Catena Media plc Year-end Report January – December 2022

Highlights

• Revenue increased by 31 percent in North America in Q4, led by the launch of licensed online sports betting in Maryland. Total group revenue from continuing operations rose 15 percent.
• The strategic review concluded with the sale of AskGamblers and related brands for EUR 45 million, streamlining the business to focus on high-growth and regulated markets in North America.
• Ninety percent of group revenue now derives from regulated markets, reflecting the group’s commitment to compliance.
• In January, revenue from North America rose 19 percent when excluding the exceptional 2022 launches in New York and Louisiana and the 2023 Ohio launch. In total, group revenue from continuing operations decreased by 4 percent, an expected outcome after the record launches last year when North American revenue increased by almost 65 percent from January 2021.
• The Financial Trading segment was divested at the end of January.
   

October–December 2022

• Revenue from continuing operations was EUR 27.4m (23.8), an increase of 15 percent.
• Revenue in North America increased by 31 percent to EUR 21.5m (16.4), equivalent to 78 percent (69) of group revenue.
• Organic growth was 15 percent.
• New depositing customers (NDCs) totalled 84,651 (83,539), an increase of 1 percent.
• Adjusted EBITDA from continuing operations increased by 14 percent to EUR 12.3m (10.8), corresponding to an adjusted EBITDA margin of 45 percent (45).
• EBITDA from continuing operations, including items affecting comparability of EUR -0.5m (0.5), totalled EUR 12.8m (10.3) corresponding to an EBITDA margin of 47 percent (43).
• Earnings per share from continuing operations totalled EUR 0.04 (0.06) before dilution and EUR 0.03 (0.04) after dilution.
• Cash and cash equivalents were EUR 24.6m (27.7) on 31 December.
• Outstanding shares totalled 76,330,859 and outstanding warrants totalled 33,761,013 on 31 December. On 1 February 2023 the company cancelled 4,295,510 ordinary shares, bringing the number of outstanding shares to 72,035,349.

January–December 2022

• Revenue from continuing operations was EUR 110.1m (102.8), an increase of 7 percent.
• Revenue in North America increased by 24 percent to EUR 84.5m (67.9), equivalent to 77 percent (66) of group revenue.
• Organic growth was -4 percent.
• New depositing customers (NDCs) totalled 354,050 (345,963), an increase of 2 percent.
• Adjusted EBITDA from continuing operations decreased by 16 percent to EUR 50.1m (59.5), corresponding to an adjusted EBITDA margin of 46 percent (58).
• EBITDA from continuing operations, including items affecting comparability of EUR 2.1m (6.2), decreased by 10 percent to EUR 48.1m (53.3) corresponding to an EBITDA margin of 44 percent (52).
• Earnings per share from continuing operations were EUR 0.35 (-0.19) before dilution and EUR 0.24 (-0.13) after dilution.
• Cash and cash equivalents totalled EUR 24.6m (27.7) on 31 December.
• Catena Media repurchased 1,973,000 of its ordinary shares for EUR 8.6m and held 5.6 percent of all total outstanding shares on 31 December.
• Outstanding shares totalled 76,330,859 and the number of outstanding warrants was 33,761,013 on 31 December. On 1 February 2023 the company cancelled 4,295,510 ordinary shares, bringing the number of outstanding shares to 72,035,349.

Significant events during Q4 2022

• On 15 December the group agreed to sell its AskGamblers business and associated global casino brands for EUR 45 million on a cash- and debt-free basis. The transaction, completed on 31 January 2023, was for the sale of two wholly owned subsidiaries in Malta and Serbia.
• The group successfully launched online sports betting affiliation in Maryland in November 2022.
   

Significant events after the period

• In January 2023 the group appointed Carnegie Investment Bank as financial adviser to assist in assessing the company’s strategic options amid interest from third parties in acquiring certain assets, including all the remaining assets of the group.
• In January the group repurchased 409,193 of its ordinary shares.
• On 1 February the company cancelled 4,295,510 ordinary shares. Catena Media now holds 409,193 of its own ordinary shares, representing 0.01 percent of the outstanding shares.
• The start of licensed online sports betting in Ohio on 1 January delivered Catena Media’s strongest ever initial launch period for a state sportsbook opening.
• In January, revenue from North America rose 19 percent when excluding the exceptional 2022 launches in New York and Louisiana and the 2023 Ohio launch. In total, group revenue from continuing operations decreased by 4 percent, an expected outcome after the record launches last year when North American revenue increased by almost 65 percent from January 2021.
• On 8 February the company announced the departure of CFO Peter Messner.

