Raketech Group, a prominent player in the affiliate business domain, has recently announced the divestiture of its non-core US advisory business for a reported $2.3 million. This strategic decision is aligned with Raketech's broader objective of optimizing growth potential in digitalized subscription and affiliate marketing revenues while expanding its sub-affiliate marketing and partnership revenue streams.
Key Transaction Details
The transaction, expected to close by August 31, involves a partial settlement on closing, complemented by an ongoing revenue share agreement. An unavoidable outcome of this move is a non-cash impairment charge approximately totaling €10 million for Raketech. Despite this financial setback, the company remains optimistic about the strategic benefits of the divestiture.
Commenting on this development, Johan Svensson, CEO of Raketech, noted, "This strategic sale is an important step in streamlining our operations and focusing on our core strengths." According to Svensson, this move, albeit accompanied by a significant one-off impairment charge, is expected to enhance the company's focus, drive improved performance, and ultimately deliver long-term sustainable growth and value creation. "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," he added.
A Tumultuous Period
Raketech's recent financial disclosures underscore a period of mixed outcomes. The company’s Q2 results, set to publish on August 14, reveal a 17.2% drop in adjusted EBITDA to €5.1 million. Nevertheless, total revenue for the same period saw a significant rise of 20.1%, reaching €19 million. However, this positive revenue growth came alongside a sharp increase in operating expenses, which surged by 47.5% to €17.7 million, contributing to a steep 93.8% drop in net profit, which stood at €174,000 for the quarter.
Previous Acquisitions and Future Prospects
The US-facing tipster ATS Consultants, acquired by Raketech in December 2021 for $15.5 million, included valuable assets like Winnersandwhiners.com, Statsalt.com, and Picksandparlays.com. While the recent divestiture indicates a strategic pivot, the acquisition’s pricing and subsequent performance highlight the dynamic and at times unpredictable nature of the affiliate marketing sector.
Despite the impairment and fluctuating financial results, Raketech's future holds promising ventures. Among the notable deals is an exclusive lead generation agreement that guarantees a minimum fee of $250,000 over the next 12 months. Svensson remains optimistic that the company's commitment to leveraging high-quality US operations will pay dividends. "By leveraging our high-quality US operations, our strategy is to maximize the growth potential in digitalized subscription and affiliate marketing revenues and expand our sub-affiliate marketing and partnership revenue streams," Svensson elaborated.
Strategic Focus
The divestiture reflects Raketech’s commitment to sharpening its strategic focus on high-potential growth areas within its portfolio. By offloading the non-core US advisory segment, Raketech is better positioned to concentrate resources and efforts on more lucrative and scalable segments of its business. This streamlined approach is anticipated to not only mitigate immediate financial strains but also to build a more robust and sustainable operational framework moving forward.
The latest developments around Raketech indicate a transformative phase for the company. With rigorous strategic alignments and prudent financial management, Raketech aims to navigate through the ebbs and flows of the dynamic affiliate marketing landscape, hoping to secure long-term success and value creation for its stakeholders.