ambition and strong visions. During Q4, our US business grew revenue 71% YOY to a record high 34 mEUR bringing total 2022 US revenues above the 100 mUSD mark. This is reached even with us having moved 15 mUSD – up from the estimated >10 mUSD in Q3 – from upfront payment (CPA) based contracts to revenue share. 2022 US revenue grew 102% YOY and it is worth mentioning that this growth comes on top of the 370% growth from 2020-2021. I am proud to see great results have been delivered in the US, despite having to navigate the Group through the changing climate, where sportsbooks shifted focus from growth to profitability. The performance was driven by all our US-based sports media as well as the launch of New York and Maryland, combined with a strong Paid Media performance. Let me comment further on our Paid Media business, as it really has taken off. Amazing Paid Media performance In 2020, we made a strategic investment into Paid Media by acquiring the Atemi Group, which specializes within the paid advertising space of the major search engines and social media platforms. This acquisition has turned out to be a great financial investment for Better Collective and brings synergies on multiple levels. Firstly, Paid Media brings flexibility and scalability when entering new markets and during special sporting events like the recent men's World Cup. Secondly, this business provides deep insights into the improvement on our organic rankings in major search engines, insights into which keywords provide the best value as well as click through and conversion rate benchmarks. Thirdly, we invest heavily in business intelligence as Paid Media comes with deep insights into the return on investment, as well as insights into market potential prior to making an investment, which is crucial for our decision-making process and long-term strategy planning. Lastly, after acquiring Atemi, efforts were put into moving many of our CPA contracts to revenue share in our Paid Media business, which has turned out to be a very important investment. The move had a short-term dampening effect throughout 2021, where profitability slowed as we built for the future. We have now created a self-accelerating effect of stable revenue share income, which expectedly will grow larger over time. Consequently, the Paid Media business will have a larger pool of revenue to tap into when investing in advertising - which will continue to accelerate the revenue share “snowball” we are accumulating and grow the margin long-term. Paid Media delivered strong growth of 94%, and with operations on a global scale, we have invested heavily in specific geographies during Q4, where we foresee that the return on investment will be the highest. Due to the massive topline growth, the Q4 Paid Media margin ended at all-time-high of 23%. The Paid Media performance is another indicator of the strength of having a large “revenue share ball” building up. The main contributors to the all-time-high Paid Media margin were the large pool of revenue share income that continues to fill, and solid CPA income in the US. As the US continues to move towards revenue share, we expect a lower CPA income to be mitigated by a larger revenue share “snow-ball”. Despite having an extremely successful World Cup in terms of securing many NDCs, the tournament had a short-term dampening effect on the Group as well as the Paid Media margin due to extraordinarily high numbers of NDCs sent on revenue share contracts. Therefore, it is arguably even more impressive that we delivered a 23% Paid Media margin, while reaching our 85 mEUR Group EBITDA target. When we acquired the Atemi Group, the Paid Media business was in its mere infancy, and it now has been raised into its youth. We still have plenty of schooling to do to bring it to maturity - but we are ready for the journey! We will dive more into these developments at our Capital Markets Day on March 23, 2023. Looking ahead After the overwhelmingly good start to January, I look forward even more to 2023. January was boosted by the Ohio launch - giving us our best month ever - with revenues of >37 mEUR - implying growth of >40%, despite tough comparisons to the New York launch in January 2022, where we doubled the revenue from 2021. This year will expectedly have fewer large single events than 2022, with the main ones being the summer women’s World Cup in Australia and New Zealand, and the launch of sports betting in Massachusetts. We will continue our growth efforts in LATAM and keep an eye out for new market opportunities. We remain largely unaffected by the macroeconomic environment but will persistently monitor developments. Lastly, we will keep focusing on gearing our business for the future, which - among others - includes investing in a new AdTech platform and moving more US revenue to revenue share contracts - all of which is included in our 2023 guidance. I would like to round off another great year by thanking all my dedicated colleagues and partners – without you we would not be where we are today.
Better Collective reports record-breaking Q4 and full year of 2022
is republished from iGamingNews.com.
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