A quarter of underperformance as we implement management changes and a new operating model to improve results in second half of 2024

Catena Media plc Interim Report January – March 2024

January–March 2024

• Revenue from continuing operations was EUR 16.0m (31.5), a decrease of 49 percent.
• Revenue in North America decreased 50 percent to EUR 14.3m (28.9), equivalent to 90 percent (92) of group revenue from continuing operations.
• New depositing customers (NDCs) from continuing operations totalled 44,077 (74,186), a decrease of 41 percent.
• Adjusted EBITDA from continuing operations decreased 90 percent to EUR 1.9m (18.7), corresponding to an adjusted EBITDA margin of 12 percent (59).
• EBITDA from continuing operations, including items affecting comparability of EUR 1.0m (0.8), totalled EUR 0.9m (17.9), corresponding to an EBITDA margin of 6 percent (57).
• Earnings per share from continuing operations totalled EUR -0.03 (0.15) before dilution and EUR -0.03 (0.11) after dilution.
• Cash and cash equivalents were EUR 23.4m (52.4) on 31 March.
• Outstanding shares totalled 78,773,422 and outstanding warrants were 27,022,940 on 31 March.

Significant events during Q1 2024

• On 10 January the group received consent from bondholders regarding the written procedure for its outstanding bond loan 2021/2024 and a partial prepayment of half of the nominal amount of the bond was made. As a result, the total outstanding nominal amount of the bond is EUR 27.5m (55.0m), of which Catena Media holds EUR 6.15m (12.3). The maturity date was extended to 9 June 2025.
• The group launched online sports betting affiliation in Vermont, with an adult population of 0.5m, on 11 January.
• On 26 February the group announced the departure of CEO Michael Daly. VP Corporate Strategy Pierre Cadena assumed the role of Interim CEO with immediate effect.
• On 5 March the group appointed Manuel Stan as new CEO, effective 1 July 2024.
• The group launched online sports betting affiliation in North Carolina, with an adult population of 8.5m, on 11 March.
   

Significant events after the period

• On 5 April the group announced the appointment of Michael Gerrow as CFO, effective 15 April 2024.

Interim CEO Pierre Cadenas comments

Catena Media is implementing a programme of organisational and leadership changes to confront continued poor performance through Q1 2024. This transition is essential as we continue to target organic revenue growth in the second half of this year.  

Operational outcomes during the period were again unsatisfactory, especially in North American sports. Stronger competition, tightened marketing spending by operators, and challenging comparables with Q1 2023 – when online sports betting went live in Ohio and Massachusetts – combined to push revenue and EBITDA lower.

The legalisation of online sports betting in North Carolina on 11 March came after the Super Bowl but in time for the March Madness college basketball tournament, which provided positive uplift. Despite being in play for less than one third of the period, North Carolina was our strongest performing US state in Q1.

Market headwinds in North American sports

Competitive intensity continued to build in North American sports overall, reflecting the entry of more affiliates into the market. Crimped operator ­marketing budgets again squeezed user traffic and reduced the recruitment of new depositing customers. We nevertheless showed resilience by maintaining stable conversion rates.

In casino, where we are less reliant on operators’ marketing budgets, ­revenue held relatively firmer. Several brand improvement programs are ongoing, including an initiative to overhaul our flagship casino websites, PlayUSA and Bonus.com to improve revenue and long-term value. This process will be completed in Q3 in readiness for an expansion of our casino operations in the latter part of the year. I am pleased to report that we saw the first signs of a turnaround, with quarter-over-quarter growth of 12 percent from our North American casino products.

Products, technology and diversification in focus

Significant internal and strategic changes are being implemented on multiple levels to achieve the turnaround, and these accelerated in Q1. The initiatives have multiple focal points: technology leadership; strategic product development; enhanced operational efficiency; and a new multichannel structure to diversify our product offerings.

