In a strategic move to streamline its operations and hone in on core competencies, Raketech Group, a leading affiliate business, has announced the sale of its non-core US advisory business for a consideration of $2.3 million. The transaction, set to complete by August 31, marks a significant step in re-aligning the company's focus and maximizing growth potential in its primary channels.
Transaction Details and Financial Implications
The divestiture deal will see part of the transaction settled at the closing, with the remainder fulfilled through an ongoing revenue share agreement. However, the sale will result in a non-cash impairment charge of approximately €10 million for Raketech.
Johan Svensson, CEO of Raketech, emphasized the importance of this strategic adjustment, stating, "This strategic sale is an important step in streamlining our operations and focusing on our core strengths." 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."
Acquisitions and Performance Metrics
Raketech's move to divest comes less than two years after its acquisition of the US-facing tipster ATS Consultants in December 2021 for a much larger sum of $15.5 million. The acquisition included prominent sites such as Winnersandwhiners.com, Statsalt.com, and Picksandparlays.com, which were integrated into Raketech’s portfolio to boost its US market presence.
The company's recent quarterly financial release provides context for this strategic realignment. Raketech's Q2 results, due to be published on August 14, highlight a complex financial landscape. Despite a noteworthy 20.1% increase in revenue, rising to €19 million, the company faced a 47.5% surge in total operating expenses, which soared to €17.7 million. Adjusted EBITDA saw a downturn, dropping 17.2% to €5.1 million, while net profit plummeted by a staggering 93.8% to €174,000.
Strategic Focus and Future Prospects
In line with the divestiture, Raketech has also signed an exclusive lead generation agreement, guaranteeing a minimum fee of $250,000 over the next 12 months. This aligns with the company’s strategic focus on enhancing growth in digitalized subscription services and affiliate marketing revenues.
Johan Svensson elaborated on the future direction of the company, saying, "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."
This divestiture allows Raketech to redirect resources and efforts towards its digital subscription and affiliate marketing services, which are viewed as key drivers for future growth. As Raketech continues to optimize its portfolio and strategic focus, the company aims to reinforce its market position and unlock new revenue streams through refined operations and partnerships.
As the August 31 transaction deadline approaches, all eyes will be on Raketech's performance and strategic implementations as they navigate this pivotal transition phase. The outcomes of these strategic moves will be critical in shaping the company’s trajectory in an increasingly competitive market landscape.