Penser Access & Future by Carnegie: Raketech Group Holding: Trough can have been reached – Q3 review
Still challenging on all fronts
Revenues reached EUR12.9m in Q3, representing a Y/Y drop of 39.9%. This figure was 20.4% lower than our sales estimate for the quarter. This can be explained by the ongoing challenges for the company's sub-affiliation business and the still tough markets for affiliation marketing. Adjusted EBITDA for Q3 came in at EUR 3.1m, implying a margin of 24.1%. Thanks to the restructuring programme launched earlier in the year, the company has succeeded in reducing OPEX by 18% since Q1(24). The robust cost control led to a -12.3% deviation from our EBITDA estimate for the quarter. Q4 has had a poor start, with revenues down 45.2% to EUR4m. Altogether, this was a particularly weak report from Raketech. Although we had previously flagged the tough comparables for H2 and had forecast a Y/Y drop, we had not expected anything of this magnitude.
Estimates adjusted after changes
Ahead of the Q3 report, we adjusted our full-year estimates to a little under the lower end of the guidance range, given the challenges the company had seen in H1. In this report, Raketech confirmed that the lower end of its guidance will be hard to reach, and so we cut our EBITDA estimate for this year by 12.6%. We believe Raketech's strategic initiatives this year will result in a return to growth, thanks to the solid structural growth in the gaming markets. In spite of this, we reduce our EBITDA estimates for 2025–2026 by an average of 12.6%.
Fair value cut
Prompted by these estimate changes, we lower our fair value to SEK10–16 (14–18). We consider the primary share price catalyst to be a turnaround in the operational issues that have plagued 2024. We believe this is reasonable, thanks to the high structural growth in the gaming markets and the role of affiliates there. Before this, however, the share will come under pressure from concerns about whether the future cash chest can cover the coming earnouts.
Read the full report, published on 15-08-2024 at 06:30 AM: https://researchdocs.carnegie.se/research/2024/11/14/rakeq3_eng.pdf
Read the Swedish version: https://researchdocs.carnegie.se/research/2024/11/14/rakeq3.pdf
This is a commissioned research from Carnegie Investment Bank. Read more here: https://www.carnegie.se/cr/penser-access/