Macro conditions lead to 5% revenue dip at Catena Media despite Q2 cost-cutting measures
Catena Media has shifted its strategic focus towards the reduction of costs after generating revenue of €28.9m in Q2 2022, down 4.9% year-on-year.
Due to prevailing macroeconomic conditions and an associated reduction in entertainment spend among customers, strong growth in the firm’s North American segment failed to offset significant headwinds in other markets.Revenue in North America totalled €14.9m, an increase of 20.2%, as the region accounted for 51.6% of total group revenue.
Revenue from other markets therefore totalled €14.0m, down by 22.2% from €18.0m and representing 48.4% of total revenue. Adjusted EBITDA for the period was reduced by 40.1%, from €15.1m in the prior year period to just €9.1m in Q2 2022.
That gave the business an adjusted EBITDA margin of 31%, down from 50% last year.
The business also saw a reduction in the number of new depositing customers (NDCs) during the quarter, with a total of 135,812 during Q2, down 3%.
By vertical, online casino continued to be Catena’s biggest sector by revenue despite a year-on-year dip, generating €17.2m, down 18.4% from €21.1m, accounting for 59.4% of group revenue.
Sports betting, while making up a smaller proportion of total revenue at 37.8%, saw growth of 31.4% to €10.9m.
Catena’s financial trading division generated a further €773,000, down 20.6% and representing just 2.7% of group revenue.
These figures brought total revenue for the first half of 2022 to €74.1m, an increase of 4.2% year-on-year, with North America generating €44.4m, or 59.9% of the total.
Adjusted EBITDA for H1 was €34.7m, down 13.6%, at an adjusted EBITDA margin of 47%, compared to 56% in H1 2021.
Catena Media CEO Michael Daly: “Q2 proved a challenging quarter for Catena Media as largely external factors led to a disappointing 5% dip in group revenue and a margin squeeze in parts of the business that caused adjusted EBITDA to decrease by 40%.”
During the second quarter, significant events for Catena included the launch of operations in Ontario, the initiation of a strategic review amid interest from third parties in acquiring some of its assets including the AskGamblers brand, and the repurchase of 620,000 of Catena’s own ordinary shares for a price of €2.8m.
Following the end of the reporting period, revenue in July increased by 8%, Catena said, while revenue from North American sports betting and casino rose by 33%.
In August, the business announced its first major US media partnership with Advance Local-owned NJ.com in New Jersey.
Catena subsequently announced its intention to expand its ongoing strategic review to the entire European online sports betting and casino affiliation segment, in which it will seek annual operational and capital expenditure savings of at least €5m.
“Q2 proved a challenging quarter for Catena Media as largely external factors led to a disappointing 5% dip in group revenue and a margin squeeze in parts of the business that caused adjusted EBITDA to decrease by 40%,” said Catena Media CEO Michael Daly.
“A sharp deterioration in global economic conditions affected trading in multiple markets, denting performance in parts of our online sports betting and casino portfolio just as we had taken on extra cost to support new market launches and product upgrades.
Catena Media CEO Michael Daly: “A sharp deterioration in global economic conditions affected trading in multiple markets, denting performance in parts of our online sports betting and casino portfolio just as we had taken on extra cost to support new market launches and product upgrades.”
“During the quarter, we took steps to reduce expenditures in response to the changing landscape and scaled back strategic investments from planned levels. Although we saw an initial effect of these measures in Q2, it was insufficient to compensate for the full impact of lower margins, particularly under our revenue share agreements with operators outside North America.”
Daly added that regulatory setbacks in US markets – such as a delay to the introduction of sports betting in Ohio until 2023 – “shift a highly promising outlook marginally farther forward,” meaning the business’ previously stated goal of achieving 12-month revenue of $100m in North America will likely not be reached until the first half of 2023.
For now, the business will continue on its strategic review and cost-saving mission in Europe. “In fast-changing economic conditions we are working diligently to obtain the best outcomes for Catena Media and our shareholders,” Daly concluded.