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Despite Q3 revenue growth, Better Collective saw a 16% drop in its share value after CEO Jesper Søgaard warned about a “short-term dampening impact”.

Topline numbers

In Q3 2023, affiliate group Better Collective saw a 26% year-on-year revenue increase to €75m, 16% of which stemmed from organic growth. 

Group EBITDA before special items reached €20m, marking a 35% year-on-year growth, with the EBITDA margin standing at 26% before special items.

A more detailed overview can be found here

News nugget 

Despite revenue growth, shares in better Collective had dropped more than 16% at the time of writing. 

This stands out considering the strong performance of Better Collective stock, which saw a 62% increase over the past 12 months.

CFO Flemming Pedersen provided context by highlighting that “following the exceptional performance during the first half of this year, Q3 was more in line with our expectations.”

During the quarter, Better Collective continued working on transitioning from a cost-per-acquisition model to revenue share in the US market. This transition, the group said, was faster than anticipated. 

“We estimate that the revenue from customer lifetime value through revenue share exceeds the upfront CPA, although it requires that we must wait a bit longer before we can harvest the fruits,” CEO and co-founder Jesper Søgaard said. 

“This transitional phase will continue to have a short-term dampening impact on our financial performance in the coming quarters, also heading into 2024. 

“However, given the above-mentioned factors, this is something we must see through, as it simply is not an opportunity we want to miss out on,” he added.

In addition, Better Collected reported a 6% revenue decline to €24.3m for the month October.

The decrease was attributed to an estimated impact of €8m due to a lower-than-expected sports win margin.

While this is another factor that might have discouraged some investors, Søgaard commented: “We are actually pleased with the October performance.” 

He added that sports results are not something that the group can influence and that the margins will normalise over time.

Søgaard said he was positive about Q4, “so we have kept our guidance, basically things are progressing according to plan for us.”

Best quote

“We have acquired quite a lot of strong sports media brands in North America with the intent of becoming the number one in the market. I do believe we have that position now, which is why we were also able to strike attractive deals with important players in that market.”
Better Collective CEO and co-founder Jesper Søgaard on the partnership with ESPN Bet

Best question

AGBSC analyst Oscar Rönnkvist asked several questions. His objective was to gauge the underlying activity in contrast to figures that might impact short-term revenues or growth.

CEO Søgaard acknowledged that Q4’s comparisons would be affected by the previous year’s World Cup, while Q1 2024 figures would be compared against Q1 2023, coinciding with the launch of Ohio sports betting. 

However, despite the “tough comparisons”, he said the group is focused on the long term and executing the business. 

“We think we are in a in a very good position and are building on the strengths we have.”

He added that the company will be working on fully integrated the new acquisitions and “harvesting the synergies”, especially from the acquisition of Playmaker Capital

“So again, we we we have our heads down focused on execution and and I excited about the future.”

Current trading & outlook

Better Collective reiterated its full-year revenue guidance between €315m and €325m for the year, with an EBITDA before special items in the range of €105m to €115m.

In other news, Better Collective also announced that its listing on the Nasdaq Copenhagen has been approved. 

Earlier this year, Stockholm-listed Better Collective said it was set to undertake a dual listing of its shares on Nasdaq Copenhagen.

The first day of trading of the company’s shares on Nasdaq Copenhagen is expected to be tomorrow (17 November). 

However, as the dual listing does not include any offer of shares or rights in the company, Better Collective shares can only be traded on Nasdaq Copenhagen when existing shareholders of Better Collective have transferred and exchanged their shares from Nasdaq Stockholm to Nasdaq Copenhagen.

“Since the announcement of our intention to dual list, we have received a lot of positive comments both from the investor side and group stakeholders more broadly, and I cannot wait to welcome more Danish investors onboard our vision to become the leading digital sports media group,” Søgaard concluded.  

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