Affiliate marketing giant Catena Media has reported a full-year loss of €10.5m (£8.8m/$11.3m) for 2019, primarily due to impairment charges related to assets acquired between 2016 and 2018, while all core business units struggled in the period.
Revenue for the 12-month period through to 31 December 2019 amounted to €102.8m, down 2.1% from €105.0m in the previous year.
Catena noted a 1.8% year-on-year decline in search revenue from €89.9m to €88.3m, while paid revenue also dropped 15.0% to €11.9m and subscription revenue 57.7% to €2.6m.
The affiliate giant said revenue share arrangements were responsible for 43% of total revenue for the year, with 40% attribute to cost per acquisition revenue, 15% from fixed fees and 2% from subscriptions. Catena also noted that around 81% of revenue was generated in locally regulated or taxed markets.
In terms of spending, Catena has issued a warning earlier this week that higher costs related to certain areas of the business would likely impact its full-year financial performance.
Total operating expenses amounted to €108.5m, an increase of 64.9% on 2018 as Catena felt the impact of various additional costs. Direct costs were up 4.6% to €13.6m, while personnel expenses climbed 18.8% to €22.8m, and depreciation and amortisation spend jumped 62.1% to €14.1m.
However, Catena said impairment costs on intangible assets totalled €32.1m. As the business noted earlier this week, this write-down was related to assets acquired between 2016 and 2018.
These impairment costs included a write-down of €17.9m related to intangible financial assets that are primarily focused on the European Union, as well as €13.2m related to casino assets acquired in 2016, and €900,000 in reference to assets in the sports market.
Exceptional costs also included €2.7m for loss allowances on trade receivables, as well as €2.0m for a refinanced bond, and further spending on credit facility and reorganisation costs.
Significantly higher operating costs, coupled with the decline in revenue, meant Catena posted an operating loss of €5.7m for the year, compared to a profit of €39.1m in 2018.
Loss before tax amounted to €10.3m, down from a profit of €33.1m in 2018, and after paying €178,000 in taxes, loss for the year stood at €10.5m, a stark contrast to €30.8m in profit in the previous year.
“As the efforts we have put into our products now show a positive growth trend, we also saw challenges with some of our previously acquired assets not performing as planned,” Catena’s chief executive Per Hellberg said.
“In our strategic review, operational efficiency programmes and evaluations of previously acquired products, we are writing down the value of certain assets acquired in the period 2016-2018, which simply can’t perform under today’s market conditions.
“Now, with only two earn-out commitment to be settled, and with a strong operating refinancing of the company; we will communicate further details as soon as we have information to give.”
In terms of the fourth quarter, during which most of the additional spending took place, revenue was down 2.6% to €26.6m, with year-on-year declines across search revenue, paid revenue and subscription revenue.
Q4 operating expenses amounted to €53.8m, up 200.6% on the previous year, which contributed to an operating loss of €27.3m, compared to a profit of €9.4m in 2018. Loss before tax totalled €32.2, in contrast to a profit of €13.1m last year, while loss after tax stood at €31.1m, down from a profit of €12.4m in 2018.
“We will continue to execute on our strategy to focus on few brands, invest in new markets, and continue our focus on cost control,” Hellberg said. “We are prepared for continued improvements in 2020 and beyond.”