Affiliate marketing company Raketech Group has made a significant move in its business strategy by divesting its non-core US advisory operations for $2.3 million. This strategic sale is set to close by August 31, with the settlement structured partly upon closing and through an ongoing revenue share agreement. As a result of the transaction, Raketech will incur a non-cash impairment charge of approximately €10 million.
Raketech initially entered the US market in December 2021 with the acquisition of ATS Consultants, a US-facing tipster, for $15.5 million. This acquisition included renowned sites such as Winnersandwhiners.com, Statsalt.com, and Picksandparlays.com. However, the divestment of its US advisory business is a clear indication of Raketech's intent to streamline its operations.
Financial Impact
Raketech's Q2 financial results provided a mixed outlook. While the company experienced a 20.1% increase in revenue, reaching €19 million, its adjusted EBITDA saw a decline of 17.2%, dropping to €5.1 million. Furthermore, the total operating expenses climbed by 47.5%, amounting to €17.7 million. The bottom line took a substantial hit, with net profit plummeting by an astonishing 93.8% to a mere €174,000.
Despite these financial challenges, Raketech secured an exclusive lead generation agreement, promising a minimum fee of $250,000 over the next 12 months. This agreement underscores the company's commitment to leveraging its high-quality US operations and maximizing its growth potential in digitalized subscription and affiliate marketing revenues.
Focus on Core Strengths
CEO Johan Svensson emphasized the strategic rationale behind the sale, stating, "This strategic sale is an important step in streamlining our operations and focusing on our core strengths." Svensson expressed confidence that, despite the one-off non-cash impairment charge, this move would ultimately enhance the company's focus, drive improved performance, and deliver long-term sustainable growth and value creation.
Svensson further elaborated on the company's future direction, saying, "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."
With the divestiture, Raketech aims to refine its operational focus, concentrating on its core areas of expertise. The strategic reorientation aligns with the company's goal of optimizing growth potential within the digital subscription and affiliate marketing domains. This calculated move signals Raketech's commitment to evolving its business model to adapt to changing industry dynamics and market opportunities.
Looking Ahead
Raketech's Q2 results, set to be published on August 14, will provide a comprehensive view of the company's performance and the impact of the recent divestiture. The financial metrics and strategic initiatives will be closely scrutinized by industry analysts and investors, given the company's mixed financial performance and the substantial impairment charge.
The affiliate marketing industry continues to evolve rapidly, and companies like Raketech must navigate shifting market landscapes and competitive pressures. By divesting its non-core US advisory business and focusing on its digital subscription and affiliate marketing revenues, Raketech aims to position itself for sustained growth and long-term value creation.
The coming months will be crucial for Raketech as it executes its refined strategic plan and endeavors to capitalize on emerging opportunities within the affiliate marketing sector. The company's ability to adapt and innovate will determine its success in an ever-changing industry.