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Despite a poor start to the year, Catena Media remains optimistic about the “North American opportunity” and is eyeing a potential US listing.

Topline numbers

In Q1, revenue from continuing operations decreased by 5% year-on-year to €35m.

The affiliate attributed this decline to the strong comparatives created by the record-breaking launch of online sports betting in New York in Q1 2022 and the go-live in Louisiana in the same quarter.

Revenue in North America decreased by 2% to €28.9m, accounting for 83% of the group’s total revenue. Organic growth from continuing operations decreased by 5%.

Adjusted EBITDA decreased by 7% year-on-year to €20.5m. This corresponds to an adjusted EBITDA margin of 59%.

New depositing customers (NDCs) from continuing operations totalled 113,294, also a year-on-year decrease of 3%.

News nugget

Ahead of its Q1 results, Catena Media revealed new financial targets with revenue from the North American market projected to reach $125m in 2025, which would represent compound annual organic growth of 12% from the current year.

In addition, AEBITDA margin is projected to exceed 50% by 2025, which is intended to be achieved through cost optimisation measures. 

“The North American market is still relatively early in its growth cycle and process, with many states and provinces yet to open for online sportsbook, and many more for online casino,” CEO Michael Daly said.

“Due to the US federal election cycle, we will see a temporary slowdown in state openings and will adjust operationally to that reality over the next 12 to 18 months.

“After that, we expect a resumption, and perhaps even an acceleration, of state launches once a new legislative cycle starts in 2025,” he added.

Catena Media projects that revenue growth will resume in 2024, albeit at somewhat lower margins than the extremely high levels of the past couple of years.

Daly described North America as a “highly attractive opportunity” for sustainable long-term growth, but said the company remains open to strategic alternatives and structural possibilities, including the prospect of a US share listing as well as the sale of the entire business.

Cost-reduction efforts

To offset the slower launch calendar, Catena Media said it will focus on achieving further efficiencies in the business in order to continue delivering high margins.

“Our ambition is to be net cash positive already during the second half of this year as we leverage the positive impact of cost-reduction efforts on cash-flow generation,” Daly explained.

“The reduced financial risk consolidates a solid financial position that will enable us to capitalise on strategic opportunities, including acquisitions, in the Americas.

“It will also create scope for future share buybacks and dividends as we seek to deliver shareholder value, but as yet, no timeline for such steps has been set,” he added.

In Q4 2022, Catena Media already disclosed that the divestment of its AskGamblers brand has provided the company with increased resources for M&A activities and organic investments, all while avoiding excessive debt burdens.

While the company emphasised that “aggressive cost management” has yielded profitability improvements in the UK and Italy, outgoing CFO Peter Messner also revealed that total costs in North America increased by 46% year-on-year, although only around 3% sequentially.

These cost dynamics stem from Catena Media’s “growth investments” as part preparations for forthcoming state openings in North America, mostly due to media and influencer partnerships.

Notably, the North American cost base presently constitutes 66% of the total group cost from continuing operations.

Best quote

“North America represents a highly attractive opportunity for sustainable long-term growth, and Catena Media is well positioned to be a leading affiliate in that market. We will continue working with Carnegie and remain open to strategic alternatives and structural options, which could potentially include a share listing in the US.”

Catena Media CEO Michael Daly

Best question

During the earnings call, Oscar Rönnkvist from ABG Sundal was the only analyst who actively posed multiple questions.

He was not satisfied with Daly’s previous comments about Catena Media’s capital allocation plans. Rönnkvist sought clarification on whether the company anticipates numerous M&A opportunities or if a buyback programme might be implemented in the near future.

However, Daly kept it general: “We consider all options mentioned at this point. There are certainly M&A opportunities in various regions, including North America, Latin America, and other parts of the world, both in terms of creative partnerships and technological advancements, which can contribute to the further development of our platforms and teams.”

Daly added that the firm needs to strike a balance and assess what best serves the interests of its shareholders, whether that will be M&A, a share buyback or dividend payments.  

“We’ll want to have all those tools in our toolbox, and at the right moment, we will deploy each of those.”

A written question focused on Catena Media’s operations in Latin America and why the firm is not interested in the region.

Daly replied: “That’s a false impression. We are absolutely interested in Latin America. It is a future growth area for us. We are investing in the teams and the products there.”

However, he said the region’s revenue contribution is still very small. “So, you don’t hear us talk a lot about it.”

