Affiliate Monitor - December 2019

Date: 
15 December 2019

Now that the pace of M&A has slowed in the affiliate sector, it’s starting to become clear that not all of the acquisitions have been entirely successful.

As the third-quarter results from the leading affiliates show, many are suffering a form of indigestion as the fall in new depositing customers and a number of other key financials shows.

This is being reflected in the share prices of the key players, as investors clearly see the number of new sign-ups as a vital sign of a company’s health.

In this key metric, the third quarter saw Catena Media regain its position at the top of the table, having briefly been overtaken in NDCs by Better Collective the previous quarter.

The latter fared much better in terms of revenue, however, eclipsing the rest of the listed affiliates with revenue growth of 54%. Apart from Gambling.com Group, which registered growth of just 2%, the rest of the field went backwards on the revenue front.

But many of the issues currently hitting the bottom lines of affiliates stem from negative regulatory developments in Europe and there’s a lot more optimism when it comes to the potential on the other side of the pond.

One problem there though is that operators are driving a hard bargain. While it is only in relatively recent times that operators in Europe have started to put pressure on affiliate margins, in the US affiliates are faced with lower margins from the outset.

When combined with the preference for CPA over revenue share, it’s understandable that shareholders are questioning the long-term future for affiliates in the US.

A look at Catena’s ‘hangover’ in New Jersey exemplifies the issue perfectly. It pulled in a rush of business in the third quarter of last year as the market opened, but with these players on CPA deals, this performance could not be replicated this year.

Nonetheless, while there are hurdles to overcome Stateside, it’s clear affiliates are pinning many of their hopes on this rapidly expanding new market.

We hope you enjoy this report and find it useful. Should you have any suggestions or feedback please don’t hesitate to email me at stephen.carter@clariongaming.com

Stephen Carter
Editorial director, iGB

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