Better Collective’s Q3 Performance Impacted by Low Margins

Online educational gambling platforms developer Better Collective released its third quarter earnings report today, revealing significant organic growth and a record revenue month in September.

Triple-Digit Revenue Increase

Better Collective picked in the third quarter right where it closed the second, posting a triple-digit increase in revenue year-over-year. Group revenue in the three months ended September 30, 2021, jumped by 148% to €45.4 million ($51.4 million) compared to €18.3 million ($20.7 million) in Q3 2020.

Organic revenue growth reached 29% driven by a record monthly revenue registered in September, €20.3 million ($23 million), as the month alone contributed to 45% to the group’s quarterly total, which could have been much higher if not for the negative impact from low sports win margins in July and August as competition led to accelerated marketing campaigns.

Q3 was a great quarter closing with an all-time high monthly revenue in September. This was partially the result of strong performance across all our US assets, including our recent acquisition, Action Network.”

Jesper Søgaard, Co-Founder and CEO, Better Collective

The business performed exceptionally well in the US, with third-quarter revenue exceeding five times the respective reading in 2020, as September brought in €8.9 million ($10 million) to reflect the strong start of the high season in US professional sports, as well as the addition of Arizona as active online sports betting jurisdiction.

September was also the beginning of the high season for US sports, which is expected to fully materialize in the Q4 results.”

Jesper Søgaard, Co-Founder and CEO, Better Collective

In Germany, though, the new gambling regulation entering into force on July 1 resulted in revenue in September being in line with the monthly average in H1, while full-year 2021 revenue is expected to exceed the results of 2019 and 2020, setting the company for growth in 2022.

In media partnerships, Better Collective experienced a strong quarter registering almost 45,000 new depositing customers. The company also noted that it would be entering into new media partnerships across various countries.

Other KPIs

Group EBITDA before accounting for special items reached €13.6 million ($15.4 million) as compared to €8.3 million ($9.4 million) in Q3 2020, while EBITDA margin was 30%, 40% and 9% across Publishing and Paid Media, respectively.

Accounting for special items, €11.6 million ($13.1 million) in adjustment related to the contingent liability related to the acquisition of Rical, brought EBITDA down to just under €2 million ($2.3 million) compared to €8.6 million ($9.7 million) in Q3 2020.

Cash generated from operations amounted to €10.5 million ($11.9 million), posting an increase of 26%, while cash conversion rate was 76%. The quarter saw Better Collective acquire two sports betting assets in the Netherlands for total upfront payments of €5.9 million ($6.7 million) to establish a leading position in the new online gaming market in the country, as well as resolving a share issue that raised €145 million ($164 million) in cash proceeds.

At the end of the reported quarter, capital reserves stood at €64.1 million ($72.6 million), of which €35.4 million ($40 million) in cash and €28.7 million ($32.5 million) unused credit facility.