Raketech Group Holding PLC

Good morning and welcome. My name is Johan Svensson and I'm the acting CEO of Raketech. Today, CFO Måns Holmborn and I are here to present Raketech's Q1 report. We will start with our Q1 financials and our revised full year guidance. Raketech delivered €19 million in revenues in Q1, representing an organic growth of 20%. Adjusted EBITDA of 5.1 million euro and EBITDA of 4.3 million euro after one-time cost due to restructuring. Sub-affiliation continued to be a contributor to our organic growth. While decline within affiliation marketing impacted our EBITDA significantly. As reported in the training update 1st of May, we have revised our full year guidance from 24 to 26 million euro in EBITDA to around 20 million euro in adjusted EBITDA. Free cash flow before earn out payment is estimated to come in just below adjusted EBITDA. Now let's look at our different business areas and we will start with affiliation marketing. Affiliation marketing. Our in-house operated assets had a weak quarter with revenues of 8.8 million euro, a decline with 18.5% compared to Q1 last year. Mainly affected by strong comparison numbers in Sweden, a negative impact of a Google Core update for our Casumba assets. The Google Core update started during the quarter and was completed in April. The traffic situation for Kasumba has stabilized, but at a lower level compared to the start of the quarter and last year. One of our assets was more affected than the others. We are working hard together with the founders on various initiatives to improve the situation and recover the lost traffic. Right now, it's still difficult to project when we can see a full recovery. Our Nordic Sport assets have a strong quarter. The three-year partnership starting April 1st was closed with Dalsky Speed and we see a high demand for sport traffic and expect an additional boost during the second quarter with the upcoming UEFA Euro. Also, the affiliation revenue from our US TIPS assets had its best quarter so far, still low levels but promising development. Sub-affiliation. Sub-affiliation revenues amounted to 9 million euro, an increase with 150% compared to Q1 last year, but a decline in top line compared to previous quarter. For the first time we are now reporting gross profit and we had a strong quarter with 23% gross profit margin. The foundation of sub-affiliation is that we help our affiliates and publishers with selling their traffic to operators and optimize their business. Today we have two different products, Raytech Network and Affiliation Cloud. Raytech Network is a platform focusing on paid traffic and Affiliation Cloud focusing on affiliates with products generating organic traffic. The development of Affiliation Cloud continues, both in terms of improved data quality and other features. The plan is to migrate the rate of network business into Affiliation Cloud during the second half of this year and to have one product and platform for both paid and organic affiliates. Moving on to betting tips and subscription. Our US tipster sales delivered 1.2 million euro in revenue during Q1, a 15% decline compared to Q1 last year. We are actively reviewing our strategy for this business area. On the next slide, I will give you more details about the US tipster business. Going to the next slide and our strategic initiatives for our different business areas. I will start with affiliation marketing, our in-house owned assets where we had our second consecutive quarter with negative organic growth. We have recently changed our operational model. We have sized down the number of product teams to secure the right competence and strategy for each product. This restructuring has also resulted in cost savings. To be able to secure the right competence, we are open for new partnerships and work with entrepreneurs with a proven track record of affiliation marketing. This is something Rapetek has done successfully in the past. As mentioned, our Casuba assets took a hit in the latest Google Core update, and a part of our strategy to turn around affiliation marketing is to lower the SEO dependency. It means an extra focus on products with a higher portion of direct traffic, An example of this is our TV Sports Guides, where we saw a boost in traffic and sales during the quarter. Another growth initiative is to increase our CRM activities. To continue to develop CRM will be important to increase the value of each lead and something we will continue to invest in. Customized partnerships with operators. Our ambition is to work closer in a longer contract with our preferred partners, where we have opportunity To work long-term, we have a content strategy to increase the conversion and deliver value. During the first quarter of the year, we closed two longer contracts with Danske Spiel and B-Bet in Denmark, and an exclusive deal with a new Swedish casino operator. Sub-affiliation. As mentioned in the Q4 presentation, the focus is to expand to new markets and onboard new publishers. During the quarter, we launched US on Affiliation Cloud with a promising start. The development of our Affiliation Cloud platform is progressing with the target to migrate all sub-affiliation traffic and revenue to the platform during the second half of the year. Betting tips and subscription. Our US tips to business today consists of two models, advisory and multi-capper. Both of these models are fed with leads from our websites. Advisory is a manual process with dependency on the performance of our U.S.-based TipsySafe team that work directly with the end users, our customers. The multi-capper model is online-based and integrated on our websites. Those beliefs are generated, converted, and managed online on our products. Today the majority of our betting tips and subscription revenue still comes from advisory but we have seen a good organic growth on our multi-capital platform. This is a result of our digitization efforts which have been focused on increased traffic volumes, improved conversions on our products and dedicated marketing initiatives. We are actively reviewing our U.S. betting tips and subscription strategy. We will continue to focus on accelerating the multi-capit business as it scales much more efficient compared to the advisory business. The result of our efforts to digitize the tips to business has also led to increased affiliate revenue from the U.S. sportsbook operators. Q1 was a record quarter in terms of affiliate revenue from the multi-capit platforms. Now over to CFO Måns Farberg.

