Acroud’s purchase of a media and affiliate business helped drive revenue up 53.9% in the fourth quarter, but an impairment charge related to old assets from a historic acquisition impacted bottom line.
The group completed its acquisition of the unnamed business in October last year after it initially brokered an agreement to purchase a 60% stake in June 2022, with the operation now referred to as Acroud Media.
The deal included igaming affiliation assets and technology, with Acroud at the time saying the purchase had the potential to add more than €9.0m (£8.0m/$9.6m) in annual revenue to the group.
With the newly acquired business now operating as part of the Acroud group, Acroud chief executive Robert Andersson said the benefits of the new addition were clear to see in Q4, with revenue up significantly year-on-year.
“This quarter has been the first quarter with our new media business, and I am happy to say it is firing on all cylinders,” Andersson said. “The new business comprises mainly of sport revenue driven by rev- share deals, giving us a very stable and secure long-term revenue stream.
“A 160% year-on-year growth in new depositing customers (NDCs) has been mainly driven by the new Media business, which has found the right way to capitalise on the players’ interest in football, during the World Cup and domestic leagues alike.
“I am very happy and proud that we are now one of the affiliates in the market with the most sport book revenue in its revenue mix.”
Group revenue for the fourth quarter reached €10.0m, up from €6.5m in the corresponding period in 2021.
Revenue from the affiliation business amounted to €6.3m, a year-on-year rise of 133.3% and a 109.9% quarter-on-quarter increase. Acroud noted that the new acquisition contributed €3.7m to this total, and without this, revenue would have fallen 11.0% quarter-on-quarter.
Breaking this performance down further, 74% of all affiliation revenue came from revenue share agreements, 12% cost-per-acquisition and the remaining 13% other sources. Of all affiliation activity, 59% was paid media, 32% SEO and 9% social and community-based.
Acroud’s second business area, software-as-a-service (SaaS), drew €3.7m in revenue in the fourth quarter, down 4.2% year-on-year. The SaaS segment comprises two core solutions in a subscription model and network model.
The network model drew the most revenue, but the €3.4m generated was 6.1% lower than in the previous year despite record NDCs for the quarter. In contrast, subscription model revenue was 25.0% higher at €290,000.
On the subject of NDCs, Acroud said that across its entire operations, this was 160.0% up year-on-year to 84,086.
Turning to costs, external expenses were 32.0% higher at €6.6m but personnel spending was reduced 10.0% to €1.0m for the quarter. Depreciation and amortisation was up 109.9% to €1.1m.
Acroud also referenced a one-off €18.0m impairment charge related to old assets stemming from its acquisition of Highlight Media in 2016, at a time when Acroud was operating as Net Gaming. The impairment charge did not affect cash flow but did impact comparability for the quarter and the full year.
After also accounting for €3.4m in finance costs, this left a pre-tax loss of €20.2m, compared to a €191,000 loss at the same point in 2021.
Acroud paid €80,000 in tax, meaning net loss for the period was €20.3m, much wider than €356,000 in the previous year. However, adjusted earnings before interest, tax, depreciation and amortisation (EBTIDA) rocketed by 134.7% to €2.5m.
Looking at the full year and whole Acroud did not off a full breakdown of its performance, it did reveal that revenue increased 24.6% to €30.9m, with a large portion of this growth taking place in Q4 following the acquisition.
External expenses hit €20.5m, personnel costs €3.7m and deprecation and amortisation €2.9m, while Acroud also included the €18.0m impairment charge from Q4.
With financial costs at €4.8m, this meant a pre-tax loss of €17.9m, in contrast to a €638,000 profit in the previous year. Acroud paid €569,000 in tax, leaving a total net loss of €18.4m, compared to a €719,000 net profit in 2021.
Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) for the full year was 40.7% higher at €7.6m.
“This is just the beginning of a new era,” Andersson said. “I am excited and geared-up to continue taking this company to the next levels.
“We have set out our business goals and plans for 2023 which will guide and push us to continue working towards the two main financial targets set: (i) 20% organic growth in EBITDA and (ii) optimise further our capital structure by lowering our net debt / EBITDA ratio and lowering our gross debt.
“This positive momentum, which started in Q4, puts us in the right track to deliver our financial targets in 2023 and beyond.”
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