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With Better Collective now hoping to hit annual revenues of €160m in 2021, consolidation continues to be a huge theme for an affiliate sector hemmed in by further regulation of the gambling space, writes SCOTT LONGLEY
There has long been an air of inevitability about Better Collective’s rise to the top of the tree in the affiliate space. Formed in 2004, the company progressed to a float on the Nasdaq Stockholm exchange in 2018, at which point in the company’s development it was on course for annual revenues of €40.5m. Fast forward to the end of 2020 – a tumultuous year for all – and the company was very close to hitting that number in the last quarter alone. In fact, the total of €36.7m for the last three months of 2020 smashed all previous revenue records in the listed affiliate sector by some distance. It far exceeded the previous highest quarterly revenue number, as tracked by Affiliate Monitor, which came from Catena Media in the second quarter of last year, when it hit €27.8m. Like its rival, Better Collective has reached the top largely off the back of M&A. In its fourth quarter presentation, the company spoke about the 20 acquisitions it had completed since 2017, worth approximately €80m. This included deals last year for HTLV.org in the esports space, as well as smaller deals for IrishRacing.com and Polish market-facing Zagranie. But it was the deal for the Atemi Group that best symbolised Better Collective’s clear ambitions. The €44m buyout announced in October 2020 not only took Better Collective to the top of the market – adding to both top-line revenue and the new depositing customers tally – but it also established the company as a leader in the paid media arena. The initial fruits of the deal were evident in the fourth quarter as revenues rose 88% year-on-year to €37m. Similarly, in January, the company disclosed that revenues were up 78% year-on-year to €13m. This puts it firmly on track to establish another sectoral record revenue total for the first quarter. In fact, the new financial targets unveiled in the fourth quarter presentation showed the company is hopeful of hitting annual revenues of more than €160m for the year. With the sporting calendar in its favour – the delayed European Championships will take place this summer – no one would bet against the company comfortably exceeding that target.
WEIGHT OF MONEY
The significance of these numbers can’t be overstated. Yes, the affiliate space remains hugely fragmented and in the lower echelons there does indeed remain a swarm of smaller players. But consolidation continues to be a huge theme even as the affiliate space is more clearly hemmed in by the effect of the further regulation of the gambling space generally. “The more you look at M&A, the more it is clear the affiliate industry is moving towards this regulated business,” says Ben Robinson, partner at boutique investment and M&A consultancy RB Capital. “The bigger players are not interested in any of the grey stuff.” The twin forces of regulation and consolidation make it harder for smaller players to survive and thrive – and make the offers from the acquisitive big fish, should they come knocking, all that much harder to refuse.
LATE TO THE PARTY
Acroud would also like to have added another deal to that list. However, in late February, it said it was withdrawing from one potential acquisition that had been the subject of a previously announced letter of intent. The deal was related to a US-facing affiliate acquisition, which would have given the company an enhanced footprint in the state-by-state market there. That potential deal was announced in the same month as a further US acquisition, which did go through. “The rationale behind the withdrawal is a combination of higher transaction risk than anticipated and increased momentum for our current assets,” Acroud said.
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