Catena to redouble Americas push as strategic review nears completion

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An ongoing strategic review, undertaken to fund a maintained Americas push, is nearing completion at Catena Media, with this aforementioned region again bringing much optimism following the third quarter.

With restructuring measures slashing the firm’s European headcount by more than 25 per cent at a €5.5m per annum saving, Michael Daly, CEO, also noted that “certain grey-market assets” had also been offloaded as part of a wider restructuring effort. 

This, it is reiterated, is intended to transition Catena into an organisation “focused on the Americas and other regulated and stable markets”.

In August the company first touched upon potential divestments to raise funds for M&A activities in North and Latin America, with Daly providing an update in a Q3 CEO statement.

“The strategic review is nearing completion at the time of writing. Certain assets are currently in a divestment phase,” he stated. 

“Amid significant interest from multiple parties, this process is being managed by an external adviser and is approaching a conclusion. I look forward to making a fuller announcement in the near future. 

“The measures being taken, and to be taken, as part of the strategic review are optimising the business to capitalise on the growth of online sports betting and casino in North America, where a wave of regulation continues to open new markets to licensed operators and create exciting openings for Catena Media. 

“The reorganisation inevitably consumed a great deal of operational energy during the period”

“Other future opportunities include Latin America and esports, both of which offer high potential for profitable growth over the longer term.”

Despite voicing much optimism about the group’s future performance, third quarter revenue dropped two percentage points to €32.27m (2021: €33m), with organic growth at negative four per cent, or one per cent lower when excluding the German online sports betting and igaming arena. 

Adjusted EBITDA fell 29 per cent to €11.65m (2021: €16.4m), with new depositing customers closing the three month period at 116,746, down 24 per cent year-on-year from 153,701.

“For the group, revenue decreased slightly and the EBITDA margin narrowed,” Daly continued. 

“I am nevertheless encouraged by our overall performance given macroeconomic challenges in multiple markets, our heavy growth-oriented investments in North America, and considering the internal engagement that the ongoing strategic review demanded from the business throughout the period.”

In Europe, where Catena noted “the current high-inflation environment is most pronounced and the squeeze on player spending is most acute,” a scaling back of operations has been undertaken.

This has seen a focus placed upon “a smaller core of strategic high-margin brands” that are said to primarily be across regulated online sportsbook markets, and casino to a lesser extent, that it is hoped will deliver stable near-term growth potential in the UK and Italy. 

“The reorganisation inevitably consumed a great deal of operational energy during the period, so I was especially pleased to see positive signs in Q3 from the new European core, led by solid growth in our Italian online sports betting business,” Daly said.

“This ongoing commitment positions us to take full advantage of forthcoming launches”

“I look forward to developing our high-performance Italian and UK assets as we move ahead.”

In North America, revenue increased 11 per cent to close Q3 at €18.63m (2021: €16.82m), boosted by launches across New York, Louisiana and Ontario earlier in the year and Connecticut in Q4 2021.

Looking ahead, Catena has detailed that “we have advanced plans in place” regarding Ohio, Maryland and Massachusetts, the former of which is slated to commence legalised online sports betting at the turn of the new year. 

“In North America, the Kansas launch in September coincided with a successful start to the new NFL season and met our expectations for player engagement,” the Catena CEO noted.

“Credit for this goes to our North American team, in which we have invested heavily both in terms of personnel and technology. This ongoing commitment positions us to take full advantage of forthcoming launches and will also provide a springboard to grow in our established markets.”

On a segmented basis, casino revenue dropped 10 per cent to €17.9 (2021: €19.89m), with AEBITDA down 30 percentage points from 2021’s €11.56m to €8.13m. The division occupied 56 per cent of total revenue.

Despite double digital growth across North America, Catena reported headwinds in New jersey, a second successive drop in Japan and continued struggles in Europe headlined by the aforementioned German challenges

Sports revenue grew 13 per cent €14m (2021: €12.43m) but AEBITDA dropped 21 per cent to €3.82m (2021: €4.83m).

“We continue to build for the future, and do so from a position of unprecedented strength”

North America tracked a six per cent revenue uptick through the reporting period, however, regulatory uncertainty and an economic slowdown dampened player engagement and operator spending across Europe.

The group’s financial trading division saw revenue decline 51 per cent to €367m (2021: €749m), with AEBITDA swinging to a loss of €308m from an income on €7m one year earlier.

“Once the strategic review is behind us, I look forward to the organisation redoubling its focus on the highly promising Latin American market. 

“I fully expect that we will soon begin to see this dynamic region take on a significant role in our Americas story. Another exciting area is esports, where our Esports.net brand reported exceedingly rapid user growth in Q3 and where I see rich opportunities ahead. 

“We continue to build for the future, and do so from a position of unprecedented strength. Our low debt, strong cash flow, organic search know-how and lean organisation make Catena Media uniquely placed to set the pace in lead generation for online sports betting and casino – in North America and beyond.