Better Collective Q1 2025 Earnings Summary

Q1 2025 Highlights:

• Revenue & Profit: Q1 revenue reached €83 million, a 13% year-over-year decline. Organic revenue dropped 18%. Adjusted EBITDA stood at €22 million with a 27% margin—4 percentage points lower than Q1 2024.
• New Depositing Customers (NDCs): The company reported 316,000 NDCs, down 30% YoY, largely due to fewer US market launches and tougher comps. Notably, 80% of NDCs were under revenue share agreements, contributing to recurring income.
• Cost Efficiency: Operating costs fell by 8%, with €9 million in savings realized this quarter, aligning with a larger €50 million cost-cutting initiative.

Key Headwinds:

1. Tough Comparisons: Stronger comps due to North Carolina’s market launch in Q1 2024 created a high baseline for this year.
2. Regulatory Shifts in Brazil: The country’s first regulated quarter reduced revenue by €7 million but is seen as a long-term structural gain.
3. Reduced US Marketing Spend: Decreased promotional activity from US partners led to a €5 million drop in revenue.

Strategic Shift & Outlook:

• Better Collective is transitioning from an upfront payment model to a recurring revenue model. In Q1, 59% of revenue came from recurring sources.
• The company reorganized its structure into three global business units: Publishing, Paid Media, and Esports, moving away from a geography-based model.
• Full-year guidance was maintained, with revenue expected between €320–350 million and EBITDA between €100–120 million. By 2027, the company targets 35–40% EBITDA margins.
• Growth drivers include further US iGaming legalization, expansion into new markets, and the 2026 FIFA World Cup—anticipated to be a major betting event.

Share Buybacks & Valuation:

• The company launched a €10 million share buyback in Q1, following another of equal size last quarter.
• With its stock having fallen to SEK 95 last month amid global market volatility, Better Collective sees buybacks as a more attractive use of capital than further M&A at this stage.

Acquisitions & Restructuring:

• Better Collective has completed 35 acquisitions in the past seven years, including notable ones like Action Network ($240M) and FUTBIN (€105M).
• Past acquisitions boosted short-term revenue but added integration complexity. The current restructuring aims to streamline operations and scale best practices across units.

Conclusion:
While Q1 2025 reflected short-term revenue declines, Better Collective’s business model transformation, cost discipline, and focus on recurring revenue position it for long-term recovery. With macro tailwinds like the World Cup and regulatory clarity in key markets, the company’s stock could be near a bottom and poised for a rebound.