Positioned for high-growth opportunities in North America and other key markets

STOCKHOLM, Nov. 17, 2022 /PRNewswire/ -- Catena Media plc Interim Report January – September 2022

Highlights

• Revenue rose 11 percent in the fast-growing North American market in Q3, led by the launch of licensed online sports betting in Kansas and a strong NFL season start. Group revenue decreased by 2 percent.
• Solid growth in established markets contributed to a 43 percent increase in North American sports revenue when excluding the Arizona (Q3 2021) and Kansas launches.
• As part of the expanded strategic review announced in August, restructuring measures unlocked combined annualised cash savings in Europe of EUR 5.5m, higher than the initial target of EUR 5m. The savings, which included a 25 percent reduction in European headcount, will be fully effective from Q1 2023.
• Various grey-market performance marketing assets were divested during Q3 as part of the strategic review. From Q4 onwards, this will positively impact the European gross margin and EBITDA margin, while reducing revenue.
• The company is in advanced discussions over specific asset divestments as it evaluates multiple options for certain parts of the business subject to the strategic review. External advisors have been engaged to support this process, which remains ongoing.
• In October, revenue from North American sports betting and casino increased by 20 percent compared to October 2021. Total group revenue decreased by 1 percent excluding divested assets.                 

July–September 2022

• Revenue was EUR 32.3m (33.1), a decrease of 2 percent.
• Revenue in North America increased by 11 percent to EUR 18.6m (16.8), equivalent to 58 percent (51) of group revenue.
• Organic growth was -4 percent, or -3 percent excluding the German sports betting and casino market.
• New depositing customers (NDCs) totalled 116,746 (153,701), a decrease of 24 percent.
• Adjusted EBITDA decreased by 29 percent to EUR 11.7m (16.4), corresponding to an adjusted EBITDA margin of 36 percent (50). The decrease reflected continued strong growth-oriented investment into the fast-expanding North American market.
• EBITDA, including items affecting comparability of EUR 13.2m (1.5), totalled EUR -1.5m (14.9), reflecting European restructuring costs and a EUR 12.8m loss on disposal of grey-market performance marketing assets. The EBITDA margin was -5 percent (45).
• Earnings per share totalled EUR -0.08 (-0.51) before dilution and EUR -0.05 (-0.34) after dilution.
• Cash and cash equivalents were EUR 28.3m (28.6) on 30 September.
• Outstanding shares totalled 76,323,995 and the number of outstanding warrants was 33,767,877 on 30 September.

January–September 2022

• Revenue was EUR 106.4m (104.2), an increase of 2 percent.
• Revenue in North America increased by 22 percent to EUR 63.0m (51.4), equivalent to 59 percent (49) of group revenue.
• Organic growth was -8 percent, or -6 percent excluding the German sports betting and casino market. 
• New depositing customers (NDCs) totalled 424,476 (451,272), a decrease of 6 percent.
• Adjusted EBITDA decreased by 18 percent to EUR 46.3m (56.6), corresponding to an adjusted EBITDA margin of 44 percent (54).
• EBITDA, including items affecting comparability of EUR 15.3m (5.7), decreased by 39 percent to EUR 31.0m (50.9), mainly due to European restructuring costs and a EUR 12.8m loss of disposal on grey-market performance marketing assets. The EBITDA margin was 29 percent (49).
• Earnings per share were EUR 0.22 (-0.18) before dilution and EUR 0.15 (-0.12) after dilution.
• Cash and cash equivalents totalled EUR 28.3m (28.6) on 30 September.
• Catena Media repurchased 1,973,000 of its ordinary shares for EUR 8.6m and held 5.6 percent of all total outstanding shares on 30 September.
• Outstanding shares totalled 76,323,995 and the number of outstanding warrants was 33,767,877 on 30 September.                 

Significant events after the period

• Pre-live marketing campaigns signed with operators in Maryland and Ohio prior to projected launches of licensed sports betting in Q4 and/or Q1.
• The company is in advanced discussions over specific asset divestments as it evaluates multiple options for certain parts of the business subject to the strategic review. Depending on the outcome of the strategic review, certain assets' carrying value or useful life may need to be adjusted.
• In October, revenue from North American sports betting and casino increased by 20 percent compared to October 2021. Total group revenue decreased by 1 percent excluding divested assets.

CEO Michael Daly's comments

Q3 was a healthy quarter for Catena Media in which we again reported strong growth in our core North American business. Revenue in North America reached EUR 18.6m, an increase of 11 percent from Q3 last year, which was an extremely strong quarter that saw the legalisation of online sports betting in the large Arizona market and the nationwide launch of a large operator. Excluding the Arizona opening and also the successful onboarding of Kansas in Q3, North American revenue was up 24 percent overall and rose 43 percent in sports.

For the group, revenue decreased slightly and the EBITDA margin narrowed. I am nevertheless encouraged by our overall performance given macroeconomic challenges in multiple markets, our heavy growth-oriented investments in North America, and considering the internal engagement that the ongoing strategic review demanded from the business throughout the period.

The strategic review is nearing completion at the time of writing. Certain assets are currently in a divestment phase. Amid significant interest from multiple parties, this process is being managed by an external adviser and is approaching a conclusion. I look forward to making a fuller announcement in the near future.

