Good day, and thank you for standing by. Welcome to the Better Collective conference call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one, one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one and one again. Alternatively, you may submit your question via the webcast. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Jesper Søgaard, co-founder and CEO. Please go ahead.
Thank you very much, and good afternoon or good morning to those of you in the Americas. My name is Jesper Søgaard, and I'm the CEO and Co-founder of Better Collective. I would like to welcome you to this extraordinary webcast that we host on the back of announcing that we have signed a definitive agreement to acquire the Canadian Playmaker Capital. Let me start by saying that Playmaker Capital has been one of our prime acquisition targets for the past couple of years. We've grown significantly in South America during the past years and have actively been looking for strong sports media targets to combine with our existing portfolio. Playmaker Capital was at the very top of our target list, specifically due to its South American exposure, and we have gained substantial insight to the business through several media partnerships with some of their brands.
I'm extremely excited that we've finally been able to come to terms and find a structure that both brings immediate value to the shareholders of Playmaker Capital, and at the same time is highly value accretive to the shareholders of Better Collective. Today, I'm joined by our CFO, Flemming Pedersen, and together we'll introduce you to the transformational acquisition of Playmaker Capital and how we see it adding value to the Better Collective group. Please follow me to the next slide. As usual, I ask you to please pay attention to the disclaimers towards any forward-looking statements, and also refer to the press release we issued yesterday that provides further detailed information. Please follow me to the next slide. Allow me to start with anchoring this in our vision of becoming the leading digital sports media group.
We're well underway with this transformation and have already completed several acquisitions these past years that will take us further in fulfilling this vision. We firmly believe that Better Collective is the best home for quality sports media. We've proven that we can make better businesses out of the many digital platforms we have acquired over the years, that cater to large audiences of sports fans, and further improve the quality of the content for millions of daily visitors. As most of you will know, Better Collective is rooted in Europe. However, in recent years, we've also managed to grow significantly in the Americas. Following the acquisition of Playmaker Capital, we can confidently state that we are the clear market leader in North America, and that we have gained market leadership in South America as well. Please follow me to the next slide.
For those of you who follow us, you'll likely recognize this slide that illustrates where we want to take Better Collective in terms of our M&A strategy. Playmaker Capital fits perfectly into the strategy. We want to own quality sports media, where we see potential in growing the audience and applying our toolbox of business models, including our world-leading competencies within performance marketing when partnering with Tier One sportsbooks. There's no doubt that adding Playmaker Capital to our already strong media portfolio will bring us much closer towards becoming the leading digital sports media group. Please follow me to the next slide. On this slide, you get a sense of what the combined group will look like following the acquisition. Playmaker Capital brings very strong sports media brands across the Americas under the umbrellas of Futbol Sites in South America, Yardbarker in the U.S., and The Nation Network in Canada.
In total, these media brands have audiences of 200 million monthly visits and 180 million followers on social media. Combined with Better Collective's existing portfolio, we now cater to almost 400 million monthly visits, securing Better Collective, the second-largest addressable digital audience within sports. Allow me to dive a little more into some of Playmaker's key brands. Futbol Sites is a top-ranked South American digital sports media group with an audience of more than 180 million monthly visits. Futbol Sites' extensive portfolio of web, social, video, and podcast properties are fan favorites for sports enthusiasts and communities across every major sports market in South America. Futbol Sites' media brands, among others, include Bolavip, Somos Fanáticos, and RedGol. Yardbarker is a popular U.S. sports and entertainment media, attracting more than 13 million monthly visits.
The brand is famous for its daily email newsletter, The Morning Bark, which has more than 400,000 subscribers. The Nation Network, also known as TNN, is another group of quality sports brands. The overarching brand within TNN is Daily Faceoff, a hockey-focused sports media with a large and loyal audience, actively consuming content across all channels. Alongside web properties that generate more than 6.5 million monthly visits. TNN's portfolio also includes more than 25 podcasts that generate more than 1 million monthly streams. In addition to the highlighted sports media brands, Playmaker also operates Wedge, which is a paid media division with a core focus on the U.S. market. This business will be integrated into Better Collective's best-in-class paid media division.