Thank you, Johan. Total revenues increased with 20% from last year, driven by an increase for sub-affiliation, partly offset by a softer development for affiliation marketing. Sub-affiliation represents approximately 47% of total revenues in Q1, more or less in line with what we've seen the last few quarters. although we see a sequential decrease for sub affiliation from q4 of last year we see good appetite from new and existing publishers affiliation marketing decreased from last year driven primarily by a weaker result from the consumer assets and our swedish assets as joanne covered earlier our other larger assets in other markets show stable to positive performance On the right hand side and a quick note on our revenue mix for revenue share, CPA and flat fees. In absolute terms, we are growing revenue share, which is good, and we see specifically an increase in rev share from our sub affiliation area in Q1. The majority, however, of the revenues within sub affiliation is CPA, which has driven the overall increase in CPA for the group over the last few quarters. As for the regional split and starting with the Nordics, the shifts we have seen for the Nordics between the quarters is essentially an effect of the growth within sub-affiliation. And the decrease in Q1 versus Q4 relates also primarily to sub-affiliation with some effects of seasonality within affiliation marketing, which we normally see from Q4 to Q1. Similar to previous quarters, the main drivers within the rest of the world relates to Kazumba and again, sub-affiliation. The vertical split on the right hand side shows Casino grown from last year representing 82% of total revenues in Q4. The largest shifts we have seen within the verticals is driven by the growth in sub-affiliation And we will continue to see sub-affiliation contributing to both sports and casino throughout the quarters. As Johan, however, covered earlier, we are actively focusing on growing and monetizing on our high traffic in-house sports assets. And we expect to see positive development here going forward. And in the shorter timeframe, we expect to see a positive result from the upcoming UEFA Euro. EBITDA adjusted for costs relating to restructuring amounted to 5.1 million. The non-recurring costs we adjusted for relate to our review of our operating model that Johan mentioned, as well as costs related to the change of CEO in early Q1. As highlighted, EBITDA was primarily affected by a softer performance from our Kazumba assets, as well as tough comparisons for our Swedish assets. We did, however, see a strong contribution of a 23% gross profit within sub-affiliation. This is higher than previous quarters, driven by a positive development for WebShare. And as we move along, we'll see the margin vary depending on primarily WebShare. Worth mentioning, however, is that our primary focus is to ensure we grow this area from the perspective of increasing gross profit in absolute terms. On the right hand side, we did see a strong free cash flow before earnouts. I have mentioned during the last couple of quarters that we were expecting a catch up from improved working capital stemming primarily from trade receivables, which materialized during Q1. Another point to make here is that we settled about 13 million in earnouts to Kazumba during the quarter. And with regards to the upcoming earnouts, Moving on to the next slide. As I mentioned on the previous slide, we settled 13 million of the Kazumba earn out during the quarter, bringing the total outstanding consideration at the end of the quarter to 34 million. For the next 12 months, we have upcoming earn outs to settle of about 14 million. An important point to make here is that the remaining 20 million can be settled at any point in time up until September 2026, meaning there is a lot of financial flexibility for us. Another point to make is that our option to settle part of the earn out in shares is also at our own full discretion, adding even more flexibility. In conclusion, given our current cash flow estimates for the year, our free cash flow is well above upcoming estimator earner settlements. Back to you, Johan.

Thank you, Måns, to conclude here. Affiliation marketing, it is our full focus to turn around our declining in-house assets, including virtual Zumba products, to deliver long-term organic growth. Here we work in parallel with various initiatives. At the same time, we see a strong appetite for sports traffic in the Nordics, where we are investing in our products and in new content to meet the demand from the operators. SAP affiliation, despite the drop in revenue compared to Q4, we saw a stable performance during the quarter with an increased gross profit margin. US tipster and subscription. The plan is to continue the targetization of the tipster business and increase revenue from affiliation marketing on the tipster assets. We're also reviewing our strategy and the advisory part of the business. Outlook. Looking at April, the revenue came in at 5.9 million euro, which is in line with April last year. However, higher share of revenue from our lower margin sub-affiliation business. Guidance for 2024. First of May we revised our guidance for the full year to around 20 million euro in adjusted EBITDA with free cash flow before or now just below the EBITDA. With these words we now open up for Q&A.