CEO Comments Third Quarter 2018
CEO comments from Per Hellberg
Underlying organic growth shows continued strength
The result of the third quarter of 2018 was another step forward towards our target of EUR 100m adjusted EBITDA by 2020. The FIFA World Cup dominated in July, with fewer sports events but larger volumes for each of them. With heavy activity in July, both among customers and end users, August was slower due to a lack of events, lower affiliation budgets set by operators and holiday periods around the world. September was back to normal and the shortfall in August was more than made up by online sports betting in the US taking off just in time for the opening of the NFL season. Also, our US casino business performed strongly, most likely triggered by the current considerable focus on the US gambling industry.
Our efforts to build a strong finance vertical continue. After acquiring five finance assets recently, we have what we need to build a strong product focusing on English speaking customers globally. However, the crypto trend has faded, and, for reasons of compliance, we have removed binary options from our sites. Combined, this had a negative impact on our revenue. More importantly, we now have a skilled and committed organisation in place. This means the prospects for growth look very promising for the future.
SUBSTATIAL GROWTH OPPORTUNITIES
Although it is our experience that regulated markets are great opportunities but slow movers, the US seems to be the exception. The investments Catena Media made, well in time for the launch of online Sports betting, took off in September, with thousands of leads provided for operators. While some of our competitors are still searching for their first recruits, we have an 18-person strong team in the US market. This is sufficient for us to be able to grow in New Jersey, and prepares us for the launches that are imminent in Pennsylvania and West Virginia. We are also ready for other states to pass legislation. It is my belief that Catena Media’s business, through being in the sweet spot of the value chain, has substantial growth opportunities ahead. The reason behind this statement is that we hold a large part of the lead generation market in New Jersey, where eight Sports betting operators and several casinos have gone live. And we are also ahead of the market in Pennsylvania and West Virginia, with leading positions for relevant search terms and with a dozen-plus sites that are already seeing large volumes of traffic.
CONTINUED COST-EFFICIENT GROWTH
Over the past three years, Catena Media has progressed from being just 80 people who were iGaming experts, to being about 350 people who are great at creating and running websites offering highly demanded curated content in multiple verticals and different markets. Today, we have more than 120 employees in the tech team who, together with all of our other great employees, are focusing on activities to make us grow organically and more cost-efficiently, providing improved profitability and earnings per share. Our aim is to be the titan among lead generators. To accomplish that, we will focus on fewer brands but in more markets, on fewer but larger acquisitions that further improve the core in our business.
Our 17-percent organic growth* paired with our success in the US is not only something we are boasting about. Several international investors have come onboard recently. I am also delighted to find such an increase of interest in our share – as of the past quarter, there are about 11,400 Catena Media shareholders compared with 8,700 at the end of the second quarter. We are now fully geared to continue our growth journey, both organically and through strategic acquisitions, while improving profitability. We are now starting to see increased effects from economies of scale in the fourth quarter, organic growth is in line with expectations and we will continue along that path going forward.