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  • Q4 2023: Share price sinks as Catena Media reports 41% revenue drop
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Catena Media’s self-described “weak” Q4 2023 report revealed a 41% year-on-year revenue drop, but CEO Michael Daly believes the business is “turning a corner”.

Topline numbers

In Q4 2023, Catena Media reported a 41% year-on-year revenue decrease to €14.5m.

Revenue in North America decreased by 43% to €12.3m, equivalent to 85% of group revenue from continuing operations.

Adjusted EBITDA from continuing operations decreased by 88% to €1.5m. This corresponds to an adjusted EBITDA margin of 10%, down from 48% in Q4 2022. 

New depositing customers (NDCs) from continuing operations totalled 32,032, down 43% year-on-year.

For full-year 2023, the affiliate reported revenue from continuing operations of €76.7m, a year-on-year decrease of 22%.

Revenue in North America decreased by 21% to €67.1m, accounting for 87% of group revenue from continuing operations.

NDCs saw a 19% annual decrease and totalled 184,257.

Adjusted EBITDA from continuing operations decreased by 47% to €25.4m, corresponding to an adjusted EBITDA margin of 33%, down from 49% in 2022. 

Management commentary

CEO Michael Daly described the results as “disappointing”, however, he added that the company is on its way to transition to a more sustainable revenue model.

“In Q4, market headwinds caused revenue and EBITDA declines in our core North American market. Lower cost-per-acquisition (CPA) rates paid by operators again impacted revenue, as did stiffer competition directed against us as the established market leader,” he said.

Catena Media continued to convert operator deals from CPA to revenue share.

“This rebalancing will bring greater stability and sustainability to revenue inflow over time. The short-term drawback is that foregoing CPA in favour of revenue share reduces upfront income, and we felt this impact in Q4.”

Tech investments

Daly also pointed to a wide-ranging internal investment programme, including large investments in both tech and AI. 

“Planned and initiated earlier in 2023, the investments have since been accelerated. They are designed to position us for the future and also to restore the group to a sustainable long-term growth trajectory,” Daly said. 

The cornerstone of this transformation is a new technical platform that will launch in Q1. 

“Once fully rolled out in Q2, this will be the first time Catena Media focuses affiliation activities on a single, coherent tech infrastructure. Creating this new backbone is a step change that will make us technically far more robust across all products and make it easier to deploy new verticals,” Daly added. 

In Q4 2023, Catena Media established a joint venture with a specialist AI partner to develop a generative AI application exclusively dedicated to content production for online betting and casino gaming affiliation. 

“This project is progressing at high speed. In less than three months it has delivered a minimum viable product (MVP) that we have already introduced to the business. 

“The focus now and in the months ahead will be on refining and adapting the MVP for multiple brands as its impact on our content production evolves from quantitative driver to qualitative enabler. We will update the market with our progress as we reach different milestones,” Daly added. 

A more streamlined organisation 

The business stressed that the completion of the strategic review and associated divestments enabled the firm to undertake the investments. 

“The strategic review has narrowed our geographic spread and streamlined the organisation. Most importantly, it has allowed us to diversify the channels in which we want to specialise going forward,” the CEO added. 

“Catena Media is now transitioning into a multichannel business that operates media partnerships, paid media, subaffiliation and other verticals alongside our core expertise in organic search. 

“We firmly believe this new multicentric structure and our core focus on regulated markets in the Americas will deliver sustainable revenue growth over time.”

Updated financial targets 

Catena Media anticipates a challenging reporting environment until the new investments gain traction in the second half of this year. 

Therefore, the group has updated its financial targets for the period 2024 to 2026. 

The business expects a resumption of organic growth in the second half of 2024 and full-year adjusted EBITDA in the range of €20-30m.

The updated targets also include achieving double-digit organic growth in revenue and adjusted EBITDA for both 2025 and 2026 at the group level, while maintaining a net interest-bearing debt to adjusted EBITDA ratio between 0 and 1.75.

“A strategic reboot on the scale that we have undertaken can take time and test the patience of employees and shareholders. Q4 was a difficult quarter, but I believe we are now turning the corner,” Daly said. 

Investor concerns

Investors are showing skepticism, with Catena Media’s shares plummeting nearly 13% during the initial hours of trading. 

Adding to the turmoil, STS founder and GiG shareholder Mateusz Juroszek has publicly called for Catena Media’s management team to step down. 

On LinkedIn, he bluntly stated: “I think Catena Media management should resign today and assets should be sold on the market. What a story in how to destroy the business.”

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