Catena Media plc: Interim Report January – March 2022

Highlights

• All-time high in revenue and earnings, with revenue up 11 percent. Adjusted EBITDA rose by 2 percent, the ninth successive quarterly increase.
• Sports revenue more than doubled in North America after New York and Louisiana legalised online sports betting in January.
• New York became Catena Media’s largest North American market by revenue.
• Organic growth down 9 percent due to continued headwinds in some European markets, the impact of the exceptionally strong Q1 last year, driven by launches in Michigan and Virginia, and the effect of the Lineups and i15 Media acquisitions, which will start contributing organically from May and September 2022, respectively.
• Solid double-digit growth in Asia-Pacific (Japan), although the currency impact of a weaker yen negatively affected revenue in April.   
• Group revenue in April increased by 3 percent, or 7 percent excluding the German sports betting and casino market, compared to April 2021. Revenue in North America rose by 46 percent.
• The launch of legalised online sports betting and casino in Ontario in April was slower than expected due to low initial operator participation. Operator involvement is now increasing, and we expect the market to offer good potential as it develops.
   

January-March 2022 

• Revenue was EUR 45.2m (40.7), an increase of 11 percent.
• Organic growth was -9 percent, or -6 percent excluding the German sports betting and casino market.
• New depositing customers (NDCs) totalled 171,918 (157,546), an increase of 9 percent.
• Revenue in North America increased by 32 percent to EUR 29.5m (22.3), equivalent to 65 percent (55) of group revenue.
• Adjusted EBITDA increased by 2 percent to EUR 25.6m (25.0), corresponding to an adjusted EBITDA margin of 57 percent (61).
• EBITDA, including items affecting comparability of EUR 0.4m (1.7), increased by 8 percent and totalled EUR 25.2m (23.3), equal to an EBITDA margin of 56 percent (57).
• Earnings per share were EUR 0.28 (0.26) before dilution and EUR 0.19 (0.17) after dilution.
• Cash and cash equivalents totalled EUR 26.7m (37.5) on 31 March.
• Catena Media repurchased 1,353,000 of its ordinary shares for EUR 5.8m and held 4.8% of all total outstanding shares on 31 March.
• The number of all outstanding shares was 76,315,268 and the number of all outstanding warrants was 33,776,604 on 31 March.
   

Significant events after the period

• The Canadian province of Ontario launched online sports betting in April 2022.
• From 1 April 2022 to 14 April 2022, the company repurchased a further 620,000 of its ordinary shares for EUR 2.8m under its share buyback programme. As of 14 April 2022, the company owned 4,295,510 or 5.6 percent, of its ordinary shares.
• In April, total revenue increased by 3 percent, or 7 percent excluding the German sports betting and casino market, compared to April 2021. Revenue from North American sports betting and casino rose by 46 percent.

CEO Michael Daly’s comments

I am pleased to report another quarter of record-breaking performance at Catena Media. Revenue rose for the sixth consecutive quarter to reach an all-time high of 45.2m, an increase of 11 percent on an exceedingly strong quarter last year. Adjusted EBITDA also hit a new record peak for the ninth successive quarter, advancing 2 percent to 25.6m despite the significant costs we have incurred under our investment programme to unlock future growth potential.

Globally, the prime focus was on North America and the opening of legalised online sports betting in Louisiana and New York in January. We made strong headway in both states, with New York in particular exceeding expectations on the back of the highest advertising spend for a US state launch and buoyant cost per acquisition (CPA) rates. New York is now our largest North American market. Our two acquisitions from last year, Lineups.com and i15 Media, did an excellent job in bolstering our market positioning there and in Louisiana. They are contributing according to plan, and their strategic input and market knowledge now constitute a major asset for the group.

Super Bowl generated a strong revenue inflow, with established states including the large Pennsylvania market generating solid growth in bettor traffic in parallel to the surge from newly regulated states. This uplift illustrated the advantages of our CPA-based revenue model in North America. The pool of potential sports bettors is ever-changing, and opportunities exist to recruit new players in sports betting markets even multiple years after launch. Underscoring the possibilities on offer in established markets was Illinois, where quarterly revenue tripled after regulators in March lifted Covid-19 restrictions requiring in-person registration for sports betting.

