Interim report January – March 2021
May 19th, 2021 07:00 CEST
Catena Media plc (Nasdaq Stockholm: CTM)
January – March 2021
- Operating revenue was EUR 40.7m (26.7), an increase of 53 percent.
- Organic search revenue increased by 61 percent and totalled EUR 38.4m (23.9).
- Adjusted EBITDA increased by 94 percent and totalled EUR 25.1m (12.9), corresponding to an adjusted EBITDA margin of 62 percent (48).
- EBITDA, including items affecting comparability of EUR 1.8m (0.4), increased by 87 percent and totalled EUR 23.3m (12.5), equal to an EBITDA margin of 57 percent (47). Out of the EUR 1.8m items affecting comparability, EUR 1.7m related to restructuring.
- Earnings per share were EUR 0.26 (0.15) before dilution and EUR 0.17 (0.15) after dilution.
- Operating cash flow increased by 85 percent to EUR 20.8m (11.2).
- Cash and cash equivalents totalled EUR 37.5m (19.3) on 31 March.
- Net interest-bearing liabilities (NIBL) were EUR 40.8m (143.2) on 31 March, resulting in a leverage ratio (NIBL/adjusted EBITDA) of 0.64 (3.17).
- New depositing customers (NDCs) totalled 157,546 (119,529), an increase of 32 percent.
- Revenue from iGaming operations in the US rose by more than 200 percent to EUR 22.4m, equivalent to 55% of total Q1 revenue.
- Göran Blomberg was appointed Interim CEO, effective 7 January 2021.
- Michael Daly was appointed group CEO, effective 1 March 2021.
Significant events after the period
- On 9 April 2021, Catena Media published preliminary earnings for the first quarter, ahead of the Q1 report, due to exceptionally strong performance.
- On 4 May 2021 Catena Media acquired Lineups.com, a leading US online sports affiliation company specialising in analytics, betting predictions and tools.
- The company announced on 5 May 2021 it would explore financing alternatives to replace an existing EUR 88.5m bond loan, which matures in March 2022.
- The annual general meeting was held on 12 May 2021.
- The board will hold an extraordinary general meeting on 14 July 2021 for shareholders to take a fresh vote on the extraordinary resolution to authorise a share buyback program. The underlying purpose is flexibility regarding a more efficient capital usage. The intention is to commence share buybacks during the second half of 2021.
- In April, organic revenue grew 15 percent, or 24 percent excluding Germany, compared to average monthly revenue in Q2 2020.
“Our excellent performance reflects a solid focus on driving our global portfolio of affiliation brands. Revenue growth in North America was exceptional, supported by the successful launch of operations in Michigan and Virginia.”
Michael Daly, CEO
Record performance led by US strength and progress in key global markets
I am pleased to report a very strong start to the year by Catena Media. Revenue and earnings reached all-time quarterly highs thanks to exceptional performance in North America and solid gains in other parts of the business. This robust showing provides a springboard to achieve revenue gains during 2021 well above our target of double-digit organic growth.
The excellent performance reflects our teams’ focus on driving our global portfolio of affiliation brands. Special credit goes to North America, where year-on-year revenue jumped more than 200 percent, supported by the successful launch of operations in Michigan and Virginia during January. Several other US states are moving towards opening their markets and we see potential for one or more of these to go live later this year. Likewise, the Canadian market is opening up and Ontario is projected to come online later this year or at the start of 2022. Our strategic preparations and financial strength pre-position us for multiple new market launches and we are fully ready to act as soon as they come on stream.
Going forward, our North American business will benefit substantially from the addition of Lineups.com, which we acquired on 4 May. Lineups, whose Q1 sales accounted for about 10 percent of Catena Media’s Q1 revenue, has an estimated EBITDA margin exceeding 70 percent and provides a valuable alternative channel through which to address the US sports betting audience and further build market share. The purchase also demonstrates our readiness to pursue selective mergers and acquisitions that offer a good strategic fit for Catena Media. The successful refinancing carried out in the last year and the efforts of our internal teams have significantly reduced group net debt. Combined with strong cash generation across the business, this positions us to conduct additional M&A where we see scope for adding true value to the business.
Outside North America, we face an ongoing headwind in Germany due to regulatory issues. As the German market re-regulates in the second half of 2021 we see opportunities to turn the corner and build revenue again. Elsewhere in Europe, the UK market held steady, while performance in Italy was exceptionally strong. Overall, we are well placed to capitalise on the start of the European summer sports season in Q2 and the planned UEFA European Football Championship.
Asia-Pacific and Japan continued to exceed our expectations in Q1. Though still a small part of the Catena portfolio, these markets are expected to grow significantly in the coming years as they regulate and, in the case of Japan especially, adopt land-based casinos that drive increased online betting and gaming activity.
In Q1 we continued to see reduced volatility arising from the COVID-19 pandemic and we are optimistic that the worst of the impact on sports betting and iGaming is now behind us. Nevertheless, the risk of resurgence in Europe and elsewhere continues to temper our expectations somewhat.
In sports betting, we are truly developing the full reach of a global organisation, with North America now rivalling Europe in size. A broader international presence reduces our sensitivity to regional cycles in sports calendars, creating more consistent and predictable revenue flows over time.
By contrast, casino affiliation is a year-round product in all markets. Each market that opens up strengthens us financially, and we were pleased in the US to commence casino operations in Michigan during the quarter alongside our existing casino activities in Pennsylvania, New Jersey and West Virginia. AskGamblers.com continues to be an exceptionally strong casino product in Europe and shows steady growth in new markets including Japan. The AskGamblers complaints service returned a record sum to users, underlining our commitment to responsible and fair gaming. As a digital platform, Catena Media has a relatively small environmental footprint, and we continue to focus our sustainability efforts on social responsibility and governance.
Our Financial Trading segment, albeit small in size, performed well during the quarter amid growing interest in crypto-related trading and increased revenue from conversions and fixed fees.
From an internal perspective, we continue to optimise our ability to maximise growth through onward expansion in our North America while also making inroads into frontier markets in Latin America, Asia and Africa. Change can easily disrupt an organisation, so I was especially cheered to see our teams deliver an exceptional performance in Q1 in spite of transformation-related distractions. The results of the transformation will start to be seen in Q2 when the process completes its initial phase. By the end of the year I expect to see more fruits of our labour and that certain products we believe are underperforming will have turned the corner and be heading in the right direction.
The second quarter of 2021 has begun well, with organic revenue growth in April of 15 percent, or 24 percent excluding Germany, compared to average monthly revenue in Q2 last year. Q2 was our strongest quarter in 2020 due to high online casino demand in the US. We still have a way to go to realise our full potential, but the outlook is bright and I see clear promise for a prolonged upward trajectory for Catena Media in the next five to ten years and beyond.
On a personal note, my sincere thanks to the team for their hard work and efforts. In these first months as CEO, I have been extremely happy with everyone’s efforts to double down on Catena Media and help us grow and take the big win.
Michael Daly, CEO
For further information, please contact:
Michael Daly, CEO
Phone: +1 702 300 6720, E-mail: [email protected]
Peter Messner, Group CFO
Phone: +46 768 95 26 93, E-mail: [email protected]
E-mail: [email protected]
The information was submitted for publication, through the agency of the contact persons set out above, on 19 May 2020 at 7.00 AM CEST.
About Catena Media
Catena Media has a leading position within online lead generation. The company has about 400 employees in the US, Australia, Japan, Serbia, the UK, Sweden, Italy and Malta (HQ). The company is listed on Nasdaq Stockholm. Further information is available at www.catenamedia.com.
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