Key points:
– Better Collective CEO posted on social media about 'emotional days,' involving cost reductions and redundancies
– Better Collective share price has fallen 36.5% in five days to $13.08, following downgrading of financial targets in trading update
– US difficulties attributed, as well as a "slowdown in commercial activity" in Brazil
Better Collective Co-Founder and CEO Jesper Søgaard has announced a plan to "adjust" the organisation's cost base, including redundancies, in an emotional social media post on LinkedIn.
Better Collective is considered a 'super affiliate' and had, in recent years, led the way in the affiliate sector after a dropping off in performance from rivals like Catena Media.
It had continually shown signs of revenue and profit growth across consistently positive quarterly trading reports, making particular headway in the US market.
However, within the last week, its share price has fallen by a staggering 36.5% and, despite a small bounce on Monday, currently sits at $13.08.
This mainly came after a trading update on Thursday that downgraded full-year 2024 financial guidance; revenue targets were reduced from €395-€425m ($425-$460m) to €355-€375m, with EBITDA also reduced from €130-€140m to €100m-€110m.
Søgaard's post confirms the company is facing genuine challenges "due to shifts in the US market," as well as a "continued slowdown" in anticipation of upcoming regulation in Brazil.
Indeed, state-by-state regulation poses challenges in the US, reducing margins, while the operator base with which to work is significantly less varied than in other regions. FanDuel and DraftKings lead the way in most states – brands the majority of US bettors have already heard of, immediately reducing the need for an affiliate site like those Better Collective owns.
Sweepstakes is also a "multi-billion-dollar" industry in the US already. Catena Media has previously discussed its focus on the sweepstakes sector but perhaps this rival vertical is creating extra competition for Better Collective.
In Latin America, meanwhile, upcoming regulation and increased market entrances may be good for the market as a whole, but they will weaken Better Collective's position as a pre-existing force within that region.
Additionally, this may raise the question of what precise role affiliates play within the wider gaming ecosystem. With operators and, particularly B2B suppliers, currently seeing huge success, is there less need for affiliates in today's market where brands are becoming more sophisticated in appealing to players directly?
Still, the results of the last week remain relatively surprising given that Søgaard's last post on LinkedIn – two months ago – praised a "great team effort" to deliver a "strong Q2 for Better Collective."
Good to know: For Q2, Better Collective reported a 27% year-on-year rise in revenue to €99m ($110.3m). Profit after tax also rose 24% to €10.3m
Søgaard's post in full read: "Some emotional days for Better Collective. Today, I shared with our team the details of the plan we are introducing to adjust our cost base following our recent trading update including a downgrade of our financial targets for the year.
"Unfortunately, this plan also includes the difficult decision to part ways with some of our colleagues. Each of them has played a role in shaping Better Collective into what it is today, and for that I owe them all a big thank you!
"The decision was not made lightly, but prompted by lower than expected performance, in particular due to shifts in the US market as well as a continued slowdown in commercial activities in Brazil in anticipation of the upcoming regulations – markets that in recent years have been growth drivers for BC and which we still believe have strong long-term growth potentials ahead.
"Over the past years, Better Collective has grown extensively both organically and through acquisitions, adding both new verticals and competencies but also increased complexity to our organisation. Taking these steps now is essential to recalibrate our organisation and investment strategies to the current market conditions to secure Better Collective’s long-term success.
"Since Christian and I founded BC in 2004, we have experienced two decades of growth expanding BC’s global footprint alongside an incredible team. Leading this group of people, who embrace our vision and act as true advocates for Better Collective is an immense privilege.
"Although we are now focusing on navigating difficult changes, I remain confident that we will emerge stronger as a group and are well-equipped for the long-term growth opportunities ahead. Best regards, Jesper."
