Better Collective’s Q1 2025 Results Hit Expectations Despite Brazil’s Regulatory Headwinds

A Tough Quarter in Line with Forecasts

Better Collective rolled out its Q1 2025 financial results, hitting the mark despite a rough ride from Brazil’s new betting regulations and a sluggish North American market.

The company posted revenues of €83 million, down 13% from €95 million in Q1 2024, with organic growth dipping 18%. EBITDA before special items took a bigger hit, dropping 24% to €22 million, yielding a 27% margin.

“Revenue & EBITDA as expected,” said Jesper Søgaard, Co-CEO and co-founder, capturing the vibe of a quarter that met guidance but faced serious headwinds.

Brazil’s regulatory shift alone shaved €7 million off revenue and EBITDA, while North America’s lower marketing buzz added to the mess.

Breaking Down the Numbers

The financials tell a clear story. Recurring revenues, a core driver, fell 8% to €49 million, making up 60% of total revenue. Revenue share income, hit hard by Brazil’s rules, dropped 13%, though subscription revenues held steady, and CPM-based revenues jumped 13%, boosted by the Playmaker Capital acquisition and Brazil’s strong ad market start.

Costs were a bright spot, cut by €5 million (8%), or €9 million when adjusting for Playmaker’s full-quarter inclusion and USD exchange rates.

Over €5 million of savings came from staff and operational trims, tied to a €50 million cost-efficiency program launched in October 2024, which Søgaard noted is “on track.”

Cash flow from operations before special items was solid at €21 million, with a 93% cash conversion rate, though delayed Brazilian client payments stung. The net debt-to-EBITDA ratio stood at 2.33, and the group delivered 316,000 New Depositing Customers (NDCs), down 30% year-over-year, with 80% on revenue share deal.

Brazil’s Regulatory Buzzkill

Brazil, which generated €70 million (19% of 2024 revenue), was a big drag in Q1 2025. New regulations, effective January 1, 2025, slapped a 26% tax on gross gaming revenue and sparked customer churn as players reactivated accounts, cutting revenue share income by 13% and impacting revenue and EBITDA by €7 million.

Delayed client payments of €9 million further crimped cash flow. Still, Søgaard highlighted a silver lining: “Brazil activity and player migration higher than expected.”

The company’s 100-strong local team, bolstered by the €55 million Playmaker Capital buy in 2024, positions it to ride out the storm.

Better Collective expects a 50-70% short-term drop in Brazil’s revenue share income, hitting 2025 EBITDA by €35-50 million, but sees growth returning by 2026, with higher-value players driving long-term gains.

North America’s Marketing Slump

North America, covering the U.S. and Canada, also took a hit, with revenues plunging 32% to €23 million. Organic growth tanked 35%, driven by two factors: a €5-6 million headwind from last year’s North Carolina market launch and another €5-6 million from reduced partner marketing activity. “NA revenue as expected, impacted by last year’s NC state launch and lower marketing activity,” Søgaard said.

EBITDA before special items cratered 54% to €4.2 million, with an 18% margin, though still aligning with the full-year target of over 20%. Costs in the segment dropped 24%, thanks to the efficiency program.

Despite the dip, North America’s 28% revenue share and growing revenue share base, projected to add €10-15 million in 2025, keep Better Collective bullish on the world’s largest regulated betting market.

Segment Performance and Cost Cuts

Segment results showed mixed fortunes. The Publishing segment, 72% of group revenue, saw revenues fall 13% to €58 million, with EBITDA down 26% to €16.6 million at a 29% margin.

Paid Media revenues dropped 14% to €24.6 million, with EBITDA off 17% to €5.4 million at a 22% margin. Europe & Rest of World, the cash cow, posted €59.5 million in revenue (down 2%) and €17.8 million in EBITDA (down 11%), contributing 81% of operating profits.

North America, despite its 28% revenue share, accounted for just 19% of profits. The €50 million cost-efficiency program, fully implemented in Q4 2024, delivered €5 million in Q1 savings, with Søgaard noting, “Cost efficiency program on track,” ensuring full-year savings hit the target.

A new €10 million share buyback program kicked off, following a prior one completed in April.

Looking Ahead

Better Collective’s 2025 guidance remains unchanged: revenue of €320-350 million, EBITDA before special items of €100-120 million, free cash flow of €55-75 million, and net debt-to-EBITDA below 3x, per the report.

Brazil’s regulations and a tough H1 2024 comparison (due to North Carolina, European Championships, and U.S. marketing) will pressure results, but growth in Europe, esports, and non-Brazil South America should add €20-40 million to EBITDA.