US And Brazil Legalization Will Drive Digital Betting Expansion

Key Takeaways

• Aggressive restructuring and digital expansion position the company for faster-than-expected margin and revenue growth, outpacing conservative analyst forecasts.
  
• Regulatory clarity and strategic market investments, especially in Brazil and the U.S., could significantly boost customer acquisition and long-term earnings quality.
  
• Regulatory headwinds, competitive threats, shifting partner/consumer behaviors, and structural industry pressures risk long-term growth, market share, and profitability for Better Collective.

Catalysts

Operates as a digital sports media company in Europe, North America, and internationally.

• Analyst consensus anticipates long-term organic growth and margin improvements, but the evidence suggests the company's aggressive cost realignment and restructuring into three global business units will deliver scalability and operational leverage at a pace and magnitude that could drive EBITDA expansion well beyond current forecasts as early as 2025 and 2026.
  
• While analysts broadly expect meaningful but gradual revenue growth from recent strategic investments in Brazil and North America, the company is already seeing stronger-than-expected player retention, low churn, and rapid migration post-regulation in Brazil, pointing to revenues rebounding faster and at higher quality than consensus models, accelerating earnings recovery through 2025.
  
• Better Collective's vast proprietary audience reach-now exceeding 450 million monthly visits-creates an unappreciated opportunity to diversify into high-margin digital advertising, influencer-driven content monetization, and AI-driven personalized offerings, positioning the company for material revenue and net margin upside as the global audience shifts further toward digital media.
  
• With regulatory clarity improving in Brazil and the U.S., and Better Collective actively shaping market dialogue, the potential introduction of welcome bonuses or pro-affiliate incentives could trigger a step-change in new customer acquisition and compound top-line growth.
  
• The company's robust revenue share and recurring revenue strategy, especially in U.S. markets primed for further gaming legalization and the catalytic impact of events like the 2026 FIFA World Cup, sets the stage for structurally higher long-term revenue visibility and earnings quality compared to pure CPA-based models, warranting a re-rating of the stock's valuation multiple.

Better Collective Future Earnings and Revenue Growth

Assumptions

• This narrative explores a more optimistic perspective on Better Collective compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
• The bullish analysts are assuming Better Collective's revenue will grow by 7.6% annually over the next 3 years.
• The bullish analysts assume that profit margins will increase from 8.4% today to 19.5% in 3 years time.
• The bullish analysts expect earnings to reach €87.0 million (and earnings per share of €1.41) by about August 2028, up from €30.1 million today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 17.2x on those 2028 earnings, down from 23.7x today. This future PE is lower than the current PE for the SE Interactive Media and Services industry at 69.1x.
• Analysts expect the number of shares outstanding to grow by 1.38% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 7.1%, as per the Simply Wall St company report.

Better Collective Future Earnings Per Share Growth

Risks

• Prolonged regulatory uncertainty and constraints in critical markets such as Brazil-particularly the ongoing ban on welcome bonuses and increased taxation-are slowing new customer acquisition and could lead to persistent revenue and EBITDA softness if not resolved, limiting future earnings growth.
  
• Heightened competition from both traditional sports betting operators and new entrants leveraging alternative technologies, such as predictive market platforms and financial service brands (e.g., Robinhood, Kalshi), poses a threat to Better Collective's market share and bargaining power, potentially resulting in margin compression and hindered revenue expansion.
  
• Lower marketing activity from partners and the absence of major market launches in the U.S. have led to declining new depositing customer (NDC) numbers, which may signal longer-term challenges in sustaining organic player growth and recurring revenues across key geographies.
  
• Ongoing shifts in consumer preferences-especially among younger demographics, who are increasingly gravitating toward esports, social media, and non-traditional entertainment-could reduce the growth trajectory of the core sports betting affiliate market, reducing the company's addressable revenue base over time.
  
• Structural industry pressures such as operator consolidation, reduced affiliate commissions, and greater emphasis on in-house user acquisition threaten the affiliate marketing model on which Better Collective relies, risking further margin erosion and increasing earnings volatility.

Valuation

• The assumed bullish price target for Better Collective is SEK219.36, which is the highest price target estimate amongst analysts. This valuation is based on what can be assumed as the expectations of Better Collective's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of SEK219.36, and the most bearish reporting a price target of just SEK123.41.
• In order for you to agree with the bullish analysts, you'd need to believe that by 2028, revenues will be €446.8 million, earnings will come to €87.0 million, and it would be trading on a PE ratio of 17.2x, assuming you use a discount rate of 7.1%.
• Given the current share price of SEK132.1, the bullish analyst price target of SEK219.36 is 39.8% 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.