Current trading & outlook

Catena Media stated that its performance in April fell short in comparison to the previous year, with a 12% decrease in revenue compared to April 2022.

This decline is primarily attributed to challenging comparisons arising from new market launches.

However, CEO Daly emphasised that April’s performance may not be indicative of the overall trajectory for the remainder of the quarter.

Investors, however, were not quite convinced, and shares in Catena media were trading more than 16% lower at the time of writing.

Catena Media has appointed Erik Edeen as interim chief financial officer (CFO) for a second time, effective from 22 May 2023.

Edeen will replace Peter Messner (pictured left), who is set to leave the affiliate in early June after holding the position since April 2020.

Edeen is already familiar with Catena Media.

He previously served as the firm’s interim CFO from 2019 to 2020, taking over after the departure of Pia-Lena Olofsson.

He is now returning to the temporary role for a second time.

Commenting on the appointment, Catena Media CEO Michael Daly said: “I’m excited to welcome Erik as our interim CFO.

“His long professional career and past experience of Catena Media will make him a valuable member of the executive management team.”

Edeen currently serves as a partner within Deloitte Sweden’s Business Process Solutions division.

He has more than 16 years of experience in leading financial management roles at both public and private corporations, including ICA Gruppen AB and Investor AB.

Most recently, Edeen worked as a strategic adviser to a global media corporation.

He holds a Master of Business and Economics with a major in Financial Accounting from Uppsala University.

In February, after announcing Messner’s departure, Catena Media initiated the process of recruiting a new CFO.

Messner will now join audiobook and e-book streaming service Storytel AB as group CFO.

Catena Media revenue grew 15% to €27.4m in Q4 2022, while the sale of its AskGamblers business to GiG has freed up resources for future acquisitions.

Topline numbers

In Q4 2022, revenue from continuing operations was €27.4m, which represents a 15% year-on-year increase.

North America accounted for 78% of total revenue as the region grew by 31% year-on-year to €21.5m.

Adjusted EBITDA from the group’s continuing operations increased by 14% to €12.3m, up from €10.8m in Q4 2021.

That corresponds to an adjusted EBITDA margin of 45%.

For full-year 2022, revenue from continuing operations was €110.1m, an increase of 7% compared to 2021.

In contrast, adjusted EBITDA from continuing operations decreased by 16% to €50.1m, at a margin of 46%.

News nugget 

Catena Media confirmed its commitment to regulated market growth and shared some more insights into its strategic priorities for 2023.

CEO Michael Daly said the sale of its AskGamblers brand to GiG had freed up resources for M&A and organic investment without taking on excessive levels of debt.

Daly said: “AskGamblers is a solid business with healthy margins. However, the accelerating trend towards market regulation led us to conclude that the brand, which partly addresses non-regulated grey markets, would enjoy better development prospects under new ownership.”

Catena Media added that following the completion of a strategic review first announced in May 2022, the business “will positively evaluate M&A investments to further strengthen its position in strategic markets.”

The firm also revealed in its report that it had divested its Financial Trading segment via a management buyout at the end of January 2023.

Daly explained that “shifts in the global sports betting industry and in various trading markets led Financial Trading to become an under-appreciated part of the Catena Media portfolio”.

He added: “Over time, we ceased to have the bandwidth or parameters to maximise the business’ potential under our ownership.”

Daly said the company now has “the ability to invest flexibly into newly regulated markets in different regions”.

“At present, those opportunities are concentrated in North America and it is our firm belief that the US and Canada offer the best investment case for the company and its shareholders in current conditions,” he said.

Best quote

Catena Media CEO Michael Daly: “Some 90% of revenue from continuing operations now comes from regulated markets. We are nevertheless not averse to investing in markets that offer stable and predictable operating conditions, even if they are not yet regulated. One example is Japan, which operates a tolerant approach to online casino and where we are committed to expanding our already-significant market presence.”

Best question

Analyst Oscar Rönnkvist from AGB Sundal pointed to Catena Media’s recent trading update that projected adjusted EBITDA from continuing operations of €10.8m. However, the company actually reported adjusted EBITDA of €12.3m.

Rönnkvist asked about the cost reductions made to achieve this result.

In response, CFO Peter Messner said that Catena Media was not focused on faster cost-cutting measures, but was following the plan previously announced as part of its European restructuring and streamlining measures.

Messner further explained there were several elements to consider when comparing Q4 of the previous year to Q4 of 2022.

