Better Collective primed to seal €45m acquisition despite faltering Q2 revenue
Affiliate giant signs letter of intent to acquire unnamed egaming firm as second quarter revenue falls 4%
Better Collective recorded a 4% fall in Q2 2020 revenue as the affiliate firm paid a price for its exposure to sports betting during the coronavirus pandemic.
The Danish company recorded €15.3m in Q2 revenue, compared to €15.8m in Q2 2019, with Better Collective citing the sports shutdown from mid-March through to April and May as the key reason for the depreciation.
However, positive revenue growth was recorded in June, rising 20%, and post-Q2 in July with revenue rising 16% to €6.1m.
Q2 EBITA was down 7% to €6.3m (€6.8m) while post-tax profit increased slightly year-on-year to €3.9m (€3.7m).
New depositing customers (NDCs) plummeted by 36% to just 71,000 for Q2 as the cancellation of sporting events reduced interest in sports betting.
Despite the financial implications of the pandemic, Better Collective noted a H1 2020 revenue rise of 18% year-on-year to €36.2m (€30.7m) and an EBITA increase of 12% to €19.8m (€13.3m).
Better Collective has also signed a letter of intent to acquire an undisclosed egaming company for up to €45m. The company in question recorded H1 2020 revenue of more than €40m and more than €8m in EBITDA.
The company noted that it expects to complete “one or more acquisitions before year end”, which will in turn result in a revenue increase.
The affiliate also revealed it is rebuilding its US-facing site vegasinsider.com, which it expects to launch ahead of the start of the NFL season in September, as well as ramping up efforts to attain licences across the States.
Jesper Søgaard, Better Collective CEO, said that while he was “proud” to maintain an EBITA margin of >40%, H2 2020 is set to be “somewhat affected by the lost momentum” due to the pandemic.
Søgaard said: “We expect the pandemic to keep impacting our operation for some time to come. Resources have been redistributed internally to focus on the business areas that have remained active throughout and to prepare for sports returning to the arenas.
“The cost reduction programmed implemented for Q2 has proven effective, resulting in a cost reduction of around €3m for Q2 2020 compared to Q1 2020,” he added.
Speaking on M&A, Søgaard pointed to the success of Better Collective’s Q1 acquisition of esports site HLTV.org as the reason for upping its efforts in that regard.
Søgaard said: “Following the acquisition of HLTV.org in Q1, our esports platforms have delivered strong growth in Q2. Already a rapidly growing area for the whole industry and an ideal extension to our focus on classical sports, the lack of sports in recent months has further fuelled the growth in this area.
“We remain highly dedicated to continuing to build our position as the main consolidator in the industry, and we currently have a healthy pipeline of acquisition candidates.
“We signed a letter of intent for the acquisition of a company specialised within lead generation towards online gambling. The acquisition is pending due diligence and final contract negotiations and will, if completed, be an important strategic move for Better Collective,” he added.