Better Collective revenue jumps 40% in Q1 2020
Danish affiliate offers redundancy and reduced salaries to more than 50 employees in Covid-19 cost-saving measures
Better Collective has recorded year-on-year revenue growth of 40% for Q1 as the Danish affiliate avoided a coronavirus-related downturn during the first three months of 2020.
Strong performance saw revenue for Q1 2020 reach €20.9m, compared to €14.9m in Q1 2019, before the enforced sports shutdown in mid-March started to affect operations.
After the reporting period, Better Collective noted revenue was down 17% annually in April to approximately €4.6m, while several cost-saving measures have been implemented to protect the business.
These measures, which became effective on 1 April, have seen more than 50 employees either made redundant or placed on reduced salaries.
The board of directors has also agreed to waive individual salaries and fees for Q2 2020, while all other remaining employees, including management, have agreed to reduce their salaries during Q2.
Better Collective said that a total cost reduction of around €2m would be achieved for Q2 2020 compared to Q1 2020.
Elsewhere, EBITDA increased 32% from Q1 2019 (€6.5m) to Q1 2020 (€8.6m), while post-tax profit grew by €1m year-on-year to €4.68m in Q1 2020.
The number of NDCs was noted as 116,000 – the same amount as last year – with the flat figure attributed to low levels of sporting action since mid-March.
Better Collective completed the acquisition of esports site HLTV.org ApS in February for a fee of €34.5m, of which €26.4m was paid upfront.
Other disclosed investments include €161,000 for a new office in Florida, plus the remaining earn-out payments from the 2018 acquisition of WBS I.K.E. Online Marketing.
Looking ahead to the remainder of 2020, with the impact of the Covid-19 pandemic in mind, Better Collective has noted that it expects to see a total growth of more than 30% and operating margin for EBITDA to be greater than 40%.
The affiliate highlighted that it could lose up to €10m in revenue for 2020 due to postponed sports events, including €4m alone from the UEFA European Championships.
This assumption is based on the notion that all major sporting events would return to normal activity levels in H2 2020.
CEO Jesper Søgaard said that while the coronavirus outbreak is having a negative impact on operations, his firm’s cost-saving measures will protect the business.
Søgaard said: “An unprecedented halt on major sports events was seen as a result of the Covid-19 pandemic postponing events and thus revenue. However, our digital business model has proven strong under these circumstances and we have as a company demonstrated the flexibility to withstand a period with low sports activity.
“The situation calls for flexibility and we have redistributed resources internally to focus on business areas that have remained active. We have implemented a cost-saving programme comprising of more than 50 single initiatives,” he noted.
Looking ahead to the remainder of the year, Søgaard noted that Q2 would be the exception to the rule and he hoped normality would soon return.
He said: “We expect low sports activity throughout most of Q2, though some of the major European sports leagues may resume without physical spectators sometime in the quarter, like the German Bundesliga confirmed to start on 16 May 2020. Our Q2 performance is likely to be the exception in an otherwise strong growth story. However, we expect high activity during the second half of 2020.”