Playmaker Capital as a business is not new to us, and we already have a lot of confidence in the strength of the acquired sports media. This stems from the past 1-2 years, where we have worked with some of the brands on the media partnership agreements. This has given us inside knowledge of brand values, monetizing opportunities, and tech setup. Not least, we have experience working with the management team and some of the many talented employees in Playmaker, where we see a lot of overlap in terms of cultural fit. I'll now hand over the word to Flemming, who will review the key financial highlights of the transaction. Please turn to the next slide.
Thank you, Jesper. Let me walk you through some of the financial highlights of the transaction. We will pay CAD 0.70 per share, which is a 46% premium to the latest closing price. The total acquisition price is EUR 176 million on a debt-free basis. Of the EUR 176 million, EUR 112 million will be settled directly to the shareholders of Playmaker, and the remaining EUR 64 million consist of existing debt and contingent liabilities that Better Collective will take over. As Playmaker Capital is a public company listed on the TSX Venture Exchange, there is a process until final closing that involves shareholders' approval. In this case, two-thirds of the Playmaker shareholders need to accept the offer, which is recommended by the Playmaker board.
Before the announcement yesterday, the board has obtained backing from approximately 50% of the shareholders. Furthermore, the transaction is dependent on obtaining certain regulatory approvals. We expect that closing will take place in Q1 2024, and thereafter, Playmaker Capital will be consolidated into the Better Collective group. The direct consideration to the Playmaker shareholders will, upon closing, be settled in a ratio of 65% Better Collective shares and 35% in cash. At Better Collective, we have a very natural focus on dilution, given our founder's large shareholding of 40%, as well as many employees, including myself, being invested in the company. So just like any other acquisition, we have focused on minimizing shareholder dilution. This acquisition is completed at a balance, balanced ratio of cash as well as shares.
Over the past years, we have been acquiring our own shares in buyback programs, and these treasury shares will be utilized now. Due to this, the number of new shares will be limited, and the dilution of Better Collective shareholders will only be approximately 3%, while immediately adding more than 10% in Adjusted EBITDA compared to our current forecasted operational earnings. The cash consideration will be paid with existing cash and already available bank credit facilities, and the debt leverage, net debt to EBITDA, is forecasted to stay below three after closing, which is in line with our external targets and our bank covenants. We expect to see synergistic effects already after the first year and expect to increase from here. On a 12-month basis, we are paying an EBITDA multiple of 11.7x for the company.
In 2026, three years post-acquisition, we estimate that the EBITDA multiple will fall below 5x, and that the Playmaker business will see operational profit margins in line with Better Collective's other publishing assets, meaning more than 40%. Following 2026, we still expect to see growth from these synergies, given the revenue share income expectedly will continue to expand. With that outlook and the minimal shareholder dilution, we see this acquisition as being highly value accretive. Please follow me to the next slide. On this slide, you see our financial targets for 2023 and for the period 2023-2027. Here, I would like to highlight that after closing of the transaction, we intend to update the long-term financial targets, which we issued ahead of our Capital Markets Day in March this year.
Please follow me to the next slide, and then, the word back to Jesper.
Thanks, Flemming. Let me summarize by stating that as a large shareholder myself and as a co-founder, as well as CEO, I'm extremely excited that we've been able to combine our two companies under the Better Collective umbrella. I see a lot of potential from a business perspective and by way of creating shareholder value. This is Better Collective's second-largest acquisition to date and is done with minimal shareholder dilution. The transaction is large and complex, and due to this, we'll establish a dedicated integration team involving management from both sides, which will ensure an optimal integration and unlocks the business synergies as soon as possible. The transaction is transformational for Better Collective, and I expect it to strengthen our combined organizations in the Americas by miles. Playmaker already has a very strong South American presence with experienced management in place.
