Better Collective Sees Record Margins Amid Growth Setback

Better Collective A/S ((SE:BETCO)) has held its Q4 earnings call. Read on for the main highlights of the call.

Better Collective’s latest earnings call painted a cautiously optimistic picture, mixing record profitability with notable revenue pressure. Management stressed that efficiency gains, strong North American outperformance, and promising new products offset much of the hit from regulation, FX, and sports margins, reinforcing confidence in a gradual return to growth despite a softer 2025.

Q4 revenue trends under currency and margin pressure

Group revenue in Q4 slipped 2% year-over-year to EUR 94 million, though it grew 2% in constant currencies. Management argued that adjusting for unusually low sports win margins, underlying growth would have been closer to about 7%, suggesting core demand remains solid.

Record quarterly EBITDA and margin expansion

Despite top-line softness, Q4 EBITDA before special items hit a record EUR 37 million, up 10% year-over-year. This translated into a robust 39% EBITDA margin, the highest in the company’s history and a clear signal of operating leverage and tight cost control.

EUR 50 million efficiency program boosts profitability

The company completed its EUR 50 million efficiency program, driving an around 8% decline in group costs year-over-year. These savings contributed roughly EUR 10 million of EBITDA upside in Q4 alone, demonstrating the tangible earnings impact of the restructuring.

North America outperforms on recurring revenue share

In North America, revenue share reached EUR 22 million for the full year, well ahead of the previous EUR 10–15 million expectation. Of this, about EUR 17 million was pure revenue share, strengthening the recurring revenue base and improving the quality of earnings in a key growth region.

Record deposits underline strong user engagement

The value of deposits hit a record EUR 820 million in the quarter, up roughly 6–7% year-over-year and about 13% sequentially. Management highlighted this as evidence of high engagement and solid cohort quality, even as reported revenue was held back by external factors.

New products Playbook and FanReach widen monetization

Better Collective launched Playbook, an AI-powered betting solution, which has already processed millions of bets and shown strong early engagement. In the U.S., FanReach now connects the group to more than 50 million sports fans, opening new data-driven media and monetization opportunities.

2026 guidance, buyback, and balance sheet discipline

For 2026, the company targets organic revenue growth of 7–12% and EBITDA of EUR 110–120 million, implying 8–18% growth. The board also approved an annual EUR 40 million share buyback, while management aims to keep net debt-to-EBITDA below 3x to preserve financial flexibility.

Financing strength, cash conversion, and long-term CAGR

The group secured a new EUR 319 million three-year committed facility plus a EUR 50 million M&A line, reinforcing liquidity for both operations and deals. Cash conversion reached 92%, and since 2018 the firm has delivered a 35% revenue CAGR and 30% EBITDA CAGR, underscoring a strong long-run growth profile.

Full-year revenue decline amid external headwinds

Full-year revenue fell to EUR 337 million from EUR 371 million, a roughly 9% drop. Management linked this primarily to regulatory and market-driven headwinds rather than underlying demand, framing the decline as cyclical and transitional.

EBITDA contraction despite cost actions

EBITDA before special items declined to EUR 102 million from EUR 113 million, down about 10% year-over-year. The drop came despite the efficiency program and reflected the scale of regulatory, FX, and sports margin pressures on the income statement.

More than EUR 40 million of combined headwinds

Management quantified that 2025 EBITDA took over EUR 40 million of combined hits from external factors. The regulatory transition in Brazil alone cost about EUR 22 million, while lower sports win margins and FX added approximately EUR 17 million and EUR 9 million of pressure respectively.

Q4 revenue dented by FX, margins, and Brazil

In Q4, revenue was reduced by an estimated EUR 12 million year-over-year from external detractors. Around EUR 4 million came from FX, EUR 5 million from sports win margin volatility, and EUR 3 million from Brazil’s regulatory transition, masking the underlying operational performance.

Brazil marketing restrictions curb new customers

Tighter marketing rules in Brazil, particularly limits on welcome bonuses, constrained Better Collective’s ability to acquire new users for operator partners. This curbed net depositing customers and near-term new intake, pressuring growth in what had been a key expansion market.

Free cash flow falls short on timing effects

Free cash flow came in at EUR 38 million, below guidance at the low end of EUR 55 million. Management attributed the shortfall mainly to about EUR 15 million of short-term working capital timing and increased investment in new partnerships that are expected to support future growth.

Heightened exposure to sports margins and FX

The year underscored the business’s sensitivity to swings in sports win margins and foreign exchange, with FX alone cutting revenue by about EUR 9 million. These factors added volatility to reported results, even as user activity and deposits continued to rise.

Risks around publishing and emerging channels

Management also flagged structural risks in future publishing growth, which relies heavily on NDC and CPA-driven channels exposed to changes in search and AI discovery algorithms. Early-stage initiatives like prediction markets and international Playbook expansion could face stiff competition and uncertain regulatory landscapes.

Forward guidance points to renewed growth and margin expansion

Looking ahead to 2026, Better Collective expects 7–12% organic revenue growth and EBITDA of EUR 110–120 million, after factoring in around EUR 8 million of tax effects. Beyond 2026, the company targets an EBITDA margin of 35–40% for 2027–28, while maintaining strong cash conversion and disciplined leverage below 3x.

Overall, Better Collective’s call balanced near-term revenue and EBITDA declines against record margins, strong cash generation, and product-led growth potential. Investors will be watching whether easing headwinds in Brazil, more stable sports margins, and scaling of Playbook and FanReach can unlock the guided return to growth and margin expansion by 2026 and beyond.