Better Collective co-founder and CEO Jesper Søgaard announced a plan to "adjust" the organization's cost base, including layoffs, in a touching social media post on LinkedIn.
Better Collective is considered a "super affiliate" and has been a leader in the affiliate space for years, especially after lagging behind competitors like Catena Media.
The company's quarterly trading reports continue to show positive momentum, with signs of revenue and profit growth, particularly progress in the U.S. market.
However, its stock price has fallen significantly by 36.5% over the past week, and although it rebounded slightly on Monday, it is currently at $13.08.
This is mainly after the trading update on Thursday, which lowered the full-year financial guidance for 2024; revenue targets were reduced from 395 million euros to 425 million euros ($425 million to $460 million) to 355 million euros to 375 million euros, and EBITDA was also reduced from 130 million euros to 140 million euros to 100 million euros to 110 million euros.
Søgaard's post confirmed that the company is facing real challenges, "due to changes in the U.S. market" and a "continued slowdown" caused by upcoming regulatory changes in Brazil.
In fact, regulatory challenges in various U.S. states have reduced profit margins, and the base of operators available for partnerships is much smaller than in other regions. FanDuel and DraftKings lead in most states—most U.S. bettors have already heard of these brands, which immediately reduces the demand for Better Collective's affiliate websites.
In the U.S., the lottery industry is already a "multi-billion dollar" industry. Catena Media had previously discussed its focus on lottery activities, but perhaps this vertical competitor is bringing additional competition to Better Collective.
Meanwhile, in Latin America, upcoming regulatory measures and increased market access may benefit the overall market but could weaken Better Collective's existing strength in the region.
Moreover, this may raise a question: what role do affiliates play in the broader gaming ecosystem? Operators, especially B2B suppliers, have achieved great success, and in today's market, brands are becoming more sophisticated in directly attracting players—is there a reduced need for affiliates?
Nevertheless, considering that just two months ago, Søgaard praised the "excellent team effort" on LinkedIn for "bringing strong second-quarter results to Better Collective," last week's results are still relatively surprising.
Worth noting: Better Collective reported that second-quarter revenue grew 27% year-over-year to 99 million euros ($110.3 million). Net profit also grew 24% to 10.3 million euros.
Søgaard's full post reads: "These are somewhat sad days for Better Collective. Today, I shared with our team the details of our plan to adjust our cost base following our recent trading update, which includes lowering our financial targets for this year.
"Unfortunately, this plan also includes the difficult decision to part ways with some colleagues. Each of them has played a role in shaping Better Collective into what it is today, and for that, I owe them a deep gratitude!
"Making this decision was not taken lightly, but due to performance below expectations, especially due to changes in the U.S. market and the upcoming regulatory changes in Brazil—markets that have been growth drivers for BC in recent years, we still believe they have strong long-term growth potential.
"Over the past few years, Better Collective has grown significantly through internal development and acquisitions, not only adding new verticals and capabilities but also increasing organizational complexity. Taking these measures now is crucial for re-aligning our organization and investment strategy according to current market conditions to ensure the long-term success of Better Collective.
"Since Christian and I founded BC in 2004, we have experienced 20 years of growth, expanding BC's global influence with an excellent team. Leading this group of people who embrace our vision and truly advocate for Better Collective is a great honor.
"Although we are now focused on navigating through tough changes, I still believe that we will emerge as a stronger team and be well-prepared for future long-term growth opportunities. Sincerely, Jesper."