This is also something we've been building out this year. Further, Better Collective brings a very strong organization in North America, which in turn can be utilized in combination with Playmaker. Truly a great fit. I'm looking forward to the final closing, so we can start working together and unlock this great potential. I'm very pleased that the talented leadership team of Playmaker will stay on board to help integration and to drive the business forward. Further, with the acquisition, we acquire a lot of in-house media capabilities, which we can employ across our existing brands. We bring deep knowledge in growing existing sports media brands together with our toolbox of business models that monetizes the audience in a much more efficient manner. Every day at Better Collective, we work towards our vision of becoming the leading digital sports media group.
Acquiring Playmaker Capital brings us many steps closer in realizing our ambitious vision. Lastly, as Flemming also alluded to, we expect to grow the existing margin at Playmaker significantly, which brings down the EBITDA multiple from the last twelve months of 11.7x down to below 5x in 2026. And we do all of this while only diluting shareholders by 3.1%, while adding more than 10% compared to current forecasted adjusted EBITDA. This is very much in line with our core focus of capital allocation. This seems like the perfect end to our presentation, and I hope that you are, are as excited as we are. We'll now open up for questions and remind you that we are currently in a silent period with our Q3 report being released on November fifteenth.
So we'll have to focus on questions relating to this acquisition. If you have other questions, I hope you will join us for our Q3 webcast, which we host on November sixteenth. Thank you for listening in. Operator, please open for questions over the phone.
Thank you. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one and one again. We will now take the first question. It comes from the line of Oscar Rönnkvist from ABG Sundal Collier. Please go ahead.
Thank you. Good afternoon, guys, and thanks to you for taking my questions. So first, just given that you highlighted the less transformational, just wondering what types of operational transformation you are expecting as a result of this acquisition, or if we just should see this as sort of a very large bolt-on within the, I would say, like, standard BC formula, where the big size maybe is the transformational part. So do you see any sort of operational transformation as a result? Thank you.
I think there are a couple of points to mention here. So we are basically doubling our reach, which is significant to Better Collective. And secondly, with the organization Playmaker has in place in South America, we get a content production organization expertise for that region, which is second to none. And to be honest, we ourselves are not even close to having such a position in terms of experienced journalists operating all over South America. So that is a very significant development for Better Collective, as we are very bullish on South America as a region. Those two points are probably the ones where I really think it's transformational for the group.
With that doubling of reach and audience, I'm sure we're gonna see a lot of benefits in terms of group commercial opportunities and strength. So we are really excited about this.
Perfect. Thank you very much. Just the next one regarding the valuation. So just also could you elaborate on what characteristics you see in Playmaker that would support a significant valuation premium towards your previous few acquisitions? So for instance, I'm just talking about the Swedish acquisitions that are 24x multiple or below 3x, the Danish acquisition at below 5x post synergies in 2024 with the Playmaker or below 5x in 2026. Also looking at the price per visitor, despite LATAM being presumably lower in our view than the Nordics, for instance. So if you could just explain why you think that Playmaker is sort of especially attractive, or if we should just see the previous few acquisitions as very, very cheap. Thank you.
Thanks, Oscar. Sorry. And well, one thing I mentioned in the call I just made. Sorry for this. One second. We have been doing media partnerships with Playmaker Capital in the last couple of years. And that has given us unique insights to the audience and the potential for improved monetization. And I think that gives us a lot of comfort around what are the concrete synergies we believe we can harvest with this acquisition. And ultimately, we believe that there is a lot of potential for growing the monetization and thus, revenue of this business under our ownership and in collaboration with the Playmaker Capital team.
So that is really the part where we are very confident in what we can achieve with this business. And then I also again would like to highlight the region. So South America is a very exciting region right now. And we believe it is gonna be a high-growth region globally. And again, that warrants a very exciting future for this business.
... So basically, we definitely view the acquisition price as favorable to Better Collective. No doubt about that.
