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Better Collective increases organic revenue by 29 percent; strong growth across US assets and media partnerships

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SPORT1 and MAGIC SPORTS MEDIA enter into cooperation with Better Collective to launch new sports betting section on SPORT1.de
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Interim report January 1 – September 30, 2021

Highlights third quarter 2021

  • Group Revenue grew by 148% to 45,413 tEUR (Q3 2020: 18,298 tEUR). Organic revenue growth was 29%. September reached a new monthly revenue record of 20,285 tEUR, equal to 45% of the total quarterly revenue.
    • The quarter showed strong underlying growth on all major KPIs, however, revenue was impacted downwards by very low sports win margins in July and August. The sports win margins were negatively affected by larger operators accelerating marketing campaigns (free-bets, retention-bonuses etc.), as well as continued strong NDC performance, where new depositors receive sign-up bonuses.
    • The US business performed strongly with Q3 2021 revenue of >5x compared to Q3 2020 revenue. Revenue for September jumped to 8.9 mEUR (>10 mUSD) reflecting a strong start of the high season for US sports and the state of Arizona opening for online sports betting. Strong performance across all US assets including the newly acquired Action Network.
    • In Germany, a long-awaited new gambling regulation came into force from July 1. The market development has been in line with our expectations; for Better Collective, September revenue from the German market was on par with the monthly average in H1. Based on the current performance in Germany, revenue for the full year 2021 is expected to exceed prior years 2019 and 2020, respectively, with expected continued revenue growth in 2022.
    • Media partnerships continued with strong performance with almost 45,000 NDCs. More media partnerships are expected to be established in various countries.
  • Group EBITDA before special items increased 63% to 13,583 tEUR (Q3 2020: 8,326 tEUR). The EBITDA-margin before special items was 30% (Publishing 40% and Paid Media 9%).
  • Special Items in Q3 2021 amounted to a cost of 11,588 tEUR vs. an income of 44 tEUR in Q3 2020. It includes an 11,487 tEUR adjustment of the contingent liability related to the 2019 acquisition of Rical LLC, treated as a P/L item under IFRS.
  • EBITDA after special items amounted to 1,995 tEUR, a decrease of 6,375 tEUR vs. 8,370 tEUR in Q3 2020.
  • Cash Flow from operations before special items was 10,498 tEUR (Q3 2020: 8,359 tEUR), an increase of 26%. The cash conversion was 76%, and was impacted by a significant increase in revenue for September vs. June driving increased trade receivables from Q2 2021. End of Q3, capital reserves stood at 64.1 mEUR including cash of 35.4 mEUR and unused bank credit facilities of 28.7 mEUR.
  • New Depositing Customers (NDCs) were >200,000 in the quarter with an implied growth of 110% and a new quarterly record despite July and August being the low season for major sports.
  • Better Collective acquired Soccernews.nl and Voetbalwedden.net for total 5.9 mEUR upfront payments plus deferred and earn-out payments of up to 3.75 mEUR, to gain a leading position in the newly regulated Dutch online sports betting market.
  • Better Collective resolved on a directed share issue of 6.9 million shares, raising proceeds of 145 mEUR to maintain financial flexibility.
  • For the fourth consecutive year, Better Collective topped the prestigious EGR Global’s Power Affiliates 2021 ranking.

Financial highlights first nine months 2021

  • In the first nine months of 2021, revenue grew by 128% to 124,257 tEUR (YTD 2020: 54,472 tEUR).
  • In the first nine months of 2021, EBITDA before special items increased 64% to 39,439 tEUR (YTD 2020: 24,044 tEUR). The EBITDA-margin before special items was 32%.
  • Special Items amounted to a cost of 17,006 tEUR vs. an income of 252 tEUR YTD 2020. It includes an 11,487 tEUR adjustment of the contingent liability related to the 2019 acquisition of Rical LLC, treated as a P/L item under IFRS, in addition to 5,784 tEUR related to M&A transactions, primarily the acquisition of Action Network in May, 2021.
  • EBITDA after special items amounted to 22,433 tEUR YTD, a decrease of 1,863 tEUR vs. 24,296 tEUR YTD 2020.
  • Cash Flow from operations before special items was 37,670 tEUR (YTD 2020: 28,173 tEUR), an increase of 34%. The cash conversion rate before special items was 97%. End of Q3 2021, cash and unused credit facilities amounted to 64.1 mEUR.
  • New Depositing Customers exceeded 575,000 in the first nine months of 2021 (growth of 103%).
  • Better Collective acquired leading US sports betting media platform, Action Network, for 196 mEUR (240 mUSD), gaining market leadership within sports betting media in the US.
  • On May 26, 2021, the Board of Directors resolved on a directed share issue of 6.9 million shares, raising proceeds of 145 mEUR to maintain financial flexibility.

