Better Collective has reported its trading update for the first quarter of 2022, praising a ‘record financial performance’ thanks to exceptional US growth that outperformed expectations.
The digital sports media group declared revenues of $70.95m, a 74% improvement year-over-year (Q1 2021: $40.89m) driven by US market gains that produced ‘46% of group revenue in the quarter, a 5x compared to Q1 2021, supported by the opening of New York state and the signing of a media partnership with New York Post’.
Better Collective’s Publishing segment Q1 revenues came in at $50.93m, a 103% growth YoY (Q1 2021: $25.14m), propelled by organic growth of its proprietary online portals and strong media partnership performances including with New York Post, NJ.com, and The Daily Telegraph.
The group’s Paid Media segment saw a 27% YoY increase in revenues to $20.02m (Q1 2021: $15.75m), as it switched to revenue share and hybrid revenue contracts on key accounts over its previous CPA model.
360,000 new depositing customers (NDCs) were recorded during the quarter, a 95% growth, of which 230,000 were on revenue share contracts.
Jesper Søgaard, Co-Founder & CEO of Better Collective, commented: “2022 got off to a flying start with significant growth across business areas. Q1 showed very strong organic growth and a record quarterly revenue of $70.95m which was driven by a record intake of new depositing customers and an all-time high gross gaming on revenue share accounts.”
Better Collective’s EBITDA for Q1 came in at $24.3m, up 75% YoY (Q1 2021: $13.89m) with a margin of 34% (Publishing 42% and Paid Media 15%). A gain in EBITDA was sustained compared to the group’s revenue share being affected due to ‘lower than expected sports win margin within certain geographies.’
Cash flow from operations stood at $13.84m, an 18% decline YoY due to ‘temporary impacts on working capital due to its high revenue performance in the quarter’ after changes to its publishing network’s income model. Profits after tax came in at $14.47m (Q1 2021: $8.75m).
“In addition to the high growth in the US, I was happy to see strong growth in LatAm, Media Partnerships, and Paid Media,” Søgaard continued.
“However, the March performance was lower than expected due to low sports win margin across the industry affecting revenue share income, while the absolute income from revenue share was sustained from strong NDC performance in recent quarters.
“There are certain external factors, including competitive marketing campaigns from operators and unfavorable sports results, that have affected our revenue share income negatively in the past 9-12 months.”
The CEO added: “However we remain positive that this will improve again and what excites me the most is our ability to deliver new valuable customers to our partners.”
During the quarter, Better Collective acquired FIFA e-sports gaming community Futbin, and it also expanded its North American media network via the acquisition of Canada Sports Betting.
In connection with these acquisitions, the digital sports media group updated its financial targets for 2022 for operational earnings (EBITDA) to approximately $89m, above its previous guidance of $79m.
“With the publication of the Q1 report the financial target for revenue growth is updated and is now expected to be 20-30% (previous 15-25%),” the group stated in its update.
“The financial target relating to debt leverage remains unchanged <3.0x. In the update, the low sports win margins seen over the last 9-12 months have been taken into account for the rest of 2022 with an expected dampening effect.
“With the US market growing in relation to the rest of the business and with the addition of FUTBIN, seasonality is increasing significantly with the majority of the group’s business activities being in Q4 followed by Q1.”