Raketech expects casino focus to mitigate Covid-19 impact

27 March 2020

Online affiliate and content marketing provider Raketech said it does not expect the outbreak of novel coronavirus (Covid-19) to have a long-term impact on its business, but did warn that the pandemic is likely to affect sports betting income.

Raketech said that despite the ongoing situation regarding coronavirus, its first-quarter performance is so far in line with management expectations.

Overall revenue for January and February amounted to approximately €4.0m (£3.6m/$4.4m), with revenue in March set to be in line with the two previous months, excluding revenue from the newly acquired Lead Republik business.

Raketech said that as the strategies to handle the outbreak have differed from country to country, this has made it difficult to predict the likely impact of Covid-19 on its business in the longer term.

However, Raketech did say that it does not anticipate “substantial negative effects on the igaming industry in the long-term”, but did note that its sports betting revenue will most likely be affected negatively due to the many cancelled and postponed events around the world.

The provider also noted that as Covid-19 is limiting the amount of gambling consumers can take part in at physical locations, this is driving more traffic to igaming platforms, in particular online casino sites.

Raketech draws approximately 70% of its total revenue from casino, compared to 25% from sports betting activities and 5% from other sources.

In terms of the steps Raketech has taken to safeguard its staff, the provider has allowed staff to work from home for a number of weeks already, while it has also banned business trips and placed all staff that have travelled into self-quarantine for a minimum of 14 days. Raketech said despite this disruption, it has been able to maintain operational efficiently.

“Currently we work hard to help our customers, the operators to reallocate their marketing investments from sports to our main product vertical casino where we continue to see good demand,” Raketech chief executive Oskar Mühlbach said.

“The situation furthermore confirms that our strategy to increase our global footprint, product offering and vertical spread is the way forward in terms of securing a healthy and balanced business risk set up.”

Last month, Raketech reported a year-on-year rise in profit for 2019, despite new regulations in the Swedish market pushing revenue down. Total revenue at for the 12 months to 31 December 2019 amounted to €23.9m, down 6.5% from €25.6m in the previous year.

Lower revenue and higher costs pushed operating profit down 45.5% to €6.1m. However, when taking into account $2.3m in other non-operating income, which related to party liability that was waived in Q1 of 2019, profit before tax was up 54.2% to €7.4m.