Excellent. Thank you. Just, I just have a final one. So, obviously the top line synergies are quite clear with the monetization enhancement by increasing affiliation links, right? But just on the sort of the cost side, could we expect any synergies from, I guess, that some headquarters and some listing costs maybe could be eliminated or reduced? Could you talk about, are there any more sort of potential cost synergies that you could see?
I think it's early days to discuss that. Clearly, where we see the bigger synergies here is on the top line. We will, of course, work together with Playmaker management to see if there are other obvious synergies, either, you can say, in one or the other place. And yeah, one obvious is, of course, that you don't have to pay listing fees. So, but aside from that, I would just highlight that this is really a case where you can say we focus on top line synergies primarily. But of course, we never want to double efforts, so we're also looking at that, of course.
Understood. That was all for me. Thank you very much.
Thanks, Oscar.
Thanks a lot, Oscar. Thank you. We will now take the next question. Coming from the line of Hjalmar Ahlberg from Redeye. Please go ahead.
Thank you. Maybe just one more follow-up on the synergies. I guess you kind of mentioned that it sounded like you said that the biggest mix from the synergies will be top line rather than OpEx. But will you also kind of keep us updated on the progress of this post-acquisition close?
Yeah, definitely. I think, in our reporting, we will definitely follow up on this, and also work with that in connection with our guidance that we give out. First of all, we have also stated that we will address this in our long-term guidance. It is a big acquisition coming in early in the phase after releasing our long-term guidance. So, we will come back on that to also guide where we see the businesses heading, also with Playmaker on board.
Right. And two questions on the revenue mix. Firstly, if you can give some indication on how big South America and about how big is North America. And also maybe if you can give some information on the recurring part in the terms, in the way that you categorize recurring revenue.
I think that the way we can express it right now, we haven't detailed all of that now. Playmaker Capital have public information out there, but I can say that South America is the biggest part when it comes to revenue. And you can say, except for the asset of Wedge, which is, you can say, also doing affiliation, there has been no applied affiliation or performance marketing, as of yet, except for the media partnerships we have done, at limited scale so far. So I think the bigger upside here is, of course, that we will try to utilize, want to utilize Better Collective's monetizing models and the partnership with the sports books.
Right. And mentioning paid media and the Wedge operation, is that very similar to what you have? Where can they add something new to your paid media, or it's more about just integrating the two?
We definitely see interesting synergies there. There is expertise that can be used in both directions. So, obviously this will be integrated under the paid media in Better Collective, but with the Wedge team continuing, and basically, they will just utilize expertise across the team. So we expect also to see some synergies and improvements from that collaboration.
Right. I just looked briefly on Playmaker's investor relation site, and it seems like they have done a lot of acquisitions themselves. Have they run this kind of like decentralized approach or the businesses were integrated already today?
The business does consist of several acquisitions they have done in recent years, and they are integrated sort of in different ways. So basically, not too dissimilar to Better Collective, where based on the relevance of immediate integration or later on integration, there will be sort of different phases of that. But it's obviously something we are quite familiar with, having done this ourselves many times.
Right. And a final one, just on seasonality. It looked like on the financial presentation for Playmaker that Q4 is a seasonally heavy quarter or maybe similar to what you see in North America. But is there anything more there than that? I mean, it looked like the Q4 last year was very strong, but maybe it was something more than seasonality.
Yeah, well, we had the World Cup in football, and since it's-
Yeah
... a very big audience in South America, that was a unique year. Or not completely unique, every fourth year you'll have that event.
Mm-hmm.
But a very significant event for their business, just like ours.
Okay. Thank you very much.
... Thank you, Hjalmar
Thank you. We will now take the next question from the line of Sebastian Gray from Nordea. Please go ahead.
Hi, yes, Jesper Fleming, Sebastian here from Nordea. First of all, congratulations on the acquisition. It looks very interesting, and it seems like the stock market agrees with me on that one. So just to follow up here, just to maybe get a better understanding of Playmaker Capital and their current sort of revenue stream. So as you said, it seems like affiliation or performance marketing was added fairly recently and constitutes one third of the revenue mix. So how do you view overall their current work on affiliation? Is this an integrated part of the business, or and how should we think of sort of the split going forward?
