Raketech Group has announced a 3.4% year-on-year decline in revenue for the second quarter of 2024. The company’s earnings totaled €17.0 million ($18.7 million), accompanied by a significant decrease in EBITDA to €4.4 million, reflecting a 20% reduction compared to the same period last year.
Impact of Google Algorithm Update
The most significant challenge faced by Raketech was the impact of a major Google algorithm update on its Casumba assets. This update negatively affected the company’s visibility and search engine performance, leading to reduced traffic and revenue.
Decreased Affiliation Marketing Revenue
A notable decrease in affiliation marketing revenue contributed to the overall revenue decline. This drop reflects the broader challenges in the affiliate marketing sector, exacerbated by the algorithm changes.
Performance Issues with Swedish Casino Assets
The performance of Raketech’s Swedish casino assets also declined, further impacting the company’s revenue. This issue highlights the volatility and competitive nature of the online casino market.
Sub-Affiliation Revenue and Betting Tips Growth
On a positive note, growth in sub-affiliation revenue and gains from betting tips and subscription income helped to partially offset the revenue decline. These areas of growth indicate some resilience in Raketech’s diversified business model.
Strong Performance in Sports Assets
Raketech’s sports assets performed robustly during the quarter. Engagement with major sporting events, such as the UEFA Euro 2024 and the Indian Premier League, contributed positively to the company’s performance in this segment.
Comprehensive Business Audit
Raketech conducted an in-depth audit of its business operations to identify weaknesses and areas for improvement. This audit was crucial in developing targeted strategies to address the issues brought about by the Google update.
Content and Technical Enhancements
The company has implemented initiatives aimed at improving content quality and technical product features. These enhancements are designed to boost user experience and restore lost traffic and revenue.
SEO Optimization and User Experience Focus
Raketech has intensified efforts in search engine optimization (SEO) and user experience (UX) improvements. These steps are vital for regaining visibility and ensuring that users have a seamless experience across the company’s platforms.
Sale of Non-Core US Advisory Business
In July 2024, Raketech completed the sale of its non-core US advisory business. This transaction resulted in a one-off non-cash impairment charge of €10.5 million. The sale was part of a broader strategy to streamline operations and focus on core business areas.
Issuance of New Shares
Raketech issued 1,437,913 new shares on July 15, 2024, as part of an earnout consideration payment related to the Casumba acquisition. This move was aimed at strengthening the company’s financial position and supporting future growth initiatives.
Adjusted Full-Year Guidance
In light of the current challenges, Raketech has revised its full-year guidance. The company now expects adjusted EBITDA to range between €17 million and €19 million, down from the earlier forecast of €20 million. This adjustment reflects the ongoing impact of the Google update and other operational challenges.
Revenue Trends in July 2024
July 2024 saw a significant revenue decline of 33%, primarily driven by weaker performance in the sub-affiliation segment. This sharp decrease underscores the challenges faced by the company in maintaining revenue growth amidst a challenging market environment.
Leadership Changes
Amid these developments, Raketech has undergone leadership changes, including the appointment of Dalia Turner as Chief People Officer in December 2023. This change is part of the company’s efforts to strengthen its leadership team and drive future success.
Raketech Group’s financial results for Q2 2024 highlight the impact of external challenges, particularly the Google algorithm update, on its performance. Despite these setbacks, the company is actively implementing strategic measures to address the issues and stabilize its performance. The sale of non-core assets and issuance of new shares are part of a broader strategy to streamline operations and focus on core business areas. Looking ahead, Raketech’s revised full-year guidance reflects the ongoing challenges, but the company’s strong performance in sports assets and strategic adjustments offer hope for recovery.