CEO Michael Daly’s comments

The final quarter of 2022 was strong for Catena Media as we recorded a 15 percent increase in revenue to EUR 27.4m, along with growth of 14 percent in adjusted EBITDA from continuing operations. These figures reflected the further expansion of our core North American business, where revenue climbed 31 percent on the back of robust performance in Maryland, which legalised licensed online sports betting in November, a strong World Cup, and contributions from recently opened markets in New York, Louisiana, Ontario and Kansas. We also profited from a favourable run-up period prior to the launch of legal sports betting in Ohio on 1 January 2023.

The timing of the Maryland launch on Thanksgiving proved beneficial as the holiday traditionally coincides with a strong NFL schedule. Our teams made sure we hit the ground running for the player pre-registration phase as well as the go-live. Today, we have in place a well-oiled launch model with the agility and acumen to capitalise fully on legalisation processes, drawing on our experiences from multiple state openings in the last three years in North America.

The model was replicated in Ohio, where it delivered our most successful ever initial sports betting launch phase, outshining the high-value New York opening in January 2022. New market launches in North America are always hard to predict with precision due to the complexities of the regulation process and the political factors that are involved. Massachusetts is scheduled to legalise in March, while Vermont and Maine have also been suggested as potential candidates for legalised sports betting later in the year. Beyond these, we see no firm indications from new states regarding online sportsbook or casino launches in 2023. That being said, past experience suggests that the status quo can change quickly once a regulation process moves forward.

A prime challenge is to ensure organic growth in existing state and provincial markets. We aim to achieve this by building on our excellence in online search positioning and by exploring new verticals such as media partnerships. In Q4 we saw initial positive impacts from our first large such partnership in North America, an agreement with the US media company Advance Local under which we provide online sports betting and casino content to the NJ.com news website.

North America accounted for 78 percent of our revenue from continuing operations in Q4. Fully exploiting the high-margin opportunities on offer in this market will be our core operational focus going forward. The shift towards regulation in online sports betting and casino continues to gain momentum globally – and nowhere more so than in North America, where five new states and provinces legalised online sports betting in 2022, while Ontario also opened for online casino.

We believe that regulated markets provide a more protectable and predictable environment for operators and for affiliates like Catena Media. Regulation also levels the playing field for all market players, and we welcome this positive force in our industry. As a remote-first, global organisation we possess the ability to invest flexibly into newly regulated markets in different regions once they can offer stable and foreseeable operating frameworks for affiliate marketing. At present, those opportunities are concentrated in North America and it is our firm belief that the United States and Canada offer the best investment case for the company and its shareholders in current conditions.

This, essentially, is the rationale behind the streamlined strategic focus that developed out of the strategic review announced in May 2022. The review process concluded in Q4 with the sale of AskGamblers and associated global casino brands to Gaming Innovation Group (GiG) for EUR 45m. 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.

The divestment of our Financial Trading segment via a management buyout at the end of January 2023 fits the same pattern. 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. Over time, we ceased to have the bandwidth or parameters to maximise the business’s potential under our ownership. It is with hope and expectation that we wish the Financial Trading team well in their endeavour.

Some 90 percent 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. In Q4, the historic weakness of the yen and the country’s continued emergence from Covid-19 lockdowns contributed to lower year-on-year revenue from casino gaming in Japan. I nevertheless remain firmly optimistic about the future growth opportunity. In Q4 we strengthened the Japanese organisation and invested further in technological expertise to ensure we are well equipped to deliver strong and sustainable financial performance via our Japanese brands. I fully expect these measures to bear fruit over time.

In conclusion, I would like to express my appreciation for the efforts of all our employees throughout 2022. Their ability to remain focused on the business despite the sometimes significant distraction of organisational change impressed me greatly and I warmly thank each and every one for their valuable contributions.
 

Presentation of Catena Media’s results

CEO Michael Daly and Group CFO Peter Messner will present the Q4 2022 report in a combined audiocast and telephone conference on 22 February 2023 at 09:00 CET.

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-q4-2022

Teleconference

Via teleconference you are able to ask questions verbally. If you wish to participate via teleconference, 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=5007225

The presentation will be available on the website:

https://www.catenamedia.com/investors/reports/quarterly
 

Contact details for further information:

Investor Relations
Email: [email protected]

Michael Daly, CEO
Email: [email protected]

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

The information was submitted for publication, through the agency of the contact persons, on 22 February 2023 at 07:00 CET.
 

About Catena Media

Catena Media is a global leader in generating high-value leads for operators of online sports betting and casino platforms. 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.