Better Collective has published its financial results for the second quarter of 2022, reporting year-over-year revenue growth, but EBITDA down compared to the previous year.
Reflecting on the results, CEO Jesper Søgaard noted that “Q2 was a productive quarter,” adding that the company’s US business performance is “in line” with its strategy “to continue large scale investments” in what is becoming its largest single market.
For Q2, Better Collective declared revenues of $55.6m, a 40% increase YoY (2021: $39.7m), and an organic growth of 22% “despite an exceptional Q2 2021 and low season especially in the US”.
Per vertical, Publishing earned revenues of $37.8m, a 46% YoY improvement (2021: $25.8m), while Paid Media increased by 28% to $17.7m (2021: $13.8m).
Per region, the US achieved revenues in Q2 of $13m, a 90% growth YoY (2021: $6.9m), while Europe & Rest of the World (RoW) improved by 30% to $42.5m (2021: $32.8m).
While revenue was up YoY for Better Collective, its EBITDA before special items in the quarter was down 3% YoY to $12.1m (2021: $12.5m) with a margin of 22%, where Publishing was 26% and Paid Media was 12%.
In the US, EBITDA came in at a loss of $1.8m, an expected loss due to “seasonality” and “ongoing change from CPA to revenue share” in its partner contracts. The group expects the deals to be “transformational” for its US business, with short-term costs being absorbed by “continued strong growth”.
As a result, Better Collective still expects to meet the anticipated market growth in the US with revenues exceeding $100m by the end of the year, delivering full-year profitability.
Cash flow from operations before special items more than doubled YoY to $22.3m (2021: $11m), with cash conversion at 182% “due to a significant improvement in net working capital, as expected from the strong Q1”.
New Depositing Customers (NDCs) were >387,000 in the quarter, a 93% uptick YoY. NDCs sent on revenue share contracts were >317,000, a 110% YoY improvement.
CEO Søgaard commented: “Q2 was a productive quarter. Revenues from revenue share contracts as well as NDCs were at an all-time high of 22 mEUR and >387.000, respectively.
“Our geographical diversification really proved its worth as the Europe & RoW, Publishing business continued its strong momentum for both revenue and earnings. Our US business showed 90% topline growth and a negative EBITDA, which runs in line with our strategy to continue large-scale investments in what rapidly has become our largest single market.”
Better Collective US movement
During the quarter in the US, Better Collective established a new media partnership with the Philadelphia Inquirer, delivering sports betting content to its readership. Action Network is also supplying premium content, proprietary tools, and in-depth analytics.
The group also launched in the Canadian province of Ontario when its online sports betting market went live in April, utilizing the acquisition of Canada Sports Betting from the previous quarter.
Better Collective also acquired FUTBIN and related domains, constituting world-leading esports media brands within esoccer, for a total purchase price of up to $105m.
The quarter also saw VegasInsider launch its app, the merger between FantasyLabs and RotoGrinders, and the launch of the BetSync app through Action Network.
Since the end of Q2, Better Collective has also agreed to partnerships with the Chicago Tribune alongside Action Network, and Boston.com – part of the Boston Globe Media Partners – with VegasInsider.
The group also won Sports Media Company of the Year at the SBC Awards North America 2022, and its headquarters in New York is expected to open in September.
Søgaard added that with the 90% topline growth, Better Collective feels “well positioned to benefit from the opportunities ahead” in the US market.
Better Collective also noted that, in terms of its Europe & RoW operations, media partnerships and operations in Latin America played a big part in its success during the quarter, adding upcoming regulations in the market offer “exciting opportunities”.
2022 financial targets
Looking ahead, Better Collective’s Board of Directors announced the targets for the financial year 2022 have not changed since its Q1 report, with revenue growth expected to be between 20-30%, EBITDA expected at approximately $89m, and the financial target related to debt leverage expected at <3.0x.