Catena Media maintains North America market leader aims despite stuttering 2023 start
Affiliate holds confidence in its long-term growth targets as it confirms strategic review into potential US listing or sale of business ongoing
Catena Media has stressed it will continue to work closely with Carnegie Investment Bank regarding a potential US listing or sale of the company amid a tough start to 2023.
The affiliate engaged the investment firm following the December 2022 sale of its AskGamblers brand to Gaming Innovation Group for €45m and made the appointment to help explore viable options for the firm’s future.
Catena Media is fully focused on realising the opportunity in the US, with funding being allocated to the division following the sale of AskGamblers and a restructure in its European operations.
Michael Daly, Catena Media CEO, said : “In January, we engaged Carnegie Investment Bank to advise on exploratory discussions concerning strategic options for the group, including a potential sale of all remaining assets.
“North America represents a highly attractive opportunity for sustainable long-term growth, and Catena Media is well positioned to be a leading affiliate in that market.”
However, Catena noted that discussion regarding a potential sale of the business have “yet to produce an adequate valuation of the group’s expected future performance and cash flows.”
Daly’s comments come as he noted the affiliate had a “satisfactory start to the year”, despite a number of areas in which the business experienced difficulties
Group revenue from continuing operations in the opening quarter fell 5% to €35m (£30.5m), with the North American division dropping by 2% to €28.9m.
Revenue including discounted operations plummeted 205% from €45.2m to €36.2m.
In North America, Catena noted the decline in revenue was due to “challenging comparatives from the record New York launch in January 2022” and the go-live in Louisana in the same quarter.
There were nonetheless positives in the US for Catena, with the affiliate highlighting the launch of online sports betting in Ohio and Massachusetts at the start of the year.
On the US performance, Daly said: “The dedicated efforts of our North American team to maximise the advantageous timing just ahead of the February Super Bowl led to one of our best-ever launches, albeit some way behind New York in gross revenue terms.
“We were also pleased to welcome Massachusetts as an online sportsbook state ahead of the March Madness basketball tournament.”
Moving forward in the US, Daly added: “Looking ahead, we foresee that the flow of new state launches in North America will slow for the remainder of this year and likely also in 2024 as the US federal election cycle kicks in.
“Forthcoming elections tend to create a hiatus in gambling-related legislation, and 2023 appears to fit that pattern. So far, Kentucky is the only US state that has confirmed plans to legalise online sports betting this year.”
In Europe, the firm pointed to gains across its Italian casino and sports betting arms, as well as a positive performance around the Cheltenham Festival in March.
At a vertical level, the group’s casino arm saw revenue drop 5% to €13.2m, but adjusted EBITDA rose by 18% to €8.1m. The dip was driven by negative performance in Japan but North America and Europe helped stave off a major decrease.
Catena’s casino performance in Italy saw a “sharp increase” in customer registrations and depositors, with an added emphasis put on cost efficiency.
Sports revenue and adjusted EBITDA declined 5% and 62% to €21.8m and €12.4m, respectively. However, new depositing customers rose by 1% in the segment.
Elsewhere, total ddjusted EBITDA for the firm decreased by 7% to €20.5m, and new depositing customers fell to 113,294 from Q1 2022’s return of 117,286.
CEO Daly went on to share the firm’s ambitions for the rest of this year given the stuttering start to 2023.
He said: “Our ambition is to be net cash positive during the second half of this year as we leverage the positive impact of cost-reduction efforts on cash flow generation.”
The CEO further revealed Catena’s targets for the next two years as it aims to maximise opportunities in North America and deliver sustainable growth and shareholder value.
The affiliate aims to achieve revenue of $125m in the US by 2025, representing a compound annual organic growth rate of 12% from what was achieved in 2022.
Adjusted EBITDA margin is projected to exceed 50%, with the firm conducting cost optimisation measures to achieve this.
Daly explained: “The North American market is still relatively early in its growth cycle and process, with many states and provinces yet to open for online sportsbook, and many more for online casino.
“Due to the US federal election cycle, we will see a temporary slowdown in state openings and will adjust operationally to that reality over the next 12 to 18 months. After that, we expect a resumption, and perhaps even an acceleration, of state launches once a new legislative cycle starts in 2025.
“North America represents an attractive opportunity for sustainable growth over the long term, and we remain deeply committed to taking full advantage of the market’s strong fundamentals and our unique position as a leading affiliate partner for operators,” he concluded.