Could you maybe give some color to this?
Yeah. So, historically, most of the revenue have been generated by traditional advertising sales based on CPM rates. This is where we obviously also having already done media partnerships with them know there's an exciting synergy applying our Performance Marketing deals towards their big audience. So for the future, obviously, that is a revenue stream that we expect to grow quite a bit under our ownership. And as you allude to, there is already affiliation, but it's solely on the paid side for the Wedge business. So we will continue expanding that again, utilizing both the expertise with our team and the Wedge team.
But on the publishing side, for their media brands, there's not been done affiliation as of yet, only under our media partnerships.
Okay, that's very clear, yes. But so just to understand, so there has been conducted no affiliation on the South American media brands with 180 million monthly visitors?
True.
Okay, cool. Next, just maybe to understand here, you say a clear path to post-integration synergies below 5x EBITDA by 2026. So corresponding to a 30 or at least EUR 35 million EBITDA contribution by 2026. So given the fact that you add almost 200 million new monthly readers, I guess sort of the ratio between readership and EBITDA is... it doesn't sound so excessive compared to your own current sort of ratios. So maybe you can just help me understand here, what should we think of this? Is this a question of market mix or are there any structural differences to the acquired assets compared to your own as of now?
Well, you probably have to then be mindful of looking at our brand portfolio. We have some brands that are pure sports media brands. We have some that are centered around affiliation, much more like it could be betting expert with a betting community. Obviously, the tendency there to convert to a sportsbook is higher than at a traditional sports media. So you do need to keep that in mind when you look at this audience. But having said that, we know for a fact that there's significant opportunity with affiliation on a traditional sports media brand. And that is, of course, what we would like to execute on especially the football sites in South America.
And in terms of timing of this, well, it is a big and complex business that we're acquiring. So the integration will start immediately on the back of closing. But harvesting those synergies, we sort of look some years out to give that guidance with on the 5 for 2026. I don't know if, Flemming, if you have something to add?
Yeah, I think, notably, you can say it takes some time before you can say you see the full revenue synergies. And now we gave-
Mm.
Sort of a midterm guidance of the 5x. Clearly, when you apply performance marketing, there is a build-up over time.
Mm.
Better Collective's portfolio of revenue share has been building up for many years. So just starting that, and going three years out, that's a very short time. But,
Mm.
Even there we see, you can say, what you mentioned in synergies, and we also, as we write in the press release, that will continue thereafter. So it's sort of the, you can say, the classic snowball effect that we are seeing here.
Okay, that is very clear. Thank you so much, and once again, congratulations.
Thanks a lot, Sebastian.
Thank you. We will now take the next question. From the line of Ed Young from Morgan Stanley. Please go ahead.
Thank you. I've got three questions, if that's okay. The first one, you mentioned you're going to create a integration committee, given the size of this deal. I just wondered if you could sort of help us think about the sort of guideposts of what you're particularly sort of focused on with that committee. And on a sort of bigger picture part of that question, are you going to or do you need to make changes to the way you've run the business? Are you reaching a point of scale where you need to be sort of overseeing more, a bit more indirectly than you were before?
Just interested if you see this as a, not just a transformational deal for Better Collective, but also the kind of way you have to run the business?
... Yeah, so starting out with that, with that committee, it is, it will consist of people from, from the existing BC management and then from the Playmaker Capital, management. And, and as mentioned, Playmaker Capital, they, they have themselves done, quite a few acquisitions, so they are also very, very experienced in running integrations. So there's a very strong alignment between the, the management teams of setting this up and, and really go for harvesting synergies, as, as soon as possible. And it's gonna be based on, on, on some of the, the different opportunities. So one opportunity will relate to, in this project, we are focusing on, on, on revenue, so a top-level synergy. Another project may, be focused on, on a cost opportunity, where we can free up resources potentially to invest in other parts of, of the business.
