In a significant reshaping of its business model, affiliate powerhouse Raketech Group has announced the divestiture of its non-core US advisory business for $2.3 million. This move, expected to be finalized by August 31, is set to streamline the company's operations, allowing it to concentrate on areas with the highest growth potential.
This transaction involves a mixed settlement method, with part of the payment occurring at the time of closure and the rest via an ongoing revenue share agreement. While this sale marks a strategic step forward for Raketech, it also entails a considerable financial impact. The company is poised to incur a non-cash impairment charge amounting to approximately €10 million as a result.
Raketech originally ventured into the US market with the acquisition of ATS Consultants in December 2021 for $15.5 million. Through this deal, Raketech took ownership of popular online tipster sites including Winnersandwhiners.com, Statsalt.com, and Picksandparlays.com. However, despite the portfolio's promising potential, the company has opted to redirect its focus.
Financial Results and Strategic Realignment
Coinciding with the announcement of the divestiture, Raketech has disclosed its financial results for the second quarter, posting mixed outcomes. The company's revenue exhibited a robust growth of 20.1%, climbing to €19 million. However, this was offset by a stark 47.5% rise in total operating expenses, which reached €17.7 million, profoundly impacting profitability.
Raketech's adjusted EBITDA dropped by 17.2% to €5.1 million, and net profit plummeted by an alarming 93.8%, settling at just €174,000. Despite the financial turbulence, Raketech’s forward-looking strategy focuses on bolstering its core strengths and harnessing new revenue streams.
CEO Johan Svensson commented, "This strategic sale is an important step in streamlining our operations and focusing on our core strengths." Svensson expressed confidence that, despite the immediate financial setback of the non-cash impairment charge, this move will ultimately yield 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.
Strategic Focus on Core Strengths
As part of its revised business strategy, Raketech aims to capitalize on its high-quality US operations. Svensson elaborated on the company's future trajectory, stating, "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."
An exclusive lead generation agreement signed by Raketech, promising a minimum fee of $250,000 over the upcoming 12 months, underscores this strategic pivot. This agreement is expected to provide a stable revenue base while complementing Raketech’s efforts to enhance growth in digital and affiliate marketing domains.
As Raketech continues to refine its business portfolio, the company’s focus on digitalized subscription services and affiliate marketing revenues signals a clear commitment to evolving with industry trends, ensuring competitive positioning in a rapidly changing market landscape.
While the divestiture represents a significant shift, it is evident that Raketech is making deliberate moves to concentrate on its most promising assets. The drive towards optimization and growth could streamline operations and position the company for a future where sustainable growth and innovative revenue streams become the hallmark of its success.