In a strategic move to streamline its operations and sharpen its focus, Raketech Group has announced the divestiture of its non-core US advisory business for $2.3 million. The deal, expected to close by August 31, consists of a partial cash settlement upon closing and an ongoing revenue share agreement.
Raketech, a notable player in the affiliate business sector, had acquired the US-facing tipster ATS Consultants for $15.5 million in December 2021. The acquisition included marquee sites such as Winnersandwhiners.com, Statsalt.com, and Picksandparlays.com. However, the recent sale will see the company incurring a non-cash impairment charge of approximately €10 million.
Financial Impact and Strategic Focus
The divestiture comes ahead of Raketech's upcoming Q2 financial results, set to be published on August 14. Preliminary figures show mixed outcomes, with an adjusted EBITDA drop of 17.2% to €5.1 million despite a revenue rise of 20.1% to €19 million. Total operating expenses saw a significant increase of 47.5% to €17.7 million, leading to a staggering 93.8% drop in net profit, falling to €174,000.
CEO Johan Svensson commented on the sale, stating, "This strategic sale is an important step in streamlining our operations and focusing on our core strengths." He further elaborated, "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."
By divesting its US advisory business, Raketech aims to concentrate on digitalized subscription and affiliate marketing revenues. Svensson highlighted the importance of this direction, "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."
Exclusive Lead Generation Agreement
In addition to the divestiture, Raketech has made strides in optimizing its core operations through an exclusive lead generation agreement. The deal, which guarantees a minimum fee of $250,000 over the next 12 months, underscores Raketech's commitment to focusing on high-growth areas within its core competencies.
Long-Term Outlook
As Raketech moves forward with its strategic realignment, the company is poised to enhance its operational efficiency and capitalize on its strengths in the digital affiliate marketing domain. The divestiture and new agreements are crucial steps in refining the company's focus, setting the stage for sustained growth and profitability in an ever-competitive market.
With eyes set on long-term sustainable growth, Raketech's management remains optimistic about their strategic directions. "This move is crucial for optimizing our operations, ultimately leading to greater value creation for our stakeholders," Svensson emphasized.
As the dust settles from this significant sale, Raketech will continue to navigate the rapidly evolving landscape of digital marketing, armed with a renewed focus and a clear strategic vision.