There's no doubt that this is a very big acquisition. There's a lot of employees now added to the Better Collective group. So ultimately, we will of course review where the work being done around the organization, where we can be smart about how we operate. But it's simply way too early to tell what that concretely could look like. But we will, of course, assess everything when we do an integration of such a big organization.
Understood. My second question was on content. You spoke about this is gonna really give you scale in key markets like LATAM and Canada, you just wouldn't have been able to get them... wouldn't be able to get otherwise. That makes complete sense to me. But I just wondered if you could elaborate a bit more on how replicable it is to bring in the sort of capabilities across the wider group. I'm not sure if you're sort of referring to, you know, video podcasts or other kind of things that clearly they've had a lot of success with recently. How much can you bring the capabilities into the wider business you've already got?
Or, how much of that really is it down to the fact that they've got a sort of stable of very good content creators in the markets that are specific to them? So can you talk what, sort of thematically, how much of a revenue synergy opportunity you see that, how easy or challenging that might be?
Well, I would probably say a blend of what you just mentioned there, Ed. So first off, what we're already doing internally in Better Collective is having and developing an internal feed of all content produced across our brands. Simply allowing our journalists and brand managers across geographies to utilize already written articles of high quality that may be deemed relevant for another brand in another market. And that's definitely something we will also do with the integration of Playmaker Capital.
But the value of getting this very experienced and big and capable organization for Latin America, knowing exactly how to drive audience on social media towards their sports media brands, is a pretty unique capability, which we are very happy to bring in now. And then again, when we sit down and we work together, I'm sure expertise will be shared, and we will be able to utilize that in the rest of the BC group. And there will be, you know, our SEO capabilities and very strong experience in that field will definitely be relevant for the Playmaker brands and their editorial teams. So we will each come with best-in-class capabilities that we will utilize between our organizations.
So, I'm quite hopeful for sort of seeing that potential come alive.
Thank you. And then the final question was, as you say, Playmaker's been quite acquisitive. I think it's sort of 15-ish acquisitions they've made over the last 3 years. How did you get comfortable with the underlying performances of those businesses that have been added in recently? And I guess the flip side of that is, will you continue to back the team with capital to add further brands into their stable, if you think they've got a good eye for what needs to be added? Or do you sort of consider that the job is done, so to speak, in terms of bringing it to the scale that's required in these markets? Thanks.
Well, we have gotten insights to how they, on the data side, work with all the different brands and basically the technologies they have in place for being efficient about that. And that is a part where we've been quite impressed with what they do. Whether or not we sort of will allow them just to continue acquiring, I think there's gonna be a healthy conversation about the opportunities brought to the table, just like we have with our group M&A team. So I think it's gonna be very similar to how we conduct M&As as a group today.
And basically, they can just funnel that on, and obviously, if it's relevant for them to integrate within their existing organization, I don't see a problem with that. But again, it's too early to be very specific about how that will be operated. But they have clearly demonstrated with the acquisitions, that they've been able to find valuable brands out there.
Great. Thank you.
Thanks.
Thank you. There are no further questions on the phone at this time. I would like to hand over for web questions.
Yeah, I think I will read it out loud. The question concerns regulatory approvals, and I read the question from Ted Brown. Can you elaborate on what, if any, regulatory approvals will be required by various jurisdictions in order for closing of the transaction? And do you have any guidance on when you expect those approvals to be granted? I think it will be going into much details to sort of elaborate on all approvals that is needed for a cross-border, public-to-public transaction. But we are at a stage where we deem it at low risk not to complete the closing, and that's why we have moved forward now.
So I think I will conclude on that and also stick to the timeline that we expect this to close in Q1 next year, so in a few months. So it's something that we have a good advice on both the Canadian and European side. So I hope that that answers the question.
This was the last question we received. Once again, thank you for joining us today. If you have any unanswered questions, feel free to reach out to our IR team on investor@bettercollective.com. Thank you very much.
This concludes today's conference call. Thank you for participating. You may now disconnect.