The measures being taken, and to be taken, as part of the strategic review are optimising the business to capitalise on the growth of online sports betting and casino in North America, where a wave of regulation continues to open new markets to licensed operators and create exciting openings for Catena Media. Other future opportunities include Latin America and esports, both of which offer high potential for profitable growth over the longer term.

In Europe – the region where the current high-inflation environment is most pronounced and the squeeze on player spending is most acute – we scaled back our operations during the quarter to focus on a smaller core of strategic high-margin brands primarily in regulated online sportsbook markets, and to a lesser extent in casino. The key brands offer stable near-term growth potential and are located in the UK and Italy.

The restructuring measures led to a reduction in European headcount of more than 25 percent and generated combined annualised savings of EUR 5.5m. These savings, which were above our initial target of EUR 5m, will apply in full from January 2023. The reorganisation inevitably consumed a great deal of operational energy during the period, so I was especially pleased to see positive signs in Q3 from the new European core, led by solid growth in our Italian online sports betting business. I look forward to developing our high-performance Italian and UK assets as we move ahead.

The restructuring has also seen us offload certain grey-market assets as we transition fully into an organisation focused on the Americas and other regulated and stable markets. It is here that the appetite for supporting and extending licensed online sports betting and casino is strongest, and hence where we will be best placed to retain our market leadership and achieve high levels of sustainable growth over time.

In North America, the Kansas launch in September coincided with a successful start to the new NFL season and met our expectations for player engagement. Credit for this goes to our North American team, in which we have invested heavily both in terms of personnel and technology. This ongoing commitment positions us to take full advantage of forthcoming launches and will also provide a springboard to grow in our established markets. Three states – Maryland, Ohio and Massachusetts – have all announced their intention to legalise online sports betting in the near future, with Ohio committing to 1 January 2023 as its go-live date. We have advanced plans in place for these states, including operator collaborations in Ohio and Maryland that are already offering pre-live player deals. We continue on our path to surpassing our target of USD 100m in annual revenue.

The Q3 figures benefited from the launches earlier this year in New York, Louisiana and Ontario and in Connecticut in Q4 2021. New York slowed in Q3 after a highly successful launch in Q1 amid advertising pullback by operators in response to high tax rates. Inflationary pressures and cost-of-living increases may also have impacted on player spend. Nevertheless, New York has proven a very healthy business for us and will remain so going forward.

Our strength and expertise in organic search has already made Catena Media the leading affiliate for online sports betting and casino in North America. We see no reason why this remarkable growth story should not continue. High player values and public enthusiasm for online sports betting and casino are projected to support high margins for the foreseeable future. And as the market gradually shifts towards maturity in terms of state launches, we believe that operator-side activities and the development and refinement of our affiliate offerings will preserve healthy growth rates even in established markets. Diversifying into media partnerships such as our NJ.com venture with Advance Local, which we announced this quarter, will also provide new revenue streams – albeit at lower margins than our cost-per-acquisition activities – as we move forward. Here, we intend to select our partners carefully to ensure that such deals are revenue-enhancing and take our business forward.

Once the strategic review is behind us, I look forward to the organisation redoubling its focus on the highly promising Latin American market. I fully expect that we will soon begin to see this dynamic region take on a significant role in our Americas story. Another exciting area is esports, where our Esports.net brand reported exceedingly rapid user growth in Q3 and where I see rich opportunities ahead.

We continue to build for the future, and do so from a position of unprecedented strength. Our low debt, strong cash flow, organic search know-how and lean organisation make Catena Media uniquely placed to set the pace in lead generation for online sports betting and casino – in North America and beyond.

Presentation of Catena Media's results

CEO Michael Daly and Group CFO Peter Messner will present the Q3 2022 report in a combined audiocast and telephone conference on 17 November 2022 at 10:00 CET. There will be an opportunity to ask questions. The presentation will be in English and can be attended via this link:

https://ir.financialhearings.com/catena-media-q3-2022 

To participate via telephone, please dial:
SE: +46 8 505 163 86
UK: +44 20 319 84884
US: +1 412 317 6300

Pin code: 7580482#

The switchboard opens at 09:55 CET and the presentation will be available on the website:
https://www.catenamedia.com/investors/reports/quarterly

Contact details for further information:

Michael Daly, CEO
Email: [email protected]

Peter Messner, Group CFO
Phone: +46 768 95 26 93, Email: [email protected]

Investor Relations
Email: [email protected]

This information is information that Catena Media plc is obliged to make public pursuant to the EU Market Abuse Regulation and the Securities Market Act. The information was submitted for publication, through the agency of the contact persons, on 17 November 2022 at 07:00 CET.

About Catena Media

Catena Media is a global leader in generating high-value leads for operators of online casino, sports betting and financial trading platforms. The group's large portfolio of web-based affiliation brands guides online users to customer websites and enriches the experience of players worldwide. Headquartered in Malta, the group employs over 450 people in Europe, North America, Asia-Pacific and Oceania. The share (CTM) is listed on Nasdaq Stockholm Mid Cap. For further information see catenamedia.com.

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SOURCE Catena Media