Better Collective

Regulatory release 21/2022

Highlights first quarter 2022

• Q1 Group revenue grew by 74% to 67.4 mEUR (Q1 2021: 38.8 mEUR). Organic revenue growth was 44%.
  • Record financial performance in the quarter driven particularly by strong growth recorded across the US business, delivering 46% of group revenue in the quarter, which is 5x compared to Q1 2021, supported by the opening of New York state and the signing of a media partnership with New York Post
  • Other key performance drivers in the quarter were the LATAM markets, media partnerships and Paid Media.
  • Revenue share income was again affected by lower than expected sports win margin within certain geographies, partners and sports, however absolute performance was significantly improved due to strong NDC-performance in the recent year.
• Q1 Group EBITDA before special items increased 75% to 23.1 mEUR (Q1 2021: 13.2 mEUR). The Group EBITDA-margin before special items was 34% (Publishing 42% and Paid Media 15%).
  
• Cash Flow from operations before special items was 13.1 mEUR (Q1 2021: 16.1 mEUR), a decrease of 18%. The cash flow was temporarily impacted on net working capital due to high revenue in the quarter, and in the month of April we have seen signifi- cant inflow of cash from accounts receivable. The cash conversion was 56%. By the end of Q1, capital reserves stood at 118 mEUR of which cash of 31 mEUR and unused bank credit facilities of 87 mEUR.
  
• New Depositing Customers (NDCs) were >360,000 in the quarter (growth of 95%) of which 230,000 were on revenue share.
  
• On March 23, 2022 Better Collective acquired the assets of Canada Sports Betting (‘CSB’), for a maximum purchase price of 21.4 mEUR (23.5 mUSD). Better Collective expects that the Canadian activities will generate revenue in excess of 5 mEUR during the financial year 2022.
  
• On January 11, 2022 the share buyback program of 10 mEUR initiated on December 8, 2021 was completed with 532,482 shares accumulated under the program.
  
• On March 29, 2022 the share buyback program of 5 mEUR initiated on March 1, 2022 was completed with 348,282 shares accumulated under the program.
  
• The board of directors implemented a new Long Term Incentive Plan for key em- ployees in the Better Collective group (excl. the executive management). The total value of the 2022 LTI grant program is 1.4 mEUR (Black-Scholes value) measured at the target level.

Significant events after the closure of the period

• April revenue came in in line with expectations and reached 19 mEUR, a growth of 45% vs. 2021, of which 23% was organic growth.
  
• Canada’s largest province, Ontario launched online sports betting on April 4, 2022.
  
• On April 19, 2022, Better Collective made its second largest acquisition to date by acquiring FUTBIN and related domains, constituting world-leading esports media brands within esoccer (EA Sports FIFA). During the last 12 months, FUTBIN and related assets have generated 13 mEUR in revenues growing with a CAGR of 55% from 2019 to 2021. Total purchase price was up to 105 mEUR.
  
• On May 9, 2022 Bettter Collective settled the remaining earn-out of 5.4 mEUR (40 mDKK) related to the 2020 acquisition of HLTV. The settlement was made in cash and treasury shares. The earn-out settlement covered the original 2022 amount of 2.7 mEUR, as well as an acceleration of the 2023 amount 2.7 mEUR due to an early achievement of the performance revenue targets included in the acquisition agreement. With the settlement, Better Collective has completed all payments related to the acquisition of HLTV.

Update of financial targets 2022
In connection with the recent acquisitions of Canada Sports Betting and FUTBIN re- spectively, Better Collective updated its financial targets for the full year 2022 for operational earnings (EBITDA) to approximately 85 mEUR (previous approximately 75 mEUR).

With the publication of the Q1 report the financial target for revenue growth is updated and is now expected to be 20-30% (previous 15-25%). The financial target relating to debt leverage remains unchanged <3.0x. In the update, the low sports win margins seen over the last 9-12 months have been taken into account for the rest of 2022 with an expected dampening effect.

With the US market growing in relation to the rest of the business and with the addi- tion of FUTBIN, seasonality is increasing significantly with the majority of the groups business activities being in Q4 folllowed by Q1.

Jesper Søgaard, Co-founder & CEO of Better Collective, commented: 
“2022 got off to a flying start with significant growth across business areas. Q1 showed very strong organic growth and a record quarterly revenue of 67 mEUR which was driven by a record intake of new depositing customers and an all-time high gross gaming on revenue share accounts”.

Conference call
A telephone conference will be held at 10.00 a.m. CET today by CEO Jesper Søgaard and CFO Flemming Pedersen. The presentation will simultaneously be webcasted, and both the telephone conference and the webcast offer an opportunity to ask questions.

Dial in details for participants
Confirmation Code: 6333989
Denmark: +45 32 72 04 17    
Sweden: +46 (0)8 56618467
United Kingdom: +44 (0)8444819752
Webcast link: https://edge.media-server.com/mmc/p/mg2euga5