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2022-11-10

Acroud AB: Acroud publishes interim report Jul-Sep 2022: Another piece in Acroud's transformation

Financial highlights during third quarter 2022

  • Revenue amounted to EUR 6 683 (6 448) thousand, corresponding to a growth of 4% and an organic growth of 2.1%. 

  • EBITDA amounted to EUR 1 496 (1 258) thousand, increasing by 19% year-on-year. 

  • Profit after tax was EUR -589 (593) thousand. Adjusted profit after tax (before items affecting comparability and currency effects) was EUR -188 (482) thousand.

  • Earnings per share after dilution amounted to EUR -0.005 (0.005). Adjusted earnings per share (before items affecting comparability and currency effects) was EUR -0.001 (0.004). 

  • New Depositing Customers (NDC) amounted to 33 792 (39 632) decreasing by -15% (646%). 

  • Cash flow from operating activities amounted to EUR 1 082 (664) thousand. 

Financial highlights during first nine months 2022

  • Revenue amounted to EUR 20 886 (18 227) thousand, corresponding to a growth of 15% and an organic growth of 10.6%.

  • EBITDA amounted to EUR 5 547 (3 857) thousand, increasing by 44% year-on-year. Adjusted EBITDA (before items affecting comparability) was EUR 5 080 (4 332) thousand, increasing by 17% year-on-year.

  • Profit after tax was EUR 1 843 (1 073) thousand. Adjusted profit after tax (before items affecting comparability and currency effects) was EUR 951 (1 326) thousand.

  • Earnings per share after dilution amounted to EUR 0.014 (0.009). Adjusted earnings per share (before items affecting comparability and currency effects) was EUR 0.007 (0.011).

  • New Depositing Customers (NDC) amounted to 102 464 (100 867) increasing by 2% (303%).

  • Cash flow from operating activities amounted to EUR 4 057 (EUR 3 592 excluding one-off tax payment relating to acquisitions) thousand.

Financial highlights after the quarter

  • EBITDA in October 2022 amounted to EUR 1.1 million.

Important events during the quarter

  • In July 2022 Acroud issued senior secured bonds 2022/2025 in the total amount of SEK 225,000,000 (ISIN SE0017562481). In August 2022, in accordance with the terms and conditions, Acroud bonds were admitted for trading on the corporate bond list at Nasdaq Stockholm, and the first day of trading at Nasdaq Stockholm was on 23 August 2022.
  • On 18 July 2022, Acroud has redeemed early its existing bonds of SEK 300 million. As at the date of redemption, Acroud owned SEK 112 million from its own bond. The redemption amount was paid to each person who was registered as an owner of Existing Bonds in the debt register maintained by Euroclear Sweden at the end of business day on 11 July 2022. 

Important events after the quarter

  • Acroud completed the acquisition of 60% shareholding in Acroud Media Ltd for a total consideration of approximately GBP 5.1 million. The newly-acquired company owns assets and technology operating within the affiliation and media space and it is expected to contribute over EUR 9 million to the Company's revenues and over EUR 4 million to the Company's EBITDA annually. The purchase consideration is payable GBP 1 million in shares (issued on 18 October 2022) and GBP 4.1 million in cash (GBP 2.0 million already settled, with the rest payable over the next 18 months). Acroud has also secured a combination of call and put options for the remaining 40% of the business expiring in 2028. Both options are based on financial performance for 12 months ending 30 September 2028 with an EBITDA multiple of 5.5x. The acquisition of the remaining 40% will be settled in cash from existing reserves (40%) and via own shares (60%).

CEO comments: Another piece in Acroud's transformation
 

Quarter 3 2022 marks the start of a "new version" of our Company. With the completed acquisition our Company's KPIs will look completely different.

Summer has been upon us, during which we have experienced seasonal volatility with August revenues on the low side, only to bounce back up in September making the latter one of our best months in 2022. Despite historically being the weakest quarter, Q3 delivered EUR 6 683 thousand in revenues and EUR 1 496 thousand in EBITDA. These results represent a year-on-year growth of 4% in revenues and 19% in EBITDA. Although costs are not down quarter- on-quarter, this is because we have seen the opportunity and necessity to continue to invest in certain areas. This however means we are now using our funds in a more effective way than before.

During the quarter we have had one-off items which has affected the Company's profitability. In July the Company paid a one-off redemption fee of 3% to old bond holders, impacting the Company's profit before tax by EUR 534 thousand. Similar cost under the bond is now being accrued for throughout the term of the bond, which impacted Q3-22 results by EUR 175 thousand. The Company also adjusted its tax accrual by EUR 261 thousand to reflect the redomiciliation of one of its subsidiaries. This items in aggregate explains the loss of EUR 589 thousand incurred during the quarter.

Introducing Acroud Media Ltd

During the third quarter we also worked diligently to close the acquisition of Acroud Media Ltd.  Earlier this year, Acroud Media Ltd acquired assets which have been established by previous owners in the iGaming affiliation and paid media sphere since 2016.

