Catena rebounds in Q4 as strategic review calls for Asian outlook

North America has again proven to be fertile ground for Catena Media in 2022, driving substantial revenue growth for the company that continues a strategic review of its business and media assets. 

Having closed the year with the €45m sale of its AskGamblers division, along with a range of accompanying websites, to Gaming Innovation Group (GiG), Catena updated its investors on all financial results for its ‘continuing operations’.

North American delivering the goods

The media publisher and affiliate group reported total year end revenue of €110.1m (2021: €102.8m) and Q4 revenue of €27.4m (Q4 2021: €23.8m), an increase of 7% and 15% respectively.

Despite achieving headline growth, EBITDA fell by 10% for the ful 12 months to €48.1m (€53.3m), with a margin of 44% (52%), but a rebound in the fourth quarter saw a year-on-year increase of 19% to €12.3m (€10.8m).

The same can be said of adjusted EBITDA, which rose 14% in the final three months of the year from €10.8m in Q4 2021 to €12.3m, but fell by 16% for the full year from €59.5m to €50.1m, with corresponding margins of 45% (45%) and 46% (58%).

Catena has attributed its performance in 2022, particularly the success of the fourth quarter, to major growth in the North American markets, where revenue increased by 31% between October and December to €21.5m (€16.4m).

Activity  in the states of Maryland, Ohio, New York, Louisiana and Kansas and Ontario (Canada) were key growth areas for the firm’s North American unit, which now accounts for 78% of group-wide revenue, up from 69% last year.

Michael Daly, Catena CEO, said: These figures reflected the further expansion of our core North American business, where revenue climbed 31% 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.”

Western growth and Eastern promises

As well as securing state launches and benefiting from the continued growth for US sports betting, Catena also reported steady increases in new depositing customers, which rose by 2% for the full year to 354,050 (345,963) and 1% in Q4 to 84,651 (83,539).

The sale of its AskGamblers brand – comprising two subsidiaries in Malta and Serbia – was initiated in Q4 and completed last month, with proceeds reserved to further streamline its North American profile.

Daly explained that the group’s strategic review had concluded that a trend towards global regulation was also a factor behind the AskGamblers sale, as well as the post-close divestment of Catena’s Financial Trading segment.

“AskGamblers is a solid business with healthy margins,” he said. “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.”

Having closed 2022 with cash and cash equivalents of €24.6m (€27.7m), additional post-Q4 developments saw Catena repurchase 409,193 shares. 

The group has also appointed Carnegie Investment Bank to assist with the continuing assessment of its options and ‘interest from third parties in acquiring certain assets’ – notably, Better Collective acquired a 5% stake in the group last month.

Looking ahead, Daly underscored that the group would continue to invest in markets which offer ‘stable and predictable operating conditions even if they are not yet regulated;, although 90% of group revenue now comes from regulated markets.

One such market Catena actively targets is Japan, which Daly stated has a ‘tolerant approach’ to online casino, although acknowledging the impact of the yen’s weakness and continued emergence of COVID-19 lockdowns on the sector.

The CEO concluded: “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.”