Acquisitions drive growth for Better Collective in Q3

23 November 2018

iGaming affiliate marketing specialist Better Collective has credited its M&A activity as a key factor in its 68% year-on-year increase in revenue for the third quarter of the year.

Revenue for the three months ended September 30th grew to €11.1m, driven primarily by acquisitions.

During the quarter Better Collective finalised the acquisition of Austrian sports betting affiliate Bola Webinformation, strengthening its position in German-speaking markets. It also acquired Thessaloniki-based affiliate WBS and Malta-based KAPA, giving it a market-leading position in Greece.

When acquisitions were stripped out, organic growth accounted for 15% of the quarterly increase in revenue.

The bulk of revenue was generated from revenue share agreements with operators, accounting for 84% of the quarterly total. A further 10% came from cost-per-acquisition fees, and the final 6% from other sources.

During the quarter Better Collective also saw a significant increase in new depositing customers, which jumped 102% year-on-year to 67,000. Better Collective chief executive Jesper Søgaard (pictured) noted that as the majority of these customers had been signed up on revenue share-based contracts, this would continue to drive revenue growth in future quarters.

The quarter also saw the company generate its first US revenue streams, though did not break out numbers for the market.

"In Better Collective, we have been preparing for entering the US market for quite some time and we already have US-focused products in place which generated the first revenue streams late in the quarter,” Søgaard  said. “While we do not expect organic growth to do it alone, we believe that Better Collective has a unique offering in terms of technology and know-how in order to find attractive business in this new and potentially very big market.

"My expectation is that we will create new business organically as well as through collaborations and acquisitions.”

The revenue growth led to increases in costs, in particular staff-related costs, which climbed 59% to €3.3m. Direct costs relating to revenue were up 50% year-on-year at €1.2m. Total costs jumped 81% to €7.4m.

Operating profit for the quarter was up 58% from the prior year at €3.6m, with the profit for the period after taxes of €939,000 up 46% at €2.5m.

For the nine months ended September 30, revenue was up 68% at €28.3m, though costs associated with acquisitions hit profitability. Profit for the first three quarters of 2018 was down 54% year-on-year at €2.3m.

Looking ahead, the company is focusing efforts on growing its US affiliate business. It said that activities in the market began to generate revenue late in Q3, growing at high rates from a low base.

While it is currently running all US activities from a dedicated team based in Denmark and Paris, it is exploring M&A opportunities to develop a greater presence in the market, and aims to establish a permanent US base next year.

Image: Better Collective