1x FCF, Extremely High Margins, and Panic Selling: Raketech Might Be the Most Asymmetric Investment on the Market

While scouring every stock on the Swedish stock market from A-Z I found Raketech Group Holding PLC (RAKE.ST). They are a simple affiliate-marketing play in iGaming, yet they are an extremely high-margin and cash-generative business. Their revenues have grown from €17 million in 2017 to €61.1 million in 2024, while free cash-flow margins have consistently ranged between 25 % and 50 %. Today, its market cap sits at just €15 million, yet this year Raketech has already generated €15 million in cash from operations. Also, In the last four years it has produced more cash from operations than its entire market cap, every single year!

Here's the financials I gathered :

2024 values are adjusted for a large non-cash impairment charge of € 58.9 million

How can that possibly happen? The short answer: deferred acquisition payments.

Before we dive into why Raketech trades at such a steep discount, it’s worth breaking down exactly how the business works.

Raketech is a performance marketing and affiliate tech company focused on the online gambling and gaming space. At its core, the company connects gambling operators (like online casinos and sportsbooks) with new players through content-driven user acquisition. It does this through a SEO-optimized websites, paid media, sub-affiliation platforms, and data tools.

Business Breakdown

1. Core Affiliate Marketing (Owned & Operated Sites)
Raketech owns a portfolio of high-ranking websites that attract organic traffic from Google and other search engines. These include:

• Casino and sports betting comparison platforms

• Review sites for operators and bonuses

• Informational sites featuring news, strategy guides, live scores, and TV listings

When a user clicks through and signs up, makes a deposit, or places a bet with an operator, Raketech earns a commission—either a flat fee (CPA), a share of the revenue or a hybrid. This is pure performance-based marketing: no conversion, no cost to the operator.

2. Sub-Affiliation (Middleman for Smaller Affiliates)
Raketech also facilitates deals between small affiliates and large operators, taking a cut of the action. This segment has two main parts:

• Raketech Network: It is a network smaller affiliates mostly focused on paid-traffic (e.g., Google Ads, Facebook Ads). Raketech provides them with commercial terms and tracking tools, then takes a portion of the commissions.

• AffiliationCloud: AffiliationCloud is a self-serve platform designed for smaller creators as potential affiliates such as SEO websites, YouTubers, and bloggers. Through the platform, affiliates can log in to browse available gambling offers, access competitive commission deals, and manage everything from data and tracking to reporting and payments—all in one place. By automating and centralizing these processes, the platform enables Raketech to scale its sub-affiliation business efficiently.

3. Advertising Inventory
Raketech monetizes the ad space across its network of sites by offering:

• Banner placements

• Sponsored content

• Featured listings (e.g., “Top 3 Casinos”)

• Email marketing

Operators can choose to pay on a cost-per-click (CPC), cost-per-acquisition (CPA), or revenue share model.

4. Data & Analytics Tools
A key differentiator for Raketech is its proprietary data and reporting infrastructure. The company offers operators detailed insights that help them optimize their ad spend:

• User behavior and funnel tracking

• Conversion data and attribution

• Return on Ad Spend (ROAS)

• Geographic and demographic breakdowns

By turning performance data into actionable insights, Raketech makes itself a more valuable partner to both advertisers and affiliates.

So, why is Raketech trading so cheaply?

Despite growing revenues rapidly over the past few years, Raketech’s aggressive acquisition strategy has come with deferred payments. Specifically, the company has €8 million due in the first half of 2025, and an additional €20.8 million due by September 2026. I believe these upcoming payments have scared the investors, with the market essentially pricing in a scenario where Raketech won’t be able to meet its payments—possibly even assuming bankruptcy.

But is that fear justified?

Let’s break it down. Starting with the €8 million payment in H1 2025: according to Raketech’s Q4 2024 report, €3 million of that was already paid in January. As of the end of Q4, their cash and receivables were only €0.1 million short of covering all current liabilities, including deffered payment. So this payment should absolutely not be a problem for Raketech, especially considering they still have access to a €3.2 million credit facility.

Q4 2024 was a rough quarter, with revenue nearly halved. Yet, despite that, Raketech still produced €2.75 million in cash from operations. If they simply repeat that performance over the next two quarters, they’d generate over €5 million in operational cash—more than enough to meet their short-term obligation.

The bigger worry is the €20.8 million due by September 2026. If profitability falls, there’s a real risk they’ll struggle to fund this without some form of dilution. But let’s consider a base-case scenario: if Raketech continues generating €2.75 million in FCF per quarter, they’d produce around €19.25 million over the next seven quarters. That’s already nearly enough—and again, they have the €3.2 million credit facility and are reportedly considering selling their U.S. tipster and subscription segment, which could further increase their cash position. This is assuming that their FY25 cash from operations will fall over 25% and 9M 26 stays the same, which I believe is possible but conservative.

Even in a worse case, it’s very possible the company could negotiate to extend payment terms or restructure part of the obligation—solutions that wouldn’t necessarily involve issuing equity. As their CFO said in their Q3 webcast : “There's flexibility around, obviously, the timing of the terms of the settlement. And it's along quite the long-term for that settlement as well. So at the moment we think we have quite a lot of flexibility around it.”

Dilution is another thing I would like to talk about. Imagine the situation where Raketech is forced to double its share count—a scenario that would typically be an investor’s nightmare. But when a company is trading as cheaply as Raketech is today, even a 100% dilution would leave the stock trading at around 2x free cash flow on a per-share basis. That’s still incredibly cheap by any standard, and highlights just how cheap the stock really is.

That said, if Raketech's profitability were to decline significantly—or worse, if the company started generating losses—it could face serious trouble, potentially even bankruptcy. This risk is mainly why I believe the stock trades so cheaply. It’s important to emphasize: this is not "free money." There’s a real possibility of losing a substantial portion of one’s investment. However, I’m comfortable with that risk because I view this as a highly asymmetric opportunity with significant upside potential.

I won’t be conducting a DCF or other formal valuation in this case. The upside here is, in my view, so obvious that a complex model isn’t necessary—and frankly, I see that as a positive. If you need a detailed DCF to justify an investment, it might not be a great investment to begin with. Once the deferred payments are completed—expected by Q3 2026—I anticipate getting my investment in free cash flow within a year. Any subsequent growth or margin expansion would simply be additional upside.