Thank you. We’re very excited about the performance we saw in Q1. It was really stellar across all business units.
Could you run through a top-line Q1 overview? As an outsider, it’s difficult to pick holes because revenue, EBITDA and profit were all up...
We saw the strongest revenue ever in the quarter. Earnings year-on-year are up 44% on EBITDA. I would highlight North America, where we saw 19% growth in the quarter, despite a very tough comparison to last year, with New York launching in early January.
I think that’s due to the Ohio state launch and Massachusetts launch. Then, just good performance from existing states. We have also seen very strong growth in our part of the business of paid media, with a high margin. It was a record 20-27% margin. So I would highlight those parts of the business.
We’ve heard from a few affiliates who have talked about the competitive nature of the Norh American market and it being tough for new affiliates. But for a company like Better Collective effectively coming in with a market-leading position, what’s it like being on the other end of that scale when a new state launches? You can be confident of achieving a strong market share?
Yes, I think the position we now have has definitely given us some tailwind. When we did our first acquisitions back in 2019 and then the big one with the Action Network in 2021, it was really because we knew it would be important to get to that position. Last year we achieved more than $100m in revenue. So we are a significant player in the American sports media landscape, and ultimately that gives us unique opportunities with the sportsbooks and also the scale of traffic we have. It is something that is important for the retention of all the uses of the sportsbook. I think it’s absolutely right; it’s important to have a critical size in this market. Otherwise, you may have tough market conditions.
You mentioned the new states. Obviously, Ohio has had a fantastic start. In the company report, it was mentioned that Massachusetts had a good launch but lacked regulatory clarity. Could you tell us a bit more about that? Was that to do with the state’s rules on revenue share?
There was a bit of back and forth. Ideally, we would like to work on a revenue-share basis with our partners, which was then challenged. Let’s see where all of this lands in the long term. But that did cause change just prior to launch. It was a good state launch; we prefer having certain conditions rather than having seen them up in the air. It is what it is with the state launches and the regulatory climate.
Obviously, in North America, you’re coming with a position of strength. Latin America is a region with plenty of potential growth – but you said in your Q1 report that you need to do more here. What more do you need to do? And can you see a time when Latin America is such a big market for you that it is comparable to, say, Betsson on the operator side, or Kambi on the supplier side?
It’s a very fast-growing part of the world and the regulatory developments there are definitely catering to that. In terms of market potential, it’s definitely big and it’s always difficult. Will it be as big as Europe or North America? It is very hard for us to predict. But we’re quite certain it will be a significant part of our business.
Now we have established an office in Rio de Janeiro. We would definitely like to do some acquisitions of interesting brands in the region. So it’s ongoing work and then, from a timing perspective, it’s unpredictable. You never know when something can happen, but it’s definitely our ambition.
We’re obviously all waiting on the regulation in Brazil and that will be a massive, regulated sports betting market when it comes to fruition. But from these mergers and these deals you’ve mentioned, Better Collective is now worth over a billion dollars in market capitalisation. It’s a huge firm now and comparable with many suppliers and operators and in many cases, bigger. So can you see the affiliate sector and the sports betting media sector continuing to increase in size through the years? Maybe with that billion dollars, across the board we could be taking much bigger market caps in 10/20 years?
We hosted a Capital Markets day a couple of months back, where we laid out our vision of becoming the world's leading digital sports media group. We started out with concentrated, affiliate sites for the European market. We’ve gradually been expanding that and now we’re more focused on owning true brands and sports media brands. For example, football news sites where we have an engaged audience, where we believe we have a playbook of growing that audience, being good at monetising that and ultimately these are the scale benefits that a very big audience will give you. We are moving in the direction of becoming the leading digital sports media group. So it is an extension of the term affiliate.
For us affiliation is a business model. It’s how we generate revenue. Whereas the business we’re in is more about creating engaging content and for now broadening our reach with esports, media and community society, Half-Life TV, Futbin within the Fifa games. So we are definitely changing the nature and the scope of our business. But it all originates with a toolbox of affiliation being the leading monetisation form. Now there's also subscription, CPM selling, direct ad selling, leading to various forms of monetisation.
On that basis, could the traditional sports betting affiliate model take up less and less percentage of your business? Or is that still going to be the core?
So thinking five or 10 years out, I would assume that, as a share of total revenue, it will likely go down. It will still be the majority and it will still be growing for us in total numbers. But as we add these new forms of monetisation and we acquire more of these sports media brands, I think we will see a gradual or slight difference in the mix. The bread and butter is the affiliation, which is where we come from.
Finally, what is your objective take on the US landscape on the operator side? We've recently had Fanatics buying PointsBet’s US operations. I’m wondering what your take is on the landscape as a whole. Could someone like Fanatics come in and shake things up?
I think we’re still far from seeing the end of that market in terms of how many players and who will be the leading players. Obviously FanDuel, they are probably not going anywhere, but I definitely expect that Fanatics can make a move in this industry.
And take bet365, they’re definitely increasing their efforts in the American market. They have an amazing product. They have come with such long experience and understanding of this industry, obviously having to tailor to the North American market. The market has been around now for five years – and it’s still fairly early days. We don’t have all states regulated, so I think we will see changes to this market in the coming years.
Now we have established an office in Rio de Janeiro. We would definitely like to do some acquisitions of interesting brands in the region