Significant events after the closure of the period

  • October revenue reached 16.8 mEUR, with organic growth of 17% and a total growth of 34% vs. last year. The growth is achieved despite an all time low sports win margin in October.
  • On November 4, the completion of the acquisition of the remaining 40% of Rotogrinders Network was announced. Since the initial share acquisition Rotogrinders has shown strong performance with expected 2021 revenue more than doubling since 2019, with a 47% compound annual growth rate. Expected 2021 EBITDA is 4.4x higher than 2019, growing at a 109% compound annual growth rate.
  • In the state of New York, nine operators were recently awarded sports betting licenses. Projected to become the single largest online betting market in the US, New York presents a big opportunity for Better Collective and for our operator partners now licensed. Betting is expected to commence in January 2022, in time for the Super Bowl.
  • Better Collective received an award for its efforts within compliance at the Vixio Global Regulatory Award. At the same show, Better Collective’s subsidiary, Mindway AI, received two awards for its efforts within responsible gambling.

Financial targets
The full-year financial targets for 2021 for the group remain unchanged. Growth in the Publishing business exceeds prior expectations whereas Paid Media sees lower growth than anticipated, which is reflected in an adjustment of the detailed segment targets.

Jesper Søgaard, Co-founder & CEO of Better Collective, commented:
Q3 was a great quarter closing with an all time high monthly revenue in September. This was partially the result of strong performance across all our US assets, including our recent acquisition, Action Network. September was also the beginning of the high season for US sports, which is expected to fully materialise in the Q4 results. “

Conference call
A telephone conference will be held at 10.00 a.m. CET today by CEO Jesper Søgaard and CFO Flemming Pedersen. The presentation will simultaneously be webcasted, and both the telephone conference and the webcast offer an opportunity to ask questions.

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iSoftBet goes live with Eyas Gaming

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iSoftBet, part of IGT PlayDigital, has established a partnership with experienced operator Eyas, to provide the brand with its high-quality gaming services and products.

The agreement will see several of iSoftBet’s high-quality titles and third-party gaming content go live across Eyas’ network, allowing its customers to enjoy some of the most engaging gaming experiences on the market.

Founded in 2020 by a group of iGaming industry veterans, Eyas is a UK-facing operator with a well-rounded team comprising of IT development, marketing, and customer operations, backed by the Gauselmann Group – Germany’s leading land-based slots manufacturer and arcade operator.

The deal further reinforces the impressive commercial success that iSoftBet has experienced in recent months, having established deals with experienced operators Lowen Play, Alphabet and Casino Interlaken.

Lars Kollind, Head of Business Development at iSoftBet, said: “Off the back of this comprehensive partnership, Eyas’ customers are finally able enjoy our impressive proprietary games selection and third-party offering.

“Our pioneering games will now feature across Eyas’ sites – including Merkur Slots and Merkur Casino in the UK – and reach new audiences, helping us on our mission to further awareness about our multifaceted portfolio.”

Jack Anthony, Head of Product at Eyas, said: “We are thrilled with the deal that has been established, allowing us to offer iSoftBet’s high-quality slot titles across our various sites.

“We expect our customers to take full advantage of the brand’s efficient aggregation platform, which provides a vast selection of gaming products from a range of the industry’s leading suppliers.”

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GREEN JADE GAMES UNVEILS NEW ARCADE GAME ‘TAP TAP SPLAT’

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New from skill-based arcade games pioneer Green Jade Games comes Tap Tap Splat, a cartoon whack-a-mole style game that allows players to bet on their splatting skills.
Tap Tap Splat invites players to choose a wager amount, then whack as many jelly monsters that pop up randomly on their screen as possible in one minute. Players tap on the targets to gain points and payouts, while avoiding the bombs that will deduct points if they’re detonated.

It’s the latest addition to the Green Jade lobby, which includes a suite of state-of-the art skill-based gambling games like Jade Puzzle, Casino Blocks, Cash Quiz, Cash Smash, Galaxy Wing and Speedy Candy.
The Arcade Lobby offers many different genres of games, from Brick Breaker, to Puzzle, and from Hyper Casual to First Person Shooter. Players can also take advantage of special promotions and track their progress on leaderboards.

