In a strategic move aimed at refining its business operations, Raketech Group has decided to divest its non-core US advisory business for $2.3 million. The transaction, slated to close by August 31, signifies a major step for Raketech as it seeks to streamline its focus on digitalized subscription and affiliate marketing revenues.
“This strategic sale is an important step in streamlining our operations and focusing on our core strengths,” stated Johan Svensson, CEO of Raketech. “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.”
Details of the Transaction
The financial settlement of the sale will be conducted partially at the point of closing and through an ongoing revenue share agreement. This divestiture will unfortunately result in a non-cash impairment charge of approximately €10 million for Raketech, a significant financial hit that the company appears prepared to absorb for the sake of future-focused realignment.
Raketech had initially ventured into the US market with its acquisition of ATS Consultants in December 2021 for a total of $15.5 million. This buyout included various high-profile sites such as Winnersandwhiners.com, Statsalt.com, and Picksandparlays.com, which helped cement Raketech’s footprint in the US advisory space.
Financial Performance and Strategy
The timing of the divestiture is notable as it closely follows the release of Raketech's Q2 results on August 14. The report reveals a mixed financial performance with an adjusted EBITDA drop of 17.2% to €5.1 million. On the brighter side, revenue for the quarter rose by 20.1% to €19 million, indicating robust growth in areas aligned with Raketech’s refocused strategy. However, total operating expenses surged by 47.5% to €17.7 million, contributing to a substantial decline in net profit, down 93.8% to €174,000.
This financial backdrop puts the divestiture in a clearer context. By shedding non-core operations, Raketech aims to cut down on operating expenses and enhance its overall financial health. The divestiture is anticipated to support Raketech’s long-standing objective: "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,” Svensson further elaborated.
Forward-Looking Initiatives
Among Raketech's strategic initiatives is an exclusive lead generation agreement that guarantees a minimum fee of $250,000 over the next 12 months. This agreement underlines Raketech’s commitment to optimizing its revenue streams by focusing on high-growth areas and partnerships that align with its core strengths.
The move to divest the US advisory business also aligns well with the company’s overall strategic vision. “By simplifying and refocusing our portfolio, we are better positioned to concentrate on delivering enhanced performance and achieving long-term sustainable growth,” asserted Svensson.
This strategy marks an important pivot for Raketech, which is now poised to hone in on its digitalized services, promising a leaner, more efficient operation. While the road to transformation comes with its share of financial challenges, the company’s leadership remains optimistic about the path ahead.
The recent sale marks not just a tactical retreat from some parts of the US advisory space, but a deliberate step toward a future filled with potential in digital subscription and affiliate marketing markets on a global scale.