Raketech Group, the well-known affiliate business, has made a significant move by divesting its non-core US advisory business for $2.3 million. This strategic decision is aimed at focusing the group's efforts on its primary strengths and maximizing growth potential in key areas. The transaction is set to close by August 31, following a settlement partially at closing and partially through an ongoing revenue share agreement.
Strategic Streamlining
In a bid to streamline its operations, Raketech's CEO Johan Svensson stated, "This strategic sale is an important step in streamlining our operations and focusing on our core strengths." Despite the sale resulting in a non-cash impairment charge of approximately €10 million, Svensson remained confident about the positive long-term impact of this decision.
Raketech had initially acquired the US-facing tipster ATS Consultants in December 2021 for an impressive $15.5 million. This acquisition included prominent sites such as Winnersandwhiners.com, Statsalt.com, and Picksandparlays.com. However, with the new focus, the divestiture allows Raketech to pivot towards digitalized subscription and affiliate marketing revenues, areas they have identified as high-growth potential sectors.
Financial Outlook
Raketech is set to publish its Q2 results on August 14, revealing some notable financial changes. The Q2 results show an adjusted EBITDA drop of 17.2% to €5.1 million, even as revenue rose by 20.1% to €19 million. However, total operating expenses surged by 47.5% to €17.7 million, significantly impacting the net profit, which plummeted by 93.8% to €174,000.
The divestiture comes as Raketech signed an exclusive lead generation agreement guaranteeing a minimum fee of $250,000 over the next 12 months. This agreement aligns with Raketech's strategy to bolster its digital and affiliate marketing revenues.
Future Focus
Reflecting on this strategic shift, Svensson commented, "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." He highlighted the group's strategy to maximize growth potential in digitalized subscription and affiliate marketing revenues, and to expand its sub-affiliate marketing and partnership revenue streams.
The company's move to divest the non-core US advisory business underscores its commitment to refining and optimizing its operations. By shedding non-core assets and zeroing in on core strengths, Raketech aims to drive better performance and sustainable growth, leveraging its high-quality US operations in these lucrative sectors.
The sale serves as a strategic realignment, helping Raketech strengthen its position in the competitive digital and affiliate marketing landscape. With the expected transaction closing by August 31, all eyes will be on Raketech's subsequent financial performance and strategic maneuvers in the coming months.
As the Q2 results are made public and the company proceeds with its refined focus, stakeholders and industry watchers will be keenly observing the impacts of this strategic sale on Raketech's market standing and future growth trajectory.