In Q1 we made a number of changes to equip the organisation for this leap. We began replacing the existing geography-based operating model, which was geared towards rapid market regulation, with a product-focused operating model, a strategic pivot to enhance our agility and focus on creating high-value, results-oriented products. Key products within our portfolio will be managed as distinct entities, equipped with a clear mission, vision, and brand purpose, all underpinned by detailed financial and operational success metrics to ensure accountability and performance. Fast-response product squads are also being created to address problems as they arise and make sure we respond faster and more decisively to market dynamics than in our recent past.

To prepare for the new chapter in our journey, we strengthened the executive management team with a number of key appointments, including a Chief Technology Officer and a new CEO who will join us on 1 July. We expect to expand the leadership rebuild in the near future with senior appointments for product and commercial roles. I am confident that the new team possesses the experience and acumen to improve operating performance and drive the business forward after several recent disappointing quarters.

Value creation and technical upgrade

Since joining the company as VP Strategy in November last year, I have led the mission to embed the new product-first structure across the organisation. Our close focus on product development is not solely about optimisation; it is also about transforming how we create and deliver value. Social and sweeps casino is a good example. Here we are broadening our products to capitalise on regional synergies across the US as a route to enhancing our visibility and engagement rates. We saw positive initial impacts of this strategy in Q1.

Underpinning all the ongoing initiatives is the introduction of a new technical platform, whose rollout began during the quarter and will be integrated across our global product portfolio in Q2. This will be the first time the group directs all of its monetisation activities through a single, coherent tech architecture. Built for fast scalability, the platform will significantly strengthen our operational robustness and make it easier to centrally deploy, track, and optimise our advertising content across both our core products and new products, such as AI, paid media and sub-affiliation, into which we are expanding.

Building new verticals from the ground up

In AI, our joint venture is progressing at speed. The initial launch of our AI platform took place at one of our sports sites during Q1 and was integrated into a second site post-quarter. We are also developing our sub-affiliation network, bringing previously unreachable traffic sources to our operators, and expect to launch a product by the end of Q2.

In media partnerships, we are looking to expand existing successful deals while also exploring new media avenues. In paid media, we are currently in a pilot phase and are seeing positive results from early campaigns. This vertical is still in its infancy, but we hope to launch a product in Q3 if our efforts proceed according to plan.

Speed to market in these endeavours is important. Equally, it is important to build new verticals methodically and from the ground up. Our esports business is testament to that approach. Having spent several years gradually building traffic and brand authority, this business is today flourishing and generating strong revenue growth and healthy margins. It provides a successful model for how we can take Catena Media forward across different areas as we diversify the business model and position for a multichannel future.

Presentation of Catena Media’s results

Interim CEO Pierre Cadena and CFO Michael Gerrow will present the Q1 2024 report in a combined webcast and teleconference on 7 May 2024 at 09:00 CEST.

Webcast

Via the webcast you are able to ask written questions. If you wish to participate via webcast, please use the following link:
https://ir.financialhearings.com/catena-media-q1-report-2024

Teleconference

Via teleconference you are able to ask questions verbally. If you wish to participate in the call, please register on the link below. After registration you will be provided phone numbers and a conference ID to access the conference:
https://conference.financialhearings.com/teleconference/?id=50048938

The presentation will be available on the website:
https://www.catenamedia.com/investors/financial-reports-and-presentations

Contact details for further information:

Investor Relations
Email: [email protected]

Pierre Cadena, Interim CEO
Email: [email protected]

Michael Gerrow, CFO
Email: [email protected]

This information is information that Catena Media plc is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact persons, on 7 May 2024 at 07:00 CEST.

About Catena Media

Catena Media is a leaderin generating high-value leads for operators of online casino and sports betting platforms. The group’s large portfolio of brands guides users to customer websites and enriches the experience of players worldwide. Headquartered in Malta, the group employs over 250 people globally. The share (CTM) is listed on Nasdaq Stockholm Mid Cap. For further information see catenamedia.com.