One element is that certain European grey market assets were divested at the end of Q3 2022, which distorts the year-over-year comparison. The divested Financial Trading segment also had a negative contribution that further deteriorated during the quarter.

Current trading & outlook

Despite a 19% increase in North American revenue in January 2023, group revenue from continuing operations decreased by 4%.

This outcome was not unexpected, Catena Media said, as the previous year saw record-breaking market launches that resulted in a 65% increase in North American revenue compared to January 2021.

In other news, the affiliate announced last month that third parties had expressed interest in acquiring the entire company. Today, Daly stated that he would not provide further details on the process but expected the company’s strategic review to be concluded in 2023.

Meanwhile, the affiliate has initiated the process of hiring a new CFO as Messner prepares to leave his current position.

Catena Media has initiated the process of recruiting a new CFO as Peter Messner is set to leave his position with the affiliate.

Messner will hand over his responsibilities within the next six months, before going on to pursue career opportunities outside the sports betting and casino industry.

CEO Michael Daly commented: “Given our closer focus on the North American market, we have agreed that this is the right time to make a transition in our financial leadership.

“Peter has contributed hugely to our recent successes, and we thank him sincerely for his efforts,” he added.

Catena Media is undergoing a phase of transition and restructuring as it plans to move away from European markets and place a greater focus on the North American market.

Despite a 31% year-on-year increase in revenue from the North American market, reaching €21.5m in Q4 2022, the outcome of the business review remains uncertain.

In December, the company sold its flagship brand, AskGamblers, to Gaming Innovation Group, and in January, Catena Media confirmed that third parties have shown interest in acquiring the entire company.

20 years’ experience

Prior to Messner’s appointment, Catena Media had been searching for a new CFO for a year following the departure of Pia-Lena Olofsson at the beginning of 2019.

Messner joined Catena Media in April 2020. He brought with him over 20 years of international management experience in the media and iGaming industries.

Between February 2014 and April 2019, he served as the CFO of the digital division at Swedish media conglomerate Modern Times Group (MTG).

Before that, he held the position of CFO and director of corporate development at Ongame Network, bwin’s B2B arm for web and mobile poker solutions, between 2010 and 2013.

That business was sold to Amaya Gaming in 2012.

Messner first joined bwin in 2006 as a product and portfolio manager, before moving on to the role of integrated business planning manager in 2009.

Catena Media’s revenue from the North American market has risen 31% year-on-year to reach €21.5m during Q4 2022.

However, according to preliminary figures released today (19 January), the affiliate giant’s total revenue was down. The company generated €31.5m in Q4 of last year, a slight decrease from the €31.9m recorded in Q4 2021.

The company expects a total adjusted EBITDA of €12.7m, corresponding to a margin of 40%, as compared to €13.2m and 41% respectively in the previous year.

Catena Media is currently going through a period of change and reorganisation after revealing in mid-2022 that it wants to divest its European assets to focus on growth in the US, Asia-Pacific and Latam markets.

In December 2022, Catena Media sold its flagship website AskGamblers and several smaller domains to Gaming Innovation Group (GiG)for €45m.

This was followed by the news earlier in January that that third parties have shown interest in acquiring the entire company.

Revenue from continuing operations

During the quarter, the group generated total revenue from ‘continued operations’ of €27.4m, a 15% increase year-on-year.

This figure does not include revenue generated by the discontinued operations of AskGamblers, and related brands, as well as the Financial Trading segment, which is currently up for sale.

Adjusted EBITDA from continuing operations, excluding items affecting comparability, is expected to reach €10.8m, up 14% year-on-year and representing a margin of 39%.

Catena Media CEO Michael Daly: “We successfully delivered on our strategy of further expansion in North America while completing our strategic review with the sale of AskGamblers and related assets.”

The North American market accounted for 78% of group revenue from continuing operations during the quarter.

Commenting on the results, Catena Media CEO Michael Daly said: “It is pleasing to see such strong performance from our core North American business in Q4.

“We gained uplift from the launch of licensed online sports betting in Maryland in November and a strong run-in to the go-live for online sports betting in Ohio on January 1, 2023, which delivered our strongest ever launch period for a US state sportsbook launch.

“We successfully delivered on our strategy of further expansion in North America while completing our strategic review with the sale of AskGamblers and related assets. These preliminary results reaffirm our strategy and provide a solid platform as we enter 2023,” he added.

Moreover, Catena Media reported a reduction in operating profit due to non-cash impairment charges on goodwill of €7.3m and on other intangible assets of €9.9m.

