Better Collective, a leader in digital sports media and affiliate marketing, has reported its financial results for the third quarter of 2024, which ended on September 30. While the company saw revenue and adjusted EBITDA increases, it has lowered its full-year financial outlook due to evolving market dynamics, particularly in North America and Brazil.
Better Collective Q3 2024 Financial Results: Revenue Growth and Strategic Cost Adjustments Amid Revised Guidance
Solid Revenue Growth in Q3 2024
In Q3 2024, Better Collective posted an 8% year-on-year increase in revenue, bringing total revenue to €81 million. This growth was driven primarily by strong performance in the company’s Europe & Rest of the World segment, which saw a 15% increase to reach nearly €62.2 million.
However, the company’s North American segment faced challenges, with revenue declining by 12% compared to the same period last year, generating close to €19 million. This regional decline was attributed to shifting market conditions and lower-than-expected partner activity.
Strong Adjusted EBITDA Growth
Better Collective also reported a 14% increase in adjusted EBITDA year-on-year, reaching €22 million for the third quarter of 2024. Despite the challenges in the North American market, the company’s focus on cost optimization and operational efficiencies contributed to this improvement.
The adjusted EBITDA growth underscores Better Collective’s ability to maintain profitability while navigating changing market conditions. The company’s efforts to streamline operations and control costs have helped enhance its overall financial resilience.
Revised Full-Year Financial Guidance for FY2024
Despite a solid Q3 performance, Better Collective has adjusted its full-year 2024 financial guidance. The company lowered its revenue projection by €40-50 million, revising it from an initial range of €395-425 million to €355-375 million. Additionally, the company reduced its adjusted EBITDA target from €130-140 million to €100-110 million.
The decision to downgrade financial projections reflects a combination of factors, including a slowdown in partner activity within the US market and an accelerated market slowdown in Brazil. As the Brazilian market approaches new regulatory changes, Better Collective has been adjusting its strategies to align with the evolving landscape.
Market Challenges in the US and Brazil
According to Jesper Søgaard, Co-Founder and CEO of Better Collective, the company has been experiencing shifting dynamics in the US market, which has altered the outlook for the remainder of the year. While maturing, the US market presents ongoing challenges as state-level regulations evolve. Despite the first state being operational for six years, most states are effectively only three years mature, leading to variability in market conditions.
Regarding Brazil, Søgaard noted that the country is nearing a critical regulatory shift, which has resulted in a slowdown throughout the year. The anticipated regulation has created uncertainties, impacting both short-term growth and market engagement.
CEO’s Perspective on Young Markets
Søgaard emphasized that young and emerging markets like the US and Brazil present both challenges and opportunities. He stated, “Although the first state in the US has been operational for six years, it is effectively only three years mature for most states. Meanwhile, the Brazilian market is expectedly on the brink of regulation. Young markets bring challenges and opportunities, and we are committed to navigating this, like done historically in more mature regulations.”
Better Collective’s strategic approach remains focused on navigating regulatory environments while leveraging its extensive experience in established markets. The company is committed to long-term growth despite the short-term impact of market fluctuations.
Initiation of €50 Million Cost Reduction Program
To align its operational base with market dynamics, Better Collective initiated a €50 million cost reduction program to streamline its operations. As part of this program, the company made the difficult decision to let go of over 300 employees, which accounts for more than 15% of its entire workforce. This strategic move is expected to enhance the company’s operational efficiency and optimize its cost structure going forward.
Aligning Investments with Market Outlook
The cost-cutting measures are part of a broader strategy to align Better Collective’s investment base with the current market outlook, ensuring that resources are allocated efficiently to areas with the highest growth potential. This proactive approach is aimed at maintaining the company’s financial stability while navigating uncertain market conditions.
Strategic Focus on Long-Term Growth
Despite the challenges, Better Collective remains focused on long-term growth and continues to explore opportunities in emerging markets. The company’s strategy includes optimizing its affiliate marketing operations, expanding its digital media presence, and strengthening partnerships with key stakeholders.
With an emphasis on data-driven insights, Better Collective plans to continue investing in technology and analytics to drive better customer engagement and expand its global reach. By leveraging its strong portfolio of digital assets, the company aims to capture new opportunities in both established and emerging markets.
Conclusion: The Q3 2024 Results
Better Collective’s Q3 2024 results demonstrate its resilience in the face of challenging market conditions. The company’s ability to achieve revenue and EBITDA growth while initiating a cost reduction program highlights its commitment to operational excellence. Although the company has lowered its full-year guidance, its strategic focus on optimizing costs and navigating young markets positions it well for future growth.
FAQs About Better Collective’s Q3 2024 Financial Results
1. What were the key financial highlights for Better Collective in Q3 2024?
Better Collective reported an 8% year-on-year increase in revenue to €81 million for the third quarter of 2024. The company also achieved a 14% increase in adjusted EBITDA, reaching €22 million for the quarter.
2. Which segments contributed to Better Collective’s revenue growth in Q3 2024?
The Europe & Rest of World segment was the major driver of growth, seeing a 15% increase in revenue to nearly €62.2 million. However, the North American segment experienced a decline, with a 12% decrease year-on-year, generating close to €19 million.
3. Why did Better Collective lower its full-year financial guidance for FY2024?
The company revised its full-year guidance due to lower-than-expected partner activity in the US and an accelerated slowdown in the Brazilian market. This led to a reduction in projected revenue by €40-50 million and adjusted EBITDA by €30 million.
4. What is the new revenue and EBITDA guidance for FY2024?
Better Collective’s revised guidance for FY2024 now targets revenue in the range of €355-375 million (down from €395-425 million) and adjusted EBITDA of €100-110 million (down from €130-140 million).
5. How did market conditions in the US and Brazil affect Better Collective’s performance?
The US market faced changing dynamics and slower-than-expected partner activity, while the Brazilian market experienced a slowdown due to uncertainties around impending regulations. These factors impacted Better Collective’s financial projections for the year.
6. What measures is Better Collective taking to streamline its operations?
The company has initiated a €50 million cost reduction program to optimize operations and align investments with current market conditions. As part of this program, Better Collective reduced its workforce by over 300 employees, representing more than 15% of its total staff.
7. What are Better Collective’s plans for future growth?
Despite the short-term challenges, Better Collective remains focused on long-term growth by investing in digital media, optimizing affiliate marketing operations, and expanding its presence in both established and emerging markets.
8. How does Better Collective plan to navigate young and emerging markets?
Better Collective is leveraging its experience in more mature markets to navigate regulatory changes in emerging regions like the US and Brazil. The company is committed to capitalizing on new opportunities while addressing market-specific challenges.
9. What strategic focus areas are prioritized by Better Collective’s management?
The company’s strategic focus includes cost optimization, enhancing operational efficiency, and investing in technology and analytics to improve customer engagement and drive sustainable growth.
10. What was CEO Jesper Søgaard’s perspective on the current market challenges?
CEO Jesper Søgaard acknowledged that young markets like the US and Brazil bring both challenges and opportunities. He emphasized the company’s commitment to navigating these markets while maintaining its focus on long-term strategic goals.
