SBC News Catena targets North America as Europe poses challenges in Q1 earnings

Catena targets North America as Europe poses challenges in Q1 earnings

Catena Media has detailed a ‘solid quarter’ across during Q1 2022, as the group’s revenues increased by 11% year-on-year, driven by continued expansion in North America. 

Updating investors, the gambling affiliate and media publishing group announced revenue of €45.2 million (2020: €40.7m), whilst EBITDA rose by 2% to €25.6 million (€20m), albeit with a decreased margin of 57% (61%).

Revenue was driven by a strong international performance, with North America highlighted in particular, whilst the number of new depositing customers grew to 171,918, a 9% increase on the Q1 2021 figure of 157,546.

A unit breakdown saw sports betting increase by 77% to €25.5 million (€14.4m), accounting for 56% of operational group revenue, with adjusted EBITDA for this segment growing by 127% to €15.5 million (€6.8m). 

This was particularly bolstered by the Cheltenham Festival in the UK and Super Bowl in the US, although sports wagering revenues in Italy and Germany, due to the ‘post-COVID normalisation of betting patterns’ and impacts of market re-regulation respectively.

Despite the success of Cheltenham, the group’s UK revenue was affected by an unusually higher number of favourite victories at the festival as well as ‘lower revenue share stemming from tighter operator margins’.

Meanwhile, global casino takings declined to €19.9 million, (€25.2m), a drop of 25%, alongside a 44% fall in EBITDA to €10 million (€17.8m) – a margin of 53% – to account for a total of 42% of group revenue. 

Geographically, Europe continued to pose some challenges for the company, with organic growth falling by 9%, with the German sports betting and casino market a key factor in this. 

Germany now accounts for just 3% of Catena’s group-wide revenue, and CEO Michael Daly described the firm operations in the country as ‘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,” Daly added. 

“The German business now accounts for just 3% of group revenue, but has the potential to be a revenue driver for Catena Media once the fundamentals for operators and affiliates improve.”

Despite difficulties in Germany and the Netherlands, the group maintained that performance in Italy was ‘solid’ despite ‘some pullback in player spend’ – something encountered in other European markets, attributed by Catena to a challenging economic climate.

North America, on the other hand, was Catena’s cash cow over the past three months – revenue from the continent rose by 32% to account for 65% of group revenue (55%), or (€29.5 million ((€22.3m).

The group was particularly bolstered by the opening of New York state in January 2021 – now the largest North American market for the company – as well as the acquisitions of and i15 Media which bolstered its position in Louisiana. 

Other states highlighted as having strong potential by Catena include Illinois and Pennsylvania, although its casino revenue across the continent also faltered due to COVID-19 factors. 

However, moving forward, the group anticipates further difficulties due to economic and political factors, such as the war in Ukraine and rises in energy prices, particularly in Europe. 

Daly explained: “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.”

Maintaining its focus, Catena plans to invest ‘substantial sums in growth-oriented products across the group’, focusing on North America, the Asia-Pacific region and Latin America, which it has identified as the fastest growing. 

Although the group’s launch in the regulated Ontario market after Q1 proved to be ‘unspectacular’ for the company, Daly stated that he is ‘confident in our market position’ in North America and atticates strong revenue after the NFL season commences in September. 

The CEO concluded: “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.”

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