Brazil And North America Markets Will Expand Digital Sports Media

Key Takeaways

• Ongoing regulation in Brazil and North America, combined with digital media dominance, is set to fuel substantial, recurring revenue and earnings growth.
  
• Strategic focus on performance-based contracts, cost efficiencies, and data-driven offerings enhances operating leverage and long-term earnings visibility.
  
• High regulatory risk, declining ad revenues, and volatile event-driven earnings could hinder growth, while cost-cutting may limit future innovation and competitive strength.

Catalysts

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

• The rapid transition of Brazil to a regulated online betting market, combined with Better Collective's established local presence, acquisitions, and dominant digital sports media position in the region, is expected to unlock substantial future revenue growth as the regulatory environment stabilizes and more operators enter the market.
  
• Ongoing expansion of legalized sports betting in North America-particularly upcoming state launches like Missouri and the strong cyclical boost from the NFL season-should further drive double-digit top-line growth, with higher-value players and increased recurring revenue strength tied to revenue-share agreements.
  
• Rising consumer appetite for data-driven sports content and engagement-evidenced by the strategic elevation of Esports to its own business segment and the ownership of leading platforms like HLTV and FUTBIN-positions Better Collective for sustained high-margin, audience-driven earnings expansion as demand for analytics and interactive media rises.
  
• The successful execution of a €50 million cost efficiency program and organizational streamlining is expected to materially improve net margins and operating leverage, ensuring that future revenue growth translates more effectively into higher earnings and cash flow.
  
• Increasing focus on recurring, performance-based revenue streams (revenue share contracts, advertising, and diversified digital media offerings) creates enhanced earnings visibility and long-term value, with significant unrecognized revenue from past NDCs (new depositing customers) supporting future earnings growth.

Better Collective Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Better Collective's revenue will grow by 7.4% annually over the next 3 years.
• Analysts assume that profit margins will increase from 7.3% today to 19.9% in 3 years time.
• Analysts expect earnings to reach €84.1 million (and earnings per share of €1.12) by about September 2028, up from €25.1 million today.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 11.0x on those 2028 earnings, down from 26.2x today. This future PE is lower than the current PE for the SE Interactive Media and Services industry at 48.7x.
• 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 7.2%, as per the Simply Wall St company report.

Better Collective Future Earnings Per Share Growth

Risks

• Heightened regulatory uncertainty in key markets like Brazil-including strict bonus restrictions and ongoing concerns about nonlicensed operators-could limit growth, reduce NDCs (new depositing customers), and threaten future revenue visibility, especially as long-term regulatory frameworks remain unpredictable.
  
• Heavy revenue exposure to event-driven cycles and uncommon "high season" sporting events increases earnings volatility and could cap sustainable earnings growth if future major tournaments or state launches (e.g., in North America) underperform or are delayed, impacting both revenue and EBITDA momentum.
  
• Broad CPM (cost per mille) and digital advertising rate declines, particularly within the Esports segment, suggest structural challenges in monetizing audiences and a potential long-term softening of advertising income, which may pressure group-level margins and net earnings.
  
• The continued risk of industry-wide shifts in digital marketing, such as changes to Google's search algorithms, growing platform "walled gardens," and the introduction of AI-powered search features, could negatively impact organic traffic, reducing cost-effective customer acquisition and ultimately affecting both topline revenue and customer acquisition cost (CAC) efficiency.
  
• Extensive cost-cutting and organizational streamlining programs, while necessary after years of rapid acquisition-led growth, may constrain future reinvestment in innovation, product, or market expansion, thereby threatening long-term competitive positioning and limiting operational leverage for earnings growth.

Valuation

• The analysts have a consensus price target of SEK164.503 for Better Collective based on their expectations of its future earnings growth, profit margins and other risk factors. 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 analyst's consensus, you'd need to believe that by 2028, revenues will be €422.9 million, earnings will come to €84.1 million, and it would be trading on a PE ratio of 11.0x, assuming you use a discount rate of 7.2%.
• Given the current share price of SEK120.0, the analyst price target of SEK164.5 is 27.1% 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.