One of the acquired business' strengths is its agility to move from one opportunity to another, depending on market, regulatory and other macro developments. Also, the acquired business is almost exclusive based on sportsbook revenues, with some of the world's largest operators such as Bet 365 and Betway. Approximately 80% of total revenues comes from revenue-share deals, implying that there is an incredible potential in the recuring revenue and, as the player base keeps growing, this stable revenue stream keeps growing.

Another strength of the acquired business is that revenue is not dependent on SEO and search algorithms' results. Search engines like Google are updated from time to time, impacting sites' performance driven by SEO: sometimes the effect is negligible, sometimes positive, sometimes negative. This is one of the biggest operational risks in SEO affiliation business. This acquisition complimented by the last year's transformation, Acroud has transformed itself from 100% driven by SEO to a diversified business model including community-based and social media affiliation (The Gambling Cabin), paid media affiliation (Acroud Media) and SaaS Products.

Entering a new era in Acroud's transformation

With this new entity in place, Acroud has executed another step in its transformation. Besides continuing to diversify its business risks and investing on future growth, Acroud has managed to close an accretive acquisition which will boost its profitability and cash position. Best proof is Acroud's October 2022's results, where total EBITDA has increased to EUR 1.1million. This has put us in the right track to generate between EUR 8-9 million in Group EBITDA for 2022, in line with our financial target and guidance. Amount of NDCs referred to our partners is expected to almost double going forward, which in turn is expected to spark further long-term and sustainable growth.

Developments in Affiliation and SaaS businesses

Acroud Media will form part of the Affiliation business. During Q3-22 the affiliation business generated EUR3.0million in revenues, representing a year-on-year increase of 12%. Such growth was the result of the investments in growth initiatives particularly in regulated and strategic markets, which has intensified during this quarter. This also explains the year-on-year decline of 8% in the affiliation EBITDA, reaching EUR1.1million during the quarter.

A key event in Q4 will definitely be the World Cup championships, and we are getting ready for this worldwide event - in both Acroud Media and The Gambling Cabin teams. The Gambling Cabin team has some special treats in stores for its fans. Broadcasting from "The Gambling Villa" where the whole team will be gathered to provide comprehensive coverage of the event with sponsors and partners lined up.

The SaaS business continues to deliver year-on-year growth in EBITDA figures, reaching EUR 539 (271) thousand in Q3-22. This growth is driven by both Network model (represented mainly by Matching Visions and DreamStream brands) and Subscription model (represented by Voonix). Our Voonix software is turning out to be true hidden gem and our aim going forward is naturally to both expose and realize the true value of this software.

Refining our strategy

When reflecting on the past few years, I could not be more satisfied with our successful acquisition strategy as well as the subsequent integration into Acroud Group. All acquired entities are performing in line with, or better than our initial expectations.

We knew then, and it's evident today, that our integration strategy was right. We rejected the classic method of "buy assets and roll up" and instead built a house of brands. We supported and enhanced each business rather than forcing alignment with pre-existing ideas and methods. This strategy has allowed our companies to maintain autonomy and growth while diversifying business risks, achieving synergies and sharing knowledge within the Group.

More than anything, I am equally pleased as I am proud of the current "vibe" in the company. Everyone is positive and energized about the direction. We are not yet there but everyone is working towards that shared goal. With an entrepreneurial and positive mindset, we will continue to develop our strategies, examine our operations, and eliminate any inefficiencies.

Enjoy the Ride!

Robert Andersson, Malta, 10 November 2022
CEO Robert Andersson and CFO Roderick Attard will present the report, followed by a Q&A session today at 10:00 CET. The presentation will be held in English and will be webcasted live through www.acroud.com or via https://tv.streamfabriken.com/acroud-q3-2022.

To join the conference via phone, please dial-in using any of the numbers below:

From Sweden: +46 8 566 42 692
From UK: +44 33 33 00 92 71
From the US: +1 646 722 49 57

The webcast and the presentation slides will available to view and listen on demand after the webcast onwww.acroud.comor via theQuartr (https://quartr.com/companies/acroud_4917)app.

Responsible parties

This information constitutes inside information that Acroud AB (publ) is required to disclose under the EU Market Abuse Regulation 596/2014. The information in this press release has been published through the agency of the contact persons below, at the time specified by Acroud AB's (publ) news distributor Cision for publication of this press release. The persons below may also be contacted for further information.

For further information, please contact:

Robert Andersson, President and CEO
+356 9999 8017

Roderick Attard, CFO
+356 7925 4722

ACROUD AB (publ)
Telephone:     +356 2132 3750/1
E-mail: info@acroud.com
Website: www.acroud.com

Certified Adviser: FNCA Sweden AB, info@fnca.se

From August 2021 (Q221 Report) report Acroud has changed reporting and company language to English. This means that Interim Reports and the correlated press releases will be issued in both English and Swedish, however the English version will supersede the Swedish version.

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