Affiliation Cloud Expansion And Exclusive Publisher Deals Will Strengthen Long Term Earnings Power

Catalysts

About Raketech Group Holding

Raketech Group Holding operates performance based iGaming affiliation and B2B traffic monetization platforms for sports betting and casino operators.

What are the underlying business or industry changes driving this perspective?

• Scaling Affiliation Cloud as a smarter, more automated platform for publishers and operators, including exclusive commercial agreements, should increase high quality traffic throughput per employee and support a structural lift in EBITDA margins and earnings power.
• An ongoing shift from paid sub affiliation to a larger, higher quality organic publisher network in the U.S. and Sweden, underpinned by exclusive publisher deals, can rebuild top line momentum while stabilizing gross margins and improving free cash flow visibility.
• The growing importance of compliance, KYC and faster payouts for operators and smaller publishers makes Raketech’s full service platform more valuable over time. This should support better pricing power, higher revenue per partner and more resilient net margins.
• The divestment of Casumba and U.S. consumer assets, combined with tight cost discipline and a leaner organization, frees resources to reinvest into scalable technology rather than low return operations. This can drive operating leverage and EBITDA margin expansion as revenues recover.
• Exclusive distribution rights for select operators and key U.S. sports betting and casino publishers create a network access bottleneck that can compound as more partners onboard. This supports multi year revenue growth and a higher earnings base once fixed platform costs are absorbed.

Assumptions

How have these above catalysts been quantified?

• Analysts are assuming Raketech Group Holding's revenue will decrease by 9.4% annually over the next 3 years.
• Analysts assume that profit margins will increase from -111.9% today to 48.1% in 3 years time.
• Analysts expect earnings to reach €14.9 million (and earnings per share of €0.32) by about December 2028, up from €-46.6 million today.
• In order for the above numbers to justify the price target of the analysts, the company would need to trade at a PE ratio of 1.8x on those 2028 earnings, up from -0.2x today. This future PE is lower than the current PE for the SE Hospitality industry at 11.4x.
• Analysts expect the number of shares outstanding to remain consistent over the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 9.13%, as per the Simply Wall St company report.

Risks

What could happen that would invalidate this narrative?

• The long-term pivot from high margin owned affiliation marketing to a larger share of lower margin sub affiliation and Affiliation Cloud revenue could structurally cap profitability, limiting the recovery of historical EBITDA margins and ultimately constraining earnings growth.
• Heavy reliance on SEO driven traffic across both Raketech owned and entrepreneurial publisher assets leaves the group exposed to search algorithm changes and rising competition from AI assisted discovery. This could erode traffic volumes, weaken pricing power and put pressure on revenues and net margins.
• The shift toward exclusive publisher and operator agreements in a small number of core markets such as the U.S. and Sweden concentrates risk. Regulatory changes, competitive responses or underperformance from a few key partners could disproportionately drag on revenue growth and EBITDA.
• Deferred and contingent cash flows tied to the Casumba divestment and ongoing earn out settlements, combined with continued platform investment, may limit balance sheet flexibility in a downturn. This could restrict reinvestment capacity and weigh on future free cash flow and net earnings.
• The structurally declining paid sub affiliation segment, which management does not expect to turn around, increases dependence on the still scaling organic network and Affiliation Cloud. If this transition is slower than expected, overall group revenues and operating margins could stagnate or decline.

Valuation

How have all the factors above been brought together to estimate a fair value?

• The analysts have a consensus price target of SEK5.05 for Raketech Group Holding based on their expectations of its future earnings growth, profit margins and other risk factors.
  
• In order for you to agree with the analysts, you'd need to believe that by 2028, revenues will be €30.9 million, earnings will come to €14.9 million, and it would be trading on a PE ratio of 1.8x, assuming you use a discount rate of 9.1%.
  
• Given the current share price of SEK1.9, the analyst price target of SEK5.05 is 62.4% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.