Digital Engagement And Betting Legalization Will Expand Opportunities

Key Takeaways

• Streamlined structure and advanced data capabilities position Better Collective for sustained margin expansion and superior marketing performance, outpacing analyst expectations for both efficiency and growth.
  
• Leadership in regulated markets, robust recurring revenue streams, and dominant esports platforms drive compounding revenue and earnings growth across digital betting and sponsorship sectors.
  
• Increased regulatory risks, evolving digital trends, and operator in-housing threaten Better Collective's revenue sustainability, margin stability, and long-term earnings resilience.

Catalysts

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

• Analyst consensus anticipates €50 million in annual cost savings will improve EBITDA, but this likely understates the structural enhancements-Better Collective has now established a leaner, market-focused organization that is positioned to sustain margin expansion well beyond 2025 as operating leverage increases with revenue scale.
  
• Analysts broadly expect organic growth, but this too is likely conservative; Better Collective's rapid adaptation to the Brazilian regulatory shift, combined with its dominant local market presence and robust digital brands, positions it for outsized, compounding revenue acceleration as Brazil and other large, newly regulated markets mature and liberalize over the next 3–4 years.
  
• The company's deep and expanding focus on recurring, high-quality revenue share agreements, particularly in high-value North American and U.S. states as more jurisdictions legalize betting, creates a substantial, long-dated stream of unrecognized revenue that will steadily build earnings visibility and free cash flow over several years.
  
• With esports now a standalone segment boasting unmatched global platforms (HLTV, FUTBIN) and 56% EBITDA margins, the groundwork is in place for major revenue and earnings growth as esports betting and sponsorships benefit from sustained consumer digital engagement and the explosion of global mobile usage.
  
• Better Collective's advanced investments in first-party data, customer segmentation, and ad tech not only buffer it from shifts in Google and AI-driven search but also enable superior performance-based marketing and monetization, supporting both top-line expansion and higher net margins as advertisers and operators demand more data-driven results.

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 9.6% annually over the next 3 years.
• The bullish analysts assume that profit margins will increase from 7.3% today to 20.1% in 3 years time.
• The bullish analysts expect earnings to reach €90.6 million (and earnings per share of €1.54) by about September 2028, up from €25.1 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 13.9x on those 2028 earnings, down from 25.3x today. This future PE is lower than the current PE for the SE Interactive Media and Services industry at 49.4x.
• Analysts expect the number of shares outstanding to decline by 5.71% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 7.14%, as per the Simply Wall St company report.

Better Collective Future Earnings Per Share Growth

Risks

• Better Collective faces increasing regulatory uncertainty in core markets such as Brazil, with restrictions on bonuses and potential ad bans already impacting new depositing customer volumes and risking prolonged headwinds for revenue growth.
  
• The company's business model remains highly exposed to the effectiveness of affiliate marketing and organic search, yet industry trends such as widespread adoption of ad-blockers, privacy protections, and tech platform changes (including Google's AI overviews) could erode future traffic, decreasing the sustainability of its revenue streams.
  
• Despite recent cost efficiencies, Better Collective's dependence on a concentrated set of key operator relationships and the success of acquisitions in specific regions, such as Brazil and North America, means disruptions or competitive shifts could materially sap both topline and earnings growth.
  
• The softness in digital advertising, as demonstrated by lower CPMs in Esports and uncertainty around future ad market recovery, undermines expectations for this segment to serve as a consistent growth pillar and could pressure overall group margins and profitability.
  
• As operators increasingly invest in in-housing affiliate functions and leverage first-party data for direct customer acquisition, Better Collective's intermediary role may be structurally marginalized over time, leading to persistent pressure on both recurring revenues and long-term earnings potential.

Valuation

• The assumed bullish price target for Better Collective is SEK224.77, 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 SEK224.77, and the most bearish reporting a price target of just SEK119.55.
• In order for you to agree with the bullish analysts, you'd need to believe that by 2028, revenues will be €449.9 million, earnings will come to €90.6 million, and it would be trading on a PE ratio of 13.9x, assuming you use a discount rate of 7.1%.
• Given the current share price of SEK115.8, the bullish analyst price target of SEK224.77 is 48.5% 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.