The company said these write-downs relate to the current restructuring measures.

US online gambling stakeholders must collaborate more effectively on responsible gambling to avoid the introduction of highly restrictive regulation, according to Catena Media CEO Michael Daly.

Don’t fly too close to the sun

In conversation with iGaming NEXT, Daly explained that increasingly strict measures in European markets – including the UK – should serve as a warning to the US industry that it must get its RG affairs in order as a matter of urgency.

Looking to the UK, where ever-tightening regulations dominate industry discussions, Daly said: “The UK is a very interesting space. To me, it’s an example of what I don’t want the US to become. 

“I don’t want us to let the pendulum swing so far that when it swings back, it kills the golden goose. The pendulum has swung very far in the UK in the other direction, because let’s face it, everybody in the industry took it too far.”

In the UK, where factors including the extreme prevalence of gambling advertising seem to have created an almost universally negative public view of the industry, Daly suggested that companies had “exploited rather than explored” the market. 

This resulted in increasingly tight regulations for operators, he argued.

If a similar situation plays out in the US, Daly suggested, it could be damaging for firms, almost all of which have still not been able to turn a profit stateside.

“If you’re an operator not making money today and all of a sudden responsible gambling requirements get tighter, then we’ve made a really big mistake,” he said.

Let’s stick together

For that reason, Daly thinks the time is now for US stakeholders to begin collaborating, rather than competing, when it comes to responsible gambling.

“I think we need to figure out how we’re doing responsible gambling as an industry, what that means, what the messaging is and what the limits are,” he suggested.

“Regardless of the fact that each state has its own regulatory body we need, as an industry, to get our act together.”

“I don’t want us to let the pendulum swing so far in the US that when it swings back, it kills the golden goose.”

While this will undoubtedly be a big challenge in competitive North American markets, Daly suggested it was essential for the sector to avoid shooting itself in the foot.

“I don’t know how you get us all together in a room to make us all want to talk. Companies are always looking for a competitive advantage and say ‘well, if they’re doing that, I’ll do a little bit more of this, and that makes me a better operator in the near term’.”

But instead of throwing everything at short-term revenue, he suggested, firms should be taking a long-term approach to RG while recognising its growing importance as US markets mature.

Slow to set the pace

Since the repeal of PASPA in 2018, you could argue that few companies have put responsible gambling front-and-centre of their business strategies.

While some of the industry’s best-known businesses – such as FTSE 100 operator Entain – have been publicly banging the RG drum in the US, others have so far failed to recognise its importance.

One possible reason for that, Daly suggested, is the way the market is made up.

“We’re publicly traded companies for the most part, so the near term is often where the focus lies,” he said. “Responsible gambling is a longer term play. It has to be there all along, but it’s not something you do just for the press release now.”

Starting with 2023, Daly insisted the industry must pay more attention to RG or prepare to face the music, especially since recent coverage from outlets including the New York Times has painted a poor picture of the sector and its lobbyists, scaring legislators in the process. 

“I think responsible gambling will come more into focus across all sectors this year, and if you choose to ignore it, then ‘buyer beware’, so to speak.”

The affiliate perspective

For Daly, who leads one of the gambling industry’s largest and most prominent affiliate groups, that means something different to what it means for operators.

“At Catena, we’re working on what we should be doing more of and that’s a major issue for us this year. But we’re a small cog in a big wheel, so unless everybody’s doing something that’s going to be aligned, then it’s going to be disjointed and not help the industry,” he said.

With regards to what the affiliate’s role is in practice, he said: “The responsible side of being an affiliate is making sure that you have the alternative view on whether what’s on offer are really good bets. 

“Also, making sure that you’re putting enough language in to talk about the impact of gambling and making sure that customers understand when this changes from entertainment to addiction.”

He continued: “Just as our job is to educate the market on what is available for gaming, we also have to educate the consumer on what’s available for protection from harmful gambling.”

While affiliates can play an important role in the adoption of RG measures across the industry, their impact will be limited without widespread buy-in from operators at the same time. 

“As an affiliate it’s difficult – we’re sort of handicapped because we don’t see how the players are actually playing on the sites, that’s on the operators,” he concluded.

Gaming Innovation Group (GiG) has struck a €45m deal to acquire the casino affiliate website AskGamblers and several smaller domains from Catena Media.

Of the total consideration, GiG will pay €20m in cash on closing, €10m 12 months after closing and the €15m balance 24 months after closing.