Green Jade has spent years researching, developing and building this brand-new vertical in the igaming space. Arcade games offer the same volatility, prize range and hit frequency as slots, but with a completely different interactivity and reward sensation.
Green Jade believes arcade games help operators grow their audience through the acquisition of players who wouldn’t have previously been interested in sports betting or slots, generating increased revenues and more loyal players.

Mark Taffler, Chief Commercial Officer at Green Jade Games said: “Tap Tap Splat says it all really. It’s inspired by end-of-the pier whack-a-mole games, but with a gambling element. Over the past 12 months, we’ve seen a huge growth in the audience for skill-based arcade and we believe that will continue for the foreseeable future. Tap Tap Splat is a great addition to our ever-growing lobby of games. Not just that but it’s a great addition to any Casino’s Lobby.  It stands up vs any slots out there today“

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Flexion targets TikTok influencers to give game developers a reliable low-cost return on user acquisition

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Flexion targets TikTok influencers to give game developers a reliable low-cost return on user acquisition
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Flexion Mobile’s influencer marketing agency Audiencly is metamorphosing many of its 6000-7000 top influencers on to TikTok using a disruptive service from Liteup Media.

The recently launched cost per install (CPI) service offers game developers a way to target users on TikTok and works in a similar way to automated ad buying. TikTok is currently the fastest growing social media platform and, importantly for game developers, the best for reaching Gen Z (zoomers) — 10 to 25-year-olds, the biggest audience for many game categories.

TikTok is predicted to reach 1.5 billion monthly users by the end of the year. Over half of them will be zoomers. TikTok is the most engaging social media platform, with an average user session of 10.85 minutes. It is inherently viral which means that even accounts with only a small number of followers can trigger millions of views for the right video.

“TikTok has the potential to reach a whole new generation of game players,” says Adrian Kotowski, CEO of Audiencly, “so it’s vital for developers to include influencers on the platform in their marketing mix. By offering our carefully curated group of content creators the chance to add TikTok to their output, we’re giving our clients instant access to this channel. They retain the same tried and trusted influencer personalities but with Liteup they reach out direct to the TikTok generation.”

Disruptive influencer tech

Liteup automatically connects developers with influencers through its mobile app in a way that precisely matches target audiences. To date, Liteup has focused on micro influencers but there is no limit on the size of an influencer’s audience. This means nano-influencers can sign up, but so can Audiencly’s much higher profile personalities.

The influencers include details of their TikTok followers and the type of content they create when they sign up with Liteup, allowing developers to precisely target the audiences they need to reach. The app-based service tracks influencer followers and advertisers are only charged when a new user installs a game. This allows developers to control spend and performance in the same way as they can with other forms of user acquisition.

Audiencly is wholly owned by Flexion Mobile, a company whose core business is taking Android games and giving them an additional audience and revenue on the alternative app stores. Flexion has just completed a US$500,000 investment in Liteup Media, taking a 20% stake in the company. This is testament to how important Flexion believes TikTok influencers are in game user acquisition.

“Expanding our service for game developers is a major goal for Flexion,” says CEO Jens Lauritzson. “Advertising is no longer enough to raise the profile of a game and influencer marketing is becoming ever more attractive for user acquisition. Liteup’s disruptive service combined with Audiencly’s expertise in influencers is exciting because it fills a need that no-one else is really addressing.”

Investment improves Liteup

For Liteup, the Flexion investment and Audiencly tie-up have significant advantages.
“Flexion’s investment has allowed us to accelerate development significantly,” says Aaron Baker, Liteup’s CEO. “In a matter of months, it has taken us from a minimum viable product to a feature-rich creator app with improved UI/UX, analytics, and an in-app content system. This makes it incredibly easy for influencers and creators to come on board.”

The fragmentation of the market is a big problem for game developers wishing to use influencers as part of their user acquisition mix. By coming together with Liteup, Audiencly is now able to offer access to a broad spectrum of influencers across a number of social media platforms.“

We’re starting to consolidate influencer marketing for games,” says Adrian Kotowski, “allowing UA experts to reach a range of influencer types through a single point of contact. Developers need a reliable return on investment from performance marketing and, with influencers, that’s exactly what we are able to give them.”

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