iGB Intelligence reports Affiliate-Monitor-1Q19(clone) | Page 7

Part 1: Results from the first quarter The NDC growth at Better Collective was also is because of the long tail of “loyal players which impressive quarter-on-quarter, up 52% from continues to generate future revenues”, making it 76,000. It is a growth path which suggests that if more suitable for communities. the momentum continues into the second quarter “There is a clear element of skill in sports betting, the company could well surpass Catena Media as making it suitable for interactions and tips sharing the largest listed affiliate by quarterly NDCs. between players,” the analysts added. “The sports betting vertical is also more accepted by gambling Proportion of revenues from revenue share However, the issue with looking purely at NDCs authorities, and there are several large operators willing to lobby for online sports betting.” Hence, in part the differential between Better as a key metric is that it comes with no certainty Collective and Catena Media can be explained of quality of customer. Hence, it is worth looking by way of the former’s greater focus on sports at the percentage of revenue gained via revenue- betting compared to the more online casino- share arrangements as a potential proxy for focused Catena Media (where 41% is sport and long-term sustainable revenue prospects. In 53% is casino). this sense there is again a clear divide between Moreover, Catena also noted that CPA deals Better Collective, with 72% of total revenues are far more common in the US, so it might be coming from revenue share, compared with 44% wise to temper the enthusiasm for the higher at Catena. The only other affiliate that comes percentage of revenue-share business at Better close to this percentage is GIG’s media services Collective considering its recent acquisition in the unit with 57%, though with in-house sign-ups US market. amounting to 13% of the total business, it might Sweden not be the truest measure. Analysts at Redeye in Stockholm said in a recent The debate around regulated and unregulated coverage note for Better Collective they believe markets – about revenue sustainability and what it the quality inherent in revenue-share arrangements means to be grey in the affiliate space – has been means that the company deserves a higher multiple brought into sharp focus by the opening of the than any CPA-based business. This, the team wrote, Swedish market in January this year. Sweden has been a foundation market for many of the listed affiliates. For instance, Chart 1: Better Collective’s focus on sport Catena Media has built up a substantial Swedish and Scandinavian presence over a series of acquisitions, including the deals for Wonko Media Other 2% in March 2016, Spelbloggare.se in July the same year, Slotsia in February 2017 and Newcasinos. Casino 20% com in May that year. So the less than auspicious opening in the Swedish regulated market will have been disappointing to Catena, even as it has tried to spin the poor opening months as being a long- term positive. “For the long term we expect this will prove Sports betting 78% Source: Company reports, Redeye iGaming Business • Affiliate Monitor • August 2019  beneficial for us,” the company said in its results statement. “Since operators will need even more players, there should be even higher demand for our services. Additionally, with Swedish 4