The transaction, which includes a deal for JohnSlots and NewCasinos as well as AskGamblers, is expected to be completed in Q1 2023.

At the time of writing, shares in GiG were up nearly 6%, while Catena Media’s share price fell by 1.7%.

iGaming NEXT understands Catena Media was initially targeting a higher sale price in the region of €70m to €80m as little as six months ago.

Catena Media first announced its intention to sell its flagship online casino affiliate brand AskGamblers in May 2022 when it launched a strategic review of its business.

In August, the Malta-based affiliate said it has also included its European sports betting and casino assets that are separate to AskGamblers in its review to free up resources from its legacy European assets to focus on higher margin growth opportunities in the US, Asia-Pacific and Latam markets.

GiG’s affiliate business meanwhile has expanded steadily. In Q3 2022, GiG Media generated revenue of €15.1m, an increase of 35% year-on-year, or 2% compared to the previous quarter in 2022.

With this acquisition, GiG Media said it aims to diversify its media business further and “cement its position in the industry as the leading casino affiliate”.

GiG CEO Richard Brown: “Combining the assets with GiG’s media technology and operational capabilities, provides us with a great opportunity to expand our global reach and to deliver a path for the brand to continue with its strong evolution.”

The acquired websites generated revenue of €12.9m in the first nine months of 2022 with an EBITDA of €8.4m.

Going forward, GiG expects to have an EBITDA margin between 60-70% from the acquired assets, which are expected to generate around 53,000 First Time Depositors (FTDs) in 2022.

GiG said the websites are strong in markets that are currently non-core markets for GiG Media, therefore expanding the company’s geographical reach. Previous suitors are understood to have questioned the grey market exposure of AskGamblers, according to sources familiar with the process.

Further to the revenue growth potential, GiG expects to realise operational synergies after the acquisition via the shared use of marketing technologies, business intelligence systems and key functions.

Commenting on the acquisition, GiG CEO Richard Brown said: “GiG is extremely excited to take over the premium AskGamblers brand from Catena.

“Combining the assets with GiG’s media technology and operational capabilities, provides us with a great opportunity to expand our global reach and to deliver a path for the brand to continue with its strong evolution.

“The expansion of our strategic position in conjunction with the deal structure gives the group another great blueprint for growth. We look forward to integrating the assets and current staff into Gaming Innovation Group,” he added.

The deal is structured by way of a Share Purchase Agreement (SPA) with GiG’s subsidiary Innovation Labs, which is part of GiG Media.

As part of the transaction, GiG will acquire two subsidiaries: Catena Publishing in Malta and Catena Media D.O.O. Beograd in Serbia that operate the AskGamblers brand and the associated online casino brands JohnSlots and NewCasinos.

These companies currently employ around 90 people, with 80% based in Serbia and 20% in Malta.

GiG will finance the initial consideration through a combination of own cash, a revolving credit facility (RCF) and a share issue.

Existing shareholders have committed to participate in the share issue and the RCF, securing sufficient financing to complete the transaction at closing.

Catena Media CEO Michael Daly: “We are now in an even stronger financial position and equipped to capture the exciting market opportunities ahead of us and to take steps to broaden Catena Media’s exposure and access to the US capital markets over time.”

Catena Media CEO Michael Daly commented: “Today’s agreement is a major step in our journey to focus the business on online sports betting and casino affiliation in high-growth, regulated markets in the Americas.

“I am confident that in GiG we have found a buyer that will provide a strong environment for AskGamblers and the other brands and their talented people to develop and grow,” he added.

In addition, Daly noted: “We are now in an even stronger financial position and equipped to capture the exciting market opportunities ahead of us and to take steps to broaden Catena Media’s exposure and access to the US capital markets over time.”

Catena Media said it intends to continue streamlining its business. This will involve further divesting from markets and assets, including the group’s Financial Trading brands, as well as the remaining European brands.

The affiliate further revealed that third parties have shown interest in acquiring the Financial Trading business and is currently evaluating its position.

Topline numbers

Malta-based affiliate business Catena Media has reported a 2% year-on-year revenue decrease to €32.3m, which it mainly attributed to worsening macro-economic conditions. It also posted a 29% decline in adjusted EBITDA to €11.7m, corresponding to an adjusted EBITDA margin of 36%.

News nugget

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”.

Best quote

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.”

