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Affiliate group Raketech has agreed to sell its non-core US advisory business in a $2.25m management-led buyout.

The payment will be settled partially at closing and through an ongoing revenue share agreement.

Additionally, Raketech has signed an exclusive lead generation agreement guaranteeing a minimum fee of $250,000 over the next 12 months.

The transaction is set to close by 31 August.

The sale will result in a one-off non-cash impairment charge of approximately €10m for the US assets.

Business background

Raketech acquired the US business ATS Consultants in December 2021, in a deal worth a total of $15.5m.

That deal included an initial $12m cash payment and an additional $1m cash payment made six months post-closing.

Raketech settled the remaining $2.5m in shares, subject to a 36-month lockup period.

At the time of acquisition, ATS consisted of several high-value lead-generating sports tipster websites, which were highly dependent on a manual lead conversion sales team.

Over the past year, Raketech has increased traffic to its US tipster websites and transitioned the business model from a manual, high-touch process to a fully digital lead conversion model for multi-capper picks and predictions (MCP).

Raketech stated that the sale of the advisory business aligns with the company’s strategy to focus on its core digital strengths and maximise growth opportunities.

Result of review

When presenting its Q1 2024 results, Raketech highlighted the conclusion of a thorough operational review, and the implementation of efficiency measures and cost-cutting initiatives designed to optimise operations and enhance profitability.

The company has now revealed that the review also highlighted significant potential for US digital subscription revenue, as well as opportunities to increase affiliation revenue from Raketech’s high-value tipster website assets.

Raketech reported that “strong traffic development” has led to a significant increase in MCP sales and higher affiliation marketing revenue from leading US sportsbook operators.

However, the review also identified the underperforming, high-touch advisory operations as “increasingly non-core and subscale.”

Consequently, Raketech decided to sell the tipster advisory operations, which generated $4m in revenue for the 12 months ending Q1 2024 with minimal EBITDA contribution, to its management.

“This strategic sale is an important step in streamlining our operations and focusing on our core strengths,” said Raketech CEO Johan Svensson (pictured).

“By leveraging our high-quality US operations, our strategy is to maximise the growth potential in digitalised subscription and affiliate marketing revenues and expand our sub-affiliate marketing and partnership revenue streams.

“Despite the one-off non-cash impairment charge, we are confident that this move will enhance our focus, drive improved performance, and deliver long-term sustainable growth and value creation.”

Raketech will continue to operate its flagship US assets, including Winnersandwhiners.com, Statsalt.com, and Picksandparlays.com, which together attract approximately 50 million sessions annually.

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