Better Collective US division reports 17% revenue uptick amid strategic switch
Affiliate hails “highly promising” pivot from cost per acquisition to revenue-sharing basis with existing clients
Better Collective has reported a Q3 2022 year-on-year (YOY) revenue increase of 17% to just €0.7m during what it labeled a “seasonally low” period, and moves to switch from cost per acquisition (CPA) to a revenue-sharing basis with its US partners.
Delivering its financial report for the period, the Copenhagen-based affiliate could not match the 90% growth rate it reported during Q2, with a decreasing advertising spend from its sportsbook partners cited as a potential reason.
Excluding the move to revenue share, US growth would have been greater than 30% during the Q3 period. In terms of margin, Better Collective’s US business operated on a margin of 4%, which would have been 17% if the move towards revenue sharing over CPA had not occurred.
Addressing the “fast forwarded” revenue move, the affiliate cited an increased full-year impact for upping EBITDA losses from greater than €5m to €10m against an EBITDA target of €75m for 2022.
“The ongoing move from CPA to revenue share in the US is looking highly promising,” Better Collective CEO Jesper Søgaard said.
“Last year, few deemed it doable to operate on revenue share in the US. Since then, sportsbooks, investors, and boards have been surprised by the spending in relation to gaining market share and as the market has matured, sportsbooks have gained a better understanding of the value of a customer.”
Søgaard continued: “I see the shift we are currently undergoing in the US as similar to tech companies moving from license-based to operating a Software-as-a-Service (SaaS) model
“At Better Collective we have always favored revenue-share agreements as we consistently invest for the long term. This also means our products are already built to cater to these types of agreements,” he explained.
Better Collective recently initiated a program of compulsory redundancies to cut up to 10% of its US workforce as part of cost-saving measures. Despite this, Better Collective still maintains it will reach the estimated revenue in the US of more than $100m in 2022.
During Q3, the firm signed three new media partnerships with the Chicago Tribune, Boston.com, and SPORT1.
At a group level, the affiliate reported a 32% YOY increase in its revenue to €59.7m ($61.9m), up from the €45.4m posted in Q3 2021.
Breaking down the firm’s revenue by its two segments, publishing returned €41.3m, which is a 32% YOY increase from the €31.3m recorded last year.
Paid media posted revenue of €18.4m, up 31% YOY from €14.1m in Q3 2021.
In its latest financial period, the affiliate revealed group EBITDA before special items was €14.6m, a 7% YOY increase, with a margin of 24%.
Better Collective also reported a surge in new depositing customers for Q3 2022, recording a growth of 73% to over 354,000, with more than 282,000 new depositing customers being on revenue-share contracts.