Best question

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

Between January and September 2022, Catena Media generated revenue of €106.4m, an increase of 2% compared to the same period in 2021.

Catena Media reconfirmed its 2021-2025 financial targets, which include profitable double-digit organic growth annually, with the US as the core growth driver.

Share performance

Some investors made an exit upon the presentation of Q3 results, with Catena Media’s share price falling more than 16% today (17 November).

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. 

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.”

“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.

The share price of Catena Media has fallen by more than 9% in early trading despite the affiliate reporting a 19.9% year-on-year rise in Q4 revenue to €31.9m.

Adjusted EBITDA for the quarter came to €12.8m, up 4.3% from €12.3m in Q4 2020. During the period, Catena registered 135,250 new depositing customers (NDCs), an increase of 8.2% on the same period of last year.

The majority of quarterly revenue (€19.9m) came from the casino sector, which grew by 24.8% year-on-year. Casino contributed 65,284 of registered NDCs, down slightly from 65,947 in Q4 2020.

Sports betting revenue came to €11.1m in Q4 amid a rise of 19.5%, while the number of NDCs in the vertical also increased by 19.2%, to 69,641.

The firm’s financial trading segment generated €876,000, down 36.0% from €1.4m last year. Catena registered just 325 NDCs in this vertical during the quarter.

The vast majority of quarterly revenue, €30.5m, was generated by organic search traffic, up 28.9%, while paid advertising revenue accounted for the remaining €1.4m, down 46.3%. The business generated no subscription revenue during the quarter, compared to €375,000 in Q4 2020.

Approximately 53% of Q4 revenue came from CPA agreements, while 38% came from the rev share model. The remaining 9% was generated by fixed fee contracts.

Catena’s effective tax rate during Q4 was 12%, up from 10% in the corresponding period, leaving the business with earnings after tax of €5.8m, down from €7.7m in Q4 2020.

“A variety of temporary factors impacted on the bottom line during the quarter,” said Catena Media CEO Michael Daly. “Revenue pressure on sports betting operators in Europe squeezed our margins there.”

Meanwhile, he said: “In Japan, the easing of Covid-related restrictions caused a drop in online casino sessions as users seized the opportunity to spend more time outside home. We also resumed our investment programme for future growth as the easing of the pandemic enabled a gradual normalisation of business conditions and the consumer environment.”

Further, Daly added: “Investments were made across the group in personnel and technology to support growth and to further improve the foundational architecture of our brands so we are fully equipped to deliver profitable double-digit growth today and for years to come. This spending on our future long-term success will continue through 2022.”

The company continues to invest in adapting to regulations in European markets, notably in Italy and Germany, while also further investing in its growth across North America, Latam, Asia-Pacific and parts of Africa.

In the key strategic market of North America, Daly said: “Year-on-year performance remained buoyed by the legalisation during 2021 of online sports betting and casino gaming in Michigan and online sports betting in Virginia, Arizona and Wyoming. 

“In each case, our approach of investing substantially in the market prior to launch paid off handsomely. We successfully deployed similar tactics in New York and Louisiana prior to the legalisation of online sports betting in both states in January 2022. New York is likely to be our largest sports market going forward.”

Looking at full-year 2021, total revenue for the group came to €136.1m, an increase of 28.4% over 2020’s €106.0m.

Adjusted EBITDA in 2021 rose by 32.4% to €68.8m. This gave the business an adjusted EBITDA margin of 51% for the full year, up slightly from 49% in 2020.

Catena said the increase in margin was mainly due to higher revenue exceeding its increase in costs.

However, operating profit for the year – which totalled just €3.5m, down from €38.5m – was negatively impacted by a non-cash impairment on intangible assets of €49.4m. This consisted of €42.8m relating to German sports assets acquired between 2016 and 2018, and €6.6m relating to French sports assets acquired in 2018.

Total comprehensive income for the full year comprised a net loss of €12.7m, compared to a net income of €11.1m in 2020.

Looking to the year ahead, Daly said: “Early in 2022, our affiliate sports betting offers enjoyed successful launches in New York and Louisiana. We also look forward with anticipation to the scheduled launch of sportsbook betting and casino gaming in Ontario in Canada at the start of Q2. 

“Our extensive programme of advance investment and preparation gives us high expectations that Ontario will be among our largest North American markets in the future. 

“If the market develops at its current expected rate, and no delays or similar unforeseen events occur in relation to scheduled market openings, we confidently expect revenue in North America to surpass $100m in 2022,” he concluded.