The launch of regulated online casino and sports betting in Ontario in April, just after the end of the quarter, proved unspectacular as restrictions on advertising by operators suppressed initial activity. As a result, we launched with only a handful of operators in place, though this number has since risen as more operators have entered the arena. I am confident in our market position and see Ontario as a long-term relationship for Catena Media – both in terms of the market itself and our relations with operators. We anticipate stronger revenue inflow as the year unfolds, especially in conjunction with the NFL season start in September.

Casino revenue in North America was lower in Q1 compared to the same period last year, but this was to be expected due to the unwinding of Covid-19 lockdowns and the one-off impact of the Michigan launch in Q1 2021. Our casino operations in Asia-Pacific showed healthy revenue growth, despite the impact of continuing strict Covid-related health measures in Japan. These affected our ability to conduct the recruitment we seek in this dynamic market and constrained our pace of growth somewhat. Nevertheless, we remain firmly optimistic about our ability to capture the growth opportunities we see ahead. We continued during Q1 to implement new, innovative solutions and launched new video channels tailored to driving user traffic and gaining added traction.

The picture was more nuanced in Europe, where our UK sports betting business was boosted by a strong Cheltenham horse racing festival, but revenue overall fell slightly due to a reduction in revenue share stemming from lower operator margins. In Germany, online casino and sports betting revenue remained in the doldrums due to a very slow rebound post-regulation. Both the German and Dutch markets continue to host few licensed operators nine and six months, respectively, after regulation. The German business now accounts for just 3 percent of group revenue, but has the potential to be a revenue driver for Catena Media once the fundamentals for operators and affiliates improve.

Performance in Italian casino and sports betting remained solid, in spite of some pullback in player spend – a trend noted in several other European markets. This is likely a response to factors including the increasingly challenging economic climate and the uncertainty generated by the war in Ukraine. The combined impact of the current spike in energy prices, inflation running at a level not seen for 30 years, and rising interest rates is difficult to measure but would be expected to affect entertainment spending over time. The implications for our business are difficult to forecast, but we continue to watch developments closely and stand ready to tailor our investment spend to market realities and the prevailing conditions in our key markets.

AskGamblers, our flagship global casino brand, set a monthly revenue record in March but saw a moderate decline in revenue for the period. This remains a robust, high-margin business where we expect ongoing product development investments will deliver positive revenue benefits towards year-end.

We continued to invest substantial sums in growth-oriented projects across the group, with particular emphasis on our fastest-growing markets – North America, Asia-Pacific and Latin America. Operationally, we increased our internal focus on supporting Brazil and our other Latin American countries more actively as these markets develop, even though it will take some years before they evolve into a major revenue centre for the group.

After our solid start to 2022 we are well positioned for a busy year ahead and to keep delivering on our financial targets. We are investing strongly in personnel to prepare for future market launches and growth. Our people-focused culture and innovative strength equip us to continue capturing the outstanding opportunity in North America while remaining adaptable and responsive to market conditions at global level.

Presentation of Catena Media’s first quarter results

A combined audiocast and phone conference with the opportunity to ask questions will be held at 09:00 CEST
today, at which CEO Michael Daly and Group CFO Peter Messner will present the report.

The presentation audiocast will be accessible via the following link:
https://tv.streamfabriken.com/catena-media-q1-2022

The presentation will also be available on the company’s website:
https://www.catenamedia.com/investors/reports/quarterly

To participate via telephone, please call any of the following numbers:

SE: +46 850 558 368
UK: +44 333 300 9 272
US: +1 646 722 490 2
 

Contact details for further information:

Michael Daly, CEO
E-mail: [email protected]

Peter Messner, Group CFO
Phone: +46 768 95 26 93, E-mail: [email protected]

Investor Relations
E-mail: [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 18 May 2022 at 07:00 CEST.

About Catena Media

Catena Media is a global leader in generating high-value leads for operators in online casino, sports betting and financial trading. The group’s large portfolio of web-based affiliation brands guides online users to customer websites and enriches the experience of players worldwide. Headquartered in Malta, the group employs over 450 people in Europe, North America, Asia-Pacific and Oceania. The share (CTM) is listed on Nasdaq Stockholm Mid Cap. For further information see catenamedia.com.