Raketech aided by new customer surge in Q1
Raketech said organic growth and a rise in new customer deposits helped it to double-digit growth in revenue and profits during the first quarter of 2019.
The Stockholm-listed online affiliate and content marketing group saw a 78.2% year-on-year increase in total revenue to €8.7m for the three months to March 31. That figure included a related party liability of €2.3m that was waived during the period. Disregarding that write-off, revenue was up 31.6% to €6.5m.
In its Q1 report Raketech said revenue growth was partly driven by strong performance from its Finnish casino assets. The report shows that receipts from upfront payments is now its largest area of revenue, with a 45.5% rise now putting it ahead of revenue share proceeds. Raketech made €2.8m from upfront payments, with revenue share up 10.7% to €2.5m and fixed fees increasing by 63.4% to €1.1m.
There was little change in terms of proceeds from vertical and geographical areas. Revenue from the Nordics accounted for 95.0% of the company's total, compared to 95.3% in Q1 2018, while casino was up very slightly to 72.2% of the total compared to 71.4% in the prior year.
One major area of growth was new depositing customers (NDC), which was up 76.1% to 28,607.
Organic growth amounted to 21.5% of the revenues, which chief executive Michael Holmberg put down to higher traffic volumes, especially for its casino products and TV sports guides.
During the period, EBITDA more than doubled, rising 140.8% to €5.8m, with adjusted EBITDA up 38.3% to €3.5m.
Total operating expenses were up 35.2% to €3.7m, with large rises in direct costs relating to fixed fees and commission revenue as well as depreciation and amortisation, which was primarily attributable to the depreciation of player databases and other intellectual property acquired in the second half of the year. The company said administrative expenses had risen as it is now operating in a public environment following its flotation last June.
Direct expenses increased to €800,000 from €200,000 due to increased investment in SEO, development and content-related consultancy expenses in line with the management strategy to continue building on the Group’s external network of experts.
Employee benefit expenses were down from €1.2m to €1.0m as the company continued its shift towards outsourced developers and content writers. Full-time employees decreased from 89 to 79, with overall headcount down from 99 to 90 at the end of the period.
This left an operating profit of €5.1m, up 130.7% year-on-year, with a total profit for the quarter of €4.7m, once taxes and finance related costs had been subtracted.
While Raketech’s revenue comes predominantly from the Nordics, Holmberg said it is targeting expansion elsewhere.
“The beginning of the year has been characterised by the ongoing stabilisation phase in the Swedish gaming market, following the introduction of the new gambling legislation in January 2019,” said Raketech CEO Michael Holmberg.
“I am therefore happy to announce that we are delivering a good quarter and that we maintain our focus on organic growth and geographical expansion.
“While maintaining our position as a market leader in Sweden, we are simultaneously increasing our focus on geographical expansion.
“We have global ambitions and prioritise markets that are important to our partners, the gaming operators. As such, we are further strengthening our organisation for future expansion, both in terms of employees and technical platforms.”
Since the end of the period Raketech has appointed Oskar Mühlbach as chief operating officer and acquired the assets of the leading Finnish sport listing website TVmatsit.com for an initial purchase price of €1.6m.