Catena Media has reported a decrease in revenue during the first quarter of 2024, with North America revenue and new depositing customers falling by a considerable amount.
In reaction to the poor performance, interim CEO Pierre Cadenas stated that the company’s organisational and leadership changes will help achieve organic growth in the second half of the year, as Manuel Stan will step into the role of permanent CEO from July.
North America declines
Publishing its Q1 results, Catena declared revenue from continuing operations in the quarter of €16m, down 49 per cent year-over-year (Q1 2023: €31.5m).
North America revenue, which makes up 90 per cent of the company’s total revenue from continuing operations during the period, was again affected by market headwinds, dropping by 50 per cent YoY to €14.3m (2023: €28.9m).
Catena cited challenging comparatives, competition intensity and operator marketing budget in sports betting, as well as ongoing brand improvement programs for casino, as the reasons for the dip in North America revenue.
Across the quarter, 86 per cent of the total revenue came from cost-per-acquisition agreements, followed by revenue share at 12 per cent and fixed at two per cent.
NDCs from continuing operations declined by 41 per cent YoY to 44,077 (2023: 74,186) during Q1. 81 per cent of NDCs came from CPA deals, while 19 per cent came from revenue share agreements.
Adjusted EBITDA from continuing operations for the quarter decreased by 90 per cent YoY to €1.9m (2023: €18.7m) with a margin of 12 per cent (2023: 59 per cent margin). EBITDA from continuing operations, including items affecting comparability of €1m, totalled €909,000 (2023: €17.9m), corresponding to a margin of six per cent (2023: 57 per cent).
Earnings per share from continuing operations totalled minus €0.03 (2023: €0.15) before dilution and minus €0.03 (2023: €0.11) after dilution.
As of March 31, cash and cash equivalents were €23.4m (2023: €52.4m), outstanding shares totalled 78,773,422 and outstanding warrants were 27,022,940.
Notably during the quarter, Catena replaced its CEO, with Michael Daly departing in February and Manuel Stan announced as his successor in March. However, Stan won’t begin the role until later this year on July 1.
In the meantime, VP of Corporate Strategy Pierre Cadena has assumed the role of interim CEO.
Cadena said: “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 March 11 came after the Super Bowl but in time for the March Madness college basketball tournament, which provided a positive uplift. Despite being in play for less than one-third of the period, North Carolina was our strongest performing US state in Q1.”
Casino and sports revenue drop
Casino revenue fell by 20 per cent YoY €9.9m (2023: €12.4m), a 62 per cent share of the company’s total Q1 revenue. NDCs for the vertical were down eight per cent to 19,751 (2023: 21,558) and adjusted EBITDA down 50 per cent to €3.8m (2023: €7.6m) with a margin of 38 per cent (2023: 61 per cent).
The previously mentioned ongoing brand improvement programs impacted North America’s casino revenue. Still, Catena did note that the first sign of returns was occurring from US flagship sites Bonus.com and PlayUSA.com and growth in future quarters is expected.
Japan’s casino revenue was lower with the ongoing recovery of CasinoOnline.jp following an overhaul at the end of last year, with initial signs of a revenue rebound at the end of Q1. Meanwhile, Slotsia doubled its revenue and became its largest Japanese brand.
Sports revenue dropped by 68 per cent YoY during the quarter to €6.1m (2023: €19.2m), a 38 per cent share of Catena’s total Q1 revenue. NDCs for the vertical decreased by 54 per cent to 24,326 (2023: 52,628), while adjusted EBITDA fell by 117 per cent to a €1.9m loss (2023: €11.1m) with a margin of minus 31 per cent (2023: 58 per cent).
Despite the launch of an online sports betting affiliation in North Carolina during the period, North America revenue for sports was impacted by a “weaker operational performance and a lacklustre Super Bowl”, as well as strong yearly comparatives as Ohio and Massachusetts launched in Q1 2023.
Catena highlighted the operating environment as being a challenge in North America due to “stiff competition and a continued operator squeeze on affiliation marketing budgets, which has eroded CPA rates”.
As previously mentioned during its Q4 results, Catena is continuing in its development of technical and data-based capabilities such as AI. The group expects organic growth in the second half of 2024, with full-year adjusted EBITDA in the range of €20m to €30m.
The company noted that cost optimisation measures will “ensure continued high profitability”, with a solid financial position enabling “focused debt reduction and strategic investments” as it continues to transition from a CPA revenue model to more revenue share agreements for a “higher and more sustainable revenue inflow”.
Cadena stated: “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.”
