Catena Media share price plummets as affiliate business reports 29% EBITDA decline
The good news is that Catena Media saw an 11% year-on-year rise in revenue to €18.6m in the North American market in Q3, equivalent to 58% of group revenue. Growth was led by the launch of licensed online sports betting in Kansas in September and a strong NFL season start.
However, Catena Media’s Q3 was mainly shaped by reorganisation and restructuring as the company continued its strategic review, which consumed “a great deal of operational energy” and was a “difficult process for the organisation”, according to CEO Michael Daly.
Cost-cutting measures led to a reduction in European headcount of more than 25% and generated combined annualised savings of €5.5m. These savings, which were above Catena’s initial target of €5m, will apply in full from January 2023.
The company said that the review is nearing completion, with certain assets currently in a divestment phase. Catena Media said it would be able to provide a full overview in Q4. “Amid significant interest from multiple parties, this process is being managed by an external adviser and is approaching a conclusion,” Daly said.
Going forward, Catena said in Europe its focus will be on the UK and Italy. However, the firm’s chief focus would continue to be on the North American market, which is already its “strongest business”.
Catena Media CEO Michael Daly: “Once the strategic review is behind us, I look forward to the organisation redoubling its focus on the highly promising Latam 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.”
On the company’s Q3 earnings call, Catena Media’s German business was put under the microscope. Daly commented: “We are sending traffic to a number of operators and the conversion rates are not very healthy from our perspective.”
He added that operators in Germany are still having “trouble with some of the new rules and regulations” and the market “still hasn’t stabilised”.
Daly said he would not exclude that Germany “will grow into a very significant market” for the company someday. “We are being cautious on Germany.
We are keeping our teams in place and working on our products, but we don’t have the greatest of expectation that it blossoms as a market in the next six to 12 months,” he added.
Current trading & forecast
Catena Media reconfirmed its 2021-2025 financial targets, which include profitable double-digit organic growth annually, with the US as the core growth driver.
Some investors made an exit upon the presentation of Q3 results, with Catena Media’s share price falling more than 16% today (17 November).