SBC News Catena Q3 declines bear deep cuts of North American transformation 

Catena Q3 declines bear deep cuts of North American transformation 

Catena Media has completed its strategic review executing a divestment of legacy media assets generating its business €76m in proceeds, to enable significant debt repayments 

The announcement was declared separately to Catena Q3 trading update, which saw the Stockholm-listed media publisher reveal a 28% decline in Q3 revenues to €16m (Q32022: €22m).

The continued revenue decline reflects the “transition of North American contracts from a Cost Per Acquisition (CPA) to revenue share models”. 

In its principal market of North America, Catena saw a 18% decline in revenues Q3 revenues to €13.3m (Q32022: €28m) as its business transition saw 17% of new depositing customers (NDCs) were recruited under revenue share deals, increasing to 24% in September.

Withstanding headline declines, leadership maintains a strong outlook for North America as “despite this transition and increased competition, the EBITDA margin in North America remained strong at 44%.” 

Period trading saw new depositing customers (NDCs) from continued operations decrease by 34% to 44,986, results which reflect Catena downsizing its media network.

Adjusted EBITDA from these operations fell by 65% to €3m (Q32022: €8.8m), with an EBITDA margin of 18%, inclusive of items affecting comparability. Group cash equivalents stood at €33.5m as of the end of September.

Group CEO Michael Daly commented on Q3 results: “In Q3, we took our first major step to shift some cost-per-acquisition (CPA) contracts to a revenue share model. In the quarter around 17% of our new depositing customers in North America were recruited under revenue share – and more than 24% in September.”

“The rebalancing will secure a more sustainable revenue inflow over time but creates a negative short-term revenue impact as the volume of upfront CPA payments is reduced. This may require a potential review of our financial targets, but we expect the shift to contribute to higher total revenue per new depositing customer.

Corporate declines are witnessed on a year-to-date (YTD) basis as revenue from continuing operations decreased by 16% to €62m, with revenue in North America falling 13% to €55 – representing 88% of the group’s revenue.

YTD new customers dropped by 24% to 186,129, as adjusted EBITDA from continuing operations declined by 34% to €23.7m.

Catena’s balance sheet maintains YTD operating expenses stable at €48m as the group’s net debt stands at €25.5m as of September trading. 

2023 trading reflects Catena Media completing its strategic review, which included the divestment of its legacy media properties, generating total proceeds of €76m. The sum includes €45m from the sale of AskGamblers, €19m from operations in Italy, €6m from the UK and Australia, and €5.2m from various other assets.

Completing its strategic review, group leadership expects a scheduled in-flow of net proceeds of €47m from 2023 to 2025. The proceeds will be reserved to strengthen Catena Media’s balance sheet and enable significant debt repayments. 

Catena maintains its long-term 2025 targets, in which it aims to achieve revenues of  $125m in North America, on a net interest-bearing debt to adjusted EBITDA ratio between 0 and 1.75 times.

CEO Daly signed off on Q3 accounts: “It is 18 months since we announced our strategic review of the business and embarked on a journey that would streamline Catena Media and equip us for the next chapter in our story.

That journey, during which we sold assets for €76m, repaid debt and refocused the organisation, has come full circle. The divestiture of our Italian businesses completed the review process and finalised our strategic reset. 

Today, we stand strong as a lean and robust organisation that is net cash positive and geared to invest in future technologies to drive expansion in our core North American market.

They create a structure that allows Catena Media to respond effectively to market needs and to confront the operating challenges and opportunities we face in North America and beyond.”

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